Employment Relationships: New Zealand Employment Relations Reform

EMPLOYMENT RELATIONSHIPS NEW ZEALAND’S EMPLOYMENT RELATIONS ACT EDITED BY ERLING RASMUSSEN

EMPLOYMENT RELATIONSHIPS

EMPLOYMENT RELATIONSHIPS NEW ZEALAND EMPLOYMENT REFORMS EDITED BY ERLING RASMUSSEN

First published 2004 Auckland University Press University of Auckland Private Bag 92019 Auckland New Zealand www.auckland.ac.nz/aup © the authors, 2004 isbn 1 86940 313 4 This book is copyright. Apart from fair dealing for the purpose of private study, research, criticism or review, as permitted under the Copyright Act, no part may be reproduced by any process without prior permission of the publisher. Cover image: Mark Braunias, ‘Corporate Identities’ (oil on canvas), 1989 Printed by Publishing Press Ltd, Auckland

Contents 1

Introduction and overview Erling Rasmussen

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The Employment Relations Act: A framework for a fairer way Margaret Wilson

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The Employment Relations Act through the eyes of the media Erling Rasmussen and Colin Ross

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Collective bargaining under the Employment Relations Act Glen Thickett, Pat Walsh and Raymond Harbridge 39

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The law moves in mysterious ways Andrew Caisley

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Good faith bargaining under the Employment Relations Act: the original scheme John Hughes

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The employment institutions Ian McAndrew, Julie Morton and Alan Geare

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7 8 9

Employment relationship management under the Employment Relations Act 2000 Tony Waldegrave

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The Employment Relations Act according to Business New Zealand Barbara Burton

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10 Employee experience of employment relationships under the Employment Relations Act Tony Waldegrave

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11 Trade unions and the Employment Relations Act Robyn May

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12 The Employment Relations Act: a CTU perspective Ross Wilson

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13 Beyond the Employment Relations Act: the wider agenda for employment relations and social equity in New Zealand Nigel Haworth

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Contributors

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Index

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1

Introduction and overview erling rasmussen

From awards to employment agreements The current debate over the direction of public policy in employment relations is symbolic of the conflictual, high-profile position that employment regulation has occupied in recent decades. In contrast to the longevity of the conciliation and arbitration system, which lasted nearly 100 years, there have been frequent, radical changes in employment relations during the last two decades. This has placed the debate over suitable employment relations frameworks high on the political agenda, with employment relations being a major electoral issue in at least the last six general elections. In line with the radical economic, social and public sector reforms of the post-1984 period, the Employment Contracts Act 1991 (ECA) was a major public policy shift – a revolutionary change – which swept away the award system and introduced minimalist regulations of bargaining. The effects of the ECA framework and its associated processes and outcomes are still being debated, but the policy reaction to the ECA has been clear: following the 1999 general election, public policy in employment relations has shifted considerably. Generally, the Government has argued that the post-1999 reform programme has been prompted by unsatisfactory outcomes associated with the post-1984 reforms. As highlighted by Prime Minister Helen Clark: The earlier reform path, which had opened up the economy at high speed, failed to put in place proactive strategies to facilitate labour market adjustment and the emergence of sunrise sectors to replace the sectors on which the sun had set. The result was a rugged transition which strained society to the limits and brought the political process into disrepute . . . . We seek to build partnerships for growth which are inclusive of business and unions, regions and communities, and of all ethnicities in our multicultural country with its sizeable indigenous population (Clark 2003). 1

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Likewise, it has been stressed by government ministers that it was the intention to develop a totally different economic and social model. The employment relations approach is both driven by this model and an integrated part of it. Thus, the Employment Relations Act 2000 (ERA) charts a new direction for New Zealand employment relations. That fact alone could justify a book like this, but the book’s chapters also present a lot of new information and different views on the Act. In particular, the chapters deal with the Act’s influence on employment law and bargaining behaviour, processes and outcomes. Despite the Government’s many legislative interventions and contrary to the wild predictions surrounding the Act’s development phase, the ERA appears to have sparked few radical changes to processes and outcomes. This is a theme found in several chapters in this book, and it has been the Government’s main argument for seeking further changes to the Act by launching the Employment Relations Law Reform Bill (Reform Bill) in December 2003. At the time of writing, it is still unclear what changes will be made to the ERA. The chapters in this book were written in late 2003 or early 2004, before the Reform Bill had been finalised, and some authors have speculated about the possible impacts of the Bill while others have just noted its existence.

Historical roots meet diverse expectations and interests The historical roots of New Zealand employment relations are deep. The conciliation and arbitration system may be a distant memory for many people, but its influence on the current framework can still be detected. For example, there are many legal notions inherited from previous legislation, employment institutions continue to be a part of New Zealand employment relations (as has been the case for over 100 years) and a comprehensive code of statutory minima has been developed over many decades. There is an even stronger influence from the more recent Employment Contracts Act. Key aspects of the ECA, such as voluntary unionism, promotion of individual choice and personal grievance entitlements, are still in place. On the employer side, the ECA is often compared favourably with the current legislation. During the 1990s, employers enjoyed a strong bargaining position as collective bargaining and union influence declined and the locus of bargaining shifted towards the workplace. While there were some constraints on employers’ bargaining power with skills shortages in many sectors and an expansion of individual employee entitlements (personal grievances, human rights and privacy), employers enjoyed a high degree of ‘self-determination’ because of their ability to influence the choice of bargaining unit, bargaining processes and outcomes.

introduction and overview

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Seen in a historical perspective, the ERA is yet another attempt to develop an employment relations framework which facilitates both efficiency and equity. The architect of the conciliation and arbitration system, Pember Reeves, argued that state regulation would produce better and fairer outcomes than direct negotiations. The ECA was an attempt ‘to promote an efficient labour market’ where more employer flexibility would foster more productivity and subsequently ‘trickle down’ to improved employment conditions. Likewise, the ERA seeks ‘to build productive employment relationships’ but this time through more employer–employee collaboration and collectivism. While the understanding of the link between employment relations and economic performance may have changed over time, there are obviously expectations that such a link exists. The ERA is based on two major assumptions. First, the ERA assumes that productive employment relationships can be built through collaboration and collectivism. This is in line with the overall reform path taken by the current government. It also assumes that collective bargaining and unionism will facilitate behaviours that are flexible and effective. Likewise, more effective employment institutions and less reliance on litigious behaviour are seen to facilitate more productive relationships. While the Government can point to positive outcomes of collaborative efforts in other small countries (Auer 2000 and 2001), it is an open question whether the Act will foster productive relationships in New Zealand. Will the ERA really facilitate a sufficient change in behaviours and, if behaviour changes happen, will they be as productive as the Government is hoping? The other major assumption is the notion of ‘inherent inequality in bargaining power’. This is a classical notion in employment relations, but its relevance for current employment practices has been questioned. Employers have argued since the Employment Relations Bill that the fundamental assumption of ‘inherent inequality in bargaining power’ is a flawed assumption (Deeks and Rasmussen 2002: 121). It has been suggested that it has limited relevance in a setting of predominantly small and medium-sized organisations (SMEs). It would appear that employers can find some support for their argument in the recent ERA Review (see Waldegrave et al. 2003), which indicates that many employees do not consider that there is an inherent inequality, that they are often quite happy to negotiate on their own and that, overall, employees are positive and reasonably satisfied with their employment agreements. While these findings may not in themselves warrant a total rethink of the traditional assumption of inequality, they do illustrate a considerable variation in attitudes and evaluations amongst employers and employees. The issue of compliance costs has long been festering (Deeks and Rasmussen 2002) and new legislative reforms – the Health and Safety in Employment

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Amendment Act 2002, the Holiday Act 2003 and the Reform Bill – have again brought compliance costs to the forefront of political debate. Despite the fact that most people work in medium and larger organisations, the issue of compliance costs is often couched in terms of issues for smaller enterprises. Unions often have little time or resources to develop unionism and collective bargaining amongst SMEs and, if there is no multi-employer collective agreement, then SMEs may continue to rely on their existing arrangements. This could lead to a situation where employers and employees in SMEs are just getting on ‘with the job’ and employment relations legislation and legislative compliance are relegated to secondary importance (Lamm 2002).

Role of unions and collective bargaining Legislative support for unionism and collective bargaining was a hallmark of the conciliation and arbitration system. It is also in line with the key principles of the International Labour Organization, which have been very important drivers of the Government’s employment relations approach. There is no doubt that the legislative support was crucial in fostering a strong New Zealand union movement, but legislative support also shaped and constrained union structures and activities. Thus legislative support became a ‘crutch’ for the unions: there were many smaller, inefficient unions and they often had little bargaining power and workplace presence. This was why the Labour Relations Act 1987 prescribed a minimum union size of 1000 members and why unions were badly prepared for the workplace bargaining fostered by the ECA. The attempts to strengthen the legislative promotion of unionism and collective bargaining in both the ERA and in the Reform Bill really beg the question: will the legislative support make unions dependent on political patronage? There appears to have been a major loss of the traditional notion of unions and union activities amongst many employees. The research findings and arguments found in several chapters in this book will probably be unpleasant reading for supporters of unions. The chapters send a dire warning about the uphill battle to return to a broadly based workplace presence of unions. It could be expected that the unions would face particular difficulties amongst young employees, employees in small workplaces and private sector service organisations. Many younger people often have no previous experience of unionism, and the growth in service sector and atypical employment makes it difficult for unions to recruit effectively. Clearly, the unions need to reestablish the importance of collective bargaining and unionism if they seek to increase substantially the low levels of membership inherited from the ECA era.

introduction and overview

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The ECA made the distinction between collective bargaining and collective contracting important (Dannin 1997, Gilson and Wager 1998). The term collective contracting signifies that many collective employment contracts did not involve traditional types of collective bargaining: employees signed a common contract individually and/or the ‘negotiations’ of a collective contract did not involve a union. Collective contracting is not possible under the ERA, as a registered union has to be party to a collective agreement. This means that some collectively covered employees are faced with some stark choices. They can revert to individual agreements, but this renders the ERA’s promotion of collectivism obsolete and often has transaction cost implications for the employer. If employees want a collective agreement, they can either join one of the registered unions or develop their own registered union. Thus it will be a key issue over the coming years what will happen to those employees that were previous covered by collective contracting: will they change to individual employment agreements or will they become members of unions registered under the ERA?

The chapters In the book’s second chapter, the architect of the ERA, the former Minister of Labour, Margaret Wilson, sets out the reasoning behind the legislative framework. While the ERA clearly was a reaction to the ECA and its associated changes in collective bargaining and employment protection, it is also stressed that the ERA is forging a new future for employment relations based on honouring international labour standards and promoting collaborative employment relationships. However, the next two chapters, dealing with bargaining processes and outcomes, show that the Act has had less impact than expected. The third chapter deals with trends in media reports of employment relations, and it is noticeable that traditional bargaining issues have featured less frequently while new issues – such as skill shortages, work–life balance and an aging workforce – have gained ground. Chapter 4 is based on the collective agreement database at the Industrial Relations Centre, Victoria University and it is suggested that it is ‘business as usual’ in terms of trends in employment terms and conditions. There is little sign that the ERA has prompted a reversal of the 1990s employee concessions, despite the database’s bias towards sections of the labour market where the unions are strong. If anything, the chapter indicates that the ERA has difficulty in meeting its aim of fostering collective bargaining and may be working in perverse ways. Changes in employment law and the employment institutions are covered in the next three chapters. Again, it is noticeable that Act has not led to the

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expected outcomes. In particular, there has not been a rash of legal cases in the aftermath of the ERA’s enactment. However, as Andrew Caisley argues in chapter 5, there have been several important court decisions that have little to do with the ERA. In the area of good faith bargaining and behaviour – dealt with by John Hughes in chapter 6 – legal precedent has been slow to develop. This is a cornerstone of the ERA and its practical application is of crucial importance. It is problematic that the Court of Appeal appears to have taken a restrictive view of good faith, and the Government has clearly attempted to address this in the Reform Bill. On the other hand, chapter 7 finds the new employment institutions have functioned well and, in particular, the speedy resolution of employment ‘problems’ by both the Mediation Service and the Employment Authority has been positively received by employers and employees. There are still some minor issues – for example, the level of ‘legalism’ and a rise in case load – but, overall, a different approach to dealing with employment ‘problems’ appears to have become embedded. Chapters 8 and 9 deal with the reactions, strategies and opinions of employers. In chapter 8, Tony Waldegrave presents findings from the Department of Labour’s review of changes under the ERA. The findings show that employers have a high degree of awareness of the Act’s requirements but there have been limited adjustments to actual employer practices. Still, employers have continued to develop their information and consultation of employees and they are, if approached by unions, also relatively open to collective bargaining. Surprisingly, the Act has resulted in a decline in collective bargaining and many employers have had limited exposure to union activity. Generally, employers have a dim opinion of the recent legislative changes. That message is clearly expressed in chapter 9 by Barbara Burton from Business New Zealand (see also Burton 2001). The chapter presents a number of specific criticisms of the ERA and, more importantly, questions the underlying logic of the Act and its impact on business practices and competitiveness. The restriction of employer flexibility in managing staff and the potential shift from workplace to multi-employer bargaining may have detrimental effects on employers’ willingness to employ, productivity and sustainable economic development. Employee and union reactions and attitudes are covered in chapters 10, 11 and 12. Findings from the Department of Labour’s research reported in chapter 12 paint a picture of a fairly steady environment with few significant changes. Most employees are satisfied with their employment relationship and, in respect of employment matters, they predominantly prefer to deal directly with their employers. This, together with a low level of awareness about unions, provides a clear warning signal to unions. The chapter also finds that unions have used their limited resources to secure and build on their

introduction and overview

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already existing collective bargaining base amongst larger organisations and in particular industries. Unions have also been frustrated by extensive ‘freeriding’ (when employers pass on collectively agreed increases to non-union members) and by the cumbersome process surrounding multi-employer collective agreements. The union frustration is also evident in chapter 11, where Robin May details the rather limited progress by unions under the ERA. While the decline under the ECA has stopped, there has been little real gain in membership when a growing workforce is taken into account. Union membership has become very lopsided since it is concentrated in the public sector, large organisations and traditional strongholds. There are many private sector organisations where unions and collective bargaining are non-existent. Again, limited legislative support of collective bargaining and ‘free-riding’ are suggested as major culprits, though the chapter warns against relying too much on legislative support structures. In light of the two previous chapters, it is unsurprising that Ross Wilson from the Council of Trade Unions (CTU) suggests in chapter 12 that the ERA is a modest Act that has prompted only modest changes. The chapter recommends that further changes should be made to the ERA, but even the amendments announced in the Reform Bill are not expected to deliver sufficiently on the ERA’s main objectives. The CTU also agrees that the ERA become aligned with wider changes in employment relations that will put more emphasis on tripartite solutions and enhance efforts to move towards a ‘high skill, high wage, knowledge economy’. In the final chapter, Nigel Haworth places the ERA in the wider context of employment relations reform by alluding to the underlying principles behind the Act and detailing other key reforms instituted over the last four to five years. It is stressed that there is limited consensus surrounding the reform principles and that the reform programme has sparked, as is evident from the chapters in this book, a number of adverse and unanticipated reactions. Still, the chapter also illustrates how far the reform programme has progressed and ends with an interesting prediction: ‘given the range of measures introduced, in train or under consideration, future commentators will undoubtedly view the post-1999 period as one of the most striking periods of employment relations innovation in New Zealand’s history.’

Where to from here? The book’s chapters paint a complex picture of the employment relations reforms. There has undoubtedly been a wave of legislative reform, but the effects are unclear and the reform path itself is heatedly contested. A manifest shift towards more collective, productive employment relationships has yet to happen. It appears that it is often in areas where collective bargaining could

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provide better protection, such as the ‘secondary labour market’, that it is less prevalent. In the absence of collective bargaining, the response has frequently been ‘more legislation’, which has been met with cries of ‘increased compliance costs’. It is also an open question whether the ERA has been given sufficient time to influence attitudes and behaviours. There have obviously been major regulatory changes in employment relations since 1999 and such reforms take a long time to unfold. Nevertheless, if the current wave of reforms does not improve the fortune of unionism and collective bargaining, then collectivism will face a more confined space than was the case in the last century. Finally, I have as the editor enjoyed the diversity in viewpoints and in writing styles. There is clearly disagreement surrounding key principles of the Act, and the focal points of discussion vary across the chapters. I hope that readers will enjoy this diversity and that the book will stimulate much debate. The reader may also end up wondering, as I have done, whether it will be possible to re-establish some kind of broadly based consensus concerning a suitable employment relations framework in the foreseeable future.

references Auer, P. (ed.). 2000. Employment revival in Europe. Labour market success in Austria, Denmark, Ireland and the Netherlands. Geneva, ILO. Auer, P. (ed.). 2001. Changing labour markets in Europe. Geneva, ILO. Burton, B. 2001. ‘The Path to Subjectivity: the Decline of Certainty in Industrial Relations Law’. New Zealand Journal of Industrial Relations 26(1): 21–6. Clark, H. 2003. ‘Keynote Address to the OECD Forum.’ 29 April 2003, Paris, OECD. (www.beehive.govt.nz/ViewDocument.cfm?DocumentID=16596, accessed 3 May 2004) Dannin, E. 1997. Working Free: the origins and impact of New Zealand’s Employment Contracts Act. Auckland, Auckland University Press. Deeks, J. and Rasmussen, E. 2002. Employment Relations in New Zealand. Auckland, Pearson Education. Gilson, C. and Wagar, T. 1998. ‘From Collective Bargaining to Collective Contracts: What is the New Zealand data telling us?’, New Zealand Journal of Industrial Relations 23(3): 169–80. Lamm, F. 2002. ‘Occupational Health and Safety in Small Businesses’. In M. Lloyd (ed.) Occupational Health and Safety in New Zealand: Comtemporary Social Research. Wellington, Dunmore Press. Waldegrave, T., Anderson, D. and Wong, K. 2003. Evaluation of the Short Term Impacts of the Employment Relations Act 2000. Wellington, Department of Labour. (See also: www.dol.govt.nz)

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The Employment Relations Act: A framework for a fairer way margaret wilson

Introduction The Employment Relations Act 2000 marked a break with the employment relations regulatory framework of the 1990s enacted in the Employment Contracts Act 1991. It also signalled the advent of a new approach to the employment relationship that built on the experiences of the 1990s as well as the values of the system of conciliation and arbitration. The contractual adversarial stance to employment relations was replaced by a negotiated cooperative approach that was founded on the equitable notion of good faith. The need for a new employment relations framework was signalled in the 1999 Labour Election Manifesto. It was part of a programme for a new approach to the involvement of government in the economy. The policies of structural adjustment that dominated the New Zealand policy environment from 1984 to 1999 were premised on the withdrawal of government from economic decision-making except at the highest level, and on market forces being the governor of economic activity. The application of this approach to the labour market and the workplace was seen in the Employment Contracts Act. The consequences of this form of regulation were a low wage, low skill and low labour productivity workforce. The fact that such a policy did not position New Zealand well to compete in a global market was recognised by the end of the 1990s and contributed to the election of a Labour–Alliance coalition Government in 1999. Although resisted by the business community and their political allies at the time, the Employment Relations Act was an attempt to improve labour productivity through an inclusive approach to employment relations. The government’s role was to provide the regulatory framework that enabled 9

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employers, employees and unions to develop a partnership approach to the employment relationship. The approach in the Employment Relations Act is consistent with the government’s approach to economic and social policy generally. The fact that the Employment Relations Act attracted so much criticism from the business community was partly because it was the first major piece of legislation of the new government, and partly because of the ingrained ideological differences in the relationship between capital and labour. While such attitudes may be outmoded in the current environment, they are real and an important reminder that what is required is not only statutory change but also a cultural shift from an adversarial to a co-operative approach to conducting the employment relationship. The government’s argument is that it is possible to increase labour productivity only through such an approach.

Historical context The Employment Relations Act 2000 was designed to build on the centenary of experience of workplace relationships that was first regulated in the Industrial Conciliation and Arbitration Act 1894. New Zealand’s first statutory framework arose from a desire in the young colony to avoid the destructive consequences of industrial conflict by providing a process that required employers and trade unions to resolve their differences over wages and conditions of employment through the institutional framework of conciliation and arbitration (Woods 1963). The Liberal Government of the day determined that statutory intervention was required to regulate the industrial bargaining process. The effects of the economic depression of the 1880s, the Maritime Strike of 1890, the election of the Liberal Party to government on the votes of the newly enfranchised working man and the political leadership of William Pember Reeves, the first Minister of Labour, all combined to produce a political environment that forged a new approach to regulating industrial relations (Hamer 1988). Prior to 1893, disputes that arose between employers and the trade unions representing their employees had to rely on the common law to be resolved. Since the common law at that time was more familiar with judging the private law rights of individuals, it had much difficulty acknowledging the legitimacy of collective organisations in the workplace. It was, therefore, not an effective instrument to resolve industrial disputes or provide fair and just relationships in the workplace. It was not surprising then that resort was had to the political process to provide remedies unable to be delivered by the common law. The movement for democratic institutions and decision-making was supported by working people in the nineteenth century who were frustrated

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at the denial of their right to be part of the decisions that affected their lives, including those in the workplace. Many of the people who immigrated to New Zealand in the nineteenth century sought a better and fairer life for working people. The eight-hour working day movement and the formation of trade unions as early as the 1860s were evidence that the new colonists expected a different workplace relationship from that which they had experienced in Europe (Roth 1973). The story of the role that industrial conciliation and arbitration has played in the development of New Zealand has been told elsewhere, though a comprehensive assessment still waits to be written (Holt 1986, Wilson 1984). One of the remarkable aspects of the system was its comprehensive nature and the fact it was self-regulating. The national awards became the substitute for minimum standards legislation. For example, there was no statutory right to sick leave until the 3 days’ entitlement was enacted in the Employment Contracts Act (though it was not in the original Bill and was only included after the select committee hearings). The Arbitration Court also in effect became the legislator of matters relating to employment in the workplace. The positive result of this system was a decent standard of wages and conditions, and long periods of industrial peace. The tripartite relationship between employers, unions and the government served New Zealand well throughout much of the twentieth century. The downside of the system was a rigidity that did not respond well to changes in the marketplace. While this lack of responsiveness did not matter much while markets were reasonably stable, by the 1960s and the arrival of the European Economic Community, it became apparent that changes were necessary. The 1968 nil-wage order of the Arbitration Court marked the beginning of the end of the system of industrial conciliation and arbitration. These changes did not come easily, however. Once the compact between employers, unions and government broke down, it was replaced by 20 years of struggle, characterised by increased industrial conflict and government intervention (Boston 1984). It was the Fourth Labour Government in 1984 that began the programme of structural adjustment to make the New Zealand economy more responsive to the market. The negotiations between government, employers and unions led to the Labour Relations Act 1987, which recognised the need to replace the national award system with industry and enterprise bargaining. Whether this reform would have produced the flexibility required in the labour market will remain unknown (Brosnan, Smith and Walsh 1990). The election of the National Government in 1990 saw the imposition of the Employment Contracts Act 1991. This legislation was not negotiated but imposed by the National Government (under a first

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past the post electoral system) with the support of the employer community. It was this Act that represented a complete break with the notion of a tripartite approach to industrial relations (Walsh and Ryan 1993). The Employment Contracts Act reconstructed the workplace relationship as one between the individual employer and employee. Notions of agreement were replaced with those of contract, and the market was the primary determiner of wages and conditions.

The recent context The policy objectives of the Employment Relations Act can be understood through knowledge not only of the historical context within which industrial relations developed in New Zealand but also of the context of the 1980s and 1990s and the period of structural adjustment. It is difficult to argue that structural changes to the New Zealand economy were not required by the 1980s. The internationalisation of capital, high inflation, increasing unemployment, unacceptable overseas debt levels and the failure of traditional Keynesian economic measures to redress these conditions forced New Zealand to follow other economies and begin the process of structural reform. While other countries, such as Australia, chose a consensual-cum-corporatist strategy, New Zealand opted for a commercial/monetarist approach (Castles, Gerritsen and Vowles 1996).1 In the labour market context, this approach was expressed in a radical deregulation of the labour market, the individualisation of the employment relationship and the decentralisation of bargaining. Labour was to be treated like any other commodity: its price was best set through a free, unconstrained market. Trade unions had no role in this new employment relationship because they were a constraint on the free operation of the market. Although trade unions were not made illegal, all statutory supports were removed, including the support for collective bargaining. The Employment Contracts Act was the legal expression of this ideology, which constructed the employment relationship as a purely economic contract. There was also much reference to the merits of the common law of the nineteenth century as the primary regulator of the employment relationship (Brook 1990). However, the consequences of the Employment Contracts Act were serious. They included a reduction in the level of unionisation from around 35 per cent to about 17 per cent of the workforce; increased flexibility in the use of labour through an increase in casualisation of work; stagnant gains to productivity to around 0.5 per cent a year; increasing levels of income inequality, especially in the middle income groups; increased compliance costs, especially in the area of personal grievances, where the advent of

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lawyers increased the costs of the process of dispute resolution; and a decline in the skill base through a combination of emigration and failure to resource skill training and retraining. While the effects of the Employment Contracts Act and the policies of structural adjustment that supported it impacted on sections of society differently, by the end of the 1990s there was a growing view that, overall, the policies of structural adjustment had gone too far and were not working for the benefit of society. This realisation was a major factor in the change of government at the 1999 election.

The political context During the 1999 election campaign, as in the previous two general elections, both the Labour Party and the Alliance had campaigned on the repeal of the Employment Contracts Act. This unambiguous position gave both parties the mandate when they formed the Labour–Alliance Government to implement the policy commitment. It did not come as a surprise then when the Government proceeded immediately to start the process of repeal. This did not mean there was no opposition. The New Zealand Employers Federation and the Business Roundtable led a high profile campaign in conjunction with the opposition parties in Parliament to destabilise the Government’s relationship with the business community. The campaign was serious but misjudged because it failed to focus on the reality of the labour market, such as the low productivity rates and increasing lack of skilled labour. The campaign of opposition assumed the Government was taking an ideological position similar to the previous National Government and was just out to somehow punish employers for past wrongs. It therefore failed to understand the intent behind the legislation and the real attempt to reposition New Zealand by making it truly competitive in the global marketplace. The principles and objectives that drove the Employment Relations Act were consistent with the principles and objectives of the Government’s overall economic strategy. The Labour–Alliance Government was striving after years of neglect to take responsibility for the active management of the economy. The invisible hand of the market had proved to be an imperfect instrument with which to manage a real economy. The Government was endeavouring to rebuild the economy in a way that recognised the reality of the global economy for a small economy such as New Zealand. The need to trade and compete in the global marketplace required respect and support for market principles. Market principles alone were insufficient, however, to reconstruct the New Zealand economy. New Zealand had an urgent need to develop and retain its skill base. It was not until the end of the 1990s that the Nationalled Government began to recognise that a more active role for government

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was required if New Zealand was to successfully compete within the global market. By then the political tide had turned. It was also early recognised by the Labour–Alliance Government that New Zealand needed to create and develop economic and social environments that supported and encouraged innovation and creativity. The Government determined to develop this environment by abandoning ideological extremism and recognising the inter-relationship between social and economic policy and the need to pursue a more balanced approach. An essential element of this balanced approach was the creation of partnerships between Government and the various communities that comprise New Zealand society. The development of a partnership between Government and business was as essential an element of that approach as the partnership between the Government and the trade union movement. While the quality and nature of those partnerships would be different because of historical and ideological factors, the need to establish co-operative relationships was necessary for the rebuilding of New Zealand. How to give reality to the notion of partnership in the workplace through developing relationships was the challenge I faced, as Minister of Labour, when conducting the negotiations surrounding the Employment Relations Act. It is relevant at this point to describe the political environment in which the Labour–Alliance coalition governed. Crucial to the political context at that time is knowledge of how the MMP electoral system worked in New Zealand. New Zealand’s MMP electoral system is designed to provide balance in political decision-making. MMP was the electorate’s answer to the tyranny of the executive under the previous first past the post electoral system. The 1999 election produced a minority coalition Government. This meant that the Labour–Alliance Government had no majority and was dependent on one of the opposition parties, normally the Greens but on occasions New Zealand First, for a majority in Parliament. All decisions were therefore negotiated first between the Labour and Alliance members of government, then with one of the opposition parties. From the outset I had established a process of consultation with the Green member responsible for employment relations. This relationship proved crucial when negotiating the Bill through Parliament. The 2002 general election resulted in a Labour–Progressive minority government (the Progressive Party split from the Alliance, which was not represented in the 2002 Parliament). The United Party, a new party that guaranteed support on matters of confidence, gave political stability to the government. All other matters, however, are a matter of negotiation and the relationship with the Green Party remains crucial for the passing of employment relations legislation.

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The policy objectives of the Employment Relations Act The policies of both the Labour Party and the Alliance had been clear: that the Employment Contracts Act was to be replaced by a return to collective bargaining and recognition of the right of unions to bargain collectively on behalf of their members. The notion of good faith was also an essential element of collective bargaining and had been developed by the CTU prior to the 1999 election in its Workplace Relations Bill. At the outset of the policy work in preparation for the new legislation, I sought input from both the NZ Council of Trade Unions and the NZ Employers Federation, as well as the Employment Law Committee of the NZ Law Society. I included the lawyers because they had become major players under the Employment Contracts Act. Prior to the Employment Contracts Act, employers had sought advice from the Employer Associations. The new Act created new opportunities for the law firms, which soon provided specialist employment legal services to employers. The Employer Associations had transformed themselves from primarily service organisations into lobby groups. The legal profession had therefore become a major stakeholder in the continuation of the Employment Contracts Act regime. In the subsequent campaign against the Bill, some members of the legal community supported and on occasions led the criticism of the legislation. It proved to be very difficult to engage in a substantive way with the legal or employer community in the policy-making process. This indicated that there had to be a conscious effort by government to reconstruct the traditional tripartite approach to decision-making in this sector that had been abandoned during the 1990s. The establishment of tripartite advisory groups on reform of the Holidays Act, the Health and Safety in Employment Act and new legislation on transfer of undertakings and contracting out were practical measures to try to introduce a more inclusive approach to employment relations policy. While the employers and opposition campaign effected some changes to the provisions of the Bill, none of them were substantive, except for the removal of the provisions relating to contracting out and the transfer of undertakings. While the Government agreed to withdraw these provisions, the political commitments to the trade unions ensured that the matter would be revisited after the 2002 election. The policy work on this issue has been completed and is included in the Employment Relations Amendment Bill. The proposed Amendment Bill is the result of a programme of monitoring and evaluating the Act to assess whether it is fulfilling the objectives of the legislation in practice. The adjustments to the legislative framework are not intended to signal a change of direction, but to affirm the new approach to conducting employment relations.

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The trade unions remained engaged in the process, but the majority of the policy development was the result of interaction between the Minister of Labour, the Associate Minister of Labour and Department of Labour officials. The policy process concentrated on how to create a regulatory framework that produced greater productivity, provided a fairer process to determine wages and conditions, increased the pool of skills in the workforce and, importantly, reflected the reality of the labour market. Policy work indicated that fragmentation of the labour market was well advanced. New Zealand had always been a country of small employers. The programme of structural adjustment had not only casualised the workforce but also the traditional employer–employee relationship was being replaced in many instances by the employer–independent contractor relationship to avoid the costs associated with annual holidays, sick leave and unjustified dismissal legislation. There appeared to be a marked increase in what is now called non-standard work. The decline in manufacturing and the rise in service industries supported this trend. The fact that collective contracts had also been substantially replaced by individual contracts reflected this reality. The area where employees still had effective statutorily protected rights was that of personal grievances. In the absence of unions and employer association representatives to resolve these grievances through negotiation, the parties relied on their legal rights on the breakdown of their employment relationship. This had increased costs for employers and employees, and the practice of contingency fees had become prevalent. The courts had also interpreted the Employment Contracts Act inconsistently, so there was a general feeling of uncertainty amongst the parties. It was also apparent that the Act had contributed to a lack of labour market strategy, a deskilling of the workforce and low productivity. It would be unfair and inaccurate to assume the Employment Contracts Act was solely responsible for these outcomes because it was merely part of a larger economic strategy of structural adjustment. It was fundamental, however, in constructing a low-waged, low-skilled labour market, with small groups of high-paid and high-skilled employees.2 It was obvious that a new direction was required and that the new Act would need to clearly signal that direction. The title was therefore used to state that the notion of contract was to be replaced with that of a relationship. The objects section also clearly set out the expectations for the new Act. Section 3(a) provides that the primary object of the Act is ‘to build productive employment relationships through the promotion of mutual trust and confidence in all aspects of the employment environment and of the employment relationship’. This primary object was to be achieved through the following provisions set out in section 3(a)(i–vi):

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(i) by recognising that employment relationships must be built on good faith behaviour; and (ii) by acknowledging and addressing the inherent inequality of bargaining power in the employment relationships; and (iii) by promoting collective bargaining; and (iv) by protecting the integrity of individual choice; and (v) by promoting mediation as the primary problem-solving mechanism; and (vi) by reducing the need for judicial intervention. . . .

Although New Zealand had not ratified ILO Conventions 87 or 98 at that time (Convention 98 was subsequently ratified in 2002), it was decided to acknowledge their relevance and importance to the new framework by including reference to them in the objects section as follows: (b) to promote observance in New Zealand of the principles underlying International Labour Organization Convention 87 on Freedom of Association, and Convention 98 on the Right to Organise and Bargain Collectively.

