OVERVIEW

The aim of the Employment Relations legislation is to provide for balance in the conduct of employment relationships. It does this by:

• aiming to improve mutual trust and confidence between employers and employees;

• providing procedures for collective bargaining where employees choose to join a union;

• making provision for individuals to negotiate their wages and conditions of employment where they choose not to join a union.

In seeking to establish a balance in employment, the legislation aims to find a middle point between a number of competing rights to enable employees and employer to best contribute to workplace growth and a successful business. These include balancing:

• the rights of employers to run their businesses as they see fit, with the rights of employees to enjoy safe, satisfying work and to be treated fairly;

• the rights of individual employees with the rights of groups of collectively organised employees;

• the ability of some parties to exercise their bargaining power with the ability of others to negotiate their terms and conditions of employment.

The Select Committee has recommended a number of changes to the Bill as it was originally presented to Parliament. This has happened as a result of the Government listening to the views of employers, employees, unions and others who made submissions on the Bill. Apart from some changes which are indicated below:

• the language of the legislation has been simplified wherever possible.

• some sections have been combined where this made the legislation easier to understand.
  

The principle of "good faith" is central to the ideas underpinning the legislation. It applies to everybody – unions, employers, and employees – and in relation to all employment-related matters. It means that parties must be open and honest with each other and that nobody will be able to behave in ways that mislead or deceive the other party.

"Good faith bargaining" has some specific requirements. For example, the parties must meet together from time to time for the purposes of bargaining, and must consider and respond to proposals made by the other party. The good faith obligation does not, however, mean that the parties to a negotiation must reach an agreement.

Additional information on good faith bargaining can be found in sections on collective bargaining.

During the Select Committee process, a lot of concern was expressed about the possibility that a range of people would be included within the scope of the legislation, who currently are not covered. Specific concerns related to:

• independent contractors

• individuals who perform voluntary work in the community (for example, Family Day Care workers) for which they are not paid, but where reimbursing payments may be made

• Real estate agents

• Sharemilkers.

The Select Committee has made a number of changes to the definition of employee to ensure that the legislation makes it clear that these people are not covered by the Employment Relations Act.

These changes do not, however, change the fact that the law will allow named individuals to ask the Employment Relations Authority to decide whether they are employees, rather than, for example, independent contractors. Any decision must be based on the true nature or reality of the relationship, rather than any label which has been applied to it. This means that the parties will not be able to escape their obligations under employment law simply by saying that an employee is in fact a contractor.

Union membership is voluntary. Nobody can be forced to join a union or a particular union, or a non-registered employees’ organisation (such as a staff association).

To take advantage of the rights that the legislation offers to unions, they will have to be registered. To do this they will be first required to register as an Incorporated Society and then apply to the Department of Labour to be registered as a union. Societies will need to be able to meet two requirements before they may be registered.

• their rules must be democratic

• they must be able to demonstrate that they are independent of any employer.

A number of requirements for union rules that were previously in the legislation in relation to union rules have been deleted from the legislation by the Select Committee. This is because many of the requirements duplicated provisions of the Incorporated Societies Act, which unions will be bound by anyway.

The legislation allows unions to have access to workplaces to recruit members, to discuss union business and to deal with any matters related to terms of conditions of employment of members.

This right of access is not, however, unfettered. The Select Committee has suggested some changes to the draft legislation which address employer concerns about union access. The legislation will now require union officials, when they enter a workplace to:

• do so at reasonable times when employees are employed to work

• do so in a reasonable way, having regard for normal business operations

• comply with existing procedures related to safety, health or security.

This will not, however, allow employers to put in place procedures simply to prevent union officials from entering their workplace. Any procedures related to safety, health or security must be reasonable and apply to the workplace generally.

The legislation promotes the "good faith" principle as underpinning negotiations for collective agreements. The intent of this is to ensure that unions and employers approach the bargaining process seriously, and with a commitment to entering into a genuine process of negotiation.

Two changes have been made to the draft legislation in relation to good faith bargaining in response to concerns that the requirements were excessive.

• The prohibition on employers "negotiating or communicating" with employees on matters relating to terms and conditions of employment has been dropped – the prohibition on bargaining during this time has been retained. An additional clause has been inserted which clarifies that neither unions nor employers may do anything that undermines the other party or the bargaining process.

• The requirement that information be provided in the course of bargaining for a collective agreement will be limited only to information which is reasonably necessary to substantiate or support, or respond to, a claim. If the party who has been asked for information considers that the information is confidential, they can provide it to a mutually agreed third party instead. Any information provided must be kept completely confidential, and may only be used for the purposes of bargaining.

An interim Committee, comprising representatives of private and state sector unions and employers, has been established and has begun work on the first Code of Good Faith.

The Select Committee has recommended a number of changes to the section of the legislation on collective agreements. While some of the changes are substantive, others simplify the provisions as they were first drafted in order to make the law easier for employers and unions to understand.

Only unions and employers can negotiate collective agreements. Collective agreements must contain a "coverage clause" which describes the type of work being done to which the agreement applies. Only union members doing that type of work will be covered by the agreement.

A collective agreement may be negotiated:

• between a single union and a single employer

• between a single union and a number of employers

• between a single employer and more than one union

• between any number of unions and employers.

The legislation sets out a process for negotiations over a collective agreement. This process is designed to support the good faith principle by ensuring:

• that employees are kept informed of the fact that a bargaining process has been entered into;

• that sanctity of contract is provided for by prohibiting new claims being put forward until a collective agreement is about to expire;

• that ballots of employees must be held in some circumstances in order to gain employee agreement to enter into bargaining involving multiple parties.

