Sunday, June 24, 2007

KiwiSaver could lead to a fight between unions and employers

Yeah, I know I said I was going to join KiwiSaver, but really, it does have its faults. Some companies have super schemes partially funded by employers. What's the bet that some of these companies will pull these schemes if too many of their employees don't opt out of KiwiSaver.

Employers who are planning to wind up their existing scheme because of Kiwi Saver will be wise to follow this court case if their current scheme which they are planning to ditch is better than KiwiSaver. Some employers will be quite happy winding up current schemes and treating KiwiSaver employer contributions as part of their employees salary package, meaning employees get a 1 percent increase every year for the next four years - but paid into KiwiSaver.

The Hewlet-Packard personal grievance case has implications for those employers who may decide to wind up their existing scheme because KiwiSaver provides a useful, Government-endorsed alternative. If the Employment Court decides that employer super payments are counted as terms and conditions of employment, there will be claims for compensation if a shut down scheme had better provisions than KiwiSaver. If it decides that such payments are not part of an employees salary package, then the unions will have some work to do to bargain for pay increases if the employer treats them as such, but says they don't due to an Employment Court decision.

KiwiSaver could lead to increased union membership, meaning union fees will eat into Govt KiwiSaver subsidies, particularly hurting low income earners.

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