The objects of the Employment Relations Act clearly indicated there would be no return to compulsory unionism, national awards, monopoly unionism and compulsory arbitration. The reality of the labour market made it clear that a return to the rigidities of the past would not produce a productive outcome for any of the parties – employers, employees or government. The objects section also made it clear that the legalism of the Employment Contracts Act era was no longer a useful construction of the employment relationship. The objects section endeavours to reinforce the human as well as the economic nature of the employment relationship, and to lay down the basic principles within which that relationship would be conducted. These principles are those of good faith, and mutual trust and confidence, which are to prevail throughout all aspects of the employment relationship and not just during the collective bargaining phase. The principles therefore apply to individual agreements and to the relationship between unions and their members, as well as to the relationship between employers when both are bargaining for the same collective agreement. It is in the comprehensive nature of the application of good faith and mutual trust and confidence that is found the radicalism of the new regulatory framework. Naturally, the critics have noted that it is impossible to legislate for good faith. Of course, they are correct in that legislation cannot change individual values or beliefs. It can, however, influence and change behaviours. Whether legislation successfully changes behaviours depends on whether it is sufficiently practical in its application to enable those affected to conduct

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their affairs in an orderly and mutually productive manner. Early assessments of the Employment Relations Act would indicate it is meeting this standard. The rationale behind this approach is simple. It is based on the practical principle that the most productive employment relationship is one where the parties have mutually agreed to clearly expressed rights and responsibilities. It is a relationship based on no surprises. This requires the parties to have access to as full information as is consistent with legitimate rights to commercial and personal confidentiality. It also requires recognition that in the real world relationships break down and that, to ensure that that breakdown is not destructive to all or any of the parties, there must be an accessible, affordable dispute resolution process. The innovation of the Employment Relations Act was not to rely on the formal legal remedies in the first instance, which are costly, adversarial and often leave the parties, even the winning party, with a feeling of grievance. A re-examination of the traditional methods of dispute resolution that had served New Zealand well before the Employment Contracts Act led to a decision not to return to conciliation and arbitration. They were not appropriate dispute resolution mechanisms in the current labour market. Instead it was decided to update those notions and establish a free mediation service that would provide the parties with the opportunity to resolve their differences quickly and at minimum cost. Where mediation failed to resolve the issue, the Employment Relations Authority was established to work with the parties to resolve their differences not through an adversarial hearing but rather through an investigative process. The emphasis in this process is on the Authority member investigating the matter in dispute and giving a determination of how the matter could be resolved. If the parties are still unhappy with the outcome, then the matter can be heard de novo in the Employment Court where the full adversarial process is available to them. In summary, the dispute resolution process provides the parties with a variety of methods to resolve their dispute. It is designed to be cost efficient and speedy. The evidence to date is that it is working well in most cases, but that some lawyers and advocates still favour the adversarial process at both mediation and adjudication. This is starting to cause delays and increase the costs for those parties represented in this way. The challenge for the future success of the dispute resolution process is to retrain the lawyers and advocates, or minimise their involvement, especially at the mediation stage.

Conclusion The Employment Relations Act is a new departure in employment relations for those who have relied on legalistic adversarial models of dispute reso-

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lution in the workplace. It can be argued, however, that the approach of the Employment Relations Act is consistent with the values that underpinned the system of conciliation and arbitration. It is a model that attempts to manage conflict through negotiation, within a framework that recognises the responsibility of government to provide the institutional and procedural support for employers and employees and their representatives to resolve their differences in a peaceful, constructive manner. Conceptually, it is grounded on the notion that co-operative, inclusive regulatory frameworks produce better outcomes. Recognition of the fundamental right of employees to form and join trade unions is also an essential element of any workplace regulatory framework. Denying people this right not only produces inequitable and unsustainable outcomes in the workplace but also weakens the fabric of democracy. It is important never to forget that democratic principles and practices are relatively new in terms of the totality of human experience. They are also fragile and constantly under attack by those who do not find the sharing of power and the ability for all people to participate in decisions that affect them very congenial. In this context, the right to join a trade union has always been one of the essential institutions in any democracy. It is important that people are able to come together to support each other in pursuit of their interests. In a world where decisions that affect the lives of many are frequently made a great distance from their impact, it is doubly important that the voice of working people is heard clearly. The Employment Relations Act is an attempt to restore a balance in the relationship between employers, employees and the government. It is for employers and employees to resolve their differences, but it is for government to provide the framework within which that can happen fairly. Apart from the provision of the institutional framework, the Government recognised the need for information and education in understanding the new processes. That is why provision was made for employment relations education leave and for a fund open to both employers and trade union members. It is only through education that enduring and sustainable change can be effected. Education not only gives the power of knowledge to the individual but it should also impart the technique of rational debate to use that knowledge to resolve conflict in a way that promotes the common good for all of society.

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references Boston, J. 1984. Incomes Policy in New Zealand. Wellington, Victoria University Press. Brook, P. 1990. Freedom at Work: A Case for Reforming Labour Law in New Zealand. Auckland, Oxford University Press. Brosnan, P., Smith, D. and Walsh, P. 1990. The Dynamics of New Zealand Industrial Relations. Auckland, John Wiley. Castles, F., Gerritsen, R. and Vowles, J. 1996. The Great Experiment: Labour Parties and Public Policy Transformation in Australia and New Zealand. Auckland, Auckland University Press. Hamer, D. 1988. The New Zealand Liberals: The Years of Power, 1891–1912. Auckland, Auckland University Press. Holt, J. 1986. Compulsory Arbitration in New Zealand: The First Forty Years. Auckland, Auckland University Press. Mitchell, R. and Wilson, M. 1993. ‘Legislative Change in Industrial Relations: Australia and New Zealand in the 1980s.’ in Bray, M. and Haworth, N. (eds), Economic Restructuring and Industrial Relations in Australia and New Zealand: A Comparative Analysis. Sydney, ACIRRT. Roth, H. 1973. Trade Unions in New Zealand: Past and Present. Wellington, Reed. Walsh, P. and Ryan, R. 1993. ‘The Making of the Employment Contracts Act’ in Harbridge, R. (ed.), Employment Contracts. New Zealand Experiences. Wellington, Victoria University Press. Wilson, M. 1984. ‘Work, the State and Social Policy: Industrial Legislation’ in Wilkes, C. and Shirley, I. (eds), In the Public Interest: Health, Work and Housing in New Zealand. Auckland, Benton Ross. Wilson, M. 1994. ‘Contractualism and the Employment Contracts Act 1991: Can They Deliver Equality for Women?’, New Zealand Journal of Industrial Relations, 19(3): 256–74. Wilson, M. 1995. ‘Policy, Law and the Courts: An Analysis of Recent Employment Law Cases.’ Australian Labour Law Journal, December 1995: 203–25. Wilson, M. 1997a. ‘New Contractualism and the Employment Relationship in New Zealand.’ in Davis, G., Sullivan, B. and Yeatman, A. (eds), New Contractualism. Melbourne, Macmillan. Wilson, M. 1997b. ‘The Role of the State in the Regulation of Employment Relations: The New Zealand Experience.’ Flinders Law Review, 2(2): 131–46. Wilson, M. 1998. ‘Labour Law Reform: Context and Foundations.’ in Nolan, D.R. (ed.), The Australasian Labour Law Reforms: Australia and New Zealand at the End of the Twentieth Century. Sydney, The Federation Press. Woods, N.S. 1963. Industrial Conciliation and Arbitration in New Zealand. Wellington, Government Printer. notes 1 I have explored the similarities and differences of approach between Australia and New Zealand in Mitchell and Wilson 1993 and Wilson 1998. 2 I have analysed the effects of structural adjustment and, in particular, the impact of the Employment Contracts Act in Wilson 1994, 1995, 1997a and 1997b.

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The Employment Relations Act through the eyes of the media erling rasmussen and colin ross

Introduction People’s view of employment relations is often shaped by their own personal experiences, but an overriding influence on their attitudes and impressions is what they read and hear through the media. This chapter looks at media images of the Employment Relations Act starting from when it was first mooted in Labour Party policy during the 1990s, its passage through Parliament as the Employment Relations Bill and its implementation. This viewpoint is from a media perspective and is based on what has been reported in daily newspapers and other print and electronic media sources. The chapter builds on the regular reporting of employment relations issues and trends that is presented in the Chronicle section of each issue of the New Zealand Journal of Industrial Relations. This reporting has provided us with a large number of media reports of employment relations issues and trends and has given us a feel for how the media tend to focus on certain issues and how transitory that focus can be. The old song of ‘who wants yesterday’s paper’ is very appropriate: issues and personalities are headline material one day and then suddenly forgotten. In order to provide a wider media perspective, we have also researched other print and electronic news media. In particular, we have consulted the ‘Jobs Letter’ website (www.jobsletter.org.nz) and the ‘Newztext’ database, which is accessible from the University of Auckland and other library websites. While we have been through a mountain of media reports, we do not claim that we have covered everything. There might be the odd story, labour market trend or issue that we have overlooked, though we would be surprised if one of the major employment relations media ‘stories’ has escaped our research. 21

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The chapter starts with a discussion of the period leading up to the introduction of the Employment Relations Act. What was the background for the public policy development and what was the reaction of opposition politicians and employer groups? The rather heated debate surrounding the Employment Relations Bill made good media reporting and it also generated a fair number of predictions regarding the expected outcomes of the proposed legislative change. After being front page news, the Act quickly vanished into the back pages. However, we discuss what bargaining processes and outcomes have featured prominently in the media, and, equally importantly, we examine how bargaining processes and outcomes get a particular media bias through the media’s focus on conflict. There are certain sectors – for example, health, education and transport – that frequently appear in the media while other sectors warrant only the odd piece of reporting. Likewise, there are some ‘actors’ – government, employer organisations and unions – who appear constantly. Our discussion of labour market trends also points to certain patterns or ‘continuous stories’ that are clearly influenced by the state of the labour market. While there have been some reports of unemployment issues and government interventions to reduce unemployment, these have been overshadowed by a constant stream of media reports on skill shortages, vocational training issues, ‘brain drain or gain’ and immigration. The media reporting has often portrayed certain sectors and occupations as being in a state of perpetual ‘crisis’. The underlying theme has become one where skill shortages have had an impact on the delivery of essential public services and on growth in important export sectors. Finally, the chapter will look at the current issues and puzzles that have emerged after the first three years of the Act. There is a growing interest in atypical employment and its effect on incomes, working time, careers and upskilling. In particular, stress and the ‘work–life balance’ have featured prominently. There has also been media interest in the attempt to ‘fine tune’ the Act by the Minister of Labour Margaret Wilson. The so-called ERA Review has raised questions such as: has the Act achieved its main objectives? if not, what has worked well and what hasn’t?

Employment Relations Bill Labour Party employment relations policies in the 1993, 1996 and 1999 general elections consistently stated that Labour would repeal the Employment Contracts Act and replace it with the Employment Relations Act to redress the balance of power by once again giving primacy to collectivism (Clark 1993, Hodgson 1999). This was seen to provide a focus on

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partnerships, balancing efficiency with equity and targeted capacity building and skills development (Labour Party 1999) to counter the neo-liberal, deregulatory approach to employment relations that had prevailed during the 1990s. The Employment Relations Act would also bring New Zealand into line with International Labour Organization Conventions 87 and 98 on collective bargaining, following the strong advocacy by the Council of Trade Unions (Wilson 2000). Despite continuous opposition to the Employment Contracts Act, the Labour Party had clearly shifted from its previous employment relations policies. Michael Cullen maintained that the proposed legislation was moderate and, if it had been introduced by Labour in 1990, Labour politicians would have been accused of being ‘class traitors’ (NZJIR 25(1): 98). Opponents continued to point to the positive effects of the Employment Contracts Act, such as increased employment, more flexibility and workplacerelevant outcomes. The union movement argued that the Employment Contracts Act had reduced growth in average real wage rates, increased wage differentials and produced unsatisfactory growth. In the lead-up to the 1999 election, some opponents claimed that the employment relations policies of Labour and Alliance would return monopoly power to unions, causing increased unemployment, compliance costs, and a host of other unintended outcomes (Thompson 1999). When Helen Clark announced in January 2000 that the Employment Relations Act would replace the Employment Contracts Act by March 2000, there was a strong outcry from business and employer groups, and the National and ACT parties. A series of strongly worded headlines permeated the media both during the period leading up to the introduction of the Employment Relations Bill and during its passage through Parliament. Ralph Norris, then Chairman of the Business Roundtable, criticised the proposed legislation on the basis that it ‘risk[ed] taking New Zealand backwards’ (NZJIR 25(2): 218). Professor Judith Sloan, an Australian academic, criticised such changes to employment relations as being ‘counter to global developments’ (NZJIR 15(2): 215). The National Business Review came up with headlines such as ‘Union Laws shake up Business Confidence’, ‘ERB Will Re-create Britain’s 19th Century Work Conditions’ and ‘Market Warfare’ (National Business Review 12 May, 23 June, 11 August 2000). The Independent had headlines such as ‘Unionism is an enemy of freedom and of free speech’ and ‘Back to the Thirties’ (Independent 26 July, 2 August 2000). It was also claimed that most New Zealanders approved of the Employment Contracts Act (NZJIR 24(4): 403, 25(1): 102). This was countered by a Brookers Employment Special, which claimed that critics of the new policy were ‘scaremongering when they say it is a leap back into the adversarial

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past’ (NZJIR 25(2): 218). At the same time, the Council of Trade Unions was calling for wider rights to strike over social and economic issues. It was also clear that some members of the coalition Government felt that the Employment Relations Bill wasn’t going far enough (Independent 26 July 2000). In the context of a weaker economic outlook and plummeting business confidence, the lobbying of the business sector was effective in persuading the Government to make changes to allay business concerns. A number of concessions were made and this was reflected in media headlines such as ‘Govt backs down on Employment Relations Bill’ (Independent 24 May 2000), ‘Employment Bill Sends Government into Retreat’ (National Business Review 2 June 2000), and ‘Employers land another punch on govt’ (Independent 5 July 2000). Changes agreed were that the status of independent contractors would stay the same, there would be little change regarding fixed term contracts, the access of union officials to worksites and the role of non-striking employees were made more precise and the ability to strike on economic and human rights issues was restricted. While some employers celebrated these changes, National spokesperson Max Bradford labelled them as ‘superficial’ and said they would ‘. . . disappoint employers while delighting unions’ (Independent 19 July 2000). It is interesting, therefore, that many business spokespersons have attributed the relative calm following the enactment of the Employment Relations Act as a vindication of the importance of the concessions made by the Government (Independent 1 October 2003).

General trends and media perspectives What have been the trends and issues since the introduction of the Employment Relations Act? As with most media reporting of employment relations, there is a strong focus on conflict, dramatic events and personalities (Deeks and Rasmussen 2002, Scott 1996). This has given a high profile to employment disputes and the clashes over public policy as discussed below. However, over the last three years there has been a considerable lull in the media coverage of the Employment Relations Act. After the ‘hype’ of the Employment Relations Bill, some commentators even wondered whether all the fuss was worth it (e.g. Tremewan 2003). Besides a few high profile disputes, there has been limited reporting of bargaining processes and outcomes. The odd reporting of major collective employment agreements will probably have bypassed many readers and viewers, and it is difficult to piece together a comprehensive picture of collective bargaining processes and outcomes from the media. This is even more so with

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individual employment agreements, where the main information has come through the reporting of survey results. There has been limited reporting of the action and behaviour of individual unions and employers, except when there has been a breakdown of negotiations. The expected disagreements over the interpretation of the good faith obligation have not materialised. The media has created the impression of ‘business as usual’. Nevertheless, there is clearly more emphasis on collective bargaining, collective ‘actors’ (government, unions and employers organisations), and whether this is leading to ‘productive employment relationships’. While unions and employers organisations have become more involved in bargaining, their main role appears to be in connection with the development and implementation of public policy. This has partly been prompted by other employment relations topics becoming important public policy areas and partly by labour market initiatives – such as skill shortages and vocational education and training – being facilitated by bipartite collaboration.

Bargaining processes and outcomes There have been a limited number of media reports of collective employment agreements. The focus has been – as discussed below – on disputes during the negotiation phase rather than on the settlements. Amongst the main reported settlements can be mentioned: the agreements at Fonterra, amongst Auckland bus drivers, firefighters, and secondary school teachers, in the health sector, and amongst cricket and rugby players (Dearnley 2002, De Boni 2002, Boock 2002, Burdon 2003). According to media reports, the most important collective negotiations have been in the public sector. This is explicitly supported by an article in the New Zealand Herald (14 July 2003) which suggested that evidence was emerging of a collapse of collective bargaining in the private sector and that it was becoming increasingly the domain of public sector unions. Furthermore, multi-employer collective employment agreements (MECAs) have mainly been associated with the two public sectors of health and education. The education sector led the way by continuing the nationwide bargaining for primary and secondary teachers. These agreements were further linked through the notion of ‘pay parity’ as well as suggestions of further centralisation in the negotiation patterns of early childhood, primary and secondary teachers (NZJIR 26(1): 138, 26(3): 353). The health sector negotiations gained considerable media coverage, and the impression was created that both unions and employers were keen to see more centralisation and structure to collective bargaining. The nurses moved a long way to re-establish national bargaining with MECAs in both the South

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and North Islands. The co-ordination of negotiations and employment parity claims surfaced in several health sector stories. An interesting development was a collective employment agreement for junior doctors at twenty-one district health boards. [I]t contained a new pay premium of around 4 per cent, compared with pay rates for house surgeons and registrars in hospitals in Auckland, Waikato, Wellington, Canterbury and Otago. The rather unusual pay premium was an attempt to deal with recruitment and retention problems for the ‘non-urban’ health boards. (NZJIR 28(1): 116).

Finally, the tertiary sector union, the Association of University Staff (AUS), also started to seek a MECA, though the universities opposed such a move (The Press 16 July 2003). There were few reports of MECA negotiations in the private sector. Two MECAs were concluded; the long-standing MECA in the plastics industry was continued under the ERA (Evening Post 2 October 2000), as was the engineering sector’s MECA covering 250 or so employers (NZJIR 28(2): 200). An agreement between INL and the Engineering Union was breaking new ground: a compromise was reached with certain provisions being common at all worksites (as in a MECA) while other provisions were specific to the various worksites (Dominion 7 August 2001). Overall, there was limited movement in terms of industry or multi-employer collective employment bargaining, and the unions constantly complained, therefore, that there was too little legislative support for MECAs and too many practical difficulties in conducting multi-employer negotiations. There has been precious little written about individual employment agreements (IEAs). The focus has been on a few high-profile cases, such as Craig Norgate, Chief Executive of Fonterra, and Christine Rankin, Chief Executive Officer of Work and Income New Zealand. As the media interest in these cases has often been prompted by other factors, the insights to employment arrangements have been limited. There have also been several surveys published that indicate how employment conditions have developed. Again the focus is predominantly on managers and highly paid specialists. Amongst the many predictions during the Bill phase, three stood out: increased strike activity (discussed below), increased wages and practical difficulties with interpreting the good faith obligation. The media published several articles to tell the reader that these predictions had been somewhat off the mark. The wage movements were fairly modest, and there were several news stories of how earnings had difficulty in keeping up with the inflation rate. This prompted the Bank of New Zealand’s Chief Economist, Tony

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Alexander, to suggest in the Independent that there ‘is something amiss. The market is either not as tight, as reported by employers, or it isn’t functioning properly’ (Independent 7 May 2003). Apart from large settlements in the health and education sectors, there were few signs that the legislative support of collective bargaining had a pervasive influence: wage rises associated with collective agreements appeared to be fairly similar to general trends, which were influenced by the majority of wage earners who were on individual agreements. Good faith bargaining and behaviour issues have yet to offer the journalists many headlines. The initial Code of Good Faith developed in a tripartite setting was given some airing, but then the issue disappeared as negotiations started to take off in earnest. The stand-off during negotiations at Independent News Limited (INL) was one of the few good faith disagreements to enter the news (Dominion 7 August 2001). An appeal of an Employment Relations Authority ruling, by the Engineering, Printing and Manufacturing Union against Carter Holt Harvey, was the Court’s first major judgment on the concept of good faith. The decision was received with cautious optimism by business. While commentators were divided, most of them were relaxed about its implications, with one journalist claiming that the judgment effectively gave out lollies to both parties (NZ Herald 7 September 2002). As one media story had it, ‘good faith has made little or no impact on the employment relations environment according to a survey of the Employers and Manufacturers Association and although there have been some test cases published it is not the issue that it was thought to be’ (NZ Herald 21 October 2002).

The focus on conflict The introduction of the ERA has not seen the disappearance of conflict in the employment relations arena, but it is also fair to say that the level of conflict predicted by those who opposed the Act has not eventuated. Despite some high profile industrial disputes, it was reported in April 2001 that the number of industrial stoppages had been at its lowest level since 1935 (NZJIR 26(2): 248). A further report in that year said that the number of strikes in the first six months of the ERA was less than that of the first six months of the Employment Contracts Act (NZJIR 26(3): 356). However, the number of disputes had increased by January 2002, with the number of strikes recorded in the September 2001 quarter being the highest since December 1996, with nineteen strikes involving the loss of 23,440 work days (NZJIR 26(3): 143). The response from the author of the ERA, Minister of Labour Margaret Wilson, was to say that the increase was anticipated and the Act served to ‘. . .

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remedy [the] years of mismanagement of employment relations in the public sector and the legacy of mistrust fostered under the previous government and its Employment Contracts Act regime’ (Dominion 19 April 2002). Employer representatives and opposition politicians claimed that the Act had prompted more strikes. The media normally carried this message when a high-profile strike hit the headlines. For example, the Opposition spokesperson on Health, Roger Sowry, blamed the Act for being behind Canterbury’s protracted health sector strike (Evening Post 25 January 2002). It is interesting to note the different treatment of strikes in the public sector compared to the private sector. The public sector has had proportionally more disputes than the private sector, and it was the public sector disputes that gained maximum coverage in the media. The health and education sectors received major media attention. Although there was a focus on the bitter secondary teachers’ dispute, this had a flow-on effect with media analyses of disquiet amongst primary and kindergarten teachers. This was partly influenced by the pay parity issue, where primary and kindergarten teachers sought to maintain the pay parity with secondary teachers that had taken them so long to achieve. The tertiary sector also received attention with a number of university staff taking industrial action in support of pay claims. The media reports had a common feature: besides the traditional focus on pay demands, there was a willingness to highlight other more fundamental factors as the disputes became associated with staff shortages, stress, lack of training and unpleasant working conditions. A picture of perpetual crisis in education and health was presented by such headlines as ‘Not enough teachers at the chalk face’ (NZ Herald 15 January 2003), ‘Schools struck by English teacher crisis’ (Sunday Star-Times 1 December 2002), ‘Some classes will have no teachers, PPTA warns’ (Dominion Post 2 December 2002). Television reporters interviewed nurses on the street, surveyed empty wards and reported the resignation of dissatisfied clinicians. As public sector bargaining received plenty of media attention, there also appears to have been an astute use of the media as a way of furthering bargaining objectives. As the long-lasting firefighters’ dispute showed, it is possible to gain public support for the union’s viewpoints if a sense of crisis and inconsiderate treatment of employees can be created (Rasmussen and Lamm 2002). Police shortages in Auckland received dramatic headlines such as ‘Auckland faces crippling shortage’ (Sunday Star-Times 2 November 2002), ‘Auckland police at “boiling point”’ (Dominion Post 2 December 2002) and ‘Police seething over crippling staff shortages’ (NZ Herald 2 December 2002). However, the ‘crisis’ angle of many news stories often lacked in-depth information and evaluation about the alleged shortage. Only one newspaper article noted that, if all Auckland police officers who were

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currently taking leave without pay came back to work, then there would be no police staffing crisis in Auckland at all (NZ Herald 11 December 2002). While private sector disputes were generally less prominent in the media, they did provide a handful of very high-profile disputes. This reflected a major change in New Zealand employment relations: the traditional industries had less profile in the media, they employed fewer people and they had fewer flow-on effects on other sectors’ employment relations. The large forestry company Carter Holt Harvey (CHH) was involved in two major disputes: the waterfront dispute about log transport arrangements and the protracted dispute at the Kinleith Mill at Kawerau. The dispute at South Island harbours unfolded shortly after the enactment of the ERA and the media reports brought back memories of previous disputes at the waterfront (Dominion 27 January 2001). While images of picket line battles – including the unfortunate death of a woman whilst picketing – rekindled negative perceptions of industrial disputes, they proved to be a very minor part of the employment relations scene. Likewise, the dispute at the Kinleith Mill at Tokoroa also featured when Carter Holt Harvey contracted out its maintenance functions, resulting in a large number of layoffs (NZ Herald 14 December 2002). There were also several disputes in the transport sector with Wellington and Auckland bus drivers creating inner-city transport problems. Air New Zealand was again in the news because of the worries over its longterm financial viability. Overall, there has not been the expected upsurge in industrial disputes, and the media produced several analyses about why this has been the case. The number of strikes is partly influenced by the size of the unionised workforce since only unions can negotiate collective employment agreements and, thus, only unionised employees can strike lawfully. Still, unions appear to have avoided strike action and negative images of ‘bloody-minded’ unionism. Likewise, strikes in support of multi-employer collective agreements are now permissible. However, very few such agreements have been negotiated and there appears to be little strike activity in support of this type of agreement.

Union membership and union density Unions had announced in the media that they would actively be recruiting the ‘lost generation’ of workers that they say were lost during the period of the Employment Contracts Act (NZJIR 25(2): 216). The passing of the Employment Relations Act prompted the CTU to embark on a membership drive with a goal to increase membership from 18 per cent of the workforce to around 30 per cent (NZJIR 26(1): 131). Other unions announced intentions to target emerging sectors of the economy, such as Finsec announcing plans to

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start recruiting in the call centre industry (NZJIR 25(2): 223). Generally, there was limited discussion of union activity – except when it involved industrial disputes – and the media reporting focused on more general labour market issues or the actions of the Council of Trade Unions (CTU). The vast majority of registered unions were not mentioned once in the media. The lack of focus on union activity may be a result of the fact that union membership is still not back to previous levels. There are claims that the Employment Relations Act has had very little effect on union membership or the relative popularity of collective bargaining (NZJIR 27(3): 250). A 2003 survey conducted by the Industrial Relations Centre at Victoria University revealed that union density was stagnant, as increased union membership could not keep up with the expansion of the workforce. Most union members (53 per cent) now work in the public sector, while some private sectors have very low union density: less than 5 per cent in large sectors such as construction, retail and restaurants and hotels. ‘The bleak news for unions . . . is that they are doing best in declining sectors of the economy and worst in the growing sectors’ (NZ Herald 10 June 2003). Overall, union membership was reported in June 2003 to be 334,783 or 21.7 per cent of wage and salary earners. Despite stagnating union density, media reports illustrated that changes were occurring in the union movement. There were ongoing structural changes such as an amalgamation of two of the oldest unions – the Waterfront Workers Union and the Seafarers Union – to form the Maritime Union of New Zealand (Dominion 23 November 2002). The new legislation also brought about the formation of ‘company unions’ and smaller specialised unions. The fact that the rugby players managed to become the first registered union under the new Act created headlines. Of the ‘company unions’, the most notable was the one created at the Warehouse under the name of ‘People First’ (National Business Review 14 July 2000). By March 2001, it was reported that membership of this union had reached 20 per cent of Warehouse staff. Another company union, the Te Kuiti Beefworkers Union, received media coverage when the company, Universal Beef Packers, was subject of an Employment Court case by the Aotearoa Meat Workers Union who accused the company of being heavily involved in the formation of the new union. It was alleged that the company had financed the new union in order to polarise the workforce and in this way obtain a substandard pay deal. The Court ruled that the independence of the Te Kuiti Beefworkers Union was not compromised even though $1,000 formation costs had been paid by the employer (NZ Herald 27 November 2001). While individual unions were seldom in the media, the Council of Trade Unions featured prominently in the media on a variety of issues. It articulated

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constantly the necessity to increase union membership and ensure better working conditions. It also ran a high profile campaign for a better work– life balance. The involvement in public policy has kept the CTU in the media limelight, as has its collaboration with the Labour Government (NZ Herald 10 August 2002). Amongst the key public policy debates were the amendment to the Health and Safety in Employment Act, paid parental leave and the push for four weeks’ annual leave. Although the media had an ambivalent position regarding the CTU’s involvement in public policy debates, with the National Business Review (7 December 2001) portraying it as ‘irresponsible’, the CTU tried to push a message of moderation and progressiveness (Du Fresne 2003). In particular, there was a frequent message regarding a more comprehensive policy platform with social objectives being based on a strategy for sustainable economic growth. The CTU’s 2002 pre-election manifesto had as its core the promotion of a ‘high wage, high skill, high trust’ sustainable export economy. Ross Wilson, the President of the CTU, was quoted as saying, ‘. . . we see economic development as extremely important – a priority objective’ (NZ Herald 10 August 2002). The employer attacks on the Employment Relations Bill disappeared from the media when the Act was passed. Instead it was argued that the ‘business as usual’ situation was a result of the employer criticism of the original Bill. On the other hand, employers were quick to praise the new employment institutions, particularly the Mediation Service. Peter Tritt, Manager of Advisory Services for the Employers and Manufacturers Association (Northern), was quoted in the Independent (14 July 2001) as saying that ‘[T]he two new employment institutions have been a major success story.’ However, the employers clearly had serious concerns with the Government’s employment relations strategy, and media reports gave the impression of a running battle to contain and delay the planned reforms. This was done through active criticism of the reforms and through raising a constant theme that compliance costs were a major restraint on economic growth and the well-being of small and medium size enterprises. For example, a survey by the Employers and Manufacturers Association found there were extra costs training managers and employers to comply with the new legislation (NZJIR 27(3): 364). The compliance costs theme was in no way restricted to the ERA but it covered wider employment relations changes; in particular, the changes to health and safety legislation created a string of media reports during 2001–03. The media focused on the fact that a small business does not have the same managerial and financial resources as large companies, but the same obligations apply. As the NZ Herald (9 May 2002) formulated it, small businesses were often an overworked individual who was simply trying to keep the operation running against seemingly impossible odds.

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It was a feature of media reports that the traditional employers’ associations dominated the commentary and critique of employment relations changes. Business New Zealand and the Employers and Manufacturers Association (Northern) were regularly quoted or released information about employment relations. Their approach to the Employment Relations Act – including the new employment institutions – appeared crucial in fashioning the media’s approach to the legislation. The Business Roundtable, on the other hand, was seldom at the forefront of the discussion of the Act or other policy reforms. Its viewpoints were often just noted or mainly featured in articles written by members of the Business Roundtable. Its traditional free-market approach was unwavering – for example, it suggested that statutory annual leave entitlement should be abolished in favour of negotiated entitlements in its submission on extra annual leave (NZ Herald 9 July 2003) – but it had little relevance in terms of the overall media debate.1

Labour market trends and issues Since the introduction of the Employment Relations Act, the media have focused on two labour market themes: skill shortages and falling unemployment. This followed the strong employment growth that occurred well before the introduction of the Employment Relations Act. The reporting on skill shortages initially focused on the health sector, where the media painted a gloomy picture: overwork and poor pay were driving staff overseas to jobs with higher wages and better conditions, and this created a vicious cycle of staff shortages which placed more stress on those staff left. Media reports gave the impression of a perpetual crisis from a shortage of doctors and nurses down to hospital orderlies and cleaners. In November 2000, it was reported that 10 per cent of nursing positions in the Auckland Healthcare Region were vacant (NZJIR 26(1): 137), and the national shortage of nurses was estimated to be at least 2000 (NZJIR 26(3): 135). Additionally, research showed that nurses earned substantially less than was needed to stop them from going overseas (NZJIR 28(2): 202) and that there were extensive recruitment efforts by overseas recruiters. Nurse shortages coincided with reports of continuing shortages of specialist hospital staff such as anaesthetists, radiation therapists and pathologists. The staffing ‘crisis’ in the health sector clearly influenced negotiation processes and bargaining outcomes. Besides the rise in multi-employer collective bargaining (as noted above), there were obvious pressures on health sector employers. Several groups of nurses were involved in strike action (NZJIR 26(3): 141), and so were radiation therapists, hospital security guards and psychiatric nurses (NZJIR 28(1): 109). The strikes coincided with news

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of large pay settlements for a number of specialist hospital staff. For example, pathologists were reportedly given pay rises of $50,000 each in order to avert a staffing crisis (NZJIR 26(1): 140). However, working conditions were also a sticking point. One example was psychiatric nurses, who refused to start work because of staffing shortages (NZJIR 27(1): 247). Mental health workers also claimed they were so overworked that they had defied management directives on how to handle potentially violent patients and were skimping on patient risk assessments (NZJIR 28(2): 202). A similar picture of critical staff shortages was being painted for other essential public services such as police and education during 2000–01. Since then, reporting of shortages has extended to just about every other industry sector, with many reports of regional shortages. By December 2002, there were reports such as ‘Labour shortage holds back growth’ (NZ Herald 2 December 2002). Another report said that skills shortages were constraining one in eight businesses from growth and that such critical export industries as agriculture, horticulture and forestry were experiencing shortages (NZ Herald 27 May and 2 September 2002). Many reasons were given for these shortages, ranging from the migration of graduates to pay off their student loans to the scrapping of apprenticeship schemes during the 1990s and low birth rates (National Business Review 13 September 2002). Whatever the reasons, the predictions of higher unemployment under the Employment Relations Act did not materialise, and it is hard to gauge the direct impact of the Act on the levels of unemployment. Some reports claimed that the Employment Relations Act has made little, if any, impact on businesses, while other media stories highlighted employer complaints about the Act’s personal grievance provisions and cite this as a reason for not taking on additional staff. A survey of business conducted by the New Zealand Herald in August 2002 reported that 50 per cent of the 700 surveyed companies had refrained from taking on extra staff because of the Employment Relations Act (NZJIR 27(3): 369). However, the reports on skill shortages also pointed the finger at other public policy issues, particularly vocational education and training, and an inadequate employer focus on training and development. While the media reported higher pay levels for some groups, it is interesting that these increases had little impact on overall earning levels. Although labour market segmentation was not discussed very explicitly in the media, one could detect it through diverse pay trends, (un)employment distribution and growth patterns in high- and low-wage jobs. In March 2002, it was reported that executives had enjoyed their second largest salary increase in a decade (Dominion 26 March 2002). This was in contrast to reports on the emergence of sweatshops in parts of Auckland, which were often using illegal

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migrant workers who worked for long hours, for very little pay and in poor conditions (e.g. NZJIR 27(3): 366). The media also reported that Treasury had found that income inequality had grown faster in New Zealand than in any other OECD country during the period 1986–96 (NZJIR 25(3): 333). Likewise, it was reported that most new employment growth had been in the low-wage service economy (NZJIR 25(2): 221). These trends constituted a challenge for the centre-left Government. The Government had increased the statutory minimum wage by 21.4 per cent since March 2000, following the rise in March 2003 to $8.50 for adult employees and $6.80 per hour for the youth rate. This was in addition to changes to housing and social welfare policies. Declining unemployment figures were regularly celebrated in the media. The focus shifted from the overall level of unemployment to its composition. It was often stressed that unemployment chiefly involved the young, unskilled and certain ethnicities, and that certain regions were more affected than others. These groups and regions also benefited from a buoyant labour market. For instance, the reduction in the unemployment rate in Manukau City to 6 per cent coincided with Maori unemployment falling by 6.5 per cent and Pacific Island unemployment dropping by 11 per cent. Still, two-thirds of those without jobs were Maori or Pacific Islanders, most of whom were ‘unskilled and unqualified’ (Jobs Letter 6 May 2003). The traditional gender aspect is still important, with concerns over opportunities, part-time work and pay equity appearing regularly in media reports. However, there was also more of a focus on men, and especially mature men, in media reports. ‘As New Zealanders enter the last 10 years of a typical working life, their opportunity to save is falling. At an age when their parents would have been at the peak of their earning power, many cannot even find full-time work. The rules have changed around them . . .’ (Watkin 2002).

