I will start my short contribution today by congratulating Darien Fenton on the success she has had in getting her bill out of the ballot, and on the effort she has gone to in doing something through this bill that if the House were to pass it, would represent us as doing the right thing. The bill implements the recommendations of the Public Advisory Group to the Minister of Labour on Restructuring and Redundancy, which reported back in 2008. That group recommended that it was time to put in place a modest entitlement, on a universal basis, for qualifying employees.

I practised in the area of employment law for many years before I came into this House, and not only is this bill a decent thing to do; it is a smart thing to do from the point of view of making the law certain. I will take the House through some of the developments that have been seen in the law in this area to explain what I mean by that. There has never been a statutory obligation in this country to pay redundancy compensation to an employee dismissed through redundancy, and that absence of a statutory obligation, at the time when we last went through major unemployment in this country back in the 1990s, caused major disruptions in employment law. It was not an issue during most of the term of the last Government, so it was interesting to hear Mr Henare’s contribution on that point. There was no need to legislate for redundancy in that term, because we had full employment. But, guess what, the House needs to remember that we are not in those times now. We are now in times where the rate of unemployment is over 7 percent, and this issue will have to be confronted by the courts again.

It is timely for the House to recall what the courts did in the absence of a statutory redundancy entitlement the last time we faced high and unlikely-to-decrease unemployment. I will describe some of the legal cases. First of all, from about the early 1980s onwards the courts looked at what used to be called the dispute of rights provisions in the labour law that prevailed at the time. There ended up being a number of cases over whether the dispute of rights provisions in the legislation could be used to confer a right on workers to redundancy compensation, when their employment contract, award, or agreement did not expressly call for that entitlement, or, if the contract did so, it did not specify how much redundancy compensation—or notice, even—they would be entitled to. Employers tied themselves up in knots trying to work out what the law should be in any particular case where an employment instrument mentioned redundancy but did not go further than that—it did not define an entitlement.

The courts did not give any clear guidance as to whether there was such an entitlement. In some cases, like the Wellington Hospital Board case in the early 1980s, the court indicated that, yes, there was such an entitlement. Then there was the Cornhill Insurance case, the Westland Catchment Board case, the Timbercraft case, and, finally, Westland again, back in the Court of Appeal. All of these cases gave inconsistent results as to whether an employer had to pay redundancy.

Parliament took the matter in hand when it passed the Employment Contracts Act. Clause 34 of the Employment Contracts Bill, which became section 46 of the Act, did away with the ability to use the disputes process to get a redundancy compensation deal. But the courts were actually a step ahead of Parliament, because unemployment was still high and rising at that time, and 8 days before the introduction of the Employment Contracts Act, the Labour Court, in a decision called G N Hale and Sons Ltd v Wellington Caretakers IUOW, and in its second judgment in that case—following the matter being remitted to the Court of Appeal then sent back to the Labour Court—decided that the personal grievance jurisdiction in the relevant labour law could be used to give a redundancy entitlement. All those same problems arose for a number of years. Although, yes, it was deemed fair by the courts to pay compensation, there was never any clear guidance as to how much and in what circumstances.

We have the same provisions that applied then in our labour law at the moment, as far as personal grievances are concerned. The test is whether it is fair in all the circumstances to dismiss somebody. If the courts decide to swing the pendulum again, and decide there is an entitlement in the common law that redundancy ought to be paid to dismissed workers in certain circumstances, we will be back in that same position. No doubt this Parliament will swing in under this mean-spirited Government and just abolish the entitlement, but would it not be better to do the right thing: to support Darien Fenton’s bill and provide a modest entitlement on redundancy to workers dismissed for that reason?