The issues of low pay and poor conditions are very familiar to our many members working for contractors in our public hospitals. Until recently, procurement rules encouraged contractors to bid low to win contracts. This may change after the Government this year moved to broaden the criteria for selecting contractors.
But familiarity with the history of contractors in our public hospitals presents a big red flag. From the first encroachment of contractors in our hospitals during the 1940s, through the dark days of the Employment Contracts Act and the slow, steady fight since then to improve the lives of all hospital workers, the historical record shows contractors have actively resisted decent pay for their workers, using anti-worker laws to drive down wages and conditions. The paper below, by our former Assistant National Secretary John Ryall, spells this out in detail.
The Early
Awards
Occupational
awards (Arbitration Court-set minimum mandatory pay rates and employment
conditions for occupations) were in place from the 1890s but they didn’t really
take off in a big way until the 1930s with the election of the First Labour
Government, which brought in compulsory unionism and encouraged the formation
of new awards in places where they had not existed before.
The Hospital
Domestic Workers Award, first negotiated in 1940, covered orderlies, food
service workers, cleaners, sewing room workers and male nurses, who were
employed in public hospitals. At that time, they were all employed by Hospital
Boards, but in the 1940s the first of the contractors started creeping into
public hospitals.
Both the
Canterbury and Wellington Hospital Boards contracted out their cleaning to
Crothalls, which set off a tug-of-war between the Canterbury and Wellington
Hotel and Hospital Workers Unions and the Canterbury and Wellington Cleaners
Unions as to who covered these workers and under which Award (Hospital Domestic
Workers Award or Cleaners Award).
Luckily for
the cleaners, the Hotel and Hospital Workers won a case before the Arbitration
Court in 1946 and at that point Crothalls and other contractors, who gained
contracts in public hospitals, were covered by an award where pay rates and
employment conditions were largely dictated by the Hospital Boards.
Pressure
on Hospital Boards
In the early
1980s there was increased financial pressure placed by Government on the
Hospital Boards and, as well as getting rid of continuing care beds to the
private residential care sector, they also became more cost-conscious with
changes of contract.
There were a
number of disputes from 1981-85 (a big one in Wellington in 1981 and another in
Auckland in 1983) regarding changes of contract and the cuts in hours of
existing workers during these processes. Because the Award conditions were
minimum industry conditions (including for any business, such as retail food
stalls) that set up on a hospital premise, there was no room for a contractor
to cut these conditions, but they could cut the hours of work of the cleaners.
At the time
the Award had a provision that required the union to approve the appointment of
any part-time worker through a permit system. This was used to control the cuts.
Later in the
1980s the part-time permit system was weakened (as most parts of the smaller
unions were not using it) although this was replaced with a better provision to
maintain hours of work if the contract changed and the workers were taken over.
The Dark
Ages
The 1991
Employment Contracts Act broke up all previous arrangements and the national
award broke up into site-based collective employment agreements.
In the
periods 1992 (when the Hospital Domestic Award expired) and 1996, large parts
of the public hospital system were contracted out as the Area Health Board
system was broken up into competitive Crown Heath Enterprises, who were run by
commercial, government-appointed directors and were expected to make a profit.
P&O
Services (formerly Crothalls and now Spotless) were the dominant player and
they took over all services at Counties-Manukau, Waitemata, Bay of Plenty,
Mid-Central, Whanganui, Tairawhiti, Nelson-Marlborough and Southland. They
already had cleaning services at Wellington, Hawkes Bay and Lakes.
The other
contracting group that emerged was called Tempo and it started a cook-chill
system and took over the food services at Taranaki, Lakes, Northland,
Wellington, Canterbury and Wairarapa. Tempo, which was bought out by the US
Delaware North Corporation also gained cleaning contracts in Wellington, Hawkes
Bay and Auckland before it collapsed in 1995 leaving P&O Services (later
bought by Spotless) to take over most of its contracts.
Because the
Employment Contracts Act allowed employers to set up non-union collective
agreements, P&O would do this and then employ all their new staff on these
collective agreements despite a union collective agreement being in existence.
If they wanted to cut conditions even further, they would set up a new non-union
collective agreement while the others were still in existence and employ new
staff on even lower conditions.
In
Mid-Central Health, P&O Services had some existing workers on the old
Award, some on the union collective agreement and others on collective agreements
going from A to G, each with different cascading sets of employment conditions.