Current issues and puzzles Fuelled by speculations over the Review of the Act, the debate over the Employment Relations Act roared back into life. In particular, the media focused on the issues of ‘free-loading’ of non-union members, protection of employment conditions during ownership changes, contracting out and a strengthening of collective bargaining (for an overview, see Rasmussen and White 2004). A timely report from the Industrial Relations Centre at Victoria University showed that there had been very little improvement of working conditions under the Employment Relations Act (NZ Herald 21 July 2003). Associated issues surfacing at the same time were the review of the Holidays Act leading to an increase of annual leave entitlement to four weeks,

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a working party on pay equity in the public sector and the impact of employee participation mechanisms as part of legislative changes in occupational health and safety. Other employment relations issues had yet to be linked to the Act, in the media anyway. The fashionable issues of work–life balances, workplace stress, atypical employment patterns and skill shortages were often portrayed as separate issues from the Act, despite union efforts to make them an integral part of collective bargaining. In fact, there was little debate on the Employment Relations Act in 2003, despite continuous rumours that the Review and its associated amendments were ‘nearly ready’ (Rasmussen and White 2004). Early in the year, a spokeswoman for the Minister of Labour, Margaret Wilson, indicated that the focus was not to rewrite the Act or change its aims but to ‘identify whether fine-tuning was required to ensure the act promotes – rather than simply permits – collective bargaining’ (NZ Herald 17 February 2003). Whether more administrative support should be given to facilitate multi-employer collective bargaining, particularly where the size of firms in certain sectors makes enterprise bargaining inefficient, was also under consideration. Likewise, reductions in compliance costs associated with the bargaining process would be studied. These opaque statements were followed by constant media reports of internal disagreement between unions and politicians and within the Labour Party. The issue of free-loading or free-riding of non-union members, who gained benefits from settlement of collective agreements, surfaced in several ways. While the issue was easy to identify, it was unclear how to deal with it and employers and unions disagreed over whether it needed to be dealt with at all. The dairy giant Fonterra was involved in a test case at the Employment Court to clarify whether it was lawful to deduct a ‘bargaining fee’ from staff who were not members of the Dairy Workers Union but who still obtained collectively agreed improvements in pay and conditions. This action was subsequently ruled illegal by the Employment Court. In the public sector, union members were awarded ‘bonuses’ and back-dating of pay rises (or at least no delay in receiving pay rises) as ways of dealing with ‘free-loading’. This was consequently used by ACT MP Rodney Hide in his campaign to expose preferential payments to government employees (Dominion Post 10 July 2003, NZ Herald 28 July 2003). Although rumours about outcomes of the Review of the Act kept surfacing in the media, there was little correct information. The announcement of the Review outcomes was also continuously delayed from mid-2003, and the Employment Relations Law Reform Bill was finally tabled in December 2003. The proposed changes included: the preservation of jobs and conditions of vulnerable employees when a business changes hands; a ban on employers

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from discouraging employees to bargain collectively; forcing employers to front up for the first round of multi-employer talks; and inhibiting free-riding by stopping employers from automatically passing on union-negotiated collective deals to non-union workers. Predictably these proposals were labelled as a backward step by the Opposition and business groups but the revamp was welcomed by unionists as a ‘modest’ improvement. The President of the Council of Trade Unions, Ross Wilson, was quoted as saying that a genuine attempt had been made to address union concerns. However, the CTU would seek further ways to strengthen multi-employer bargaining, discourage free-loading and extend the protection on the sale or transfer of a business (Dominion Post 5 December 2003). The announcement of the proposed changes was followed by complaints from employer groups that they did not have sufficient time over the Christmas break to prepare submissions to the select committee hearings. In early 2004, reports began to emerge of business surveys which indicated that the business sector was overwhelmingly opposed to the proposed changes, especially the promotion of multi-employer collective contracts over individual contracts (Rasmussen and White 2004).

Conclusion The media’s reporting on the Employment Relations Act had the traditional focus on dramatic events and personalities. This created a transitory and surface image of employment relations, where the reporting of disputes and disagreement was more prevalent than constructive dialogue and agreements. That said, the traditional preoccupation with pay demands was complemented by other factors such as stress, lack of training and unpleasant working conditions. There were also indications of more ‘mediasavvy’ actors, for example in the health sector. These actors – whether board members, managers, union representatives or staff – often participated in, and appeared to create, media coverage of employment relations issues. They were not adverse to pandering to the media’s propensity to cover dramatic events, a ‘crisis’, which could be portrayed as having implications for the average New Zealand citizen. This was probably also a reflection of the media focus on collective bargaining in the public sector, with hardly any media space provided to non-conflict collective bargaining in the private sector. It was also noticeable that the Act lost its ‘newsworthiness’ rather quickly compared to the Employment Contracts Act; this might be an indication of a growing consensus between the main actors. There were several media indications of more collaboration between the key actors in terms of public policy and implementation issues. The National Party’s announcement that

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it would not seek to repeal the Act also indicated a narrowing of the public policy gap (Evening Post 26 April 2002). However, there were still profound disagreements aired in the media. This was less about the ERA and more about other developments in employment relations (for example, occupational safety and health, annual leave, pay equity). These disagreements were seldom analysed in depth in media reports. Instead, an impression was created that there were running battles on a number of disparate issues. Nevertheless, there have been several key themes in the media debate of the Act: compliance costs, well-being of small and medium size enterprises, work–life balance and stress, skill shortages and vocational education and training, free-loading and lack of union density growth. These themes illustrate how the media coverage of employment relations complements the traditional fascination with industrial disputes and confrontational interests with more diffuse and complex issues. Finally, it will probably take some time before the vital question about the Act can be answered: has the Government achieved its goals and can the ERA be called a success? There were clearly some teething problems and unanticipated outcomes, as indicated by the shift in media focus since the Employment Relations Act and the debate surrounding the Review of the Act. The legislation was also part of a wider public policy change with a legislative package designed to give workers a better deal and move away from the previous market philosophy. After nearly three years with the Act, the Minister of Labour Margaret Wilson could still maintain that the ‘enactment of the Employment Relations Act is only the start of the journey. There is still a long road ahead’ (National Business Review 21 February 2003).

references Boock, S. 2002. ‘Cricket: Winners and Losers from Pay Dispute’, New Zealand Herald, 16 November 2002. Burdon, N. 2003. ‘Relief at end to bonus row’, Southland Times, 23 July 2003, p. 24. Clark, H. 1993. ‘Employment Relations – the New Direction under Labour’, New Zealand Journal of Industrial Relations, 18(2): 153–62. De Boni, D. 2002. ‘Teachers’ pay deal comes with barbed hooks’, New Zealand Herald, 22 August 2002. Dearnley, M. 2002. ‘Global Giant signs for Workers rights’, New Zealand Herald, 10 April 2002. Deeks, J. and Rasmussen, E. 2002. Employment Relations in New Zealand. Auckland, Pearson Education. Dominion. 27 January 2001, 7 August 2001, 26 March 2002, 19 April 2002, 23 November 2002. Dominion Post. 2 December 2002, 10 July 2003, 5 December 2003. Du Fresne, K. 2003. ‘New-age unionists battle for workers hearts’, National Business Review, 14 February 2003.

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Evening Post. 2 October 2000, 25 January 2002, 26 April 2002. Hodgson, P. 1999. ‘Labour’s “Labour Relations’’’, New Zealand Journal of Industrial Relations, 24(2): 173–80. Independent. 24 May 2000, 5 July 2000, 19 July 2000, 26 July 2000, 2 August 2000, 14 July 2001, 7 May 2003, 1 October 2003. Jesson, B. 1992. ‘Lobbying and Protest: Patterns of Political Change at the Informal Level’, in Gold, H. (ed.), New Zealand Politics in Perspective. 3rd edition, Auckland, Longman Paul. National Business Review. 12 May 2000, 2 June 2000, 23 June 2000, 14 July 2000, 11 August 2000, 7 December 2001, 13 September 2002, 21 February 2003. New Zealand Herald. 27 November 2001, 9 May 2002, 27 May 2002, 10 August 2002, 2 September 2002, 7 September 2002, 21 October 2002, 2 December 2002, 11 December 2002, 14 December 2002, 15 January 2003, 17 February 2003, 10 June 2003, 9 July 2003, 14 July 2003, 21 July 2003, 28 July 2003. New Zealand Labour Party. 1999. Key Policies 1999. Wellington, New Zealand Labour Party. Rasmussen, E. and Lamm, F. 2002. An Introduction to Employment Relations in New Zealand. Auckland, Pearson Education. Rasmussen, E. and White, R. 2004. ‘Through the eyes of the media: the Employment Relations Law Reform Bill’, Paper, Department of Management and Employment Relations, The University of Auckland (see also www.employment.org.nz). Scott, J. 1996. ‘Contesting Symbolic Space: The Struggle over the Employment Contracts Act 1991’, New Zealand Journal of Industrial Relations, 21(3): 277–98. Scott, J. 1997. ‘Communication campaigns and the neo-liberal policy agency’, Media, Culture & Society, 19(2): 183–99. Sunday Star-Times. 2 November 2002, 1 December 2002. The Press. 16 July 2003. Thompson, A. 1999. ‘A return to union power is a return to the class struggle’, Independent, 10 November 1999. Tremewan, P. 2003. ‘Pain of new law was not worth the effort’, New Zealand Herald, 23 October 2003. Watkin, T. 2002. ‘Mature workers on the scrapheap’, New Zealand Herald, 30 March 2002. Wilson, R. 2000. ‘The decade of non-compliance; the New Zealand government record of non-compliance with international labour standards’, New Zealand Journal of Industrial Relations, 25(1): 79–95. notes 1 This was a major shift compared to a decade earlier when Scott (1997: 186) found: ‘Its members and other interested businessmen provided a wealth of news material, based on extensive research, on every conceivable issue of national importance – industrial relations, education, welfare, immigration, health, local government and so forth. The Business Roundtable’s libertarian position established one of the boundaries of public debate (Jesson 1992).’

4

Collective bargaining under the Employment Relations Act glen thickett, pat walsh and raymond harbridge

Introduction The Employment Relations Act is making a difference. But not the one that unions had necessarily sought, nor one that employers had necessarily anticipated. In the months preceding its introduction in October 2000, there was considerable debate about how the Act would affect employees and employers. Generally, trade unions saw the Act as a significant improvement on the Employment Contracts Act, suggesting that the promotion of collective bargaining, good faith employment relations and the observance of international labour conventions would lead to a fairer industrial relations system (see, for example, New Zealand Council of Trade Unions 2000). It comes as no surprise that employer groups were uneasy and uncertain about the Act. Headlines in the business press prior to its introduction of the Act characterise the concerns of some employers and employer organisations; these included ‘Employment Bill fears mount, despite sop of select committee process’ (Independent 27 April 2000: 17), ‘The ERB’s drastic effects were not in Labour’s manifesto’ (Independent 31 May 2000: 27) and ‘Laila’s in la-la land over employment relations’ (National Business Review 1 September 2000: 39). This chapter examines the effect of the Employment Relations Act on collective bargaining outcomes over the three years since the Act came into effect. Interestingly, the Act has presided over a decline in collective bargaining coverage. Despite the Act’s stated intention to promote collective bargaining (at s 3(a)(iii)), our data for the year to June 2003 show collective bargaining levels declining to the lowest seen over the last twenty-five years. Further, a clear trend is emerging that collective bargaining in New Zealand is becoming a public sector phenomenon. Under the Employment Relations 39

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Act, public sector employees are over five times more likely to be covered by a union-negotiated collective agreement than their private sector colleagues. The drop in collective bargaining coverage since the new Act took force in 2000 has largely been in the private sector. Accordingly, we now observe divergent outcomes between the public and private sectors in both collective bargaining coverage and multi-employer bargaining. These issues, in addition to the perennial problem of free-riding, are to the fore of the Employment Relations Act review. In addition to the changing composition of collective bargaining, this chapter examines recent trends regarding wage increases. It notes the limited influence of skill shortages and changes to inflation on wage rates in collective agreements. We highlight the overall stability of working time provisions in the collective agreements, although there has been a slight improvement in some conditions. Further, we examine employee leave entitlements, and comment on the likely influence of the Holidays Bill and the recent introduction of a statutory entitlement to paid parental leave. We also highlight trends in redundancy entitlements, in particular, pay and notice provisions. The chapter draws on a database of collective employment contracts and agreements. For detailed analysis of collective bargaining trends at the sector and industry level, see Thickett et al. (2003).

Method The Industrial Relations Centre at Victoria University holds a dataset of collective settlements for the period 1984–2003, and a union membership dataset for the period 1990–2003. The trends reported herein are derived from a comprehensive analysis of the content of collective employment agreements and certain collective contracts which had yet to expire as at 30 June 2003. These collective agreements and contracts (collective settlements) have been gathered through extensive and ongoing surveys of employers and trade unions, whom we asked to supply, voluntarily, copies of both collective and ‘standardised’ individual employment agreements they have negotiated. As always, two main caveats with regard to our data need to be stated. First, the settlements we receive from employers and unions are obtained on a voluntary (and confidential) basis. To the extent that some employers and unions have declined to participate in this project, our sample of settlements is incomplete. Nonetheless, the coverage of those settlements we do hold is substantial. While there are no recent official data available on the proportion of the labour market whose terms and conditions of employment are determined through collective negotiation, we estimate that our sample covers well over 90 per cent of all employees covered by collective employment agreements.

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The second caveat is that our analysis focuses on collective agreements – typically located in the sector of the labour market earning between the minimum wage, now $9, and $30 per hour. While we do hold copies of standardised individual agreements where these have been supplied to us – these are essentially pro-forma contracts that apply to an entire workforce with little individual variation – we do not specifically seek to collect or analyse individual contracts and agreements. It is quite possible that we would be reporting different trends if we monitored individual employment arrangements. Notwithstanding this, the trends we are reporting are very representative of industries that have a high degree of collective bargaining, specifically manufacturing, transport, education, health and the public service. Moreover, we are confident that the employment conditions in these settlements are broadly consistent with those prevailing in industries where union presence is sufficiently strong to influence outcomes across the industry. On the other hand, where union presence is relatively weak, we would expect a union premium to apply, meaning that employment conditions in the collective agreement would be superior to those elsewhere. In the period June 1991 to June 2003 we received a total of 15,588 employment contracts and agreements. Of these settlements, 2477 are current; they cover a total of 329,300 employees. This represents a collective bargaining density of some 21 per cent. This is lower than that found in employee surveys. Rasmussen et al. (2000), for example, report that 37 per cent of employees in their survey were covered by a collective employment contract. The difference between these two figures is largely attributable to differing methodologies between survey and database studies, and can be explained by distinguishing between collective bargaining and collective contracting (Dannin 1997, Gilson and Wagar 1998). Under a collective contracting arrangement, employees are covered by a collective contract but no bargaining actually takes place. Such a scenario may arise when employees at a non-unionised workplace are employed on a set of general terms and conditions over which they have little control. The Employment Relations Act stipulates that collective agreements must be negotiated by a union, and thus excludes collective contracting from the formal collective bargaining system. Databases of collective settlements, such as those at Victoria University of Wellington and the Department of Labour, primarily hold agreements negotiated between employers and unions, i.e. collective bargaining arrangements.

Collective bargaining coverage The Employment Relations Act includes as one of its objectives the promotion of collective bargaining (at s 3). Hence it is with some interest that we

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observe developing trends in bargaining arrangements under the Act. The data presented in Table 1 take an historical view of collective bargaining coverage according to whether it took place in the public or private sector and whether it was single- or multi-employer bargaining. TABLE 1: SETTLEMENT TYPE AND COLLECTIVE BARGAINING COVERAGE 1989/90–2003 Type of Settlement

1989/1990 (000s)

1993 (000s)

June 1998 (000s)

June 2000 (000s)

June 2001 (000s)

June 2003 (000s)

Multi-employer Private Sector Public Sector Total Multi-employer

384.6 169.3 553.9

38.2 51.8 90.0

41.7 50.4 92.1

34.3 54.0 88.3

37.3 56.6 93.9

23.5 68.2 91.7

Single-employer Private Sector Public Sector Total Single-employer

29.0 138.5 167.5

238.3 98.8 337.1

203.4 123.2 326.6

210.5 121.8 332.3

182.2 115.3 297.5

144.2 91.7 248.0

Total Coverage

721.4

428.7

418.7

420.6

391.4

339.7

Note: The data for 1989/90 are unofficial and are the result of comprehensive surveys of unions and employers as to the coverage of awards and collective agreements (Harbridge 1991). The data for 1993 are official data and are reported in Statistics New Zealand (1994) Labour Market Statistics. Subsequent years’ data are from Victoria University of Wellington’s collective bargaining database, published most recently as Thickett et al. (2003).

Until 1991, for the most part, workers were covered by an award negotiated at the occupational level rather than an enterprise or industry level settlement. In 1989/90 we estimated that some 721,400 employees were covered by a collective settlement, with some 553,900 employees covered by a multiemployer settlement. The Employment Contracts Act made multi-employer bargaining extremely difficult, especially with employer opposition to such bargaining. Under the Employment Contracts Act, enterprise-level bargaining became the leading type of bargaining arrangement. The data show that the number of people covered by collective contracts fell substantially in the first years of the Employment Contracts Act, before levelling off at around 420,000 during the mid 1990s. The Employment Relations Act limits collective bargaining coverage to union members. As employment contracts are replaced by agreements, we are recording the number of union members rather than the number of employees covered by the agreement. This approach, and indeed the Employment Relations Act itself, effectively excludes free-riders from our analysis and thus contributes to an apparent fall in collective bargaining coverage. Accordingly, collective bargaining coverage has fallen by 17 per cent in the twelve months to June 2003. Approximately one third of the decline in collective bargaining coverage is attributable to the removal of free-riding employees from our

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database, one third from the removal of collective employment contracts that have not been renewed as collective agreements and one third from the removal of unrepresented employees from the database. The new coverage figure of 339,700 employees is the lowest since we started reporting collective bargaining coverage in 1989/90. There is no doubt that free-riding is still occurring, however. In some instances, we have received both collective and ‘standardised’ individual agreements from organisations that are virtually identical, containing the same wage rates, annual leave entitlements and overtime rates. The collective agreement has effectively been extended to non-union employees via an individual agreement with the same terms and conditions. We are also aware of other single- and multi-employer agreements that are extended to non-union employees and organisations that follow trends established in collectivised firms, but are not collectivised themselves. It has been suggested that the Employment Relations Act encourages employers to pass on improvements for collective bargaining to employees on individual employment agreements. Indeed, the reality at most workplaces is that any individual agreement is simply a mirror of the collective. A combination of the workers’ option to ‘join the union, join the agreement’ and the employer’s desire to minimise transaction costs means that, in most cases, there are strong pressures for a single set of terms and conditions, and they will be those negotiated by the union. Possible solutions to this problem include the provision of bonus payments to employees covered by the collective agreement and the use of agency or bargaining fees payable to the union. Bonus payments to employees covered by a collective agreement have the effect of providing a discernible benefit to employees for the advantages that collective bargaining brings to the employer, whilst also allowing the employer to have a single set of conditions of employment for all staff. Agency or bargaining fees, of which the courts have been considering the legality, effectively reimburse the union for its costs in undertaking bargaining for non-union employees when they receive its benefits. The review of the Employment Relations Act has addressed the free-riding issue. The outcome of the review is the Employment Relations Law Reform Bill, which is set to come into law in October 2004. The Bill intends to hamper free-riding by making it a breach of good faith to intentionally seek to undermine a collective agreement by passing on terms and condition of the collective to employees on individual agreements. Under the provisions of the Bill, it is possible for terms and conditions in collective and individual agreements to be the same; however, genuine negotiations between the employer and the unrepresented employee must take place.

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The Employment Relations Law Reform Bill also enhances the collective bargaining provisions of the Employment Relations Act. Under the Bill, it will be a breach of good faith for an employer to advise an employee against collective bargaining or joining a collective agreement; employees will be able to authorise their union to sign off on an agreement without a ratification vote; and, if employees are interested in pursuing a multi-employer collective agreement, employers will be required to attend at least one meeting to discuss it. In addition, the Bill establishes financial penalties for breaches of good faith, and, in the event of serious and sustained breaches of good faith, the Authority will be entitled to set the terms and conditions of the agreement. A further development since the Employment Relations Act came into effect is that collectivised employees are increasingly more likely to be employed in the public sector rather than in the private sector. Historically, the balance of employee coverage between private and public sector collective settlements reported has been a 60:40 private to public ratio. Now, 52 per cent of collective bargaining coverage is located in the public sector and 48 per cent of employee coverage is in the private sector. We have used Quarterly Employment Survey (QES) data to estimate total employment by sector. While the QES data certainly under-reports total employment, it is a useful indicator of the balance of employment between the private and public sectors (the QES counts filled jobs rather than employment and it also excludes the self-employed and the agriculture industry). In February 2003, private sector employment was estimated at 1,271,300, public sector employment at 276,000 and total employment at 1,547,300. Collective bargaining coverage in the private sector is reported as 156,600, which gives a collective bargaining density rate of 12 per cent. The equivalent public sector collective bargaining density rate is 63 per cent. While these density rates are probably overstated (because employment is probably understated), the ratio between the two rates is revealing. Collective bargaining density in the public sector is over five times greater than in the private sector. TABLE 2: PRIVATE AND PUBLIC SECTOR COLLECTIVE BARGAINING DENSITY 1990–2003 Year 1990 1995 2000 2003

Private sector Coverage QES data (000s) (000s) 413.6 217.0 244.8 156.6

869.1 1,022.0 1,128.9 1,271.3

Public sector Coverage QES data (000s) (000s) 307.8 156.1 175.7 172.7

317.5 265.4 253.8 276.0

Density pvte Density sector public sector 48% 21% 22% 12%

97% 59% 69% 63%

Source: Statistics New Zealand, Quarterly Employment Survey, various years and Thickett et al. (2003).

Ratio public/pvte 2.02 2.80 3.14 5.08

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In summary, the collapse in private sector collective bargaining under the Employment Relations Act is largely attributable to the removal of free-riding employees from the ‘formal’ collective bargaining system. Free-riding was considerably higher in the private sector than in the public sector. The distribution of collective bargaining coverage between the public and private sectors is now similar to what has been reported in union membership data for the past few years (see May et al. 2003). Furthermore, the public sector has fared much better than the private sector in achieving and maintaining multi-employer agreements. In the private sector, while many unions have sought to undertake multi-employer bargaining, they have found it hard to find someone to bargain with. The absence of registered employer unions that existed prior to the 1990s has placed a serious impediment in the path of unions seeking multi-employer bargaining. In contrast, an appropriate employers’ organisation frequently does exist in the public sector and, with the support of the Government acting in its role as an employer, does engage in multi-employer bargaining arrangements. Examples include the health sector, where nurses have successfully concluded multi-employer agreements with district health boards, and the pre-school education sector, where Schedule 5 of the Employment Relations Act has brought kindergartens back within the ambit of the State Sector Act – as primary and secondary teachers are – and this, in effect, provided the framework for the kindergarten teachers’ multi-employer agreement to take place. In addition, the number of people employed in the public sector has been increasing in recent years. This has had the direct effect of increasing the number of public sector employees covered by multi-employer agreements.

Wages A primary indicator of changing trends is the degree to which wages have changed. Perhaps surprisingly, the level of wage change has been relatively constant over recent years. Annualised wage change is currently at 2.5 per cent for the year to June 2003. In fact, annualised wage change has been at 2.4 per cent, plus or minus 0.3 per cent, since 1997. This suggests that, on the whole, the level of wage change in collective agreements has remained constant during the changeover to the Employment Relations Act. Nonetheless, trends in annualised wage change at the sector level show far more variation. Over the last four years, private sector annualised wage change has steadily increased from 1.8 per cent in June 2000 to 2.8 per cent this year, whilst at the same time annualised wage change in the core Government sector has slowly fallen from 2.9 per cent to 2.2 per cent. The increase in private sector annualised wage change over these four years may in part be attributable to short-

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glen thickett, pat walsh and raymond harbridge

ages of skilled employees. The Quarterly Survey of Business Opinion reports an increasing percentage of firms are facing difficulties in hiring skilled and unskilled staff and, further, that a net 16 per cent of firms cited labour as the factor most limiting their capacity to expand output (New Zealand Institute for Economic Research 2003). TABLE 3: WEIGHTED MEAN ANNUAL WAGE CHANGE 2000–2003 Private sector June 2000 June 2001 June 2002 June 2003

Core govt

1.8% 2.1% 2.8% 2.8%

All settlements

2.9% 2.9% 1.9% 2.2%

2.3% 2.6% 2.4% 2.5%

Source: Victoria University of Wellington’s collective bargaining database, published most recently as Thickett et al. (2003).

Figure 1 plots the average annualised wage increase against the annual movement in the Labour Cost Index’s measure of all salary and wage costs, and the annual change in the All Groups category of the Consumers Price Index measure. The graph shows that the trend in the annualised wage change data is confirmed and in the same direction as that reported in the official data of the Labour Cost Index. The data we report, essentially for the unionised sector of the labour market, is traditionally higher (by approximately half of one per cent) than the data reported across the whole economy in the Labour Cost Index. Interestingly, the Labour Cost Index and the annualised wage data are closer together over the last eighteen months than they were in the latter half of the 1990s. Statistics New Zealand has suggested that the recent appreciation of the Labour Cost Index can be attributed to a number of factors, including more people being employed, more hours worked and a greater proportion of employees in higher paid jobs (Dominion Post 2 October 2003). 5.0%

Inflation

4.0%

Annual Wage Change

3.0%

2.0%

Labour Cost Index

1.0%

-1.0%

FIGURE 1: LABOUR COST INDEX, ANNUAL WAGE CHANGE AND INFLATION 1993–2003

Jun-03

Dec-02

Mar-03

Jun-02

Sep-02

Mar-02

Jun-01

Sep-01

Dec-01

Dec-00

Mar-01

Jun-00

Sep-00

Mar-00

Jun-99

Sep-99

Dec-99

Dec-98

Mar-99

Jun-98

Sep-98

Mar-98

Jun-97

Sep-97

Dec-97

Mar-97

Jun-96

Sep-96

Dec-96

Mar-96

Jun-95

Sep-95

Dec-95

Mar-95

Jun-94

Sep-94

Dec-94

Mar-94

Dec-93

Jun-93

Sep-93

0.0%

collective bargaining under the employment relations act

47

Perhaps surprisingly, Figure 1 demonstrates that annualised wage change is not all that responsive to changes in the rate of inflation. The two notable peaks in inflation in June 1995 and December 2000 do not correspond with large increases in wage change. Likewise, the trough in the rate of inflation in 1999 does not correspond with a reduction in the rate of wage change. These data show that much of the media speculation about the likely response of wage rates to changes in the inflation rate is remarkably ill-informed.

Working time Much of the focus of bargaining in the first few years of the Employment Contracts Act was the removal of penal rates of pay for working what might be called unsocial hours. In the mid-1990s, overtime payments started to be removed from collective settlements. A key component in those removals was the issue of the existence or otherwise of clock hours in the settlement. For the most part, the Employment Relations Act has not seen any restoration of working conditions lost during the decade of the Employment Contracts Act. Central to the structure of working time arrangements are the number of hours to be worked in an ordinary week. Traditionally, the ordinary working week has been set at forty hours, with work in excess of the 40-hour threshold attracting an overtime premium. Data on the number of ordinary weekly hours show, notwithstanding assumptions to the contrary, the majority of employees on collective agreements are employed to work a 40-hour week. TABLE 4: ORDINARY WEEKLY HOURS OF WORK 1998–2003 Hours not stated June 1998 June 1999 June 2000 June 2001 June 2002 June 2003

15% 20% 20% 22% 21% 18%

Less than 40 hours 16% 16% 16% 15% 14% 16%

40 hours

More than 40 hours

Coverage (000s)

66% 61% 62% 61% 63% 63%

3% 3% 2% 2% 2% 3%

418.7 421.4 420.6 391.4 399.1 329.3

Source: Victoria University of Wellington’s collective bargaining database, published most recently as Thickett et al. (2003).

These results differ from the Household Labour Force Survey, which finds that 43.7 per cent of full-time employees work a 40-hour week, while 15.8 per cent work less, and 40.5 per cent work more than forty hours per week (adapted from Labour Market Statistics 2002, Table 7.05). Obviously the difference is attributable to a variation in working time arrangements in industries with a high degree of collective bargaining in comparison to the labour

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force as a whole, and that people may in fact work more hours than their employment agreement stipulates. Historically, the ordinary working week was undertaken between Monday and Friday. We have recorded the days of the week over which the ordinary hours are to be worked. Where the ordinary working week is not specifically defined in an employment settlement, we have assumed that ordinary hours are undertaken on any day of the Monday to Sunday week. The data show that the majority of employees in the sample are employed on settlements specifying that their work can ordinarily be undertaken on any day of the Monday to Sunday week. The proportion of employees who ordinarily work a Monday to Friday week has experienced little change since the late 1990s. TABLE 5: ORDINARY DAYS OF THE WEEK 1998–2003

June 1998 June 1999 June 2000 June 2001 June 2002 June 2003

Monday - Friday

Monday - Saturday

Monday - Sunday

Coverage (000s)

39% 39% 39% 38% 37% 39%

5% 7% 8% 6% 5% 4%

56% 54% 53% 56% 58% 57%

418.7 421.4 420.6 391.4 399.1 329.3

Source: Victoria University of Wellington’s collective bargaining database, published most recently as Thickett et al. (2003).

Prior to the Employment Contracts Act, most awards and agreements included standard premiums for overtime work. The trend in collective employment contracts has been to remove the eligibility for overtime rates. In June 1994 we found that 10 per cent of employees were on contracts which did not include overtime; by June 2003 that figure had risen to 35 per cent. The data in Table 6 show that employee entitlements to overtime payments continue to be whittled away; with the Employment Relations Act having very little impact on the long-term trend. TABLE 6: EXISTENCE OF OVERTIME PREMIUMS 1994–2003 No overtime premiums provided

Overtime premiums Provided

10% 15% 18% 24% 28% 29% 28% 30% 34% 35%

90% 85% 82% 76% 72% 71% 72% 70% 66% 65%

June 1994 June 1995 June 1996 June 1997 June 1998 June 1999 June 2000 June 2001 June 2002 June 2003 Source: Thickett et al. (2003).

