9.05.2018

Public Sector Changes – Protection, Control and Redundancy

The State Sector and Public Finance Reform Bill was introduced to Parliament in late August, and is currently awaiting its first reading.

The government has introduced a Bill to change aspects of employment law for public sector employees.  Some commentators have remarked that the Bill ‘sets off the snooze button’, while others believe it makes significant changes.  While not necessarily a particularly exciting topic, the Bill does seek to implement several changes that public sector employers and employees should be aware of.

The State Sector and Public Finance Reform Bill was introduced to Parliament in late August, and is currently awaiting its first reading.  The Bill, if passed, will amend the State Sector Act 1988, the Public Finance Act 1989, and the Crown Entities Act 2004.  Essentially, the Bill fits in with the government’s policy of streamlining the state sector to deliver better public services by making it easier for government departments and other agencies to work together.

A portion of the Bill would amend the State Sector Act 1998, the primary piece of legislation that sets out how the state sector operates and promotes responsible management and integrity.

The proposed amendments to the State Sector Act 1988, according to the explanatory note that accompanies the Bill, would:

  • Strengthen the role of the State Service Commissioner to lead state services;
  • Extend the responsibilities of chief executives of government departments so that they must consider the collective interests of government when making a decision; and
  • Create “departmental agencies” to sit within a larger government department.  The idea behind the creation of such agencies is to reduce fragmentation in state services and absorb functions carried out by separate agencies.

Although not one of the more public changes, the Bill also proposes to clarify the immunity that public service chief executives and employees have from civil proceedings, provided that their actions (or omissions) were in good faith and occurred while they were pursuing their duties, functions, or powers.  In practice, this will be one of the more important amendments to public sector employees, as the relationship between this immunity and the Crown Proceedings Act 1950 had become somewhat complex following the decision of the Supreme Court in Couch v Attorney General.

The Bill introduces the term “key position” to the State Sector Act 1988.  Should the Bill pass, then the State Services Commissioner would have the power to designate a position as a key position.  This would be done on the basis that the position is critical to the public service, or, alternatively, because of the position’s potential to develop senior leaders in the state sector.  If a position is designated a “key position”, then employees can only be appointed to that position with the agreement of the State Services Commissioner.

The Bill also introduces the concept of “ministerial staff” to the State Sector Act 1988.  Ministerial staff are defined as employees (this includes acting, temporary, or casual employees) of a government department who are employed on events-based employment agreements to work directly for a Minister, as opposed to for a department.  If a particular event occurs, the employment of these employees can be terminated.  An example in the Bill of an event giving rise to termination is where the particular Minister no longer holds that particular ministerial portfolio.  In essence, ministerial staff would be fixed-term employees.

The Bill also proposes to make changes to provisions relating to redundancy payments where an employee is offered another position within the state sector.  At present, the State Sector Act 1988 gives chief executives certain powers to transfer employees within or between departments (subject, of course, to the terms of the employee’s employment agreement) where they are surplus to requirements, provided that:

  • The chief executive consults with the affected employee before any transfer appointment is made; and
  • The employee is not subject to conditions of employment any less favourable than their old position.

Many state sector employment agreements provide for redundancy compensation when such a transfer occurs.  Under the proposed amendments in the Bill, an employee will no longer be entitled to a redundancy payment where, before their employment has ended, they:

  • Are offered and accepts another position in the state sector (which includes government departments, Crown entities, and Crown companies); or
  • Are offered an alternative position in the state sector with comparable duties and responsibilities to their current position, the alternative position is in the same general locality (or within reasonable commuting distance), and on terms and conditions of employment no less favourable overall, and is treated as if it were continuous service.

If you have any questions regarding these issues email us on employmentnews@heskethhenry.co.nz or call us on (09) 375 8699.

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