In the late
1990s there was a struggle at Mid-Central to get rid of all these collective
agreements and force the company to offer all new workers the union collective
agreement before other agreements.
The
Victory Fund and the Fight for the DHB MECA
While a
Labour-Alliance Government was elected in 1999 and the Employment Relations Act
was introduced in 2000, it still took the unions time to adjust to public
hospital organising and collective bargaining.
There were
45 separate collective agreements existing in the public hospitals and some of
these local site-based agreements were so weak that their pay rates were very
close to the minimum wage; the weekend, public holiday and night penal rates
had been reduced to very low levels; and sick leave and other leave
arrangements had been reduced in many parts of the country.
The union
began a “Healthy Hospitals” campaign in 2006, focussed on the lowest paid
workers in the public hospital system, moving the nearly 2000 SFWU members into
one national Multi Employer Collective Agreement (MECA), and delivering a big
lift in the wage rates and employment conditions of our members.
The DHBs
were opposed to a National MECA, arguing that our members’ pay rates were
determined by local labour markets rather than a national one (nurses) or an
international one (doctors) and to complicate this the DHBs would not sit in
the same room as the contractors (Compass, Spotless, ISS and OCS).
After nearly
12 months of bargaining, stopwork meetings and rallies, the Labour Government
told the DHBs to conclude a MECA, although not with the contractors included. A
case in the Employment Court arguing the DHBs had a duty to conclude a MECA was
lost.
The union
had discussions with the Minister of Health and the Government about funding a
MECA settlement above the DHB financial allocations, including the cost for the
contractors.
The
Government put aside $17 million for a settlement and the union negotiators
were forced to massage the conditions to meet these parameters in a settlement
which was independently costed.
The DHB MECA
was settled on good terms with many members getting back their weekend, public
holiday and night penal rates and pay for cleaning supervisors, who had
previously only been paid about 35 cents an hour above the cleaners’ rate, was boosted
by about $2.00 an hour.
The base
rate was set at $14.25 an hour ($3 an hour above the minimum wage) and a
national service scale was introduced for the first time with a 5% increase at
the second step and 3% increases up to step 5. To preserve the “local labour
market” principle the DHBs managed to carve out an exception that non-metro DHB
members could only progress up to step 4 and not be eligible for the top step.
Current service and other allowances were incorporated into the high wage
scale.
As there had
previously been multiple DHB collective agreements, a standard set of
conditions was negotiated into the MECA and any group that had better
conditions had these preserved in separate DHB schedules.
The
contractors then followed and each negotiated their Single Employer Collective
Agreements on the basis that the same wage scale, progression system, penal
rates and overtime rates would be applied, that the parties would try to reach
agreement on a common set of employment conditions and any conditions above
these would be preserved in separate schedules for each DHB group.
The
implementation was mixed across contractors with resistance where contractors
feared a reduction of their competitive advantage over other contractors and DHB
directly employed services. Spotless members embarked on a stop-start form of
strike action and Spotless responded by locking our 700 members out of their
jobs until the union agreed to their terms for the collective agreement.
The
Employment Court refused the union’s interim injunction application, but the
members stood firm.
Eight days
later, with pickets occurring daily outside each public hospital and the
Auckland DHBs giving Spotless an ultimatum about fixing the dispute or having
their contracts terminated, the Employment Court reversed its position and gave
the union an injunction against the Spotless lockout.
Spotless had
to quickly negotiate a settlement of the collective agreement and settle with
the union for legal costs and back pay to the members. Over the next six months
Spotless lost all of the Auckland contracts and the contract at Southland DHB.
Between 2008
and 2018 the contractors were compliant with settling for whatever the DHB
offered in the MECA although the percentage increases during these years were low.
The contractors also gradually all agreed to bargaining fee arrangements for
their SECAs.
The
2018/19 Problem
In the
2018/19 round the union gained very large increases in wages and cemented in
some strong obligations for employers around training and qualifications
attainment. However, again the problem
looms that the DHBs could refuse to fund the contractor increases after signing
off the SECAs and the contractors may be stuck with paying the rates but not
getting the funding for them.
The struggle
of these workers for stability, security and decent lives continues and the
story of contractors in the DHBs will have a new chapter written in the near
future.
By John Ryall