Coverage (000s) 340.3 374.0 403.0 416.0 418.7 421.4 420.6 391.4 399.1 329.3

collective bargaining under the employment relations act

49

In Table 7, we report the trends in the removal of clock hours in the decade since 1994. Clock hours provisions set out the times of day within which ordinary hours are to be worked and are significant because they act as a trigger for the entitlement to receive, or obligation to pay, penal rates. While they are typically paid at the same rate, penal rates differ from overtime rates in the manner in which they are triggered. Overtime rates are paid once an employee works more than an agreed number of hours in any one day and/ or week, whereas penal rates are paid for all hours outside those established in the clock provision, independent of how many hours have already been worked in the day or week. It follows that, where clock hours provisions are not included, employers are under no obligation to pay penal rates, and thus the existence or otherwise of clock hours provisions is a useful indicator of the extent to which the employer has the flexibility to schedule work at irregular hours without financial penalty. The major period of activity in removing clock hours from settlements took place in the period 1994–98. Thereafter, the pattern has remained reasonably stable. In the twelve months to June 2003 the existence of clock hours provisions has increased by 7 per cent. This increase in clock hours may be attributable to the change in the composition of collective bargaining coverage or the beginning of a trend towards an improved entitlement. We will track this over the next few years. TABLE 7: EXISTENCE OF CLOCK HOURS 1994–2003

June 1994 June 1995 June 1996 June 1997 June 1998 June 1999 June 2000 June 2001 June 2002 June 2003

No clock hours

Clock hours specified

43% 42% 45% 49% 52% 51% 52% 55% 55% 52%

57% 58% 55% 51% 48% 49% 48% 45% 45% 48%

Coverage (000s) 339.2 374.0 403.0 416.0 418.7 421.4 420.6 391.4 399.1 329.3

Source: Thickett et al. (2003).

In summary, the scale and scope of working time provisions were one area that saw an immediate and continual decline after the Employment Contracts Act was introduced. In the almost three years of collective bargaining under the Employment Relations Act, both ordinary weekly hours of work and ordinary days of the week have remained largely unchanged. The existence of overtime premiums has continued to decline – although nearly two-thirds of employees in the sample are still entitled to overtime payments. However,

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glen thickett, pat walsh and raymond harbridge

clock hours provisions have increased by 7 per cent in the twelve months to June 2003.

Leave All employees have a statutory entitlement to annual leave, special leave, domestic leave and parental leave under a number of Acts of Parliament. Collective bargaining arrangements have traditionally improved on both the quantum of leave and the conditions under which these statutory minimum entitlements are available. The Holidays Act 1981 provides for an annual entitlement of three weeks’ paid leave after one year’s service. Traditionally, a fourth week’s leave has been available to most employees after a longer period of service with the same employer. Table 8 shows the trend over the past decade. TABLE 8: SERVICE FOR FOURTH WEEK’S ANNUAL LEAVE 1994–2003

June 1994 June 1995 June 1996 June 1997 June 1998 June 1999 June 2000 June 2001 June 2002 June 2003

No fourth week

After 1 year

After 2 to 4 years

After 5 years

After 6 years

After 7 or more years

5% 6% 7% 7% 7% 8% 7% 10% 10% 8%

10% 15% 16% 17% 18% 19% 20% 22% 23% 28%

4% 4% 4% 4% 4% 3% 4% 7% 5% 6%

11% 11% 13% 14% 16% 17% 16% 13% 17% 17%

39% 40% 38% 40% 36% 36% 36% 33% 31% 27%

30% 24% 22% 18% 18% 17% 17% 15% 14% 14%

Coverage (000s) 319.9 374.0 403.0 416.0 418.7 421.4 420.6 391.4 399.1 329.3

Source: Thickett et al. (2003).

The data confirm that typically a fourth week’s annual leave is available through the collective settlement and that the qualifying period of service for this has shortened over the last decade. In the year to June 1994, a mere 10 per cent of our sample of employees were entitled to a fourth week of annual leave after their first year of service. This proportion has steadily increased throughout the 1990s and early 2000s so that this year a total of 28 per cent of the employee sample now have this entitlement. The proportion of employees entitled to a fourth week of leave after six or more years has progressively decreased over the same period. Nevertheless, the majority of employees in the sample still have to accrue at least five years’ service before they are entitled to a fourth week of annual leave. However, this is set to change. The Government has stated that all employees will have a statutory entitlement to four weeks’ annual leave from 2007.

collective bargaining under the employment relations act

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The Holidays Act 2003 requires that employees who work on a statutory holiday be paid at a minimum of time and a half in addition to time off in lieu. This will affect approximately 23 per cent of employees in our sample. These employees generally receive ordinary time or time and a half for working on a statutory holiday, and their agreements are silent on the issue of a day off in lieu. Furthermore, employees who work on Anzac Day and Waitangi Day will be entitled to time off in lieu. At present, Anzac Day and Waitangi Day are often treated differently from the other nine statutory holidays and do not attract a day in lieu. This practice is no longer acceptable. Furthermore, the Act states that every employment agreement, whether collective or individual, must include a provision explaining how an employee will be paid if they work on a statutory holiday. Such a provision must be included at the earliest of twelve months from the enactment of the Act (1 April 2004) or the date on which the employee’s employment agreement is next amended. The data suggest that this is likely to affect 27 per cent of employees in our sample. The data for sick leave entitlements over the past decade is presented in Table 9. An entitlement to an unlimited number of days of sick leave increased during the latter 1990s, although this has now levelled off at 11 per cent of employees in our sample. Likewise, a general entitlement to sick leave has slowly increased with fewer employees being entitled to five days of sick leave and more employees being entitled to between six and nine days or ten days of leave. The traditional public service entitlement (forty-six days of leave after nine months and until five years of service) has declined in popularity as the expectation that an employee would be in the public service for their whole career seems anachronistic in the twenty-first century. TABLE 9: ANNUAL SICK LEAVE ENTITLEMENT 1994–2003

June 1994 June 1995 June 1996 June 1997 June 1998 June 1999 June 2000 June 2001 June 2002 June 2003

5 days

6–9 days

10 days

37% 36% 35% 36% 36% 32% 31% 30% 29% 25%

7% 11% 14% 16% 16% 18% 17% 17% 19% 18%

23% 21% 22% 22% 19% 20% 22% 20% 19% 22%

Source: Thickett et al. (2003).

More than 10 days 4% 5% 10% 8% 8% 9% 9% 9% 10% 11%

Public service

Discretionary

No limit

23% 18% 9% 8% 8% 7% 7% 8% 8% 9%

6% 5% 4% 4% 4% 4% 5% 3% 2% 2%

0% 1% 4% 4% 7% 8% 8% 11% 11% 11%

No sick leave 0% 3% 2% 2% 2% 2% 1% 2% 2% 2%

Coverage (000s) 340.0 374.0 103.0 416.0 418.7 421.4 420.6 391.4 399.1 329.3

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glen thickett, pat walsh and raymond harbridge

The Holidays Act also makes changes to special leave entitlements. Special leave is split into two distinct entitlements, one for sick and domestic leave, and the other for bereavement leave. This is likely to have little effect given that the terms of the Holidays Act 1981 were not widely taken on board in the first place. The new Act also proposes that sick leave (that is, the combination of sick and domestic leave) should be five days per year, accumulating to a maximum of fifteen days. Presently, 86 per cent of employees in our sample are employed on settlements that link domestic and sick leave entitlements. Currently, over half our sample are entitled to accumulate their sick leave beyond the fifteen days mandated by the new Act. Long service leave remains commonly provided for in collective settlements. Typically, long service leave is first available after ten or twenty years’ service, with additional holidays at similar intervals thereafter. Employees’ entitlements to long service leave have slowly eroded away over recent years. Notwithstanding the fact that 63 per cent of the employee sample have this entitlement, this has decreased by 4.5 per cent since June 2002 and 15 per cent since June 2000. Many contracts and agreements have been replacing long service leave with an early entitlement to a fourth week’s annual leave. This too, is possibly due to the fact that employees are no longer expected to spend their entire career with the same employer. TABLE 10: LONG SERVICE LEAVE 1994–2003

June 1994 June 1995 June 1996 June 1997 June 1998 June 1999 June 2000 June 2001 June 2002 June 2003

No entitlement provided

Entitlement provided

Grandparented entitlement

Coverage (000s)

18% 21% 23% 22% 23% 23% 23% 27% 28% 29%

82% 79% 77% 78% 77% 77% 74% 69% 66% 63%

.. .. .. .. .. .. 3% 4% 6% 8%

340.3 374.0 403.0 416.0 418.7 421.4 420.6 391.4 399.1 329.3

Source: Thickett et al. (2003).

Paid parental leave A further important development since the Employment Relations Act came into force was the introduction of paid parental leave in 2002. The Parental Leave and Employment Protection (Paid Parental Leave) Amendment Act builds on the Parental Leave and Employment Protection Act 1987, which

collective bargaining under the employment relations act

53

provided for unpaid parental leave. The new Act entitles all eligible parents of births due, and children born or adopted, to a statutory entitlement of up to $334.75 gross per week for a period not exceeding twelve weeks. The Industrial Relations Centre database shows that around three-quarters of employees on collective agreements have parental leave entitlements written into their agreements. Interestingly, where paid parental leave entitlements have been negotiated into an existing employment contract or agreement, these payments are not affected by the legislative entitlement. Section 71P of the 1987 Act, inserted by the 2002 Amendment, states that these payments remain operational until the parties to the agreement renegotiate them. Further, employers face a penalty if they respond to the introduction of statutory paid parental leave by unilaterally reducing entitlements already set out in an employment agreement. The database shows that 49 per cent of employees on collective agreements are entitled to payments in addition to the statutory entitlement. The most common arrangement is the provision of an ex-gratia payment of six weeks’ salary to be made to returning employees after they have accrued six months’ service. These clauses are particularly common in the core government sector, where parental leave payments had previously been negotiated into many employment contracts and agreements. Less common provisions include additional paid leave for the partner during the week of the birth or adoption and additional payments to the employee to top up the statutory payment to the employee’s normal salary or wage rate.

Employment relationship problems In contrast to its predecessor legislation, the Employment Relations Act contains no mandatory or recommended procedures for the resolution of disputes and personal grievances. However, it does require (at s 54(3)(a)(iii)) that collective agreements contain a ‘plain language explanation’ of the services available for the resolution of employment relationship problems. The lack of a provision comparable to the First and Second Schedules of the Employment Contracts Act initially led to a great deal of variation in the style of ‘employment relationship problems’ clauses in collective agreements as the parties developed their own procedures. Over time this variation has somewhat diminished. An examination of the ‘employment relationship problems’ clauses in collective agreements finds that many agreements take a very formal approach to these clauses and essentially replicate the Employment Contracts Act procedures. Other agreements tend to be extremely informal and emphasise the plain language requirement of the Act. By and large, most agreements

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contain a detailed set of provisions outlining the processes for the resolution of employment relationship problems in-house rather than simply stating the 90-day clause and relying on the Mediation Service and the Employment Relations Authority.

Redundancy The inclusion of redundancy provisions in settlements has been a major growth area since the mid 1990s. In June 1995, around the time of the Court of Appeal’s decision in Brighouse Limited v Bilderbeck, 22 per cent of our sample were on contracts that did not include redundancy provisions. Since that time, the proportion of employees covered by settlements that include a redundancy provision detailing both pay and notice has almost doubled to 72 per cent. In addition, the proportion of employees whose settlements do not containing any type of redundancy provision has collapsed from 22 per cent to 6 per cent of the sample. TABLE 11: REDUNDANCY PROVISIONS 1995–2003

June 1995 June 1996 June 1997 June 1998 June 1999 June 2000 June 2001 June 2002 June 2003

No provision

Notice only provision

Pay only provision

Pay & notice provision

Provision but no details

Stand alone agreement

Coverage (000s)

22% 13% 12% 11% 10% 9% 7% 7% 6%

15% 17% 14% 12% 10% 10% 8% 7% 3%

11% 10% 4% 5% 9% 10% 14% 13% 13%

38% 47% 59% 61% 66% 66% 68% 70% 72%

8% 9% 7% 7% 2% 2% 1% 1% 3%

5% 4% 4% 4% 3% 3% 2% 2% 3%

374.0 403.0 416.0 418.7 421.4 420.6 391.4 399.1 329.3

Source: Thickett et al. (2003).

Where redundancy provisions have been included in collective settlements, the most common quantum continues to be four weeks’ notice, six weeks’ compensation for the first year of service and two weeks’ compensation for each year of service thereafter. Fifty-three per cent of employees in the sample are entitled to four weeks’ notice in the event of redundancy. Sixty-five per cent of private sector employees are entitled to four weeks’ notice, compared to 43 per cent in the core government sector. Core government employees are more likely to be employed on settlements that are silent on notice, with 30 per cent of employees having this type of notice provision. The data are set out in Table 12 below.

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TABLE 12: REDUNDANCY NOTICE BY SECTOR AND INDUSTRY – JUNE 2003

4 weeks

5 to 8 weeks

More than 8 weeks

8%

53%

18%

11% 0% 79% 3% 24%

65% 43% 11% 74% 64%

19% 18% 0% 2% 5%

Under 4 weeks All settlements Private sector Govt core Govt – trading Local govt – core Local govt – trading

Coverage (000s)

Other

Silent

4%

1%

16%

289.9

1% 9% 4% 2% 0%

1% 0% 0% 0% 2%

3% 30% 6% 19% 5%

133.1 137.4 8.9 7.4 3.1

Source: Thickett et al. (2003).

The data in Table 13, which considers only those settlements with a detailed redundancy provision, are interesting in that they report an increase in employees’ entitlements to six weeks’ and between seven and ten weeks’ compensation for the first year of service. Over recent years, there has been a corresponding decrease in the proportion of employees whose settlements are silent on the amount of compensation for the first year of service in the event of redundancy. Further, the earlier trend of settlements specifically providing no payment in the event of a redundancy appears to be waning. The proportion of private sector employees entitled to between six and ten weeks’ compensation for the first year of service has increased notably in the twelve months to June 2003. We observe reductions in the percentage of private sector employees not entitled to redundancy payments and whose settlements are silent on redundancy payments of four and six percentage points respectively. This same private sector trend is apparent in redundancy payments for subsequent years of service and for limits on the maximum redundancy compensation available. TABLE 13: REDUNDANCY COMPENSATION FOR FIRST YEAR OF SERVICE 1996–2003

June 1996 June 1997 June 1998 June 1999 June 2000 June 2001 June 2002 June 2003

No payment

1 to 3 weeks

4 to 5 weeks

2% 2% 4% 5% 6% 8% 8% 5%

2% 3% 3% 3% 3% 3% 3% 3%

13% 14% 13% 12% 13% 14% 14% 13%

Source: Thickett et al. (2003).

6 weeks

7 to 10 weeks

More than 10 weeks

Other

Silent

Coverage (000s)

26% 29% 30% 27% 28% 30% 32% 36%

16% 17% 17% 18% 18% 24% 29% 34%

10% 9% 9% 9% 9% 5% 5% 4%

8% 8% 8% 14% 13% 7% 1% 2%

23% 18% 16% 12% 11% 9% 8% 3%

297.8 320.0 324.7 354.9 363.0 350.1 352.4 289.9

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Table 14 below reports the level of compensation for service after the first year. Commonly two weeks’ pay for subsequent years of service after the first year is provided. This represents an increase of four percentage points from the previous year. Again, there is a notable reduction in the proportion of private sector employees whose settlements are silent or contain no payment in the event of redundancy. TABLE 14: COMPENSATION FOR SUBSEQUENT YEARS OF SERVICE BY SECTOR – JUNE 2003 No payment All settlements Private sector Govt core Govt – trading Local govt – core Local govt – trading

1 week 2 weeks

3 to 4 weeks

More than 4 weeks

Other

Silent

Coverage (000s)

6%

2%

58%

7%

1%

23%

3%

289.9

11% 1% 0% 1% 9%

4% 1% 0% 2% 16%

55% 57% 94% 91% 54%

11% 4% 3% 0% 2%

1% 0% 0% 0% 0%

12% 37% 3% 4% 2%

6% 0% 0% 2% 17%

133.1 137.4 8.9 7.4 3.1

Source: Thickett et al. (2003).

What is most apparent from the redundancy data is that existing trends have been continuing despite the introduction of the Employment Relations Act. Following the Court of Appeal’s decision in Brighouse, the proportion of employees whose settlements contained redundancy provisions increased markedly. Since the late 1990s the quantum of pay and notice in those provisions has increased, and indeed has continued to increase.

Conclusion In the first three years of the Employment Contracts Act a significant realignment of wages and conditions of employment took place. It was not uncommon to observe overall changes of 5 per cent or more to conditions of employment in a given year. This has not been the case with the Employment Relations Act. Changes to collective bargaining outcomes have been less pronounced. Accordingly, it is more difficult to ascertain whether a change of 2 or 3 per cent is the beginning of a new trend or normal year-to-year variation. Overall, the Employment Relations Act has not brought about wholesale improvements to terms and conditions of employment. Wages, hours of work, overtime and penal rates are by and large unchanged over the twelve months to June 2003 – and indeed unchanged since the Act was introduced. Nevertheless, there have been some notable improvements to conditions of employment, largely pertaining to annual leave and redundancy entitlements.

collective bargaining under the employment relations act

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The Act has brought about a reduction in ‘visible’ free-riding, particularly in the private sector. Furthermore, we now observe that more public sector employees are covered by collective settlements than private sector employees – despite the fact that the private sector is around four times larger than the public sector. If this trend continues, public sector bargaining will be the mainstay of collective bargaining in New Zealand, with very large numbers of private sector employees disenfranchised outside the formal collective bargaining system. The key results indicate that, while union membership decline has been halted, growth in membership under the Act has been somewhat limited and has not matched pace with the growth in the workforce over the last twelve months. While the decline has been halted, density is essentially unchanged. The patterns and trends of terms and conditions of employment reached within collective settlements are unaltered under the new system. This raises a significant issue for public policy consideration. A central aim of the Employment Relations Act was to reinvigorate collective bargaining. Section 3(a)(iii) states that ‘promoting collective bargaining’ is an objective. However, the drive to reduce free-riding has reduced the number of workers officially covered by collective bargaining. Has the Government made bargaining too hard under the Employment Relations Act? Is the result reported what they intended? And what about the disenfranchised? The Employment Relations Law Reform Bill aims to overcome these issues through enhanced collective bargaining and good faith provisions. The first three years of the Employment Relations Act have not brought about changes that many expected. Will we see further changes now that the Act has become more familiar to the parties involved in collective bargaining? Will the trend towards public sector collective bargaining continue? Perhaps the current low unemployment rate and a shortage of skilled employees in some industries will lead to changes in bargaining outcomes. The picture may become clearer in the coming years.

references Dannin, E. 1997. Working Free: the origins and impact of New Zealand’s Employment Contracts Act. Auckland, Auckland University Press. Dominion Post. 2 October 2003. Gilson, C. and Wagar, T. 1998. ‘From Collective Bargaining to Collective Contracts: What is the New Zealand data telling us?’, New Zealand Journal of Industrial Relations, 23(3): 169–180. Harbridge, R. 1991. ‘Collective Bargaining Coverage in New Zealand: The Impact of the Employment Contracts Bill’, Australian Bulletin of Labour, 17(4): 310–324. Harbridge, R., and Wilkinson, D. 2000. ‘Free-riding: Trends in Collective Bargaining Coverage and Union Membership Levels in New Zealand’, paper presented to a National Key Centre for Industrial Relations Conference (Melbourne, Australia,

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12–14 July 2000). Independent. 27 April 2000: 17, 31 May 2000: 27. May, R., Walsh, P., Harbridge, R and Thickett, G. 2003. ‘Unions and Union Membership in New Zealand: Annual Review for 2002’, IRC Working Paper 1/03, Victoria University, Wellington. National Business Review. 1 September 2000: 39. New Zealand Council of Trade Unions. 2000. Submission on the Employment Relations Bill. Wellington, NZCTU. New Zealand Institute for Economic Research. 2003. Quarterly Survey of Business Opinion – October 2003. Wellington, New Zealand Institute for Economic Research. Rasmussen, E., McLaughlin, C. and Boxall, P. 2000. ‘A survey of employee experiences and attitudes in the New Zealand workplace’, New Zealand Journal of Industrial Relations, 25(1): 49–67. Statistics New Zealand. various years. Labour Market Statistics. Wellington, Statistics New Zealand. Statistics New Zealand. various years. Quarterly Employment Survey. Wellington, Statistics New Zealand. Thickett, Glen, Harbridge, Raymond, and Walsh Pat. 2003. ‘The Employment Relations Act and Collective Bargaining Patterns: A Review of the 2002/2003 Year’, paper presented to the Tenth Annual Employment Agreements: Bargaining Trends & Employment Law Update Seminars, (Hamilton, Auckland Dunedin, Christchurch and Wellington, July–August 2003). Wellington, Victoria University of Wellington, Industrial Relations Centre.

court decisions Brighouse Limited v Bilderbeck [1995] 1 NZLR, 158 (CA).

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The law moves in mysterious ways andrew caisley

Introduction In 1999 the Labour Government swept to power on the back of a ‘pledge card’ – five ‘promises’ printed in the form of a credit card. One of the five key promises was to abolish the Employment Contracts Act 1991 (the ECA) and usher in a new era in employment law – an era with a ‘more balanced’ approach to employment law, an era which ‘changed the focus of the employment relationship from one based on purely contractual principles to one where human relationships are at the forefront’. The prospect of a legal system governing employment based not on contract but instead on ‘human relationships’ was an interesting proposition to contemplate. It appeared that great changes were in store. Speculation about the nature and consequences of those changes about to be wrought on the legal system was rife and colourful. Supporters prophesied a new world of industrial harmony, and the Prime Minister promised that the new legislation would be ‘the answer to the prayers of all those who wanted fair and decent legislation’ (NZ Herald 9 August 2000). Detractors warned of confusion, endless litigation and impossible uncertainty. They variously predicted that we would be plunged back ten years, to the 1930s, to the nineteenth century and to the Jurassic Era (see NZ Herald 15 June 2000, Independent 2 August 2000, National Business Review 23 June 2000, NZ Herald 9 August 2000). No doubt the intrinsically political nature of any substantial change to employment law largely fuelled both the utopian optimism and the catastrophic pessimism. Now, some years on, a more sober assessment of the ‘new era’ under the Employment Relations Act (ERA) can be made. It seems that there have been both areas of significant change and also areas of significant continuity with the new legislation. Surprisingly, however, it seems that some of the areas of 59

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radical legislative change are of little consequence in practice, while some of the areas of greatest development and change are nowhere foreshadowed in the new legislation. A wry observer might conclude that ‘the law moves in mysterious ways’. This chapter looks at developments in personal grievance law. Given the promises of a new paradigm based not on contract but on relationships, one might have had a legitimate expectation that significant change would be felt in this area. Furthermore, the legislation appeared intent on ensuring such change occurred. ‘Good faith’ was introduced as a universal guiding principle and fundamental obligation. Reinstatement was given eponymous treatment – it was reinstated as the primary remedy. And the old institutions were swept away and replaced with a new Mediation Service, Employment Relations Authority and an Employment Court with a reduced role and jurisdiction. In fact, these changes have had little impact in practice. As will be discussed, ‘good faith’ has been treated by the courts as little more than convenient legislative shorthand to describe the existing body of common law relating to well-developed principles of fairness and reasonableness. Reinstatement has continued to be treated as a laudable principle, but has all too often been unworkable in practice. And the new institutions have applied the existing law to the same mixed reviews that the old institutions received – reviews that seem to be most stridently put forward by those with the least involvement. There have been, however, some significant ‘hot topics’ – areas where controversial trends and developments have been identified. Ironically, however, these do not arise from changes between the ECA and the ERA, and would have emerged regardless of the legislative change. The first trend, or alleged trend, is the shift in the test for the justifiability of a dismissal. The second trend is the reduction in awards of compensation to uneconomic levels, and the third is the growth in issues relating to stress and access to medical advice. This chapter first examines the three areas where significant legislative change has had minimal impact in practice. The paper then considers three significant issues that have arisen which are unrelated to the new legislation.

Good faith The Employment Relations Act introduced a new general obligation requiring parties to an employment relationship to deal with each other ‘in good faith’. No exhaustive definition of this obligation was given, but there was widespread anticipation that the new obligation would see developments in the law relating to fairness. Indeed, the day before the new Act became law the union movement hired a plane to fly a giant banner across central Auckland announcing ‘fairness at work starts tomorrow’ (NZ Herald 2 October

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2000: 1). The Prime Minister echoed this sentiment in Parliament, referring to the new Act as ushering in ‘a new era of fairness and decency for ordinary working people’ (Dominion 9 August 2000). The law relating to redundancy was one area where commentators expected the new obligations relating to good faith to have a significant impact. The first real opportunity to see whether this was true or not arrived when Coutts Cars Limited made one of its car groomers, Mr Baguley, redundant. He challenged the dismissal and the Employment Relations Authority applied existing legal principles to determine that the redundancy dismissal was justified. Mr Baguley appealed the decision to the Employment Court (Baguley v Coutts Cars Limited [2000] 2 ERNZ 409). The Employment Court appeared to share the expectation that the new good faith obligation would see a significant development in jurisprudence relating to personal grievances. The Court noted that: The passing of the Employment Relations Act 2000 is a proper and necessary occasion, at any rate for the Court, to revisit first principles and to determine how the law has been modified by the new legislation. The Employment Contracts Act 1991 has been repealed. A markedly different regime has been established in its place. It is therefore not satisfactory to make decisions in reliance on cases decided while the Employment Contracts Act 1991 was in force unless they state principles of general application as opposed to principles peculiarly arising out of the Employment Contracts Act 1991 (Baguley v Coutts Cars Limited [2000] 2 ERNZ 420).

The Court went on to say: Thus, the provisions of the [new] Act require a new approach to the question whether the particular employer acted as a fair and reasonable employer would. This is still a question of fact and degree in each case but it is informed and illuminated by Parliament’s declared intention to reform the nature of the employment relationship. The question of fact and degree as so informed involves a common sense assessment of the situation bearing in mind: (i) the employer’s business requirements; (ii) the employee’s right to relevant information; (iii) the employer’s ability to mitigate the blow to the employee; (iv) the nature of the employment relationship as one calling for good faiths (Baguley v Coutts Cars Limited [2000] 2 ERNZ 425).

The Court observed that as part of the process: [T]he employer needs to find out what will cause the greatest havoc to the employee in order to try to avoid it, what will injure him the least in order to try and achieve it,

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In the wake of the Employment Court decision, it seemed clear that the new good faith obligation was set to have a significant impact. In the area of redundancy at least, it seemed that the ‘new approach’ the Court was foreshadowing might impact on the test for substantive justification, consultation obligations, obligations in connection with redeployment and possibly even the obligation to pay redundancy compensation. It also seemed probable that the active and purposive approach that the Court seemed to be adopting to the good faith obligation in the area of redundancy might be carried over into ordinary dismissals. If this were to occur, it seemed that there might be significant developments in the area of personal grievance law arising from the introduction of the new good faith obligation. Given the triumphant announcements made by the Government at the time the new Act was passed about a ‘new era of fairness and decency’, one can surmise that they may have been pleased to see the Employment Court rising to the challenge and foreshadowing its intention to feed and nurture the infant good faith obligation. Coutts Cars Limited appealed the Employment Court decision to the Court of Appeal (Coutts Cars Limited v Baguley [2001] 1 ERNZ 660). In that forum, the new good faith obligation received significantly different treatment. The revolutionary talk of ‘new eras’, ‘markedly different regimes’ and ‘revisiting first principles’ did not cut much ice in the rarefied atmosphere of the Court of Appeal. Indeed, the Court could hardly have been more dismissive of the new good faith obligation. They held: We do not see that the new statutory obligation on employers and employees to deal with each other in good faith introduces any significant different obligation to that of the Courts placed upon parties to employment contracts over recent years. Undoubtedly the duty to deal in good faith will have impact in additional areas such as negotiations and collective environments, but in the area with which we are presently concerned we consider the law already required observance of good faith (Coutts Cars Limited v Baguley [2001] 1 ERNZ 672).

In contrast to the revolutionary excitement of both the Government and the Employment Court, the Court of Appeal’s view was not even evolutionary – it was stationary. At least in the context of personal grievances, the new good faith provision was simply a statutory reinstatement of existing common laws. Having looked so promising at lower altitude, the new good faith obligation shared Icarus’s fate when it rose higher. Like Daedalus, the government

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watched the fall with dismay. Indeed, the Minister of Labour has expressly criticised the courts for failing to understand the full intentions of the Act, and specifically for failing to understand that ‘good faith’ was intended to signal an obligation broader than the existing trust and confidence one. It may transpire however, that the fall was not fatal. The Government has not limited its response to mere criticism. Instead, it has had the opportunity to rebuild and relaunch the obligation in the hope that it may fare better with some more explicit and substantial wording to protect it. The relaunch of the obligation came in the form of the Employment Relations Law Reform Bill, introduced to Parliament on 4 December 2003. In what appears to be a direct attempt to ensure that the good faith obligation is better able to withstand the withering glare of the Court of Appeal, the Law Reform Bill proposes amending the good faith provision of the Employment Relations Act 2000 so that it specifically says that the duty of good faith ‘is wider in scope than the implied mutual obligations of trust and confidence’ (Employment Relations Law Reform Bill, clause 6). The proposed amendment also includes a statement that the duty of good faith ‘requires the parties to an employment relationship to be active and constructive in establishing and maintaining a productive employment relationship in which the parties are, among other things, responsive, communicative, and supportive’ (Employment Relations Law Reform Bill, clause 6). Although the general sentiment behind these proposed amendments is easy to understand, it is substantially less clear what the changes mean in practice. One can imagine a hypothetical general manager who considers that her business can be run more effectively and efficiently without a particular position. It is well-established law that she owes a duty to the company and its shareholders to run the business properly and efficiently. This duty may oblige her, in the circumstances, to disestablish the position and to terminate the employee’s employment. However, she would be under a simultaneous obligation to ‘be active and constructive in . . . maintaining a productive employment relationship in which the parties are, among other things, . . . supportive’, which could seem to contradict her duty to run the business efficiently. The explanatory notes gives no indication of how these apparently contradictory duties might be reconciled, nor any indication of which duty might take priority. One can also imagine a number of other situations where an express statutory duty to ‘maintain a productive employment relationship’ which is, among other things, ‘supportive’ could have a profoundly significant impact on the rights and obligations of employers, at least as they are presently understood. One can have some sympathy for the judiciary at all levels if they are ever required to apply this expanded definition to specific fact situations.

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Reinstatement Another area of significant change in the legislation related to reinstatement. Under the Labour Relations Act 1987, reinstatement had been the primary remedy for unjustified dismissal. The Employment Contracts Act 1991 removed the primacy of this remedy and simply made it one of the remedies available, neither ahead nor behind the other remedies which the Tribunal might grant. The Chief Judge of the Employment Court expressed dissatisfaction with what he saw as a trend against reinstatement. In Ashton v The Shoreline Hotel ([1994] 1 ERNZ 421), he observed: ‘It does not escape me that the remedy of reinstatement in the Employment Tribunal has become something of an endangered species’ ([1994] 1 ERNZ 436). He went on to observe that statistics taken as at the end of 1993 ‘showed that reinstatements down to that time had been ordered by the Tribunal in only 11 out of some 250 successful cases of personal grievance’ ([1994] 1 ERNZ 436). The Chief Judge has expressed the view that an employee’s job is regarded by most employees as their second largest asset after their home (Goddard 2003). With some persuasive force he has argued that the best remedy for having one’s job unjustifiably removed is to have the job back again. The payment of the monetary sum in compensation is at best a secondary remedy, since money cannot adequately compensate for the non-monetary benefits associated with a job, including status and job satisfaction. Furthermore, it effectively creates a system for ‘licensing’ unjustified dismissals (see, for example, comments in Ashton v The Shoreline Hotel [1994] 1 ERNZ 421 and 436). No doubt in recognition of this, the government conferred a special status on reinstatement as a remedy. Pursuant to section 125 of the Act, reinstatement is the primary remedy, to be granted ‘wherever practicable’. Furthermore, under section 126, reinstatement is to take effect immediately regardless of whether an appeal has been filed, unless otherwise ordered. Additionally, the Authority was given power to order interim reinstatement. The select committee stated: ‘This provision is intended to allow the Authority to make an order for interim reinstatement at any stage during the problem resolution process, and it should not be necessary that the problem is already referred to the Authority. In fact the sooner reinstatement can be considered, the better.’ The Authority appeared quick to embrace the new importance of reinstatement. In Keating v NZ Bloodstock Limited ((unreported), AA 4/00 19 December 2000), the applicant had been summarily dismissed for disclosing confidential information about the company to a personal acquaintance. However, the employer’s information was not put to the applicant before the decision was taken to terminate his employment for serious misconduct. The Authority observed:

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The object of the Employment Relations Authority is to build productive employment relationships . . . the building of productive relationships was facilitated in appropriate circumstances by the granting of reinstatement of injunctions rather than by continuing a rupture of the employment relationship. The change in the legislation requires the Authority to accommodate reinstatement as an interim remedy wherever possible having due regard to the established law.

