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Fixed-term payouts when ministers get marched

10 June 2014

The 2014 general election promises to be hard fought. But besides a potential change in government, readers may be interested to learn how the election will impact on ministerial staff in the Beehive.

About $1 million is being set aside by Ministerial Services to cover the cost of staff "redundancies" in the Beehive after the election, and that is if National is re-elected. If Labour and the Greens take power, then that bill is estimated to be $3.5 million.

Beehive staff are almost exclusively employed on "event-based" fixed-term agreements. They remain employed until the election or until the minister they work for loses his or her warrant.

Staff who do not get a new role after the election, or alternatively who choose to pursue other endeavours, are entitled to a payout. According to Janice Calvert, general manager of Ministerial and Secretariat Services, that payout can be up to four months' salary depending on the length of their tenure.

This is not an ordinary situation for fixed-term agreements. Nor is it a case of redundancy. These days, employees only get compensation for redundancy or their fixed-term agreement expiring when the employer agrees in the contract to pay it. Most employers don't.

It is often difficult for employers to navigate fixed-term agreements as there needs to be a genuine operational reason for having a set end date or terminating event. Employers cannot deprive employees of their ordinary rights by dressing up their employment as temporary.

In this case, it makes perfect sense for Ministerial Services to employ staff on fixed-term agreements. Staff in Ministerial offices serve the government and ministers of the day. There are obvious difficulties with ministerial advisers working for a National minister one day and a Labour minister the next.

Moreover, ministerial portfolios are almost always reallocated following the return of a governing party. Ministers come and go. No doubt Ministerial Services needs to be able to shift staff around too. Hence the "event-based" agreements. While the practice in Ministerial Services appears sound, a worker might still argue that the role they were previously employed in still exists and accordingly they should not lose their job. Clearly the payment of compensation to those unable to find an alternative position lessens the likelihood of a public legal challenge in the courts. No minister wants litigation in the public arena around staffing matters.

Employment law is littered with examples of cases where employers have sought to improperly use fixed-term agreements and been found wanting by the courts or tribunals.

Jennifer Miller was employed by Red Bull New Zealand as a brand ambassador in Christchurch. Like all brand ambassadors at the time, she was employed on a one-year fixed-term agreement.

The role was to conduct samplings of Red Bull's product at public events or places so as to promote the product, build brand awareness and introduce new consumers to the product.

Miller performed her work satisfactorily.

Nearly a year into the role, she was given a new six-month contract that was scheduled to expire in April 2002.

When one of Miller's colleagues resigned, Red Bull advertised for a new brand ambassador in Christchurch. Miller assumed the advertisement was seeking to replace her colleague.

At a meeting in March 2002, Miller was informed that she would not be offered a new contract after the expiry of her present agreement. Shortly afterwards, two new brand ambassadors were engaged on fixed-term agreements to take over Miller and her departed colleague's responsibilities.

Miller challenged the validity of the fixed-term arrangement in the Employment Relations Authority and sought interim reinstatement.

Red Bull argued that it had valid operational reasons for putting Miller on two successive fixed-term agreements. It claimed firstly that it was a business requirement that brand ambassadors turn over so that they come across as innovative, creative and easy-going.
Secondly, it argued that as the funding for promotional events was frequently reviewed, the continuing employment of the ambassadors could not be guaranteed.

The authority found an arguable case that there were no valid reasons for the fixed-term. Many companies had to review their budgets annually but that in itself was not a reason for employees to be temporary.

Furthermore, any concerns about brand ambassadors ceasing to be innovative, creative or easy-going could have been addressed as performance concerns and did not warrant fixed-term employment. Red Bull was ordered to reinstate Miller.

Ministerial Services is undoubtedly on much more solid ground than Red Bull was with its fixed-term agreements. However while not a legal requirement, offering departing employees a reasonable payout will lessen the likelihood of the matter ending up in the Courts.

Cullen - The Employment Law Firm was one of the first eleven law firms in New Zealand approved to provide employment law services to Government and the public sector.

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