POAL, CCOs and Contracting Out: some legal issues

I'm not a lawyer, but scanning the 2009 legislation (as subsequently amended) that set up Auckland Council, it seems to me that Mayor Brown has the power to sanction directly Auckland Council Investments Ltd (ACIL - the CCO established to run the city's investments). Equally, therefore, the Council has the levers to dismiss the POAL board if it is seen to be performing improperly or perversely. In other words, there is no legal impediment, as far as I can see, that stops Mr Brown deciding that boards that deliberately promote industrial disharmony in furtherance of commercial ends that are expressly at odds with Council policy should be replaced. Mr Brown is on record as saying that such powers will be used carefully. However, news that the POAL strategy is now unequivocally to refuse to settle except on its own terms (when a good settlement is possible) suggests that such powers should be invoked.

Turning to the POAL strategy itself, the contracting out approach is not without technical fishhooks. Readers may remember the tortuous development of "contracting out and sale or transfer of business" (COSTB) measures in the ERA. I won't repeat the story here, but it is to be found in brief in DoL coverage. What are the fishhooks for the company? The up-front costs are one. They have been suggested to be $24 million is redundancy compensation, a figure I haven't verified, but sounds plausible, and one which is a big one-off hit, and one that the Auckland Council and ACIL would want to think about. Then there is the relationship between Section 4 and Good Faith. POAL would have to show in law that it has acted in Good Faith (including good and effective communication with affected staff) in moving to a contracting-out model. Inter alia, it also has to show "genuine" reasons for such a move. Case law is limited in this area, but it strikes me that the behaviour of POAL is such that a good legal team might well show a lack of Good Faith in POAL behaviour and also a lack of a genuine reason for redundancy. I don't doubt at all that POAL has been trying to establish a public case for this, in support of a a future legal position. But the leaked POAL documents, for example, suggest an argument could be made about premeditated bad faith behaviour. The Employment Court is a tough environment for unions in this context, but one could see a long legal process grinding through. I'll be asking some employment law specialist what they think in the next few days and will comment in more detail then.