The Authority granted Mr Keating’s application for interim reinstatement. The second case to come before the new Authority at Auckland also raised the issue of reinstatement (Williams v Alfred Holt & Co Limited (unreported) AA 2/00). The Authority considered the meaning of ‘wherever practicable’ – the new test for the award of reinstatement. The Authority considered that Labour Court judgments under the Labour Relations Act 1987 would be relevant, since reinstatement was also a primary remedy under that statute. Reinstatement was also a central issue in the third case to come before the Auckland Authority, Fesolai v Air New Zealand Limited ((unreported) AA 3/00). However, in this case a note of caution was sounded regarding the likelihood of reinstatement being granted. Mr Fesolai was an Air New Zealand employee who wanted to send a packet of herbal medicine to the United States to assist a relative. Through his employment he had access to passenger lists, and he contacted a passenger and asked her to carry the package to the States for him. There was no suggestion that the herbal medicine contained in the package was illegal, but the passenger complained to Air New Zealand. Mr Fesolai was dismissed for serious misconduct and made an application for reinstatement. The Authority held that Mr Fesolai’s conduct was sufficiently serious to justify dismissal and that the company had taken sufficient account of his length of service and was entitled to dismiss him. The Authority went on to comment that even if there had been a finding of unjustified dismissal Mr Fesolai would not necessarily been reinstated. The Authority would have considered the degree of fault and contribution by Mr Fesolai. Where there is contributory behaviour by an employee, reinstatement may not be appropriate in the circumstances. With three of the first four cases in the Auckland Authority concerning reinstatement, it might have been anticipated that the Act was going ‘to recognise the importance of reinstatement as a remedy’ (Employment Relations Act 2000, section 101(c)) in a very meaningful way. In fact, after an early flurry of excitement, interest appears to have evaporated and reinstatement resumed its old position on the endangered species list. In day-to-day practice it is not a remedy that is frequently claimed by employees. Perhaps this is in part because of the corrosive effect a dismissal has on the relationship between the parties. It may also be a partial reflection of

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the relatively low levels of unemployment which have existed in recent years and which may make it easier for a dismissed employee to find alternative employment. A review of 624 determinations issued by the Authority in the first eighteen months of its existence revealed that reinstatement had been ordered on only thirteen occasions (NZJIR 27(3): 341). Ironically, this would suggest that reinstatement is now being ordered less often than in the early years of the Employment Contracts Act when the Chief Judge was complaining that it had become endangered as a remedy. It appears that the legislative cure has completely failed to address the perceived problem.

The new institutions A further area where radical change might have been expected was in the area of institutions. The Employment Tribunal was abolished, and replaced with the Mediation Service and the Employment Relations Authority. The Authority in particular was intended to be a fundamentally different creature, running on an inquisitorial model, rather than the traditional common law trial model used by the Tribunal. Given the high success rate which mediations conducted in the Tribunal had – the success rate was estimated to be in excess of 80 per cent (Hodge 2000) – and the absence of any real criticism of the Tribunal’s operation and performance (with the possible exception of delays in some regions – which was merely a resource issue), it was somewhat surprising that the Tribunal was abolished. Furthermore, the Government’s objectives in making such a radical change, abandoning the traditional trial process in favour of an inquisitorial model, were not readily apparent. Nevertheless, it is clear that great change was intended. In fact, the new institutions appear to have made little substantive difference (Beck and McAndrew 2000). • The new Mediation Service also has a high success rate. This is not significantly different to the success rate in excess of 80 per cent enjoyed by the Tribunal. • The regional spread of cases heard by the Tribunal and Authority is virtually identical. Fifty-seven per cent of determinations are from Auckland, 23 per cent from Wellington and 20 per cent from Christchurch. • The nature of the cases heard is still overwhelmingly focused on personal grievance claims of unjustified dismissal. This type of claim comprised 42 per cent of the Tribunal workload and an identical percentage of the Authority workload.

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• Perhaps more interestingly, the rate of grievant success has remained almost identical. Fifty-seven per cent of employees bringing grievance claims in the Tribunal were successful. This is almost identical to the 58 per cent employee success rate for claims in the Authority. Perhaps contrary to the Government’s intentions, claims by blue collar workers comprise a smaller percentage of the Authority’s overall workload. Around 30 per cent of claims in the Tribunal were brought by blue collar workers, whereas in the Authority only 23 per cent of the claims were from this group. Correspondingly, there has been an increase in the percentage of claims brought by managers, professionals and white collar workers. This group accounted for 47 per cent of the Tribunal’s workload, but has increased significantly to 60 per cent of the Authority’s workload. Given the general thrust of the legislation, it seems unlikely that the Government intended to change the institutions and make them more accessible to managers and professionals and less accessible to blue collar workers. Nevertheless, this appears to be the outcome (Beck and McAndrew 2000: 216). Another interesting feature of the new Authority is that involvement by lawyers appears largely unchanged. Fifty-nine per cent of grievants and 53 per cent of respondents were represented by lawyers in the Tribunal. The figures for the Authority are largely unchanged at 57 per cent and 50 per cent respectively (Beck and McAndrew 2000: 218). Overall, given the fundamentally different model for the new Employment Relations Authority, it is remarkable how little has changed in practice. The three most significant legislative changes in the area of personal grievance law have had almost no practical consequence. That is not to say that there have been no new trends or developments in personal grievance law – it is just that law and practice seem to have developed despite the legislation, rather than because of it. Just as the three biggest areas of legislative change produced little change in practice, the three most notable changes in practice are nowhere foreshadowed in the Employment Relations Act. We turn now to consider the three most notable trends in personal grievance law and practice over the last three years.

The test for justification Perhaps the most discussed new trend in the Employment Relations Act era is the alleged shift of the test for justification in favour of the employer. Gordon Anderson, Paul Roth and others have argued that there has been a progressive shift away from an objective test for justification, to a subjective test and inherent employer bias. This trend is said to be most clearly discernible in the

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Court of Appeal’s decision in W&H Newspapers v Oram ([2000] 2 ERNZ 448). The Government appears to have accepted the view that there has been an undesirable trend in the employer’s favour during the first three years of the Employment Relations Act and is now proposing to remedy this by further legislative intervention. The notoriety gained by the W&H Newspapers v Oram decision during the Employment Relations Act era is somewhat intriguing. The case had its genesis in a perfectly unexceptional set of facts. A long-serving employee made a mistake, or a series of mistakes, in circumstances that had significant repercussions. It was common ground that the employee had been careless and/or negligent. It was also common ground that the employee had not been deliberate or malicious. It was also accepted that the mistake or mistakes were serious and there was no dispute that the employer was entitled to take at least some form of disciplinary action. The employer followed a fair and reasonable process (which was not successfully challenged in any of the three Court hearings) and ultimately decided to dismiss the employee. In many respects it was a situation commonly faced by employers where disciplinary action is warranted and the choice between dismissal and a final warning is a difficult one. As is now well known, the employer on this particular occasion opted for dismissal. When the Court of Appeal considered the matter, it applied existing and well-known principles to the particular fact situation. Those legal principles were: • In considering whether a decision to dismiss was justified, it is the employer’s conduct which is in question. • The employer must establish that it followed a fair and reasonable process. • The employer must show that it had a fair and proper reason for taking the decision which it took. • The decision must be one which was open to a fair and reasonable employer. • The Court may not substitute its own judgment for the employer’s; that is, the Court must not decide what it would have done in the circumstances, but instead whether the decision taken by the employer was one that was justified. To a practising employment lawyer, these principles might seem unexceptional, and entirely consistent with prior case law. Nevertheless, the decision has been heralded as final confirmation of a proemployer shift in the law (for example, Roth 2001). It is argued that the Court

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of Appeal measured the employer’s actions by an employer’s standard of what a fair and reasonable employer could do. In adopting this approach the Court of Appeal is argued to have applied a subjective employer’s view of the law, rather than an objective view. It is also argued that the concept of ‘fairness’ has been limited to considerations of the procedure adopted and that there is virtually no consideration of the substantive fairness of the employer’s decision. Whether these critiques of the judgment are valid or not is an interesting discussion in its own right. For present purposes however, the more interesting point is that the Government appears to have accepted that the critique is correct and further accepted that legislative intervention is now required to correct the trend. The Employment Relations Law Reform Bill includes a new proposed test for the question of whether a dismissal or other action was justifiable. The explanatory notes to the legislation expressly record that the new provision is targeted at the W&H Newspapers v Oram decision. It is noted that it is unfair and unreasonable to determine the justifiability of a dismissal on the basis of the subjective judgment of the employer. It is also expressly noted that to constrain employment institutions from substituting their own judgment for that of the employer is to undermine the very function of the employment institutions. To deal with the perceived pro-employer trend, the Bill introduces a new test for justification which specifies that the matter is to be determined ‘on an objective basis, by considering whether the employer’s actions, and how the employee acted, was fair and reasonable to both parties’. Furthermore, an employer must have ‘considered and balanced the legitimate interests of the employee and the employer’. The effect that the proposed changes will have is difficult to predict. Since the Industrial Conciliation and Arbitration Act 1973, dismissal law has been based on the concept of justifiability and the statutes have used the simple phrase ‘unjustified dismissal’. Under the proposed amendment, it appears that the Court will now determine whether or not the dismissal was unjustified, not by directly considering the issue of ‘justifiability’ but instead by considering two proxy issues, namely ‘fairness’ and ‘reasonableness’. The words ‘justifiable’, ‘fair’ and ‘reasonable’ are not exact synonyms for each other and watching the courts attempt to develop the substantive meaning of one word, by testing it against two other different standards, each of which is vague and uncertain in its own right, promises to be fascinating. To add to the interesting spectacle, the Court is then required to consider whether the employer ‘considered and balanced the legitimate interests of the employee and the employer’ (Employment Relations Law Reform Bill). No

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guidance is given about what constitutes a ‘legitimate interest’ or how they might be ‘balanced’. The Government’s stated intention is to ‘resolve uncertainties’ arising from the W&H Newspapers v Oram decision. Whether it will be successful remains to be seen.

Level of remedies A second noticeable trend that has been identified by many, but perhaps most significantly by the Chief Judge of the Employment Court, is a trend towards a reduction in the levels of compensation awarded to successful grievants. In the early years of the Employment Contracts Act when Telecom unjustifiably dismissed one of its general managers, it was ordered to pay him close to $400,000 (Trotter v Telecom Corp of NZ Limited [1993] 2 ERNZ 659). Not long afterwards, in a case that the Chief Judge describes as ‘not untypical’, an applicant recovered a year’s loss of salary of $96,000 and compensation of $55,000 for an unjustified dismissal (Robertson v Candy Number 1 Limited & Alexander and Alexander Limited (unreported), WEC 43/96). By comparison, the Chief Judge points to a range of Tribunal and Authority cases decided after the introduction of the Employment Relations Act in which successful applicants are awarded sums in the region of $1–$2,000. For example, in Hadfield (Hadfield v Green Rebel Limited (unreported) AT 122/ 02) a school leaver was unjustifiably dismissed from his first job, on his second day. The employer told him he was useless and that he should go home, in language that was foul and abusive and ‘would have struck to the heart of any recipient’. One of the consequences for the employee was that he was put on a confidence-building course by WINZ. The employee was awarded $1,500. That case is but one of almost two dozen which the Chief Judge lists to illustrate his concern that personal grievance rights have been eroded and that there has emerged a pattern of ‘extremely low awards which must leave very little over for the employee after paying costs’ (Goddard 2003). The reason for this trend is not entirely clear. It is not in any way attributable to the Employment Relations Act – there is no substantive difference between the ECA and the ERA in connection with monetary compensation for grievance claims. Furthermore, the pattern of low awards is equally discernible in judgments issued by the Tribunal at the end of its era, and by the new Authority. It may be that the trend is partly explicable as a reflection of the growth in employment opportunities. In periods of comparatively high employment it probably takes the employees less time to secure alternative employment, and as a result levels of compensation must necessarily be comparatively lower.

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However, it is not just in the area of compensation for direct economic loss that there is concern. In his judgment in New Zealand Fasteners Ltd v Thwaites ([2000] 2 NZLR 565), Thomas J noted: Yet, compensation for non-monetary injury has anything but generous. It cannot, in my view, be fairly said that the remedy which Parliament has seen fit to provide is effective. Having regard to the costs and expenses of litigation the right to compensation for humiliation, loss of dignity and injured feelings has become an empty right.

In his view, the reason for the trend was clear. Thomas J. said, ‘I am unable to hold the Employment Court responsible for the inadequacy of compensation . . . . That Court has been bound by the awards made or approved by this Court, and this Court has frequently reiterated that such damages are to be restrained.’ Of course, it is difficult for the Government to change the level of damages being awarded, since the award in any particular case must remain at the discretion of the Court and there would be a number of difficulties with any general statutory guidance or tariff regime. Nevertheless, it is ironic that a Government which is clearly committed to ensuring that workers can protect their rights has presided over an era when the level of remedies being awarded has resulted in there being real questions concerning the effectiveness of the law.

Health, stress and medical advice The third noticeable trend over the past three or four years has been the increasing prevalence and importance of issues relating to health – and particularly psychological health. The risks for an employer of allowing to exist a working environment that causes stress or other psychological harm to employees were graphically demonstrated in an extraordinary series of judgments issued in the year the Employment Relations Act was introduced. More than a century after W. S. Gilbert observed that a policeman’s lot is not a happy one, a different Gilbert, working in the Probation Service, received significant compensation for it (Gilbert v Attorney-General [2000] 1 ERNZ 332). Mr Gilbert had been a probation officer who spent many years dealing with sex offenders and violent criminals. He was heavily and consistently overworked by a Probation Service that budgeted on the basis of having a 12– 15 per cent staff shortage, delayed filing vacancies for three to six months and compelled existing staff to take on additional burdens rather than appointing

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temporary staff. Mr Gilbert regularly expressed concerns over a prolonged period, but to no avail. The prolonged stress and pressure began to tell heavily on Mr Gilbert’s health. He suffered a series of heart conditions that resulted in periods of hospitalisation and heart surgery. He also suffered other physical and psychological harm that resulted in repeated periods of absence due to ill health. Following one period of sick leave Mr Gilbert asked about transferring to a different office but was rebuffed and told that there was no room for anyone not fully committed to the system. During another period of sick leave Mr Gilbert was advised that he should immediately retire if his condition was not to worsen dramatically and irreversibly. He returned from sick leave and explained his situation to his manager, who was unsympathetic and said that the department could not afford to carry anyone. Mr Gilbert was also denied the opportunity to take sick leave due to faulty record keeping by the department. In the face of this, Mr Gilbert tendered his resignation and brought a claim for constructive dismissal. The Employment Court found that the Probation Service breached express contractual terms relating to the ‘good employer’ obligation. It also found the employer to have breached implied terms relating to the provision of a safe system of work and a safe work environment. The Court awarded Mr Gilbert fourteen years’ salary to compensate him for lost remuneration. It had insufficient actuarial evidence to place a precise figure on his lost earnings, but noted that he earned approximately $40,000 a year and invited the parties to reach agreement on the figure. Even at a salary of $40,000, a 14-year period amounts to a total sum of $560,000. The Court also awarded him $75,000 for humiliation and distress, $50,000 for loss of career and employment prospects and $50,000 exemplary damages since the employer’s breaches were ‘repeated, serious and continued over several years’ (Gilbert v Attorney-General [2000] 1 ERNZ 395). The case was subsequently appealed to the Court of Appeal (Attorney-General v Gilbert [2002] 1 ERNZ 31), where the Employment Court decision was substantially upheld, although some modification to the damages awards was made. In the same month that the Employment Court released its judgment in the Gilbert case, the High Court released its decision in the case of Brickell v Attorney-General ([2000] 1 ERNZ 529). Mr Brickell was a police video producer for the New Zealand Police. During his employment he filmed and edited a considerable amount of horrific material. He alleged that exposure to this material and to undue stress resulted in a disabling post-traumatic stress disorder. He alleged that his employer should have put in place a system to reduce his exposure to horrific material, provided counselling and provided therapy.

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In the police’s defence, issues emerged relating to the plaintiff’s voluntary activities during which he chose to expose himself to horrific material unnecessarily, the extent to which other factors – including stress in his own personal life – contributed to his breakdown and the extent to which he complained or advised the employer of problems. The Court found that the employer was liable in negligence and that a breach of statutory duty was established. The police did fail to provide a reasonably safe system of work, and Mr Brickell was awarded almost $300,000 as compensation for loss of earnings, together with general damages for pain and suffering and loss of amenity of $75,000. Interestingly, there was a 35 per cent reduction for contributory conduct. Later in that same year, the High Court released a further decision concerning overworked policemen. In Benge and Hallinan v Attorney-General ([2000] 2 ERNZ 234), the High Court considered the cases of two overworked rural constables, one based at Otaki and the other at Lincoln. Mr Benge sustained an injury while making an arrest on what should have been a day off. Staffing shortages caused him to be working that day. They also meant that he was not given a full and proper opportunity to recover and, in particular, was not assigned exclusively to ‘light desk duties’ as he should have been. The police took the view that they would not provide ‘sheltered positions’ for their wounded and that it was policy to allocate ‘desk jobs’ to civilians. As a result, the police compulsorily retired him. The Court found that Mr Benge’s termination was not fairly effected and that he was entitled to damages for loss of earnings of over $50,000, together with damages for pain and suffering of $10,000. Mr Hallinan was an overworked police officer who could not escape the job, since he lived in a police house next door to the station and he was the sole resident officer. As a result of excessive work, he suffered a major depressive illness and was forced to ‘voluntarily disengage’ on grounds of medical unfitness. The Court again found the employer in breach of its obligations to provide a safe place of work and awarded compensation of approximately $340,000 for loss of earnings, together with $70,000 for pain and suffering. Matters did not improve for the police the following year. In Cartwright v Attorney-General ([2001] 1 ERNZ 255), the Employment Court awarded $250,000 to the former sergeant in charge at Whangamata. Mr Cartwright reported to Senior Sergeant Miller. Mr Miller formed a negative view of Mr Cartwright and adopted an aggressively confrontational style in managing him. Mr Cartwright was diagnosed with clinical depression and was off work for three and a half months. Upon returning he was subject to a performance review that ranked him in the lowest 2 per cent of the police officers in New Zealand. Mr Miller’s motive in marking Mr Cartwright so low was to ‘turn up

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the heat’. In fact, the kitchen became so hot that Mr Cartwright immediately went on sick leave and never returned to work. He was compulsorily disengaged and received his superannuation entitlements under the PERF scheme. In little over twelve months, the police and the Probation Service had between them convincingly established that employers could be liable to former staff members for stress in circumstances created by overwork (Gilbert), extremely unpleasant duties (Brickell), short staffing (Hallinan) and poor management (Cartwright). Furthermore, the police and the Probation Service demonstrated that causing psychological harm to employees could have a very significant impact on future earnings and result in substantial damages awards in terms of both absolute numbers and also number of years of compensation. These cases brought workplace stress to the attention of both Parliament and employment lawyers. Parliament responded by amending the Health and Safety in Employment Act to specifically include work-related stress as a ‘harm’ and ‘hazard’. The amendments came into force on 5 May 2003. However, there has yet to be a prosecution under the new provisions of the statute. Employment lawyers responded by taking a far greater interest in matters relating to stress. On a purely anecdotal level, there has been a noticeable increase in the number of employees taking special leave and producing medical certificates which indicate that the employee was unfit for work because of workplace stress. It is also increasingly common for this workplace stress to manifest itself at particularly inopportune times during partially completed performance management or disciplinary processes. As a result, the meaning and validity of such medical certificates is becoming a real focus of attention. As part of this increasing interest in, and concern about, workplace stress, employers are also exploring their rights to request medical information from employees. This was graphically demonstrated in the case of Radio New Zealand Limited v Snowdon ((unreported), Employment Court, Wellington, 17 July 2003). Ms Snowdon was a senior manager who had been employed by Radio New Zealand since 1994. Differences arose between her and Ms Crosby, the chief executives towards the end of 2002, relating in part to a performance assessment and in part to a disclosure Ms Snowden had made to the Radio New Zealand Board. Ms Snowdon took an extended period of sick leave and refused to provide substantive details about the nature of her incapacity. After some four months she advised that she was able to return to work. Radio New Zealand refused to allow her to do so until they had medical information confirming that she was fit to do so. The Employment Court confirmed that an employer may only require an employee to submit to an independent medical examination if the relevant

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employment agreement provides for this. However, the Court also found that an employee may be under a good faith obligation to provide information to an employer and that an employer may be justified in refusing to allow an employee back to work on the basis of insufficient medical information. In light of the significant damages awards made in favour of Gilbert, Brickell, Benge, Hallinan and Cartwright, it is easy to understand why employers such as Radio New Zealand are taking a much greater interest in issues relating to stress. It can confidently be expected that this area of the law will be the subject of ongoing litigation as employers try to manage the exposure that these cases have highlighted.

Conclusion As any student of public policy knows, the task of legislators is significantly complicated by the law of unintended consequences – that is, the tendency of actions by governments to have perverse, unanticipated and unintended outcomes. The bold attempt to radically reform employment law and introduce a new era where ‘human relationships are at the forefront’ appears to have fallen victim to this axiom of policy making. Certainly, the Government cannot have foreseen or intended that the new good faith obligation would be treated as a mere codification of established common law. Nor can it have predicted that its attempt to re-establish reinstatement as the primary remedy in personal grievance claims would result in there being no discernible change in the frequency with which reinstatement is ordered. Finally, it must have been hoping for substantial change by abolishing the old institutions and establishing new and, in the case of the Employment Relations Authority, fundamentally different institutions in their place. It must be with dismay that it now reads the statistics which suggest that it is business as usual on the personal grievance battle front. This sense of dismay can only be exacerbated by the trend for awards of compensation to remain at levels so low that members of both the Employment Court and the Court of Appeal have cause to question the effectiveness of remedies in the employment jurisdiction and question whether the right to compensation for distress, at least, is now an ‘empty right’. The one exception to this trend has been in the area of claims for stress, where very substantial awards have been made. Of course, this new development has happened entirely independently of anything in the Employment Relations Act. The Government seems to have largely accepted that its first round of change did not generate the outcomes it was seeking. It has now embarked on a further attempt to generate change. There can be no doubt that the new defi-

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nition of good faith and the proposed new test for justification have the potential to significantly impact on the law. However, the astute student of public policy might wonder whether, to what extent, the proposed changes will be remembered for their intended, or for their unintended, consequences. Both the proposed legislative changes are broad and abstract. There is little or no guidance provided within the proposed legislation on how its general principles might be realised and applied in specific situations. It appears that it will again be left to the courts to provide the substance of the change and, as has already been seen, this can result in the law moving in mysterious ways.

references Beck, K. and McAndrew, I. 2000. ‘Decisions and damages: an analysis of adjudication outcomes.’ Speech to the Employment Law Conference, 23–24 November 2000. Dominion. 9 August 2000. Goddard, T.G. 2003. ‘A Right Without a Remedy’. Speech to the Employment Law Institute, May 2003. Hodge, B. 2000. ‘The institutions under the ERA 2000.’ Speech to the Employment Law Conference, 23–24 November 2000. Independent. 2 August 2000. National Business Review. 23 June 2000. New Zealand Herald. 15 June 2000, 9 August 2000, 2 October 2000. Roth, P. 2001. ‘The Poverty of Fairness in Employment Law’. Employment Law Bulletin, 5: 85–6.

court decisions Ashton v The Shoreline Hotel [1994] 1 ERNZ 421. Attorney-General v Gilbert [2002] 1 ERNZ 31. Baguley v Coutts Cars Limited [2000] 2 ERNZ 409. Benge and Hallinan v Attorney-General [2000] 2 ERNZ 234. Brickell v Attorney-General [2000] 2 ERNZ 529. Cartwright v Attorney-General [2001] 1 ERNZ 255. Coutts Cars Limited v Baguley [2001] 1 ERNZ 660. Fesolai v Air New Zealand Limited (unreported), AA 3/00. Gilbert v Attorney-General [2000] 1 ERNZ 332. Hadfield v Green Rebel Limited (unreported) AT 122/02. Keating v NZ Bloodstock Limited (unreported), AA 4/00 19 December 2000. New Zealand Fasteners v Thwaites [2000] 2 NZLR 565. Radio New Zealand Limited v Snowdon (unreported), Employment Court, Wellington, 17 July 2003. Robertson v Candy Number 1 Limited & Alexander and Alexander Limited (unreported), WEC 43/96. Trotter v Telecom Corp of NZ Limited [1993] 2 ERNZ 659. W&H Newspapers v Oram [2000] 2 ERNZ 448. Williams v Alfred Holt & Co Limited (unreported), AA 2/00.

6

Good faith bargaining under the Employment Relations Act: the original scheme john hughes

Introduction The concept of good faith is central to the Employment Relations Act 2000 (ERA). This chapter examines the statutory framework for good faith behaviour, with particular reference to the distinction in the ERA between collective bargaining and individual bargaining, and the resultant case law. For reasons canvassed later in this chapter, there has been an unexpected paucity of the type of litigation that might otherwise have clarified the meaning of good faith under the ERA. Where litigation has occurred, however, it will be argued that the approach of the Court of Appeal to the good faith obligations in individual cases does not reflect the original intent of the legislation. As we will see, the Court has effectively confined the scope of good faith in this context to the boundaries established under the repealed Employment Contracts Act (ECA) in relation to the common law implied term of mutual trust and confidence. In this respect and others, such unanticipated limitations – and other problems arising under the ERA – have been the subject of proposed amendments in the Employment Relations Law Reform Bill 2003. The attendant uncertainties of any proposed amendments – and, particularly, controversial amendments – whilst still at the select committee stage have led to the relevant provisions of the Bill being dealt with in a postscript to this chapter. This chapter focuses, rather, on the original scheme. 77

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Background Whilst politically controversial, the use of good faith as a statutory concept was not new to the Employment Relations Bill. One commentator has identified its earlier deployment in legislative provisions ranging from criminal law to the regulation of the health system (Timmins 2002). Good faith bargaining had earlier enjoyed a brief, but inconclusive, existence under an amendment to the Labour Relations Act 1987, during the closing months of the Labour Government’s term of office in 1990. Nor was the introduction of good faith as a key element in the Bill a surprise. Both parties constituting the coalition Government had placed good faith at the forefront of their respective employment relations policies in two successive elections (Mazengarb 2000 [ER32.3]). The political uproar that greeted this aspect of the Bill, then, was largely generated by parties and organisations wedded to the neo-classical minimalism of the Employment Contracts Act 1991. For these organisations, seemingly, no alternative to pure contract theory was palatable and, in general contract law, a duty to negotiate in good faith (even if the parties expressly so provide) is not contractually enforceable by reason of its perceived uncertainty (Wellington City Council v Body Corporate 51702 (Wellington), hereafter the Wellington City Council case). Whilst opponents of the Bill focused (amongst other things) on the good faith provisions, the key difference between the ECA and the ERA lies, arguably, in the ERA’s broader recognition of imbalance in bargaining power. Collective bargaining had effectively collapsed under the ECA (Harbridge, Crawford and Kiely 2000). The drafters of the ERA saw the promotion of collective bargaining as the key to restoring some balance in bargaining power. When the Court of Appeal had held in 1996 that ‘take it or leave it’ offers from employers were within both the letter and the spirit of the ECA (Tucker Wool Processors Ltd v Harrison), the Court’s decision simply reflected what had been obvious in practice since the Act came into force (Dannin 1997). To the extent that collective bargaining had been discouraged under the ECA by the absence of any duty to negotiate, the imposition of a duty to bargain for collective agreements in good faith was seen as one step towards the promotion of collective negotiation. As a further step, a conscious policy decision was made to constrain the good faith obligation where it applied to the negotiation of individual employment agreements, so as to make collective bargaining more attractive (Department of Labour 2000a). Inter-related reforms, such as the recognition of a role for unions and the development of a framework for collective bargaining, are dealt with elsewhere in this book. Although the concept of good faith is most closely tied to bargaining behaviour, the ERA ‘infuses’ good faith obligations throughout the framework of the Act (Department of Labour 2000b).

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The framework for good faith under the ERA The framework for good faith bargaining under the ERA is set out in a number of key sections. Section 3 states that the object of the Act is ‘to build productive employment relationships through the promotion of trust and confidence in all aspects of the employment environment and of the employment relationship’. Amongst other things, this is to be achieved by ‘recognising that employment relationships must be built on good faith behaviour’. Section 4 then provides an overarching duty by requiring the parties to certain defined employment relationships to deal with each other in good faith. Without limiting the meaning of this broad obligation, the section prohibits the parties from directly or indirectly misleading or deceiving each other, or from doing anything that is likely to have this effect. The good faith duty is expressly stated not to prevent communication of statements of fact or opinion ‘reasonably held’ about an employer’s business or a union’s affairs. ‘Employment relationships’ are defined widely under section 4, and include relationships where the parties are employer and employee, union and employer, union and member, and unions and employers amongst themselves when they are bargaining for the same collective agreement. An indicative list of matters to which good faith applies is then supplied. These include bargaining for a collective agreement; consultation about employees’ collective employment interests, including the effect on employees of changes to the employer’s business; proposals that might impact on employees (including the sale or transfer of the business); making employees redundant; and access to the workplace by union representatives. Section 32 then provides the core requirements of the duty of good faith in relation to collective bargaining. That section states that the duty of good faith under section 4 requires a union and an employer bargaining for a collective agreement to take at least a number of procedural steps, including meeting, considering and responding to proposals, and refraining from undermining the bargaining or the authority of any representative of the other party. Matters relevant to whether good faith has been observed are listed in section 32 as including the provisions of a relevant code of good faith, any agreement about good faith entered into by the parties, the proportion of the employer’s employees who are members of the union and to whom the bargaining relates, and the circumstances of the union and the employer (including the operational environment of, and resources available to, each of them). A Code of Good Faith has been approved in relation to collective bargaining (Minister of Labour 2000). Further, in response to claims that the duty of good faith was inherently vague, the Government launched a detailed information campaign on the issue (Department of Labour 2001).

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Good faith in collective bargaining is restricted to matters of process alone. Section 33 states that the duty of good faith does not require a union and an employer bargaining for a collective agreement to agree on any matter for inclusion in the agreement or to enter into a collective agreement. The more detailed framework under section 32 marks a significant, and (as we have seen) deliberate, difference between good faith behaviour in bargaining for individual employment agreements and collective agreements respectively. Part 6 of the ERA contains a variety of controls designed to manage some aspects of the formation of individual agreements (Mazengarb 2000 [ERpt6.6]). ‘Good faith behaviour’ for the purpose of negotiating individual employment agreements is limited under Part 6 to protection against unfair bargaining and consistency with the common law implied term of mutual trust and confidence (section 60). The ‘unfair bargaining’ provisions in section 68 of the Act essentially then codify another common law concept, that of ‘unconscionable’ or ‘unfair’ bargaining (Mazengarb 2000 [ER68.4], ChenWishart 1989). In order to base any cause of action on the protective provisions under Part 6, an individual employment agreement must exist (in terms of an offer and acceptance of employment under section 6 of the ERA). Without the existence of such an agreement, the specialist institutions under the ERA will lack jurisdiction to deal with the matter. Thus, once an employment agreement has been entered into, a complaint could arise under Part 6 in relation either to pre-contractual behaviour (for example, initial negotiations) or post-contractual behaviour (for example, negotiations concerning a variation). Against this, without such an agreement, jurisdiction under the ERA will not exist. Thus, for example, in Hayden v Wellington Free Ambulance Service, the good faith obligation was held not to apply in relation to applicants for employment who had not been offered and accepted employment. Such complaints of unfairness in the bargaining process where no agreement has been concluded remain to be dealt with in other relevant jurisdictions, under legislation such as the Fair Trading Act 1986 (where resort would need to be made to the ordinary courts) or the Human Rights Act 1993. This provides another contrast with the provisions of section 32, under which a union bargaining for prospective employees, such as meat-workers in between killing seasons, could raise a case based on breach of good faith prior to any collective agreement being entered into (for example, during the negotiating process itself, or after impasse has been reached in negotiations).

The role of the courts Although the Employment Relations Authority has delivered a number of deci-

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sions on good faith issues (collected in Davenport 2002), the following discussion will focus on court decisions. As the Employment Court has commented, the Authority’s role ‘is not to find and state law for parties in other cases’ (NZ Amalgamated Engineering etc Union v Carter Holt Harvey Ltd (a)). In this context, predictions by politicians, lawyers and judges alike that key issues under the new good faith jurisdiction would be litigated in the infancy of the ERA have not been borne out. Three years after the ERA came into force, the Court of Appeal has dealt with only two cases involving substantive issues of good faith. Neither of these decisions set out any binding principles elaborating on the minimum content of good faith in collective bargaining under section 32 of the Act. In the absence of empirical research, any reasons advanced for the paucity of litigation (as compared, say, to North American jurisdictions) can be – at most – speculative. It is suggested, however, that the following factors will have played some part: • The new legislative regime, reinforced by a sophisticated information campaign by the Department of Labour, may have encouraged parties to avoid ‘bad faith’ behaviour in the first place. • Where perceived breaches of good faith have occurred, the ERA and the Code of Good Faith encourage resolution of difficulties through mediation, without resort to formal legal action (whilst the institutional structure under the ERA penalises bad faith behaviour designed to avoid mediation). • Much of the overseas litigation, and particularly that in North America, has arisen in relation to issues that are either clarified by the ERA (such as the duty to consider and respond to proposals) or are irrelevant to it (such as the distinction between mandatory and permissive subject matter in the bargaining process). • The absence of any significant extension of coverage in collective bargaining under the ERA might suggest that most parties to collective bargaining under the legislation will possess the experience to avoid obvious legal pitfalls in this area. • Related to this, collective bargaining collapsed most dramatically in those areas where the previous collectivisation was effectively the result of legislation emphasising machinery (for example, the award system) rather than process (such as the good faith obligation), which means that process obligations alone are likely to be ineffective as a remedy in these cases. • Where the potential for legal action might arise, bargaining dynamics could still favour avoiding court action (for example, the advantage of prospective legal success, perhaps in the distant future, may need to be weighed against the advantage of speedy settlement).

