Early childhood business drops unlawful contracts

The country’s second-largest early learning business has backed down on an illegal staff contract following a public backlash, Laura Walters reports

Evolve Education has decided to do away with a proposed contract that would have cut its teachers’ hours in half.

Evolve Education, a publicly listed company which owns 128 centres across the country, offered full time staff a 20-hour contract, with a requirement to be on-call (unpaid) for a further 20 hours, in case they were needed.

The business, which owns well-known centres like Lollipops, Active Explorers and Little Wonders, said the contracts were proposed in an effort to mitigate the fluctuating post-Covid situation and low attendance rates at its early childhood education (ECE) centres.

Staff and NZEI Te Riu Roa union immediately opposed the contracts, saying lawyers who reviewed the employment agreement categorised it as unlawful.

Education Minister Chris Hipkins then stepped in, asking the Ministry of Education to review the issue, following backlash from the sector, a public petition and a collection of media reports.

On Thursday night, Evolve chief executive Tim Wong announced to staff, parents and whānau that the centres would not be going ahead with the contracts, and staff would stay on their existing employment agreements.

He said the contracts were only ever proposed as a voluntary option for staff in centres that had been severely affected by Covid-19, in an effort to avoid redundancies. However, very few staff wanted to accept the contract.

Newsroom understands some staff left their jobs as a result of this employment offer.

Evolve was eligible for the Government’s Covid wage subsidy, and collected $12 million in order to pay its 1900 staff during lockdown.

But Wong said the business was now entering an uncertain period, with the outbreak and lockdown leading to layoffs in industries such as tourism and hospitality, which has led to declining enrolments in some of its centres.

“We therefore started a consultation process to look at the options to ensure we retained all of our existing staff. One option to do that was to share the available work around in affected centres, so we prepared a proposed alternative employment agreement to teaching staff in the affected areas to consider,” he said, adding that company management would be visiting centres around the country, to hear what staff have to say and see what lessons could be learned.

"In coming together to raise the alarm and stand up for their pay and conditions, they have shown other early childhood teachers just how powerful collective action can be."

NZEI national secretary Paul Goulter said the decision to do away with the contracts was a win for collective action.

"Today's outcome is a win for all early childhood teachers, and a win especially for Evolve's staff. In coming together to raise the alarm and stand up for their pay and conditions, they have shown other early childhood teachers just how powerful collective action can be,” he said.Goulter said he welcomed the intervention from the minister, and his call to treat early childhood education staff with good faith and goodwill.

“We still have a long way to go to fix the pay gap, but by standing their ground, Evolve's teachers have helped prevent another step backwards for the sector,” Goulter said.

This contract debacle comes as the sector faces a range of issues, which have been highlighted by Covid. These include low teacher pay, a lack of job stability, and inconsistencies in pay and employment conditions across the sector.

In a move to resolve the longstanding issue of teacher pay, the Government boosted funding to ECE services’ care service rates by 2.3 percent.

This amounted to a $151.1 million funding boost, which was solely intended to improve teacher pay.

The extra money is being labelled as the first step towards pay parity for ECE teachers, and would help improve the pay of up to 17,000 qualified teachers. Early childhood teachers are paid up to 49 percent less than other teachers with the same qualifications.

In its Thursday night announcement, Evolve also promised to pass new Government funding, earmarked for pay rises, onto its staff.

If Evolve followed through on this promise, it would be the “icing on the cake”, Goulter said.

"Without the political and public pressure teachers have generated around this issue over the past week, I'm not sure we'd have seen this commitment."

“Our expectation is 100 percent crystal clear. That money is being given, through increased funding rates, to improve the pay and employment conditions of early childhood education teachers."

This promise comes after Hipkins was forced to issue a stern warning to ECE providers who were using the extra public funding for things other than teacher pay.

“Our expectation is 100 percent crystal clear. That money is being given, through increased funding rates, to improve the pay and employment conditions of early childhood education teachers. 

“And if we see evidence it’s going elsewhere then that’s going to be quite a concern to Government.”

If centres did not pass on the extra money to teachers, it would undermine the drive towards pay parity, he said.

Because of the private ECE model, the Government doesn’t have a mechanism to pay teachers directly (as the ministry isn’t their employer), therefore the money for pay increases has come through an increase in funding rates to centres.

In order to get that funding, centres had to commit to paying teachers at least the new bottom rate of $49,862. However, the ministry could not force centres to spend any extra money on increasing salaries of teachers earning more than the bottom rate, despite the Government’s clear directive.

Evolve is the second-largest early childhood education business in the country, and is listed on the New Zealand and Australian stock exchanges.

Wong was brought in as chief executive late last year as the company continued with its “New Zealand turnaround plan”, which began with an overhaul of directors and management, and was geared towards lifting occupancy rates at its centres, improving family retention, and improving employee engagement.

The company has also started an Australian expansion plan, and purchased five centres in Australia late-last year. A further five Australian acquisitions planned were not completed due to a range of factors, including the impact of Covid-19.

Evolve has an NZX market capitalisation of $133 million. It’s share price was 11.9 cents at closing on Thursday, down 63 percent over the past year.

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