Employment

21 Aug 2009

The Nine-Day Working Fortnight Scheme – Creative Thinking in the New World Order?

The Nine Day Working Fortnight Scheme launched by the Government last week - possibly the first of its kind at a national level in the western world - could prove to be a ground-breaking initiative in taking quantifiable, positive steps to halt the impact of a recession on the economy.

Intended to be in place by 27 March this year and winding up at the end of 2010, the Scheme provides that private sector employers with more than 100 employees will be able to negotiate agreements with staff to work a nine-day fortnight, in return for those employees receiving a payment of $62.50 for the unworked day. This payment will be paid by the Government to employers, who will be obliged to pass the sum on to their employees. Employers may also top up this payment at their discretion, although it is difficult to see this happening in practice.

In return for accepting these reduced hours - and taking the associated hit in the back pocket - employees participating in the Scheme will be protected from redundancy for as long as they participate, with participation periods limited to six months per employer.

An employer may have up to 10 employees participate in the scheme for each redundancy redundancy. Some media commentary has linked participation with the need for an employer to demonstrate financial distress and a risk of redundancy, but this has not been communicated by the Government to date.

Further detail about the Scheme is yet to be released, but it is likely that this would include parameters and guidelines for implementation to aid employers and employees in making decisions about participation. If this saves an increase in redundancies over the next 18 months, the Scheme will surely be deemed a success.

There is no question in anyone's mind, that from an employment law perspective, this is a complex matter that raises a large number of issues and questions - something the architects of the Scheme are no doubt considering right now as a matter of urgency. These questions are likely to include:

What will constitute a day? Many of New Zealand's largest employers do not operate eight hour days over 10 day working fortnights.

In order to avoid making as few as five positions redundant, how will large employers go about reaching agreement with 50 employees who are willing and able to sacrifice their take home pay?

How can expectations around when the day per fortnight can be taken be fairly met, given variables such as child care and transportation costs for employees and operational start up and running costs for employers?

There are also questions which flow from the practicalities of the '21st century' workplace, such as:

How will the Scheme apply to workers who work 4 x 10 hour shifts per week?

In the same type of workplace, how will the Scheme fit alongside terms and conditions of collective agreements relating to overtime, shift patterns, and the like?

How is it intended to deal with unionised versus non-unionised workforces, particularly in the same workplace? Will putting a Scheme in place result in discrimination based on union membership?

In addition, good thinking is required around the possibility that, even with participation in the Scheme, redundancies and even mass redundancies, may become unavoidable. This raises questions around what happens to monies paid out and who will deal with the consequences - Government and employer or employer and employee.

Provided the level of clarity is delivered, the architects of the Scheme will have gone a long way to ensure that this innovative initiative contributes to the economic recovery it was designed to deliver. This in turn, could have a very positive outcome on jobs and workplace relations in New Zealand. If not, the unintended consequence may be disputes and litigation at a time when employers least need these challenges.

John Rooney is a partner in Simpson Grierson's employment team.

Published: National Business Review August 2009

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John Rooney

Partner - Employment

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