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• Some types of breach, particularly in borderline cases, may be inherently difficult to prove. • The existing remedies for breaches may not be seen as effective in the particular circumstances. • There may be a tactical reluctance to set a bad precedent which could then impact upon other parties with the same interest at stake, possibly associated with recognition of the widespread impact of key bargaining decisions under the ECA. • Some parties (and particularly individuals, small unions and small businesses) might be deterred by a consideration of the cost of bringing court action, when balanced against the uncertainty of its outcome. The approach of the courts Once courts do become involved, it was emphasised from the outset that the aim of the ERA was to provide for an indigenous approach to good faith (Department of Labour 2000a). The Employment Court has adopted this approach, citing background drafting documents and noting, however, that some assistance could be gained from experience under similar overseas legislation (NZ Amalgamated Engineering etc Union Inc v Carter Holt Harvey Ltd (b), hereafter the Engineering Union decision). Understandably, perhaps, many commentators have focused on the possible transfer of principles from these other jurisdictions, where tribunals have had significantly more time to develop general guidelines (Davenport and Brown 2002). Making due allowance for the framework of legislation unique to each particular jurisdiction, some of these guidelines at least provide avenues for argument in New Zealand once a policy choice has to be made on the basis of parallel competing arguments. By analogy, the courts in New Zealand have repeatedly cautioned against using the case law developed under the statutory concept of unfair dismissal in the UK as a guide to outcomes in personal grievances based on unjustifiable dismissal. Key approaches in that UK case law have been adopted, nonetheless, in a number of respects (Roth 2002). General interpretation of the ‘overarching’ section 4 obligation in Coutts Cars It was clear from the background drafting documents that those who originally framed the good faith obligation in section 4 anticipated that it would have a wide-ranging effect (Department of Labour 2000b). In Coutts Cars Ltd v Baguley, one of the earliest decisions under the ERA, the issue was the appropriate measure of consultation in a redundancy. Reflecting the background material, the Employment Court held that the section 4 obligation

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cast doubt on the continuing relevance (under the ERA) of some aspects of the ‘pure contract’ approach adopted by the Court of Appeal under the ECA. When the case reached the Court of Appeal, however, the majority took a different view (see chapter 5, page 62). In essence, the majority held that the section 4 duty of good faith was coterminous, in the immediate context, with the common law implied term of trust and confidence as developed under the ECA. McGrath J, dissenting, held that section 4 ‘imposes a regulatory overlay’. Further that, by necessary implication, in providing for a duty of good faith the ERA ‘goes beyond what the courts recognised at common law or under [the ECA] as implied contractual terms controlling freedom of contract’ and had imposed a ‘higher standard’. Although the Minister of Labour criticised the Coutts Cars decision, no immediate commitment to amend the legislation was made as the review of the ERA was pending (Wilson 2002). Critique of the Coutts Cars decision It is suggested that the approach in the dissenting judgment in Coutts Cars is to be preferred. First, in policy terms, the approach in the majority decision provided a marked contrast to that adopted by the Court of Appeal under the ECA. When dealing with the major changes introduced by the ECA, the Court had repeatedly analysed, emphasised and applied the shift towards pure contractualism represented by that legislation. In Coutts Cars, in contrast, the majority provided no effective recognition of the countervailing policy shift represented by the ERA, despite section 216 of the Act, which restates the Court’s obligation to have regard to the objects of the Act in determining appeals. Secondly, as a matter of internal construction, the majority’s analysis – quoted above – appears to draw a difficult distinction under section 4 between individual employment agreements (where the implied term of trust and confidence is seen to provide the appropriate boundaries of good faith) and issues of a collective nature (where the implied term might not do so). Section 4, however, draws no such distinction and was clearly intended to ‘infuse’ all aspects of the ERA. As one measure of this, section 4 can be contrasted with section 60 (the objects section to Part 6 of the ERA, which deals with individual employees’ terms and conditions of employment). Section 60, in contrast to section 4, limits the duty of good faith to the implied term of trust and confidence for the purposes of those limited provisions that it governs. It might then have been argued that the absence of any such reference in section 4 indicates that a broader compass was intended (Mazengarb 2000 [ER4.5A]). The majority in Coutts Cars made one further significant, and limiting, observation. The parties’ obligation to deal with each other in good faith

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under section 4 was said in Coutts Cars to be not so much a stand alone obligation as ‘a qualifier of the manner in which . . . dealings [between the parties] are to be conducted’. This has the effect that a cause of action based on breach of the generic good faith duty under section 4 (as opposed to the specific duty under that section not to mislead or deceive) is unlikely to succeed. Illustrating this, in a later decision, an employer was held to have breached good faith in advancing an unjustifiable reason when refusing to allow union representatives access to its premises. The Court of Appeal drew the inference, implicitly from the ‘qualifying’ nature of good faith, that allegations of breach of statutory obligations (in this case a right of access) necessarily required consideration of the section 4 duty. The Court went on to hold, however, that the addition of a separate cause of action for breach of good faith was not called for. Nor, said the Court, was it necessarily the case that all breaches of legislative obligations would be a breach of good faith: ‘[whether] rights have been breached and whether persons have acted in good faith involve rather different considerations’ (Carter Holt Harvey Ltd v National Distribution Union Inc, hereafter the Distribution Union decision). At this point the approach linking good faith with the common law implied term, whilst restricting its operation to a ‘qualifying’ role, then becomes difficult – in some cases – to reconcile with the practical operation of the implied term. The standard formulation of the implied term, adopted by the Court of Appeal in Auckland Electric Power Board v Auckland Provincial District Local Authorities Officers IUW, is that a party will not ‘without reasonable and proper cause, conduct itself in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee’ (Woods v WM Car Services (Peterborough) Ltd, emphasis added). Recourse to the implied term then takes two distinct forms in the case law. The first, aligned with the Court’s analysis in Coutts Cars, relates to the nature of a party’s behaviour. Was there something intrinsic to that party’s behaviour, in other words, capable of being characterised as a breach of the essential trust and confidence at the heart of an employment relationship? A leading illustration is the type of wrongfully coercive behaviour that induces a forced resignation, or ‘constructive dismissal’ (Mazengarb 2000 [ER103.11]). The second issue under the standard formulation, however, is an analysis of the likely ultimate effect of one party’s behaviour on the retention of the other party’s trust and confidence. This is seemingly to be considered regardless of any negative connotations that might be attached to the state of mind of the acting party in terms of ‘bad faith’ behaviour. So, for example, in a recent UK decision, an employer which declined to offer an employee a beneficial variation in contractual terms that had been offered to all of his fellow workers, on

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the honest but mistaken assumption that he was not a permanent employee, was held to be in ‘serious’ breach of the implied term (Transco plc v O’Brien). On this analysis, and contrary to the apparent approach in the Distribution Union case, it is suggested that it might indeed be argued that an employer’s repeated breach of statutory obligations – regardless, say, of motivation – was behaviour likely to lead employees to lose trust and confidence in the employer. If this is correct, paradoxically, a strict application of the Court’s approach to good faith under the Employment Relations Act would then potentially be more constrained than the conventional approach to the implied term itself. It should be emphasised that, in principle, acceptance of this second approach is conceptually distinguishable from the issue posed by any appropriate remedies. In particular, in this area and others, the courts have repeatedly ruled out the prospect of ‘double-dipping’ in compensation by framing multiple causes of action based on the same factual matrix. As we shall now see, however, in the context of assessing good faith behaviour the Employment Court has been more flexible in terms of its approach to subjective motivation as a necessary ingredient of good faith.

The relevant standard for assessing good faith The only other broad principle that has emerged in case law, and under which that more flexible approach has arisen, relates to the appropriate standard for assessing the behaviour in question. One basis for the Court of Appeal declining, in 2002, to hold that a commercial contract to negotiate in good faith created enforceable process obligations was ‘the problematic element of subjectivity’ (the Wellington City Council case). The Court contrasted this with the employment relationship under the ERA, which ‘itself immediately provides a degree of contextual objectivity’ and where the good faith obligation ‘must be regarded as having sufficient general certainty’. In the Distribution Union case, it had been argued for the employer that assessment of good faith must be carried out on a subjective basis and, for the union, that the assessment should be objective. The Court held that: The matter is not greatly assisted by seeking to characterise the enquiry as subjective or objective. Good faith connotes honesty, openness and absence of ulterior purpose or motivation. In any particular circumstances the assessment whether a person has acted in good faith will involve consideration of the knowledge with which the conduct is undertaken as disclosed in any direct evidence, and the circumstantial evidence of what occurred.

The Court’s conclusion emphasised, once more, the focus on the nature of the

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allegedly offending behaviour as opposed to its effects. The emphasis on actual knowledge, however, is again arguably unduly limiting when set against the statutory wording. Section 4, for example, includes as a breach of good faith conduct that is ‘likely’ to mislead or deceive, a concept divorced both from intention and from general ‘culpability’ (Mazengarb 2000 [ER4.10]). Section 32 (dealing with collective bargaining) states that it does not limit the section 4 duty of good faith, yet clearly contemplates that a breach of good faith can arise from behaviour that – objectively observed – undermines bargaining. Section 68, which falls within Part 6 and is thus governed by a good faith obligation consistent with the implied term of trust and confidence, again contemplates that unfair individual bargaining may occur where the party concerned ‘ought to have known’ of particular circumstances (such as the other party’s inability to understand a proposed employment agreement). The issue was later raised in New Zealand Public Service Association Inc v Auckland City Council (hereafter the Auckland City Council case). In this case, the Council (having been elected on a promise to slash spending) commissioned an independent report on its expenditure. The union, which represented a number of the Council’s employees, argued that the section 4 duty of good faith had been breached when the Council’s chief executive refused to release information to the union about the potential impact of the report on staffing and denied the union the opportunity to make representations to councillors. The Employment Court held that: In other areas of the law where the concept is established, a finding that behaviour was lacking in good faith in employment could not readily be made without an examination of the actor’s state of mind. However, once good faith is equated . . . with trust, confidence, and fair dealing, it becomes apparent that what is required is an objective assessment of the effect of the behaviour. This emerges especially from the statutory prohibition against doing anything that is likely to mislead or deceive. It is likely that these phrases were drawn from the now familiar language of the Fair Trading Act 1986 under which it is firmly established that it is causative potency, not subjective intention, that counts . . . .

The Employment Court did not cite the Distribution Union decision in its judgment and, as noted in the postscript, the Court’s approach has now been overruled by the Court of Appeal. Specific issues under section 4 The relevance of good faith to consultation under section 4 has attracted perhaps the most attention in so far scanty case law. In Coutts Cars, the Court of

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Appeal rejected any approach requiring consultation in all circumstances but held that the accent placed by the ERA on the provision of information ‘will make consultation desirable, if not essential, in most cases’ (para [43]). In the Auckland City Council decision, the employer argued that there was no statutory requirement to consult as such, rather a requirement that, where consultation is occurring, it must be undertaken in good faith. The Employment Court found, however, that, once having set a course of sweeping financial changes that potentially impacted upon employees, the employer should have consulted with their union as a general element of good faith. The language of behaviour that misleads or deceives, proscribed by the second limb of the section 4 good faith obligation, has an extensive legislative and case law history under fair trading legislation both in New Zealand and Australia (Mazengarb 2000 [ER4.6]). In the only example of breach to have been found to have occurred under the ERA so far, an employer was held to have engaged in misleading and deceptive behaviour when it consulted employees directly about a planned restructuring, instead of honouring a commitment to consult with the union, and then gave misleading responses to requests for information. Continuing to bargain inconsistently with its decision to contract out the work was also held to be misleading in some respects (the Engineering Union decision). The core requirements in collective bargaining Section 32 states that the good faith duty under section 4 requires, at least, a union and an employer bargaining for a collective agreement to do a number of things. The first requirement is that unions and employers use their best endeavours to enter into an arrangement that sets out the bargaining process in an effective and efficient manner. The Code elaborates on this obligation, listing issues such as the composition of negotiating teams, frequency of meetings, the venue and additional requirements for multi-party bargaining (Hughes 2001). The second requirement is an obligation to meet, from time to time, for the purpose of bargaining. In the leading bargaining decision so far under the ERA, the Employment Court held that the ‘bargaining’ contemplated by this requirement is confined to issues contained in formal proposals and counter-proposals and their subsequent disposition. The result in that case was that the employer could lawfully engage in two parallel processes. The first process involved purported consultation (but not bargaining) about restructuring involving mass redundancy. This was then governed by the good faith obligation in section 4 that, as we have seen, the employer was held to have breached. The second (and contemporaneous) process involved bargaining separately for a collective agreement for the potentially affected workers. This

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negotiation did not need to include the restructuring proposals, since restructuring had not been referred to in any formal bargaining proposals by either party to the collective negotiations. The effect was that the restructuring proposals, as such, were not then subject to the closer constraints of section 32 from the outset (the Engineering Union decision). It seems likely that this decision will lead parties to include template proposals about matters such as restructuring in initiating collective bargaining, so as preserve the wider protection offered by section 32. By way of a third requirement, the parties must consider and respond to proposals, but are not required to continue to meet about proposals that have been considered and responded to. The Code indicates that this duty extends to weighing the merits of proposals and providing reasoned explanations, precluding the ‘take it or leave it’ stance endorsed by the Court of Appeal as being consistent with both the letter and the spirit of the ECA. Much of the overseas discussion on consideration of proposals centres on the extent to which ‘surface bargaining’ (or ‘going through the motions’) breaches good faith (Dannin 2001). The prohibition on misleading or deceiving the other party under section 4 might then provide the Court with an effective ‘short cut’ not available in other good faith jurisdictions, since a party engaging in surface bargaining is effectively misleading the other (Mazengarb 2000 [ER32.12]). In the only case to consider the issue to date (and then briefly), the Court indicated that the degree of consideration required must be examined in the context of the nature of the proposal. Thus, in the Engineering Union decision, an ‘unsophisticated and blunt’ proposal prohibiting contracting out, once the union became aware of the employer’s intentions, was held to have been ‘considered’ satisfactorily when the employer examined it briefly and then rejected it. The third requirement is cumulative. The role and authority of representatives must be recognised; the parties are not to bargain, whether directly or indirectly, about matters relating to terms and conditions of employment with persons for whom the other party’s representative or advocate are acting without that other party’s consent; and they must not undermine, or do anything that is likely to undermine, the bargaining or the authority of the other in the bargaining. These provisions originate from decisions of the Court of Appeal under the ECA. The ECA had required simply that the authority of representatives should be recognised if any bargaining took place. The Court had then held that the duty to recognise required that no bargaining take place, on an individual level, between an employer and those employees who were represented in any collective bargaining that occurred. It had gone on to hold, by a majority, that direct communication as such was not thereby prohibited between employers and individual employees, so that the provision of

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information – even persuasive information – did not constitute bargaining in this context (NZ Fire Service Commission v Ivamy). In response, the Employment Relations Bill had originally prohibited communication during bargaining about matters relating to terms and conditions of employment. The drafting instructions had intended to prohibit the narrower range of communication on matters relating to the collective bargaining. When the substituted – and far wider reference to communication about terms and conditions – was removed in select committee, having by then become a source of political controversy, the provisions prohibiting the undermining of bargaining were added so as to manage the resulting risk (Department of Labour 2000c). Putting policy intention to one side, the drafting changes during the passage of the Employment Relations Bill have left commentators divided on the effect of the clause. At the extremes, there are those who argue that communication about collective bargaining without a representative’s consent is now impermissible (Swarbrick 2000) and those who argue that the ECA case law remains intact (French 2000). In between these approaches is the view that direct communication is an available option, but only within significant limits (Davenport 2002). Given the majority view of the Court of Appeal in Coutts Cars that the section 4 good faith obligation was intended simply to codify the Court’s earlier pronouncements on the implied term of trust and confidence, it would perhaps be unrealistic to expect the Court as currently constituted to depart markedly from its approach under the ECA on this issue either. In the absence of authority, however, the safest course is probably for the parties to agree on the scope of any communication as part of their bargaining arrangement (Treanor and Rasmussen 2003). Another important, but unresolved, issue is whether the common employer practice under the ECA of automatically passing on the results of collective bargaining to non-union employees might thereby be said to be undermining the bargaining process. One aspect of the freedom of association provisions under the ERA is a prohibition of preference in employment conditions that arises from membership, or non-membership, of a union. This prohibition, however, does not cover preference arising solely from the terms of an employment agreement. The ‘free-rider’ controversy (Little 2003) is not susceptible to simpler solutions under the current drafting of the ERA. The Court has held that a union and an employer that agreed to a clause in a collective agreement providing for deduction of ‘bargaining agency’ fees from the wages of non-union employees who benefited from the negotiation, and the employer which then included clauses giving this practical effect in individual employment agreements, were thereby in breach of freedom of association and of the unfair bargaining provisions of the ERA (amongst other things) (NZ Dairy Workers Union Inc v NZMP).

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Finally, information that is reasonably necessary to support or substantiate claims or responses made for the purposes of bargaining must be provided, on request. If the holder of the information reasonably considers that it should be treated as confidential, an independent reviewer may be requested to consider the information and then report on whether it supports the claims or responses to which it is relevant (Brown 2001). This provision has yet to attract any case law under section 32 (Davenport 2002). In the meantime, in Coutts Cars, the Court of Appeal reiterated that the overarching section 4 duty requires access to information when consultation is required, citing the objects section to Part 9 of the ERA (which states that, in resolving employment relationship problems, access to information is more important than adherence to rigid formal procedures). In the Distribution Union decision, the Employment Court cited section 32(1)(e), as well as sections 3 and 4, in holding that ‘. . .[information] is relevant if it is likely to assist employees and their unions to know that an issue exists about which it may be in their interests to associate with each other and to consider making it the subject of collective bargaining, at once or in the near future’. As we have seen, failure to provide information (to the point of misleading the union into believing that no further information was available) was held to be a breach of good faith in the Engineering Union decision. Strikes and lockouts Section 80, the objects section to Part 8 of the ERA (dealing with strikes and lockouts), states that a purpose of Part 8 is to ‘recognise that the requirement that a union and an employer must deal with each other in good faith does not preclude certain strikes and lockouts being lawful . . .’. Some statutory constraints are placed on strikes and lockouts, nevertheless, which are consistent with the good faith regime. These include provisions requiring a 40-day strike-free and lockout-free period after the date on which bargaining is initiated (section 86) and prohibiting the use of replacement labour where employees are striking lawfully or are locked out, unless there are health and safety reasons requiring short-term replacement (section 97). Notwithstanding section 80, three cases focusing on the boundaries of lawful strikes and good faith have reached the Employment Court. Each involved an implicit argument that the categories of unlawful strike action listed in Part 8 (and which do not include strike action in breach of good faith) do not constitute a code in this respect. In the first case, Ports of Auckland v New Zealand Waterfront Workers Union Inc, the parties in an essential service had been referred to mediation under a provision new to the ERA, designed to enhance the possibility of a negotiated outcome (section 92). Whilst mediation was continuing, the union

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issued a notice of strike action. Judge Travis rejected the employer’s argument that the notice was a breach of good faith, citing section 80 and noting that the mediation process would be undermined if mediation had to end before strike notice could be given. The remaining two cases both involved the University of Otago and its staff. In the first, the University applied for an injunction to prevent a threatened strike on the basis, amongst other things, of a contested allegation that the union had given an undertaking not to strike without first re-entering negotiations. It was argued that the strike notice was in breach of good faith, as being in breach of the alleged undertaking. When the union gave an undertaking to re-enter negotiations, the injunction was declined (Fogelberg v Association of University Staff (Inc) (a)). It seems strongly arguable, however, that section 80 (which was not mentioned in the Court’s decision) would have prevented the strike from being unlawful, even assuming that a breach of good faith could have been proved. This much is evident from the second, and substantive, judgment involving the parties and arising from different negotiations. In Fogelberg v Association of University Staff (Inc) (b), university academic staff had given notice of strike action which was to take the form of banning certain (unspecified) lectures, which were then not delivered. The university argued that, in refusing or failing to notify it in detail of the nature of the strike action or even of the fact that it was occurring, the union had acted in bad faith by taking ‘secret strike’ action and that the strike was therefore unlawful. The argument was not rejected in interim injunction proceedings (although the application failed). It was then not pressed on appeal in recognition of the difficulties presented, amongst other things, by section 80. The Court held here that, under the statutory scheme, ‘participation in lawful strikes is immune from any legal consequences notwithstanding that such participation plainly is a breach [of] or non-compliance with the normal requirement of mutual trust and confidence and good faith behaviour . . . section 80(a) makes it clear that departures from good faith are to be expected in situations of strike or lockout’. It is clear from these decisions that any tension that might otherwise arise between good faith obligations and the lawful right to strike or lockout are likely to be resolved in favour of the right to take lawful industrial action. This is legally explicable on a basis not yet raised in the case law. In terms of agreements or understanding between the parties, we have seen that – in their strongest form – the parties themselves must enter into a good faith ‘process’ arrangement under section 32. Yet, were such an arrangement to limit the right to strike lawfully, it would contravene section 238 of the ERA, which states that the provisions of the Act have effect despite any provision to the contrary in any contract or agreement.

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Enforcement In the Coutts Cars decision, at first instance, the Employment Court suggested (in a non-binding way) that damages might be available for a breach of the section 4 good faith obligation. The Court of Appeal left this point open and the Employment Court has not returned to this analysis since. Rather, since Coutts, the Court has suggested that breaches of the statutory duty of good faith are remediable primarily through a compliance order under section 137 of the ERA. The compliance order is a statutory remedy that essentially parallels a mandatory or prohibitory injunction (akin to the ‘cease and desist’ order available in some North American good faith jurisdictions). It is particularly suited to remedying breach of process obligations. Some commentary on the remedy has suggested that it might not be amenable to the intangible nature of some alleged breaches of good faith, particularly in the light of longestablished case law indicating that the Court would not be willing to order compliance with an uncertain obligation (Anderson 2002). In the Engineering Union decision, however, the Court ordered compliance with an agreed obligation to ‘consult meaningfully’ about planned restructuring, which the employer had breached, whilst fixing a relatively tight timetable during which the consultation was to take place. Whilst the Authority has issued injunctions in relation to good faith obligations (Davenport 2002), continuing controversy remains concerning the Authority’s power to grant these forms of interim relief in this context (Timmins 2002), despite the Court’s acceptance that the jurisdiction exists in relation to some contractual actions. No statutory penalty attaches to a failure to observe good faith, although, as in the Distribution Union decision, behaviour in breach of good faith might then give rise independently to a penalty for breach of any provision of the ERA to which that remedy attaches. Similarly, action in breach of good faith obligations (even where collective in nature) might give rise, say, to a personal grievance or to an action for breach of agreement where it has had an unjustifiable adverse effect on a particular employee or employees. By analogy, personal grievances, in particular, have long involved consideration of the implied ‘good faith’ term of mutual trust and confidence (Hughes, Roth and Anderson 2000 [3.25]). Further, and again in the collective sphere, the ERA contains a number of specific provisions designed to encourage good faith bargaining that are independently enforceable. These include the ‘freeze’ on lawful industrial action during the forty days immediately following the initiation of collective bargaining (breach of which is remediable through a variety of mechanisms, including an injunction, an action for damages or a compliance order). A breach of good faith may amount independently to a breach of contractual legislation enabling cancellation or variation of contract, such as the Contrac-

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tual Remedies Act 1979, and over which the Court has jurisdiction. Where such a breach has this consequence – say, where a clause in a collective agreement has been induced by misrepresentation – the Court may not cancel or vary the agreement or any aspect of it but can suspend it and direct the parties to re-open bargaining (section 192).

Conclusion The bargaining regime under the ERA is clearly far removed from the corresponding regime under the ECA. But what has the new good faith regime meant for those employees whose employers had utilised their contractual freedom under the ECA to the hilt, so as – for example – to de-collectivise the workforce and to impose disadvantageous conditions? For many such employees, the emphasis under the ERA on process rather than on machinery in relation to collective negotiation means that effective collective negotiations remain a distant prospect. This is particularly so for two, often interrelated, groups. The first group comprises employees of small employers. The second consists of employees wishing to engage in multi-employer negotiations, where the machinery that does regulate multi-employer bargaining contains significant hurdles to overcome (although, in contrast to the ECA, strike action over the issue is once again lawful). Indeed, over 90 per cent of collective agreements remain single employer documents, with the state sector disproportionately represented in multi-employer agreements (Employment Relations Service 2003). The Court has yet to examine substantive issues of good faith arising from multi-employer collective bargaining (Davenport 2002). For employees effectively shut out of meaningful collective bargaining, some mechanisms protect the formation of individual employment agreements and the initially applicable terms and conditions. In isolation, however, the good faith obligations that accompany negotiation of an individual employment agreement (or a variation to such an agreement) add little to the common law, albeit substantially improving on the protection available under the ECA, which had removed even that safety net (Anderson 2001). It is these employees whose position will in all likelihood form a major focus of the current review of the Employment Relations Act and its good faith provisions. Postscript Since this chapter was completed in November 2003, there have been both judicial and legislative developments. The Employment Court’s decision in the Auckland City Council decision has been overruled by the Court of Ap-

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peal (Auckland City Council v NZ Public Service Assn, unreported, Court of Appeal, 11 November 2003, CA 112/03). The Court of Appeal held that general consultation with the union was not required on the facts of the case, where the employer believed that no union members were employed in the particular group of employees and the union had not alerted the employer to the fact that one of the relevant employees was a union member. The union, according to the Court, had been given adequate information and no attempt had been made to mislead or deceive. The Court declined to ‘lay down rules or protocols defining what may or may not constitute dealing in good faith’, leaving future circumstances to be judged very much as a matter of fact and degree, and thereby creating no small measure of uncertainty. It remains unclear whether these, and other, difficulties will be eased by the passage of the Employment Relations Law Reform Bill 2003 (introduced in December 2003). At the time of writing, the Bill is still being considered by select committee and its passage has been contentious. A number of clauses in the Bill address issues raised in this chapter, although the extent to which those clauses will survive the select committee process remains to be seen. First, clause 6 of the Bill amends section 4 to provide that the duty of good faith is wider in scope than the implied common law term of mutual trust and confidence. This clause, therefore, is aimed at overriding the decision of the Court of Appeal in Coutts Cars (under clause 20 of the Bill corresponding amendments are made to section 60, which had also contained a reference to mutual trust and confidence). Under clause 6, parties are required to be ‘active and constructive’ in establishing and maintaining a productive employment relationship in which the parties are, amongst other things, ‘responsive, communicative, and supportive’. Before making a decision that is likely to have an adverse effect on the employment of employees, employers are to be obliged to provide them with access to relevant information (subject to maintaining any relevant confidentiality) and an opportunity to comment before the decision is made. Failure to comply with the duty of good faith is to be made subject to a penalty under the Act if the failure is serious and sustained, or was intended to undermine an employment agreement, or bargaining, or the employment relationship itself. Second, the ‘free-riding’ problem is addressed in clause 19, which inserts new sections 59a and 59b. Under the proposed section 59a, it will be a breach of good faith for an employer to ‘pass on’, to employees working under individual employment agreements, terms and conditions resulting from collective bargaining or a collective agreement if two conditions are satisfied. The first condition is that the employer must have done so with the intention of undermining the collective bargaining or the collective agreement. The second (and cumulative) condition is that passing on the terms and conditions

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has the effect of undermining the relevant collective bargaining or collective agreement. Section 59b is intended to operate in parallel to section 59a, where terms and conditions are passed on to a collective agreement from terms agreed in other collective bargaining or another collective agreement. Also with the aim of preventing the undermining of collective bargaining, it will be a breach of good faith for an employer to advise employees against collective bargaining or being covered by a collective agreement (clause 6). Third, a group of disparate provisions in the Bill appear to be aimed at criticism of the good faith process as enabling parties simply to ‘go through the motions’. The non-exhaustive list of actions required by collective bargaining in good faith, under section 32, is supplemented to make it clear that parties to collective bargaining must continue to bargain where agreement has not been reached on some issues, even though they have reached impasse on other issues (clause 11). In order to encourage collective bargaining and settlement, a new section 33 now provides a positive good faith duty, requiring the parties to collective bargaining for a collective agreement to conclude such an agreement unless there is genuine reason not to (clause 12) and failure to meet at least once where bargaining has been initiated over a multi-party collective agreement will be a breach of good faith (clause 14). To overcome impasse, clause 15 of the Bill inserts a number of new sections (50b to 50i) enabling the Employment Relations Authority to provide assistance, through facilitation, where a party is having serious difficulties in concluding a collective agreement. Two grounds mentioned in the proposed section 50c are that (i) one party has failed to comply with good faith in a serious and sustained way that has undermined the bargaining or (ii) that the bargaining has been unduly protracted and extensive efforts have failed to resolve the difficulty. The Authority’s power is initially to make non-binding recommendations. Strikes and lockouts will be permitted during the facilitation process, so as to preserve the incentives to bargain and reach settlement during this period. Finally, the Authority is to be given jurisdiction to make a determination fixing the provisions of a collective agreement under a new section 50j. Such a determination can only be made if three grounds are made out and if the Authority finds that it is appropriate, in all the circumstances, to do so. The listed grounds are that a breach of the duty of good faith has occurred in relation to collective bargaining and that the breach was sufficiently serious and sustained as to undermine the collective bargaining; that all other reasonable alternatives for reaching agreement have been exhausted; and that making a determination is the only effective remedy.

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references Anderson, G. 2001. ‘The Individual and the Employment Relations Act’, New Zealand Journal of Industrial Relations, 26(1): 103–18. Anderson, G. 2002. ‘Transplanting Good Faith into New Zealand Experience under the Employment Relations Act 2000’, Paper presented to the Australasian Law Teachers’ Association Conference 2002. Brown, J. 2001. ‘Good Faith Bargaining and the Disclosure of Information under the ER Act’, Employment Law Bulletin, 2–16. Chen-Wishart, M. 1989. Unconscionable Bargains. Wellington, Butterworths. Dannin, E. 1997. Working Free: the origins and impact of New Zealand’s Employment Contracts Act. Auckland, Auckland University Press. Dannin, E. 2001. ‘Good Faith Bargaining, Direct Dealing and Information Requests: The US Experience’, New Zealand Journal of Industrial Relations, 26(1): 45–58. Davenport, G. 2002. ‘Good Faith in Collective Employment Relationships’, Paper presented to the 2002 New Zealand Law Society Employment Law Conference. Davenport, G. and Brown, J. 2002. Good Faith in Collective Bargaining. Wellington, LexisNexis Butterworths. Department of Labour. 2000a. ‘Issues Relating to Good Faith’, Memorandum to the Minister of Labour, 12 January 2000. Department of Labour. 2000b. ‘Good Faith “Infused” through the Employment Relationship’, Memorandum to the Minister of Labour, 21 February 2000. Department of Labour. 2000c. Employment Relations Bill: Report of the Department of Labour to the Employment and Accident Insurance Legislation Select Committee, June 2000. Department of Labour. 2001. In Good Faith. Pamphlet, Wellington, Department of Labour. Employment Relations Service. 2003. ERA Info, January 2003. French, C. 2000. ‘Employers and Good Faith’, Paper to the 2000 New Zealand Law Society Employment Law Conference. Harbridge, R., Crawford, A. and Kiely, P. 2000. Employment Contracts: Bargaining Trends and Employment Law Update 1999/2000. Wellington, Victoria University. Hughes, J. 2001. ‘The Collective Bargaining Code of Good Faith’, New Zealand Journal of Industrial Relations, 26(1): 59–84. Hughes, J., Roth, P. and Anderson, G. 2000. Personal Grievances. 2nd edition, Wellington, LexisNexis. Little, A. 2003 ‘Building Constructive Relationships’, Address to the 17th Annual IIR Industrial Relations Conference, 2003. Mazengarb. 2000. Mazengarb’s Employment Law. 6th edition, Wellington, LexisNexis. Minister of Labour. 2000. Code of Good Faith for Bargaining for Collective Agreement, 2 October 2000, Wellington, Department of Labour. Roth, P. 2002. ‘The Poverty of Fairness in Employment Law’, Employment Law Bulletin, 85–6. Swarbrick, P. 2000. ‘Collective Bargaining’, Paper presented to the New Zealand Law Society Employment Law Conference 2000. Timmins, J. 2002. ‘Good Faith in Collective Employment Relationships’, Paper presented to the NZ Law Society Employment Law Conference 2002. Treanor, D. and Rasmussen, E. 2003. ‘The new ERA in banking’, New Zealand Journal of Industrial Relations, 28(2): 184–99. Wilson, M. The Hon., Minister of Labour. 2002. Media release, 25 January 2002.

good faith bargaining under the employment relations act court decisions Auckland City Council v NZ Public Service Assn, (unreported), Court of Appeal, 11 November 2003, CA 112/03 Auckland Electric Power Board v Auckland Provincial District Local Authorities Officers IUW Inc, [1994] 1 ERNZ 168. Carter Holt Harvey Ltd v National Distribution Union Inc, (unreported), Court of Appeal, 25 September 2002, CA 22/02. Coutts Cars Ltd v Baguley, (unreported), Court of Appeal, 1 December 2001, CA 102/01. Fogelberg v Association of University Staff (a) unreported, Employment Court, 16 February 2002, CC 6/02. (b) unreported, Employment Court, 11 October 2002, CC 23/02. Hayden v Wellington Free Ambulance Service, (unreported), Employment Court, WC 12/02. NZ Amalgamated Engineering etc Union Inc v Carter Holt Harvey Ltd (a) unreported, Employment Court, 19 August 2002, AC 36/02. (b) unreported, Employment Court, 30 August 2002, AC 53/02. NZ Dairy Workers Union Inc v NZMP, (unreported), Employment Court, 4 February 2003, AC 4/03. NZ Fire Service Commission v Ivamy [1996] 1 ERNZ 85. NZ Public Service Association Inc v Auckland City Council, (unreported), Employment Court, 21 March 2003, AC 22/03. Ports of Auckland Ltd v NZ Waterfront Workers Union Inc, (unreported), Employment Court, 27 June 2001, AC 44/01. Transco plc v O’Brien [2002] ICR 721 (CA). Tucker Wool Processors Ltd v Harrison [1999] 1 ERNZ 894 (CA). Wellington City Council v Body Corporate 51702 (Wellington), (unreported), Court of Appeal, 7 August 2002, CA 264/01. Woods v WM Car Services (Peterborough) Ltd [1982] ICR 693.

