PART TWO - International review

Overview of legal protections in international jurisdictions

The relevant international instruments are the International Labour Organisation (ILO) Termination of Employment Convention, 1982 (No. 158) (“Convention 158”) and the Termination of Employment Recommendation (No. 166) (Recommendation 166). These instruments set out the key principles relating to the dismissal of workers, including redundancy situations. In addition to placing emphasis on severance pay (funded directly by the employer or a fund constituted by employer contributions, or social security benefits or a combination of both), notice periods and appeal periods, it also focuses on member States encouraging employers to consult with worker representatives to consider alternatives to mass layoffs.

New Zealand has not ratified Convention 158 and is therefore not bound by its provisions. Recommendations by the ILO are not able to be ratified by member States and therefore New Zealand is not bound by the provisions of Recommendation 166.

Convention 158 includes:

1. Article 12 which provides for employees to be entitled to a severance allowance upon termination of employment
2. Article 13 which requires employers to consult workers representatives when they are “contemplating termination of employment for reasons of an economic, technological, structural or similar nature”, and
3. Article 14 which requires employers to provide notification to the competent authorities where the employer is contemplating redundancies.

The New Zealand Government’s long-standing policy and practice – applying to all international treaties – is that it will only ratify such conventions, and thereby incur legal obligations thereunder, when it can fully comply with them. Many of the principles under Articles 1-11 in the Convention 158 have been implemented into New Zealand redundancy law. Several countries with similar legal systems to New Zealand including Canada, Ireland, the United Kingdom and Australia have not ratified Convention 158.  

The review on legal protections in international jurisdictions provides an interesting basis to consider New Zealand’s position comparatively to international trends. While statutory provisions for redundancy are intrinsically linked to some labour market policies and international obligations, this does not prevent New Zealand taking guidance for what does work well in other jurisdictions.

The majority of jurisdictions limit their requirements to collective redundancies, however unfair dismissal claims are still available for individual redundancies. These are not explicitly considered in this review.

European Union and international labour standards play a key role in setting the framework for legal protections for redundancy and restructuring situations. Legal protections in Europe tend to be more prescriptive and are largely driven by European Union directives. While there are differences between European economies and the New Zealand context, European developments are still informative.

In considering notice and redundancy compensation requirements, the Australian National Employment Standards (NES) was recently released by the Federal Labour Government. The Standards will apply to all Australian employees regardless of their industry or occupation from 1 January 2010 - see Appendix I (The Appendix can be obtained upon your request).

In summary, there are a number of international initiatives, statutory provisions and social plans which New Zealand could seek value in from either considering or adopting. While New Zealand provides consultation requirements which are on par with other jurisdictions, this is the extent of statutory protection that employees are entitled to. The provision of notice periods and social plans in other jurisdictions are worthy of consideration. The breakdown of requirements reviewed for the respective jurisdictions and a comparative analysis are attached in Appendix J (The Appendix can be obtained upon your request).

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