• that the ratification process by which employees agree to a collective agreement is communicated to employers when bargaining begins.

A number of submissions to the Select Committee expressed concern about a clause previously included in the draft Bill that provided for continuity of employment for employees covered by a collective agreement. In response to these concerns, the Government has amended the draft Bill to require collective agreements to include a clause stating what will happen if any of the work covered by the agreement is contracted out by the employer, or if the business (or part of the business) is sold, i.e. the parties are to decide what will happen rather than the law dictating the outcome.

The legislation does not just apply to employment agreements that are negotiated by unions. It also sets out a process for negotiation of terms and conditions of employment for individuals. This will happen where:

• an employee is a member of a union, but there is no collective agreement in place for that work or that workplace;
• an employee is not a member of a union.

The provisions of this Part are designed to support the good faith principles by protecting employees against unfair bargaining and promoting mutual trust and confidence between employers and employees.

In a workplace where a collective employment agreement is in place, individual employment agreements may be negotiated for employees who are not members of the union. When an employee who is not a union member first starts work, the employer must notify the employee about the collective agreement, and employ that person on the terms and conditions of the agreement for the first 30 days of employment. After this, if the employee does not join the union, they can negotiate an individual agreement with their employer.

In a workplace where there is not a collective agreement in place, individual employment agreements can be negotiated by both union members and employees who are not members of the union.

Employees must be given a copy of a proposed individual employment agreement and be advised of their right to seek advice on it.

Individual employment agreements must contain certain information. This includes:

• the names of the employer and employee
• the work to be done by the employee
• the workplace
• working hours, or other working time arrangements (such as rostering agreements)
• the wage or salary rate
• a plain language explanation of the process by which problems in the employment relationship can be resolved.

In response to concerns outlined during the Select Committee process, the legislation has been clarified to make it clear that fixed-term agreements are permitted by law where:

• the employer has a genuine reason for entering a fixed term agreement, and advises the employee of those reasons;
• the employee is told before they enter a fixed-term agreement that their employment is a fixed-term position and that their employment will come to an end at the end of the term.

The legislation establishes an entitlement for union members who are covered by collective agreements to be able to take leave to undertake training courses on improving employment relations.

The amount of leave which an employer will have to provide for employees depends on the number of union members, rather than the size of that workplace. For example, a workplace of 75 people where there are 50 full-time equivalent union members covered by the collective agreement will have an education leave entitlement of 5 days. However, a larger workplace (say of 200 staff) will also have the same entitlement where the number of union members is the same.

The provision in the Bill relating to strikes and lockouts recognise that industrial action in support of bargaining over a collective agreement is sometimes inevitable. Nevertheless the Bill incorporates a range of provisions to limit the situations and times at which strikes and lockouts can lawfully occur to action:

• which occurs in support of bargaining for a collective agreement (either single-employer or multi-employer)
• which occurs at least 40 days after bargaining has been initiated.

The Bill also provides that notice must have been given if the proposed action relates to a workplace involved in one of the industries included in the essential industries list (schedule 1 of the Act).

The Bill also provides that strikes and lockouts can occur where the employee or employer considers that the strike or lockout is justified on health and safety grounds.

Where strike action occurs, and normal work is unavailable as a result of the strike, an employer may suspend non-striking workers without pay.

Where a lawful strike occurs, employers may, providing those employees agree to do so, use existing employees to perform the work of those who are on strike. An employer may also engage additional employees to perform that work where there are reasonable grounds for believing that the work should be performed for health and safety reasons. This would be the case, for example, where a strike occurs in a hospital.

The legislation recognises that despite the best intentions of the parties, problems sometimes occur in the employment relationship. In the past resolution of these problems has involved employers and employees in expensive adversarial processes, with cases being heard a long time after they first arose as problems.

The new institutions established by the legislation promote informal and low-level resolution of problems as soon as possible after the problem has arisen. A new independent Mediation Service is being set up within the Department of Labour, and around 40 mediators will be employed throughout New Zealand. Mediation will be the first process to occur for any employment dispute.

Employers and employees will be able to contact these mediators for help when they need it. This help may range from answering questions about the correct procedure to be followed when disciplining an employee, to helping two parties who are experiencing difficulties in negotiating an employment contract.

Unlike the current system, where the parties are expected to come into the Tribunal for a hearing, mediators will be able to go out to visit employers and employees in their workplaces. The mediation process will be completely confidential.

The legislation also sets up the Employment Relations Authority. This body will investigate employment problems that have not been able to be resolved in mediation in a speedy, informal and non-adversarial way.

The Employment Court will continue to exist. It will hear matters referred to it by the Authority, or challenges to Authority decisions.

A number of provision are in place to ensure a smooth transition into the new system.

Unions will be able to register with the new Registrar of unions from 2 October 2000.

From that date also, parties may enter into arrangements for new individual and collective employment agreements.

Any agreement that has been negotiated as an individual employment contract under the Employment Contracts Act will continue in force. This means that employers and employees will not need to re-negotiate their contracts and they become enforceable in the new institutions.

Any collective employment contract that was negotiated under the Employment Contracts Act will continue in force until its expiry, or until 31 July 2003, whichever is the earlier. At this point, it can be re-negotiated as a collective employment agreement under the Employment Relations Act, as long as a union is the negotiating party.

Special provisions have been included where an existing collective employment contract expires after 1 July 2001. In these cases a ballot of union members may be held to determine whether the majority are in favour of "opting out" of the contract for the purposes of negotiating a new collective employment agreement. While the old collective employment contract will continue to be in effect for those employees who are not union members, union members will be covered by any new collective employment agreement that is negotiated.

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