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The employment institutions ian m c andrew, julie morton and alan geare

Introduction This chapter examines the institutions established under the Employment Relations Act 2000 (ERA) to uphold the Act, to encourage ‘good faith’ in employment relations, and to help employers, employees and unions achieve their objectives. The institutions are the Mediation Service and the Employment Relations Authority. The chapter outlines the historical development of the forerunners to these institutions, and goes on to describe the emergence of the present institutions, and to discuss their structure and performance. It concludes with an assessment of the institutions against the objectives intended for them by the Act. The conclusions reached in the chapter are, to a large extent, derived from two sources. The first is a long-term research project run by the first author, and the other is Masters degree research by the second author. The Justice in Employment project under the direction of Ian McAndrew has, with significant funding support from the New Zealand Law Foundation, compiled a database of variables drawn from Employment Tribunal adjudication decisions since the early 1990s. The database documents the characteristics of the parties, the process, the issues and the outcomes for each decision. More recent work has begun some comparative analysis of Employment Relations Authority determinations. The research has been widely disseminated over the past decade, including comparatively in McAndrew (2002). Julie Morton’s research, conducted throughout 2003, was an investigation of whether the new mediation and adjudication institutions and processes established by the ERA had, in fact, achieved the significant reduction in legalism and formality – relative to institutional performance under the ECA – that was clearly intended by policy makers. Morton interviewed a sample of mediators and Authority members, as well as union advocates and lawyers acting in the 98

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employment relations field. Her results are comprehensively reported in Morton (2003).

Before the Employment Relations Act New Zealand has a remarkably sophisticated history of providing institutions and processes for the resolution of employment disputes. For most of the twentieth century, the system was a stable one, but over the past thirtyfive years, there have been some significant changes, including most recently under the ERA. The conciliation and arbitration regime From the late nineteenth century, negotiations over the setting of wages and working conditions in the private sector were governed by compulsory conciliation and contingent arbitration under the Industrial Conciliation and Arbitration Act 1894. A state Conciliation Service, and later a Mediation Service as well, together with the Arbitration Court and later the Arbitration Commission, implemented this system until 1984. At that point, arbitration of wage and conditions disputes – ‘interests disputes’ in the language of labour relations – became voluntary, and the system for wages and conditions setting in New Zealand was changed forevermore. Wages and conditions setting in the public sector was treated somewhat differently throughout this period, but the two sectors were brought substantially into line in the late 1980s. The Labour Relations Act 1987 (LRA) recast the Arbitration Court as the Labour Court and merged the conciliation and mediation functions into a single Mediation Service. The Arbitration Commission lingered on, but with little to do. Under the LRA, mediation remained actively available for the resolution of collective bargaining disputes. The origin of rights procedures Procedures for handling ‘rights disputes’ came much later to New Zealand than procedures for handling interests disputes. Rights disputes in this country have been predominantly about challenging dismissals. Until 1970, employees had only limited legal avenues under common law to challenge a dismissal. The Industrial Conciliation and Arbitration Amendment Act 1970 (the IC&AAA) introduced a personal grievance procedure, but the provision retained the common law concept ‘wrongful dismissal’ and so had little immediate effect. This was rectified when the Industrial Relations Act 1973 (the IRA) changed the wording to ‘unjustifiable dismissal’, and that remains the basis of most personal grievances today. The protection of the personal grievance provision was available only to members covered by union-negotiated documents. The IRA also provided a procedure

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for the resolution of disputes over the interpretation of collective documents, the forerunner of the statutory disputes procedure in place today. The IC&AAA of 1970 also established the Mediation Service. Mediators were active in rights dispute resolution, chairing tripartite grievance and disputes committees of union and employer representatives. The committees were a forum for achieving a mediated settlement between the parties, but, failing that, there were also provisions for the mediator to make a ruling on the grievance or dispute, or that part of it that remained unresolved. If either party was unhappy with the mediator’s decision, the matter could be referred to the Arbitration Court. As noted earlier, the Mediation Service and the Conciliation Service were combined in 1987, the conciliators having been principally involved in chairing wage and conditions bargaining. The grievance and disputes committees system remained in place until 1991, with the dozen or so mediators of the merged Mediation Service chairing the committees in a local version of the ‘med-arb’ dispute resolution technique, as well as being active in the resolution of collective bargaining disputes throughout this period. As it was originally conceived and labelled in North America in the early 1970s, med-arb is a two-step dispute resolution process sequentially involving mediation and, contingently, arbitration and presided over by a single neutral who fills both roles, if both roles are required. The final outcome in a med-arb process typically combines any agreements reached in the mediation phase with the neutral’s decisions on any unresolved matters that proceed to the arbitration phase. The decade of the Employment Contracts Act The existing institutions were pretty much swept aside by the Employment Contracts Act 1991 (ECA). The ECA effectively deregulated the bargaining environment, while extending the regulatory framework for rights disputes. Statutory grievance and disputes procedures were now incorporated into every employment contract in the land, substantially expanding the ‘catchment area’ and drastically increasing the grievance workload on the institutions. Both union density and collective bargaining coverage declined dramatically under the legislation, and employment lawyers emerged to fill the representation void. The ECA promoted institutions and processes to match its central theme – employment relationships were now to be seen as merely legal contractual relationships, and dealt with accordingly. The grievance and disputes committees were done away with. In their stead, the ECA created the Employment Tribunal. The Labour Court became the Employment Court, with an appellate and supervisory jurisdiction over the Tribunal. Employment Tribunal members were statutory officers, warrantable as

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either mediators or arbitrators or both; in practice, virtually all were both. From 1993, the Tribunal membership usually numbered about twenty-eight. Less than half were lawyers; others had backgrounds in union or employer representation or in the Mediation Service. Mediation continued to be available to assist parties in collective bargaining disputes under the ECA by virtue of the Tribunal’s general mediation warrant. However, the extent of collective bargaining fell away markedly during the decade, as did its profile, and the Tribunal was only infrequently called on to mediate bargaining disputes. Mediation and adjudication in the Employment Tribunal The regulatory features of the ECA were about rights disputes. The new Employment Tribunal was assigned both the mediation and adjudication functions for rights disputes, but the processes were to be separate and carried out by different members in relation to any given matter. There was pressure on parties to mediate, but ultimately if one party elected not to, then the matter could proceed directly to adjudication. Early on, the Employment Court determined that the Tribunal was precluded from issuing a ruling on a matter in mediation, even if asked to do so by the parties. In due course that decision was overturned and the med-arb option once again became available. In fact, however, it was used infrequently, probably because the Tribunal had by then established such a strong success rate in mediation that members were unwilling to compromise the mediation process by advertising a willingness to make a decision. As with the med-arb committee system that preceded it, the Employment Tribunal’s processes for resolution of rights disputes themselves developed an enviable record of success in many respects. Over the life of the Tribunal, more than 80 per cent of rights cases filed went to mediation, and 85 to 90 per cent of those were settled (Department of Labour 2000a: 4). The process usually took just three or four hours. Several factors conspired to ensure that a particular style of mediation developed quickly in the Tribunal. Under the ECA, employment relationships were about legal rights and obligations. So, too, were cases arising out of employment relationships. And most that came to the Tribunal were terminated relationships, often long terminated. With the decline of unions, parties were often represented by lawyers. If parties were unable to reach a settlement in mediation, adjudication was the next forum available to them. Consequently, the likely outcome of the case in adjudication hovered as a powerful influence on parties in mediation, and Employment Tribunal members, being adjudicators as well as mediators, were ideally placed to advise parties on the likely outcome if their case proceeded to adjudication.

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So the usual approach to mediation in the Tribunal was a ‘litigation risk analysis’ in which the Tribunal member heard the facts and arguments presented by each side, and was then able to advise each side about the strengths and weaknesses of its case and the prospects in adjudication. The member then used that advice as leverage to guide the parties towards a settlement that was, ideally, in proportion to the merits of the case, though subject to the realities of the situation in which the parties found themselves. In large measure, then, Tribunal mediators were ‘deal makers’, engineering agreements on ‘exit packages’ for often long-dead employment relationships. Creeping legalism, formality and costs The ECA charged the Employment Tribunal with being a ‘low level, informal Tribunal’. Initially the Tribunal achieved that even in its adjudication jurisdiction. Gradually, however, over the decade of the 1990s, adjudication in the Tribunal tended to become more formal, more legalistic and more costly. Adjudication in the Tribunal was adversarial in nature. The representatives of the parties, most often lawyers, largely shaped the cases put before the adjudicator. And they became more inventive with their arguments and challenges over time. In its supervisory role, the Employment Court became more demanding of the Tribunal’s processes, so that both hearings and decisions became longer and more detailed. Costs increased. So did time delays to hearings and then to decisions. Costs and delays became the twin criticisms of the Tribunal (Department of Labour 1999, 2000a, 2000b). Representation costs were not only a concern in adjudication, where a typical one-day dismissal hearing might involve legal costs of $5,000 or more for each party, but also added to the ‘price’ of achieving settlement in mediation. Time delays were a chronic problem for the Tribunal. By the time it was up and running in August 1991, it already had a substantial backlog of cases waiting for it. And despite several injections of additional ‘temporary’ members, the volume of incoming cases was such that the backlog was never appreciably reduced. By the late 1990s, the Tribunal was disposing of over 5000 cases each year. Still, in some provincial centres, at the extreme, parties could wait a year or more for mediation and close to two years for an adjudication hearing. More usually, parties might expect to wait perhaps three months for mediation and six months for adjudication. Some part of this reflected inadequate resourcing, but, to some extent, it arose from increasing legalism and formality.

New institutions under the Employment Relations Act Despite these points of concern, the Employment Tribunal, its members, and

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its mediation and adjudication functions were widely respected as soundly based and effective in the context of what, by the turn of the century, was now a well-entrenched contract-based employment relations system in New Zealand (Hodge 2000). It was unsurprising, then, that retention of the Tribunal was a feature of the opposition Labour Party’s employment relations policy for the 1999 election. In government, however, Labour abandoned the idea of remaking the Employment Tribunal, keeping it on to finish up cases filed under the ECA, but replacing it under the new legislation with a staff of mediators housed in the Department of Labour and a new adjudicatory body in the Employment Relations Authority. At the point in January 2000 that the Department of Labour published its employment institutions ‘options paper’, advancing the objective of ‘enhancing and supporting employment relationships’ as central to the new legislation and promoting a new style of mediation as pivotal to achieving that objective, the institutional strategy changed course. The Mediation Service Formal, legally based mediation revolving around litigation risk analysis and negotiated ‘exit packages’ was not seen as a foundation for supporting employment relationships. A wider and less formal style of dispute resolution aimed at repairing employment relationships, rather than winding them up, was to be preferred. A new emphasis on mediation of collective bargaining was also envisioned. There were doubts expressed as to whether Employment Tribunal members could or would make the necessary transition in mediation style. It was envisioned that a larger number of mediators with process expertise but a lower level of legal expertise would be a better formula for the range and types of mediation preferred. Mediation services are defined broadly under the Act, as they have been in implementation by the Employment Relations Service (ERS) of the Department of Labour. A great deal of emphasis is put on the provision of information electronically, by phone and in person, to educate employers and employees about their rights and obligations. However, the core of mediation services remains the active third-party intervention in an employment relationship. In putting together a Mediation Service staff under the ERA, several modes of intervention were anticipated. First, mediation of collective bargaining was to be resurrected with considerably more gusto than the Tribunal had been allowed under the ECA. Inevitably, there would be event-based mediation in bargaining disputes, most obviously where strike notices were served in essential industries. Beyond that, however, the philosophy of the Act also signalled the desirability of a more proactive approach to assisting parties to

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improve collective relationships, thereby avoiding or at least minimising industrial disputes. Second, it was always likely that the mediation of rights-based disputes – principally grievances, and in the main dismissals – would remain a staple of the mediation workload, as it had been for three decades. While it was hoped that new approaches would mean that many intended dismissals would be cut off at the pass, the ERA did not significantly change the contractual basis of employment relationships installed by the ECA, and so rights-based cases could be expected to continue to flow in. Third and relatedly, the philosophy of the ERA dictated that mediation services, including hands-on involvement by a mediator, be available for early intervention to assist parties with workplace problems, without regard to how the problems were defined and with a minimum of paperwork, cost or fuss. This was intended to be the core mediation intervention to maintain and enhance employment relationships, the corollary hopefully being a dramatic reduction in terminal cases. And, of course, a proactive approach to assisting parties to improve their relationships was also to be available, leading with the extensive information services on offer. To provide these services, the Department of Labour recruited a mixed staff of almost forty mediators. About one-third were legally qualified. About half had employment relations backgrounds. Others had dispute resolution training or backgrounds in fields other than employment. Seven were held over from the Employment Tribunal, including several very experienced personnel who had been with the Mediation Service prior to the ECA. This recruitment strategy was no doubt intended to pull together a force of mediators who would fit the profile of the anticipated workload. The diversity brought strengths but also some complications, including early workload and pay inequities. And there were, inevitably, differences in mediation philosophies, and in personal mediation styles. In time, a Chief Mediator was installed in lieu of a manager to provide professional leadership on these sorts of issues. The Employment Relations Authority The other part of the institutional dispute resolution equation to emerge during the Government’s policy discussion was the need to simplify adjudication procedures. This evolved into a rejection of the adversarial approach to adjudication practised in the Tribunal, and a preference for the adjudicator-driven inquisitorial approach common to civil law jurisdictions (Green 2000). With the greater emphases on mediation and the preservation of employment relationships, a smaller force of investigative adjudicators was envisioned, and

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that vision eventually took shape as the Employment Relations Authority. It was anticipated that the Employment Court would be required to play only a much reduced role in rights disputes under the ERA. The new Authority was, then, intended to function quite differently from the Tribunal in its adjudication jurisdiction. The Authority was to replace what was seen as the Tribunal’s relatively formal, costly, adversarial, lawyerdriven, court-supervised adjudication process (and corresponding decision outputs) with a less formal, less legally technical, self-supervising, memberdirected investigative process and shorter, to-the-point determinations. This change in approach would, it was reasoned, produce shorter hearings and encourage parties to represent themselves, further reducing costs. The Authority was also given a broader jurisdiction and more freedom to act in certain contractual matters (Dumbleton 2001). The Authority was established with an authorised strength of just thirteen members, with registries in Auckland, Wellington and Christchurch only. The Tribunal was being retained to clear its own backlog so the Authority could start afresh. And it was expected that the expanded and refocused mediation effort, the insistence under the ERA that parties participate in mediation and the distance that had been put between mediation and a determination in the Authority would substantially reduce the number of matters requiring an adjudicated decision. The Chief of the Tribunal was appointed as the initial Chief of the Authority, and eight of the other twelve original members had been Tribunal members. Most other and subsequent appointees have been lawyers, several with trade union affiliations, although several later appointees have also been drawn from earlier Tribunal ranks.

Institutional performance under the Employment Relations Act Employment institutions are expected to resolve employment disputes one way or another – that is the first test of their success. But more than that, the ERA institutions are also expected to deal with matters much more quickly, less formally and legalistically, and less expensively than did the Employment Tribunal. And beyond simply ‘handling’ disputes that come to them, the institutions under the ERA – and particularly the Mediation Service – are charged with promoting positive employment relationships; in effect, working not merely to resolve individual disputes, but to avoid them. There was to be more mediation investment in collective relationships as well, event-based mediation in industrial disputes certainly, but also proactive involvement with parties to promote positive ongoing union–management relationships.

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The institutional workload One way to measure institutional performance is to look at the numbers. As a baseline, in the calendar year 1999, the last ‘uninterrupted’ year of its operation, the Employment Tribunal received 4379 new applications and it disposed of 5336 cases, around 80 per cent of them by mediated resolution (Hodge 2000: 131). In the year to 30 June 2003, the Mediation Service received 9256 new applications for assistance and disposed of 9278. Of these disposals, about 2000 were settlements reached directly by the parties and lodged with the Service for endorsement and recording. But 4212 of the remainder were full settlements and another 1662 were identified as either withdrawn or not proceeding. Matters dealt with but not settled during the year numbered 1155. Only 47 involved the mediator making a decision at the request of the parties. About 1000 matters were outstanding at 30 June 2003, up about 18 per cent from twelve months earlier (Department of Labour 2002a, 2003). In the year to 30 June 2003, the Employment Relations Authority received 2384 new applications and disposed of 2225. Of these disposals, 653 involved a determination by the Authority, while in 1555 cases the matter was either withdrawn or the investigation abandoned. Many of these cases would have been resolved in mediation following a referral to mediation by the Authority. The Authority directed to mediation exactly one half of the 3634 applications it received during its first two years of operation. At 30 June 2003, the Authority had 1053 applications outstanding, up about 25 per cent from twelve months earlier (Department of Labour, 2002a, 2003).

Assessing the Mediation Service The Mediation Service has, in some respects, been highly successful, but there continues to be agonising over its ability to fulfil what policy makers see as its key role in meeting the objectives of the ERA – the enhancement of positive employment relationships. Since the inception of the first Mediation Service in 1970, there has often been a policy intention that mediators should take a proactive role in assisting parties to employment and industrial relationships to get along with one another, rather than being exclusively occupied with patching up breakdowns in relationships or, worse still, sealing the terms of ‘divorce’ once employment relationships were over. But the reality in the 1970s and 1980s was that mediators were predominantly involved in settling dismissal grievances and other ‘terminal’ matters (wage and holiday payouts, and the like) – sealing the terms of employment ‘divorces’. In the 1990s, the ECA, more than any other piece of legislation over the years, endorsed the legitimacy of

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that sort of role, and further distanced mediators from involvement in ongoing relationships. The ERA clearly goes further than earlier legislation in intending that the Mediation Service be proactive in intervening before the hard problem stages of employment and industrial relationships. The Service was to work to salvage, repair and enhance both individual and collective relationships, and thereby minimise dismissals on the individual front, strikes and lockouts on the collective front and the more acrimonious, final and litigious sorts of cases that follow those events. In fact, however, for whatever reason, only a very small fraction of cases coming to the Service for mediator intervention have involved requests for assistance in repairing troubled relationships. The Department of Labour’s report on the first two years under the ERA (2002a) revealed that 62 per cent of completed mediation applications in that period were personal grievances, most of them dismissals. Much of the balance also involved what are usually ‘terminal’ cases – recovery of wages (6.4 per cent) and redundancy (5.8 per cent) being examples. The reported profile of settlements was not markedly different than those mediated in the Tribunal era either. Less than 2.5 per cent involved reinstatement of the employee. While these would have been disappointing results in terms of the overarching intent of the ERA to promote positive employment relationships, it is also important to note that the two-year report contained some good news. The Mediation Service was not only processing large numbers of cases (14,357 applications during the twenty-four months), but settlement rates were high (12.8 per cent ‘not settled’) and similar to those achieved in Tribunal mediation, user satisfaction levels were high (86 per cent of respondents were either ‘satisfied’ or ‘very satisfied’ with the overall handling of their issue) and the time to hearing and resolution was very much improved over the Tribunal’s record. The figures showed that over 50 per cent of cases were completed within three weeks of the application being opened in the Mediation Service, 75 per cent were completed within six weeks and 90 per cent within eleven weeks. Some early tensions Despite these successes, the stubborn caseload profile and the continuing heavy use of lawyers and other professional representation generated some tensions. A ministerial briefing paper (Department of Labour 2002c) for the new government term in 2002 painted a generally rosy appraisal of the Mediation Service, citing an Employers’ Association survey of members, and reporting what has become a familiar theme – the speed of disposition and flexibility of scheduling are seen as the key advantages of the Mediation Ser-

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vice over its predecessor. At the same time, the paper flagged as policy issues the need to more aggressively promote the low-level use of mediation to assist relationships, and the need to keep a watch on the use of legal representation in mediation, the costs associated with that and the continuing use of mediation ‘to simply set an “exit price” as opposed to preventing or resolving employment relationship problems’. A paper circulated by the Chief Mediator (Hooper 2002) in November 2002 underlined the lack of progress in moving the focus of the mediation effort as the ERA intended. The Chief Mediator reported that, two years in, the volume of cases coming to mediation was increasing, testing the Service’s capacity, but the profile of the caseload remained largely as it always has been – dominated by dismissal grievances, in which the role of mediation is to broker an ‘exit package’. With the rising volume of this sort of case work, the Service has had little capacity to develop and promote more proactive services. And, in any event, the Service has so far found little appetite for early intervention amongst the parties. For the most part, employers and employees seem inclined to make all of the efforts to work together that they are prepared to make without assistance, and to turn to the Mediation Service only at the point that they have given up on their relationship. The ECA installed the legal contract as the basis of employment relationships. Whatever else it could be said to have done, the ERA has not changed that fundamental premise. That being so, and given the continuing domination of the mediation caseload by personal grievances and other terminal cases, it is unsurprising that parties, in large numbers, continue to seek legal advice when going to mediation, that they take an approach in mediation that is based on legal principles and that they look for an outcome that reflects the merits of their situation. Those parties and their representatives continue to value a litigation risk approach to mediation and are likely to be unsatisfied by an approach that does not provide guidance towards a settlement based on the merits of the case. The tensions in all of this are obvious. UMR research commissioned by the ERS found that the Mediation Service was well regarded for its speed and flexibility, but that parties wanted mediators to assess the strength of their case and give them some direction. The main criticism of the Service reported by UMR was the belief that mediators ‘sat on the fence’, providing no direction for settlement that was based on the merits of the case (UMR Research Limited 2002: 95). A mediator lacking the knowledge base to conduct a litigation risk analysis, but faced with parties wanting leadership rather than simply facilitation, is reduced to engaging in pure ‘settlement mediation’ in which the parties are pushed to compromise solely on the basis that there

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will be no settlement without compromise. Many parties find this less than satisfying. Morton (2003) conducted an extensive study on the success of the ERA institutions in reducing legalism and formality in dispute resolution processes, interviewing mediators and members of the Authority, as well as surveying lawyers and union representatives. Morton’s report largely confirms other evidence. She found that the changes in the mediation process and caseload profile have generally been much less than were intended, though parties do applaud the markedly quicker and easier access to mediation. Both mediators and advocates recognised that there were different styles of mediation of rights disputes practised in the Service. Not unexpectedly, Morton found that lawyers in particular were generally less than happy with a non-directive approach by mediators, and that experienced advocates are still inclined to seek out particular mediators, continuing a disparity in workloads. System adjustments for 2004 These tensions have been addressed by policy makers in recent times. In an August 2003 address (Wilson 2003), the Minister of Labour signalled several matters worrying the Government. First, grievants were too quick to seek mediation help once their relationship with their employer had broken down, without trying to settle their differences privately. Second, government was concerned with continuing legalistic and adversarial approaches in mediation, and with inflated claims for monetary compensation. And third, there were some administrative practices in mediation that could be made more efficient. These concerns flagged by the Minister eventually materialised as proposals for change in the Employment Relations Law Reform Bill (ERLR Bill). The Bill, if enacted into law, will provide that mediators are able to ‘fast track’ minor or straightforward problems through a time-limited mediation process and that, failing agreement, the mediator would make a binding decision – back to the ‘med-arb’ process used pre-ECA, but largely neglected since then for fear of damaging the success rate in mediation under both the ECA and ERA. The Bill also ‘empowers mediators to set specific processes and procedures to govern the conduct of mediations and be more active in guiding the parties towards the resolution of their employment relationship problems’; clarifies the mediator’s entitlement to deal directly with parties, effectively sidelining their representatives, to talk about their positions and approaches in mediation; and requires that settlement monies would ordinarily be paid directly to a party rather than, as has been the practice, to the party’s representative.

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What all of this is likely to mean in practice is set out in a November 2003 memorandum from the Chief Mediator which reports that ‘the focus for ERS mediation services is moving towards improving our accessibility to clients and endeavoring to intervene to enhance employment relationships rather than resolve grievances’ (Hooper 2003b: 1). By now, a familiar refrain indeed! The broad intent for the redirection is to more efficiently and systematically process what are assessed as routine grievances and wage cases through the abbreviated ‘med-arb’ process, thereby pushing disposals ahead of referrals and freeing up mediator capacity that can be devoted to expanding the Service’s proactive, preventative efforts. Mediating collective bargaining disputes One area of significant qualitative contribution by the Mediation Service under the ERA has been mediation intervention in collective bargaining relationships. While the Service retains plans for a comprehensive proactive approach to collective bargaining relationships (Hooper 2003a), designed to promote bargaining skills and an interest-based bargaining philosophy, and thereby to avoid strikes and lockouts, most interventions in bargaining relationships have not thus far been of that type. As with the rights caseload, most mediation interventions in collective bargaining have been event-based, most often triggered by a strike notice issued in an essential service. In terms of success rates, there has almost always been a settlement, sooner or later. Though implementation of a full preventative programme remains in the future, mediators have at times been able to use event-based interventions to assist parties in enhancing their bargaining relationships. In a minority of cases, mediation assistance is sought early in a bargaining relationship and mediators can work with parties on negotiating constructive bargaining process agreements. On other occasions, mediators entering an impasse situation have been able to work with parties to bring some structure and orderly process to the bargaining relationship as a basis for breaking the deadlock and moving the negotiations forward. Pressure of workload has meant that mediators have less often had the luxury of being able to debrief parties following a mediation intervention leading to agreement. But anecdotal evidence indicates that some of that has been happening under the ERA, and that work may provide a model for the future. Much of the Service’s proactive programme for the future, in terms of both individual and collective employment relationships, is predicated on using event-based interventions – in grievances, strikes and the like – as a contact opportunity for educating parties and working to enhance the relationships between parties.

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Assessing the Employment Relations Authority In the eighteen months leading up to the enactment of the ERA, the Employment Tribunal issued 1566 decisions. In the year to 30 June 2003, the Authority issued 653 determinations. Other than this difference in volume, the Authority’s caseload does not look much different from that of the Tribunal before the ERA; the substantive adjudication work remains focused on unjustifiable dismissal personal grievances. While the lower case count would be a pleasing sign for policy makers, the number of applications to the Authority nonetheless exceeds what was originally hoped, and has been steadily increasing (Morton 2003). If the adjudication caseload profile has not changed much, the clientele has. An analysis of the first eighteen months of the Authority’s operation (McAndrew 2002: 329) revealed that white collar workers are now 60 per cent of grievants in the Authority (versus 47 per cent at adjudication in the Tribunal). Correspondingly, pink and blue collar workers are now just 38 per cent of grievants in the Authority (versus 53 per cent at adjudication in the Tribunal), and are presumably more inclined than white collar workers – for whatever reason – to resolve matters in mediation. Determinations and outcomes The Authority’s investigative approach was designed to address the time delays, legal formality and costs to the parties that had crept into the Employment Tribunal’s adjudication jurisdiction. And the Authority has certainly had some success in addressing those issues. Investigations in the Authority are, on average, taking less time than adjudications did in the Tribunal. In the Tribunal, 68 per cent of grievance hearings were completed inside one day; in the Authority, the figure is 77 per cent (McAndrew 2002: 328). Reduced formality, technicality and legalism, and the stripping away of the Employment Court’s supervision of the lower body’s procedures, were also expected to lead to shorter decisions. Again, this has happened, with most Authority determinations (86 per cent) running to ten pages or less. A majority of substantive Tribunal decisions exceeded ten pages (McAndrew 2002:.328). The Authority has also been successful in markedly reducing waiting times to hearing, addressing another escalating concern that dogged the Tribunal throughout its existence. More recently, though, some disquiet has been expressed by members of the Authority about the increasing ratio of work to resources, and the anticipation that waiting times will inevitably increase as demand continues to increase (Morton 2003: 136). These changes to process seem to have occurred without much change to outcomes. McAndrew’s comparative study of grievance decisions during the

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Authority’s first eighteen months and the Tribunal’s ‘last’ eighteen months (McAndrew 2002) showed little change in grievant success rates, other than a drop in success rates for workers bringing constructive dismissal claims (from 48 per cent success in the Tribunal to 33 per cent in the Authority) . The same comparative study showed that most Authority awards in both the wage reimbursement and compensation for humiliation, loss of dignity and injury to feelings remedy categories remain in the range up to $5,000, as was the case in the Tribunal. There is, however, some movement into the $5,000–$9,999 range evident for both remedies. This may represent a shift in decision-maker thinking, or it may simply reflect an allowance for inflation over time. Either way, there cannot be said to be a marked change in remedy patterns from the Tribunal to the Authority. In terms of personal grievance win–loss outcomes in the Authority during the first eighteen months, the key predictor in McAndrew’s study proved to be member identity. The statistical model sorted Authority members into two fairly clear camps. Most former long-serving Tribunal members were in one group, from whom grievants won 38 per cent of cases in the 18-month period examined. All newly appointed Authority members were in the other group, and from this group grievants won 66 per cent of cases. There can be many explanations for these patterns, including circumstantial factors – such as the apparently greater disposition in some parts of the country to ‘try on’ less meritorious cases – and deliberate factors – such as case allocation policies. That new appointees might see things differently from decision makers with long experience in adjudication nonetheless remains a possibility. While the Authority should generally be seen as one of the successes of the ERA, it will be a disappointment to the framers of the legislation that reinstatement remains only a very occasional remedy in Authority determinations. In terms of the ERA’s objective of preserving employment relationships, reinstatement is obviously the next best thing to avoiding dismissal in the first place. Given the difficulty that the Mediation Service has experienced to date in getting any traction for its preventative, early intervention work, the infrequency with which dismissed employees seek and win reinstatement seems inconsistent with the philosophy of the Act. Process, formality, representation and legalism The purposeful change in process from the Tribunal to the Authority was the move from an adversarial to an inquisitorial model, designed to wrest control of the process from advocates and to promote a less formal, less legalistic, less time-consuming and less costly adjudication process. To a considerable extent the change has achieved these outcomes, though the achievements probably remain short of the ideals contemplated by policy makers.

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Most Authority members strive for a measure of informality and are keen that parties feel comfortable with the investigation process. Authority members who were previously members of the Employment Tribunal confirm that formality and legalism are much reduced in the new process. While there has been a reduction in legalism and formality, some practices – such as the continuing use of briefs of evidence and written legal submissions – limit further streamlining. Employment lawyers surveyed by Morton in 2003 commented that submissions were fundamental to legalism, and while they remain, so does an element of legalism. Unsurprisingly, the Department of Labour policy papers directly linked the level of legal formality to the role played by lawyers in the Employment Tribunal (Stockdill 2001: 2). One of the hopes of policy makers was that parties would feel sufficiently comfortable with Authority procedures to attend without legal representation. These hopes appear to have been realised to only a limited extent. There has been some movement towards self-representation in the Authority, mainly amongst applicants, but this seems to have been at the expense of lay advocates rather than the legal profession. Certainly there is no lessening of the use of lawyers in the Authority, proportionally speaking, relative to their involvement in the Tribunal adjudication process under the ECA. McAndrew’s study of Authority determinations in the first eighteen months found some interesting connections to representation. Employers who self-represented were less likely to win their case than if they brought a lawyer or advocate with them, but employees were more likely to win if they represented themselves. On the other hand, McAndrew found that employees who successfully represented themselves were awarded, on average, only about half the compensation awarded to represented employees. This could be due to the simplicity of the cases brought by those employees who represent themselves, or it could be due to insufficient examination of an unrepresented applicant’s level of loss or suffering. Some Authority members are reluctant to ask questions about a grievant’s level of suffering associated with compensation claims in case it appears they are leading or favouring that party (Morton 2003: 119, 120). Morton reported that Authority members generally did not regard unrepresented parties as being at a disadvantage vis-à-vis represented parties, and so they saw no reason to be more active on behalf of the unrepresented. Over the long term, if the results remain as they were in the first eighteen months of the ERA, this could discourage parties from venturing into the Authority without professional representation. In a related area, there is, at best, mixed evidence on whether the objective of reducing the costs to parties of resolving an employment dispute by formal

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decision has been met. McAndrew’s study of Authority determinations showed some interesting results. In costs awards to successful employee applicants, awards in what used to be regarded as the ‘usual’ range, say $501 to $2,000 (70 per cent of awards in McAndrew’s comparable Tribunal sample), constituted less than 40 per cent of awards in the Authority, with the rest pushed out to the lower and higher categories. There were as many awards of $500 or less to employees as there were awards in this $501 to $2,000 range, presumably reflecting in part the different procedures in the Authority, relative to Tribunal adjudication procedures. But there were also substantially more awards above $2,000 than was the case with the Tribunal sample. A recent Employers and Manufacturers Association (Central) survey reported that 47 per cent of respondents considered that the cost of defending a personal grievance claim had increased under the ERA (Department of Labour 2002b). Some Authority members have themselves expressed concerns at what they believe to be ever-increasing costs applications. This could be, as some members believe, because parties are engaging representation that exceeds the needs of the case. Or it may be, as some employment lawyers say, because the lack of pleadings has required increased preparation time in order to be ‘ready for anything’ at the investigation meeting (Morton 2003: 125).

Conclusions The foregoing discussion allows for some succinctly drawn conclusions. The ERA is philosophically dedicated to the preservation and enhancement of positive employment relationships as a cornerstone of a healthy society and a prosperous economy. Under the ERA, the Mediation Service and the Employment Relations Authority, and each of their activities, are intended to promote those objectives, and it was that fact, more than anything else, that was to distinguish them from the Employment Tribunal. It was intended that mediation would play an even more prominent role than it had in the past, with adjudication in the Authority, and even more so in the Court, shrinking in importance correspondingly. What adjudication occurred would be less formal, less legalistic and less costly than had been the case in the Tribunal. Mediation was to be promoted as being available early to assist parties with budding problems and as being preventative and remedial, both in individual relationship matters and collective bargaining matters. Mediation as a formal, event-centred and legally based process for fixing strikes and brokering ‘exit packages’ for dismissed employees was to be deemphasised as essentially signifying ‘system failures’ in a proactive, preventative mediation system.

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We conclude that, as a framework for dispute resolution, the ERA institutions and processes have worked well in many respects, but that they are yet to bring about any fundamental change in employment relations practices or, indeed, in employment dispute resolution. Change has been most evident in the adjudication jurisdiction. The number of cases being determined by adjudication is much reduced. That said, it should be acknowledged that the number of cases going to the Authority is running well ahead of what was hoped, and is increasing. Department of Labour surveys have consistently shown high levels of satisfaction among users of the Authority, and it is widely acknowledged that the Authority’s investigation process, and the speed with which cases are dealt, represent some welcome advantages over the earlier Tribunal procedure. It has to be said, though, that while significant and positive change in the adjudication process has occurred, the changes arguably fall short of what was originally intended by policy makers. As noted, for example, legal briefs and submissions remain standard. This may be more a philosophical problem than a real one. It may well be that Authority members are best placed to determine the appropriate mix of practices, and that further dilution of process might be at the expense of justice. Nonetheless, the continued high cost of achieving an adjudicated outcome would be a concern to policy makers. Applause for the Authority is not entirely unanimous. Morton’s study found, perhaps predictably, that employment lawyers’ opinions about the investigative process are divided. Some lawyers expressed appreciation of Authority members taking a firm control over the process, while others were unimpressed with the new inquisitorial role and felt that this impinged on their client’s access to justice. In general terms, though, it can be said that the Authority has been successful in changing the nature of the adjudication process, while still probably falling short of the ideals set for it by policy makers. And there remains the danger, of course, that the advances that have been made can be put in jeopardy if the Authority’s resources are not adjusted to keep pace with the rising caseload. Significant changes recently proposed for the Mediation Service indicate that policy makers are dissatisfied with the progress being made in changing the focus and style of employment mediation to prevention and early intervention. It is perhaps worth reiterating that there continue to be some substantial positives for the Mediation Service ahead of these mooted changes. Despite the volume of referrals stretching capacity, user satisfaction with the Service remains at a high level, 86 per cent of clients surveyed in 2002–03 being

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‘satisfied’ or ‘very satisfied’ with their mediation experience (Department of Labour 2003: 68). More detailed figures generated by the Mediation Service show that small majorities of users were ‘very satisfied’ on most dimensions measured, although just 47 per cent were ‘very satisfied’ that the mediator helped the settlement process. It may be that much of the success of mediation is in the process itself and the opportunities that it affords the parties, and that the particularities of personnel and approach are overstated. Nonetheless, these statistics are consistent with other evidence that the speed and efficiency of mediation under the ERA are most valued by users, but that many of them continue to look for more leadership from the mediator in getting to a settlement. The philosophy of the ERA commits the Mediation Service to a proactive programme of preventative mediation assistance to parties to promote positive employment relationships. The UMR research commissioned by the Department of Labour in 2002 found that employers had little enthusiasm for early mediation intervention in employment problems, while employees interviewed generally felt that requesting mediation assistance was likely to escalate the problem, probably to their detriment. Accordingly, both parties were inclined to try to work out issues themselves, and to take that process as far as they could without involving mediation. The documented experience is that most parties turn to the Mediation Service for help only when they have effectively given up on their relationship, and that fact has been acknowledged by the Service. Indeed, policy makers now lament that, while parties are reluctant to involve a mediator when they are wrestling with their problems, they are too quick to turn to the Mediation Service once they have given up on their relationship. While frustrating for the Mediation Service, which is cast in the primary role of brokering ‘exit packages’ or impasse settlements, a role that it clearly does not want as its primary role, there is no reason to believe that parties have widely changed their view on their need for early mediation intervention or that any substantial change in the future will come quickly. As long as this is so, a policy of ‘piggy-backing’ on event-based interventions to go on and identify parties with whom the Service might usefully invest proactively might be a sounder policy than efforts at wholesale, philosophically based promotion of early intervention by government in employment relationships on a ‘we know what’s best for you’ basis. Particularly in the collective bargaining arena, the Mediation Service’s strategy of following event-based interventions with targeted follow-up preventative work is beginning to show promise. It is likely that the Service can lead some parties traumatised by a strike or a wrenching personal grievance into assessing and working on their relationship with some facilitative media-

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tion. That strategy, while it recommends itself as sensible and realistic, is unlikely to produce a wholesale conversion of the mediation caseload to early intervention preventative work any time soon. The change will be much more gradual, but as it occurs, is likely to be more real and permanent, and to carry with it a change in employers’ approaches to employment relationships. There is a danger that in overreaching for a massive, more immediate and perhaps forced change in the profile of mediation interventions, via the sorts of measures proposed in the ERLR Bill, that this will occur at the expense of the Service doing – or doing effectively – what parties have consistently wanted done, and have consistently had done by public mediation services since the early 1970s. Since 1990, for example, mediators have largely avoided the med-arb process and have enjoyed a very high success rate in settling cases that the parties have chosen to bring to mediation. What will be the implications for the mediation process of now channelling ‘routine’ cases to an abbreviated med-arb process? Perhaps a more gradual and natural transition to a mediation caseload more weighted to proaction and prevention is to be preferred. As a final aside, we note that the ERLR Bill authorises the Employment Relations Authority to provide ‘facilitation’ beyond mediation to parties who are having serious difficulties in concluding a collective agreement. Under very limited circumstances, a form of arbitration would be available. It is unclear what substantial need is being met by this proposed new intervention. Policy makers appear to have in mind something similar to the ‘fact finding’ process quite commonly used in North American public sector bargaining disputes, and such a process might have proved valuable in a handful of disputes so far under the ERA. On the other hand, there has to be some danger that the effectiveness of mediation in collective bargaining disputes might be compromised if this proposed new intervention is not very carefully crafted. Mediation of both bargaining and rights disputes has a very strong history of success in New Zealand. The integrity of the process ought not to be lightly jeopardised by experimentation with more contrived procedures in impatient pursuit of improbably ambitious policy targets.

references Department of Labour. 1999. Memorandum to the Minister: Employment Relations Bill – policy issues. Wellington. Department of Labour. 2000a. Employment institutions options paper. Wellington. Department of Labour. 2000b. Role of the specialist employment institutions. Wellington.

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Department of Labour. 2002a. The Employment Relations Act: A summary of the first two years (2 October 2000 to 30 September 2002). Wellington. Department of Labour. 2002b. Employment Relations Service Submission on Law Commission preliminary paper 51: Striking the balance. Wellington. Department of Labour. 2002c. Ministerial Briefings 2002: Social Policy Labour. Wellington. Department of Labour. 2003. Report of the Department of Labour, Te Tari Mahi, for the year ended 30 June 2003. Wellington. Dumbleton, A. 2001. ‘The Employment Relations Authority gets underway’, New Zealand Journal of Industrial Relations, 26(1): 119–30. Green, P. 2000. ‘Viva la difference? Dispute resolution under the Employment Relations Act 2000’, Employment Law Bulletin, October, pp. 137–44. Hodge, B. 2000. The institutions under the ERA 2000, Paper presented at the New Zealand Law Society, 23–24 November, Wellington. Hooper, S. 2002. Report on the use of preventative pro-active mediation techniques as an alternative to event-based processes. Hooper, S. 2003a. The future of mediation services (Mediation Service memorandum, undated). Hooper, S. 2003b. Outcome plan for ERS mediation services. McAndrew, I. 2002. ‘Determinations of the Employment Relations Authority’, New Zealand Journal of Industrial Relations, 27(3): 323–47. Morton, J. 2003. Reducing legalism: the impact of the Employment Relations Act 2000, Unpublished Masters Thesis, University of Otago, Dunedin. Stockdill, R. 2001. Availability of Legal Aid for mediation under the Employment Relations Act, Wellington, Department of Labour. UMR Research Limited. 2002. The process of dispute resolution – A qualitative study amongst employees and employers. Wilson, M. The Hon. 2003. Address to the Employment Law Institute.

8

Employment relationship management under the Employment Relations Act 2000 tony waldegrave 1

Introduction This chapter draws on the New Zealand Department of Labour’s evaluation of early responses to the Employment Relations Act (Waldegrave et al. 2003) to discuss employer experiences of employment relationship management under the Act. The evaluation was conducted within the first three years of the Act coming into force in October 2000. The chapter focuses on two main areas: the promotion of collective bargaining and the Act’s requirements for good faith in all aspects of employment relations. The evaluation involved nationally representative surveys of employers of workplaces, employees and unions, and a series of case studies of large and small companies in both the public and private sectors. Full details of research methods are given in the report (Waldegrave et al. 2003), available through the Department’s website at www.dol.govt.nz. Collective bargaining Background The ERA aims to promote collective bargaining and observance in New Zealand of ILO Convention 98 (on the right to organise and bargain collectively). The Act provides unions with the exclusive right to represent employees in collective bargaining; provides unions with rights to access, educate and recruit employees; and introduces required procedures for the initiation and conduct of collective bargaining between employers and unions. It also aims to protect employee freedom of choice between whether they are covered by a collective employment agreement or an individual employment agreement. 119

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The ERA reintroduces the requirement for unions to be registered that was abolished by the Employment Contracts Act 1991 (ECA). Unions are required to have a minimum of fifteen members. Under the ERA, only registered unions can negotiate for a collective agreement on behalf of employees. Previously, contracts were negotiated by both unions and less formal groups of workers. The ERA was introduced at a point of low levels of union representation that could also be seen to represent a low point of the potential decline in collective bargaining. The ECA period saw a decline in the number of large unions and some growth in the numbers of small unions. Unions with more than 5000 members retained more than 80 per cent of all union members, helped by a reduction in the number of big unions from twenty-eight to twelve from 1991 to 1999. The ERA’s aim to promote collective bargaining envisages that employees will be free and able to join unions and will make informed and free decisions about joining a union and to be covered by a collective agreement. Where a group of employees wish to be covered by collective bargaining, their union and employers will then undertake collective bargaining in accordance with the requirements of the ERA. Achievement of satisfactory collective agreements is expected to contribute to increased demand for collective bargaining. Union activity and membership levels Union activity in worksites since the introduction of the ERA is an indicator of potential for change in collective bargaining activity. Eleven per cent of all employers had received requests for access to employees under the ERA. Approximately three-quarters (71 per cent) of these already had union members at their sites. The case studies found that unions did not always formally request access; however, it could be expected that approaches to new sites may involve more formal use of the provisions. Unions confirmed in the evaluation survey of unions that their focus since the introduction of the ERA had been primarily on worksites with existing union coverage. Several unions explained that their resources at the introduction of the ERA were low, and that they subsequently had lower priority for contacting employees at workplaces without coverage, which was more resource intensive. Management views on unions did not appear to be a key barrier to unions accessing employees. Management support of employees joining unions tended to be neutral (61 per cent). Public sector organisations and others with existing union coverage were more supportive of union membership. Attitudes toward the role of unions in a workplace were often shaped by past experience of working with unions. Employers with no experience of work-

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ing with unions were typically less favourable of union involvement in their workplace affairs. Just under a quarter of employees surveyed were union members, indicating a slight increase in overall union membership under the ERA. One per cent of sites reported that union membership had commenced at their sites since the introduction of the ERA. New membership was more frequently reported at worksites that were part of multi-site organisations. A similar percentage of sites reported increased proportions of union members at their sites (3 per cent) as reported decreased proportions of members. Formalisation of employment agreements The ERA introduced a requirement for all employment agreements to be in writing. The site survey found that 80 per cent of employers were aware of this requirement. Despite this high level of employer awareness, data from the employee survey showed that only two-thirds of employees reported that they had seen and signed an employment agreement. Seven per cent of employees did not know whether they had an employment agreement. Interestingly, at a third of sites that used only individual employment agreements, the requirement to have written agreements had resulted in employers making changes to these agreements. The main changes were to the wording of agreements (to reflect ERA requirements), that the employer would offer written agreements and that the agreement would include information on entitlements. Agreement coverage Data from the site survey comparing agreement structure in early 2002 with agreement structure before the ERA showed little change in the proportion of sites using collective agreements. Two-thirds of employers reported that they offered only individual employment agreements to their employees, 12 per cent reported that they offered both collective and individual agreements and a further 8 per cent reported that they offered only collectives. The increased use of individual agreements corresponded with decreased use of other types of agreements. Of employers that used collective agreements before the ERA, more than a third had had at least some of their employees on non-union collectives. Those that reported currently having only individual agreements were much more likely to have had no union involved in their pre-ERA collectives. Since the ERA came into force, a third of these reduced their use of collectives, including 25 per cent who under the ERA had no collectives. The predominant use of individual agreements at worksites increased from 62 per cent before the ERA to 69 per cent after the ERA.

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TABLE 1: USE OF AGREEMENTS REPORTED BY EMPLOYER REPRESENTATIVES Percentage of sites (1)

Agreement type

Pre-ERA N=1956

Currently (of those that existed pre-ERA) N=1956

Currently (all sites) N=2004

Collective only Both collective and individual Individual only Other (2)

8 per cent 11 per cent 59 per cent 23 per cent

8 per cent 12 per cent 65 per cent 15 per cent

8 per cent 12 per cent 66 per cent 15 per cent

SOURCE: Site survey 2003. NOTE: (1) Percentages may not add up to 100 due to rounding. (2) The ‘other’ category includes those who reported at least some agreements that were unclassifiable, including unspecified verbal and/ or written agreements and verbal collectives.

Occurrence of collective bargaining Of the 20 per cent of employers that were using collective agreements under the ERA, only 12 per cent had undertaken collective bargaining since the introduction of the Act. The following table shows what had happened to preERA collective contracts under the ERA. TABLE 2: CURRENT STATUS OF PRE-ERA COLLECTIVE CONTRACTS Current status of pre-October 2000 collectives Rolled over without renegotiation Completed renegotiation Renegotiated following workplace ballot Still being renegotiated Lapsed without renegotiation

Sites with collectives pre-Oct 2000 (N=740) 29 52 (11) 14 14

Share of pre-Oct 2000 collectives 23* 56 (12) 9 12

SOURCE: Site survey 2003 *Share under-represented because of higher levels with unknown numbers

Renegotiation of collective contracts had occurred more frequently in larger and more unionised sites. Rolling over collectives without negotiation was more frequent at smaller sites. Other data sources suggest that some collectives would have lapsed due to the requirement for unions to be involved in the collective agreement negotiation. Smaller worksites in particular were unlikely to have a union available, or to establish a union, for the purposes of collective agreement negotiations. The case studies found that, in larger organisations, the existence of systems to manage the employment arrangements of large groups of employees provided a platform for bargaining. Larger organisations were more likely to have written employment agreements and formal processes for reviewing and renewing agreements. In smaller organisations where there was no union presence or formal structure for employee representation, employees were

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more likely to have less familiarity with bargaining dynamics or understanding of how their terms and conditions could be improved. Where bargaining did occur in smaller organisations it was usually at the point of recruitment, and usually concerned with starting salary, starting date and leave arrangements. One employer in a medium-sized retail business explained that employees, particularly those who lacked experience in the workforce, often accepted what they were offered without any negotiation at all: ‘Most new employees just sign the contract, and say “when do I start”. It’s different for those who are older or in a big career.’ The following data on the history of current collective agreements shows the volume of new bargaining that has occurred under the ERA. TABLE 3: HISTORY OF CURRENT COLLECTIVE AGREEMENTS History of current collectives Rolled over without renegotiation Renegotiated Still being negotiated New since October 2000

Sites with current collectives (per cent)

Share of current collectives (per cent)

27 50 13 23

21 52 8 19

SOURCE: Site survey 2003

Almost three-quarters of current collective agreements existed before the ERA came into force. A quarter of current collectives had not involved negotiation at the point of this research (agreements were not required to have been renegotiated under the ERA until July 2002). Nineteen per cent of all current collectives had been negotiated for the first time under the ERA. Thus, 23 per cent of the sites with current collectives had negotiated new collectives since October 2000. Translated to total sites, this represented 4 per cent with new collectives. The new collectives accounted for approximately 19 per cent of all the current collectives. While there was a slight increase in the proportion of sites that reported using collectives, there had been change underlying this in the expiry of old contracts without negotiation and the formalisation of agreements in line with requirements of the new Act. Collective agreement negotiation rates were higher in the central (55 per cent) and local government (32 per cent) sectors, plus the industry groups of manufacturing (17 per cent), government administration (71 per cent) and education (37 per cent). Lower rates were reported from the private sector (8 per cent), plus agriculture (2 per cent), retail trade (6 per cent) and business/ property services (4 per cent). The site survey found that change in the proportion of employees covered by collectives had occurred in just over a third of established worksites with

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collectives. Five per cent more sites (20 per cent) reported a decrease in the proportion of employees on collectives than reported an increase (15 per cent). TABLE 4: CHANGES IN PROPORTION OF EMPLOYEES COVERED BY COLLECTIVE AGREEMENTS Proportion of employees on collectives

Worksites*

Stayed the same Increased Decreased Don’t know

63 per cent 15 per cent 20 per cent 1 per cent

SOURCE: Site survey 2003 * Based on sites that existed pre- and post-ERA and have collectives (N=849)

The change in the proportion of employees covered by collectives was positively correlated with the size of workplace and level of unionisation. Sites with 75 per cent or more of their employees in unions were more likely to report an increase in the proportions of employees on collectives (27 per cent), while those with fewer than 25 per cent were more likely to report a decrease (32 per cent). Single sites with 50 or more employees were more likely than others to report a decrease (34 per cent). Multi-employer collective bargaining The ERA also aims to promote bargaining for multi-employer collective agreements (MECAs). Fourteen per cent of employers reported being party to a MECA at the time of the research. The proportion of agreements that were MECAs had not changed significantly since the introduction of the Act. The Employment Relations Service reported that 1 per cent of agreements were multi-employer agreements, although these covered 6 per cent of employees (see Employment Relations Service 2003: 11). Interviewees in the case studies and union research identified several barriers to MECA bargaining, and to reaching MECAs. A key concern, expressed by both employers and unions in both the public and private sectors, was that MECA bargaining required considerably more resources to co-ordinate parties and to undertake bargaining. Some unions felt that the Act was limited in the extent to which it promoted MECA bargaining and required more work by unions than employers. In particular, one union representative explained that the Act did not require employers to be as co-ordinated as it did unions: ‘. . . the Act should say the employers must agree on a process for effective consideration of claims and how to meet. Need them to form a unit as do the unions. . . .’ The case studies investigated employer preferences for agreement use and found that some preferred a collective agreement to apply only in their organisation. Some employers felt that a MECA may introduce rigidity that

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would in turn affect their ability to respond to different pressure points within their industry. Some were also concerned that MECA bargaining would force them to share commercially sensitive information with competitors. A common concern was that the standardisation of work terms and conditions in a MECA might reduce how attractive a particular organisation is to prospective employees.

Good faith This section focuses on the impact of the ERA requirement for good faith. The first part looks at general awareness and understanding of the requirement. This is followed by discussion of the impact of the good faith requirement on collective bargaining. Awareness of the good faith requirement Two-thirds of employers said they were aware of the requirement for good faith. Awareness increased by size of organisation. Employers in small organisations that did not use written agreements were most likely to not be aware of the good faith requirement. For example, an owner of a small hairdressing salon said she had not heard of good faith, and thought that it meant ‘. . . that employees were trustworthy and that they could be left unsupervised, and that you could have faith in them’. Interpretations of what good faith means varied by size of organisation and the degree of unionisation. In organisations that did not use collectives, good faith was usually seen to apply to the conduct of operational activities. In organisations using collective agreements, it was more often discussed in terms of bargaining activities. One employer at an organisation that recently undertook collective bargaining for the first time described good faith as: ‘If two groups come to the table, they present a list of conditions, come to an agreement and stand by their word and everyone works together to achieve that.’ Impact of good faith in workplaces Of employers who were aware of the good faith requirement, most (71 per cent) had considered how good faith could apply at their workplaces. Nineteen per cent had made changes to meet the requirement, 52 per cent had not made any changes. This 52 per cent included 2 per cent who thought they should make changes. The main changes made were aimed at increasing communication with staff, changes to terms and conditions of employment, improving documentation and procedures, improving relationships with unions and improving bargaining processes.

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Willingness to bargain The ERA requires employers to enter into collective bargaining when initiated by a union in accordance with the Act. Perceived willingness to bargain is an indicator of the context in which bargaining may occur. Unions that were involved in bargaining provided their perspective of this issue. Just over half of all unions perceived no change in employer willingness to bargain since the introduction of the ERA, and just under a third reported that employers were more willing. Larger unions were more likely to perceive improvement in willingness to bargain. Many private sector unions felt some of the employers they dealt with were still highly resistant to bargaining. Information sharing A further indicator of good faith behaviour is the extent to which information is exchanged for bargaining purposes. The ERA introduced provisions to guide what and how information is exchanged between parties for collective bargaining. Section 34 (2) of the ERA requires that requests for information be made in writing, be sufficiently detailed about information needed, relate to a particular bargaining claim and specify a reasonable timeframe for provision of the information. If either employer or union considers the information to be confidential, an independent reviewer may be appointed by mutual agreement. The evaluation looked at how frequently information was exchanged and whether this had changed under the ERA. The site survey found that a quarter of sites involved in collective bargaining since October 2000 had received requests for information from unions as part of negotiations. Those with higher levels of union membership were more likely to report receiving requests for information. Information requesting was also higher in both local (52 per cent) and central government (45 per cent) worksites. All of the largest unions and most (80 per cent) of the established unions with more than 1000 members had requested information. Those that hadn’t were typically smaller unions, although a high number of small and new unions had requested information for bargaining purposes. Most of the unions that had requested information reported that they had requested more under the Act than previously. Most of the larger established unions had requested more information under the Act. A third of all unions and high proportions of the smaller unions reported no change in the amount of information they requested. Most employers that had received requests for information (84 per cent) reported having at least once given the unions everything they asked for, 13 per cent had given them part of what they asked for and 2 per cent had declined a request at least once. There were 7 per cent who were unsure.2

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Employers that currently had predominantly individual agreements were less likely to report having given everything (56 per cent) and more likely to be unsure (30 per cent). Sites with less than 25 per cent union membership were also less likely to have given everything (56 per cent). Unions that had requested information under the ERA were asked how frequently they received what was requested. Most unions that requested information felt they had received what they wanted most of the time. One in five unions received the information they wanted on less than half of the occasions that they requested it. This group included unions within each of the five union types. The case studies indicated that what was requested, and the formality of requests, varied considerably across bargaining relationships. Just over half of the unions, and more than two-thirds of the larger unions, felt that the amount of information they now received was greater than what they had received before the ERA. Most of the remainder reported no change. Public sector unions felt they made less use of the information provision procedures because much relevant information was already publicly available. Most private sector unions reported significant use of the information-requesting provisions, but more barriers to receiving information. Smaller unions were more likely to rely on trust and were often reluctant to introduce formality into their bargaining relationships by formally requesting information. The case studies found that in some situations employers maintained an open flow of information about company performance, particularly where it required staff understanding of cost cutting. These employers felt that this flow of information reduced the need for unions to make formal requests to them. The site survey asked employers what type of information they had provided to unions. Nineteen per cent had given a written report summarising the trading position of the company, 27 per cent had given a verbal report of the same and 61 per cent had supplied some other type of information. The other main types of information were staff names/membership lists and pay scales/remuneration. Several of the smaller and medium-sized unions commented that the information they received was often not relevant or useful. Two unions thought that the requirement to link information they were interested in to particular claims was a significant barrier to their ability to gain useful information. Several unions felt they would not receive useful information if they asked for it. One union felt they needed to do more to relate requests to specific claims. Use of independent reviewers Although the ERA encourages the use of independent reviewers, both site and union data showed that independent reviewers were rarely used. Just 8 per cent of sites that had received requests for information had engaged an inde-

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pendent reviewer. The large unions also reported little use of reviewers and said that this was due mainly to the amount of work or the cost involved. Code of good faith Under the ERA a Code of Good Faith was prepared by employer, union and state sector representatives and was available from the Department of Labour. The Code aimed to provide guidance to employers and unions in the application of good faith to bargaining in collective agreement. Use of the Code is an indicator of effort to apply the requirements of the ERA in this area. The case studies found that employers were often likely to be unaware of whether the Code of Good Faith was used in their bargaining activities, but were aware of negotiations being guided by some form of process agreement. Larger unions were more likely to be aware of the details of the Code of Good Faith and monitor whether bargaining occurred in accordance with the Code. Just over half (56 per cent) of unions reported that the Code of Good Faith was used in their bargaining relationships, which included all of the large unions and almost all the medium-sized unions. Small and newly established unions were as likely to have used the Code as to have not used it. Most of those interviewed had used the Code to provide ideas or guidance for their bargaining, but did not necessarily refer to it regularly. Unions that had not used the Code were smaller and more likely to have less formal bargaining arrangements with employers. Several unions explained that they had not used the Code because they thought this would make their relationships more legalistic and formal. Several unions felt that there was limited value in a detailed code of good faith because parties needed to work out what the good faith requirement meant in their own relationships and bargaining. This view was more frequently expressed by unions that had well-developed bargaining relationships. A few unions that had more confrontational bargaining relationships were interested in a more prescriptive code being available. They thought that examples of ‘good faith and bad faith behaviour’ would be particularly useful. Two of these unions described the existing code as ‘wishy-washy’ and ‘airy-fairy’.

Perceptions of the bargaining process The employee survey asked employees who had been involved in some form of negotiation or renegotiation of their agreement under the ERA whether they felt the process was fair or unfair. The table below shows that the majority of employees involved in some form of bargaining perceived the process to have been fair.

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TABLE 5: PERCEPTIONS OF FAIRNESS OF BARGAINING PROCESS

Fairness of process Fair Unfair Neither fair nor unfair Don’t know/No response

New employee (N=472) per cent 82 6 7 5

Changed from IEA to CEA (N=31) per cent 75 15 9 2

Changes made to IEA (N=34) per cent

Negotiations about CEA to cover their job (N=56) per cent

CEA renegotiated (N=221) per cent

81 2 17 1

54 19 9 18

74 15 5 6

SOURCE: Employee survey 2003

The evaluation also looked at the conduct of collective bargaining in relation to more specific requirements for how parties interact with one another and parties outside of bargaining. Employers and unions involved in collective bargaining are required to: • respect the role of the other’s representative by not seeking to bargain directly with those for whom the representative acts; • not do anything to undermine the bargaining process or the authority of the other’s representative. Some of those interviewed in the case studies and union research felt that these requirements were often not followed in their bargaining relationships. The main behaviours that were perceived to undermine collective bargaining were: • addressing all staff during bargaining to inform them that they would receive the same terms and conditions as were being bargained over (for example, ‘The employer put notice out [saying that] once agreement is settled you’ll all get it’); • addressing staff on individual agreements to inform them they would receive the same terms and conditions as those on the collective (for example, ‘We wanted 3.8 increase, the employer said 3.25 then went to non-union members and offered them 3.25 backdated. Lawyer said unless an IEA person says they were put under pressure it won’t stand up in court . . .’); • offering a signing bonus to those on collective or individual agreements, while bargaining was under way, to sign up to an individual agreement; • supporting the establishment and development of an in-house union to undermine the role of an existing union. Typically, employers explained that their communication outside of the bargaining relationship was due to the need to treat staff fairly. In several cases,

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employers explained that they were not prepared to treat some of their employees differently, and in some cases said that their communication of this message to staff was an attempt to act in good faith. Some public sector employers said their main concern about the bargaining process to date was instances of union representatives not recognising the bargaining authority of employer representatives and contacting more senior personnel. Extension of collective terms and conditions Unions perceived the extension of collectively negotiated terms and conditions to employees who were on individual agreements to be the most significant barrier to promotion of collective bargaining and unionisation. Unions referred to the situation where non-union members received the benefits of union negotiations as free-riding or free-loading. Most unions thought that free-riding was widespread in workplaces where they had negotiated collective agreements. Only six unions thought that terms and conditions that they had negotiated were not passed on to employees on individual arrangements. The case studies also found that almost all employees employed on individual employment agreements received identical terms and conditions to employees on collective employment agreements, where there was an applicable collective employment agreement in the workplace. In one case, an employer offered employees on individual employment agreements better terms and conditions than those secured through collective bargaining to discourage union membership. A number of employers in the case studies had also taken steps to ensure that bargaining outcomes were identical for employees on both types of agreements. Both employer and non-union employee interests in short-term free-riding were apparent from the research. Non-union employees gained the services of the union without having to pay the weekly fees, or only had to pay them until a collective agreement was reached. Employers benefited from lower transaction costs by using a collective agreement as basis for the individual agreements of employees who were not non-union members. In some situations, employers and unions had agreed to arrangements which addressed union concerns about free-riding, including: • provision of a signing bonus to employees who were union members; • back pay only being given to employees who were union members; • employees’ receipt of collective provisions being delayed until they had been members of a union for a specified period; • additional leave or superannuation entitlements being available only to union members.

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These types of arrangements were rare and unions considered them to be an unreliable way to promote collectivisation. Most unions expressed frustration that the ERA did not prevent the occurrence of free-riding and hoped that the legislation would be amended to this effect.

Conclusion For the most part, employers reported high awareness of the Act, but little change in how they managed their businesses and their overall employment relations since the Act was implemented. In general, the largest differences observed in response to the Act were between the small and medium-sized private sector organisations, and the larger private and public sector organisations. The latter group were more likely to be aware of the Act’s requirements and to have made changes in accordance with those requirements. Most employers were aware of the ERA’s requirement for employment agreements to be in writing. This was particularly true of larger employers. The evaluation indicates that the Act has promoted the use of formal agreements. Some employers had also made changes to the content and wording of agreements to reflect the Act’s requirements. Nevertheless, there remained many employees who did not have written agreements, especially in smaller organisations. Levels of collective bargaining and coverage have not increased significantly since the ERA came into force. Smaller workplaces remain predominantly unaffected by efforts to promote collective bargaining, unless they are part of a multi-employer collective bargaining arrangement. Low demand for union services and low union resources were factors that appeared to affect the lack of change in levels of unionisation and collectivisation. Most of the change that had occurred in volume and coverage of collective bargaining was in larger, more unionised and public sector workplaces. Evidence that a proportion of pre-ERA collective agreements have expired without being renegotiated, or have been renegotiated without union involvement, may signal areas for further collectivisation. The evaluation analysis indicated that union resources have been channelled mainly into sites that had existing membership and potential for expanded coverage. Some larger unions have achieved large gains in coverage while others have experienced more modest improvements. Employees at larger workplaces where unions have good or improved access to members and improved coverage were more likely to report improved terms and conditions. Employees at sites that are less accessible or that have less opportunity for coverage improvements (such as single sites) were more likely to experience decreases in coverage.

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There had been little new multi-employer collective bargaining. Private sector unions perceive a continued lack of employer interest and coordination as key barriers to more MECA bargaining occurring under the ERA. Some unions reported that they were trying to move closer to MECA bargaining through closer alignment of terms and conditions across different collective negotiations they were involved in. Almost all unions felt that extension of collective terms and conditions to those on individual arrangements was the most significant barrier to greater growth of unions and collective coverage. Employers for the most part perceived that the extension of conditions to all employees regardless of agreement type was consistent with the Act’s requirements for good faith behaviour and freedom of choice. The research suggested that, overall, there had been some increase in willingness to enter into collective bargaining when initiated by a union. In some cases, employer willingness to bargain had also increased since the introduction of the ERA. Some unions continued to experience resistance to bargaining, but were confident that the Act at least enabled them to bring employers to the bargaining table if necessary. There were similar findings with respect to other parts of bargaining processes, such as provision of information. Although most employers involved in bargaining did not receive requests, the volume of information requested and provided increased under the ERA. Some of the barriers perceived by unions to more extensive use of the information provisions were the effort required, doubt over the likelihood of receiving useful information and reluctance to introduce formality to the process. While unions saw potential for increased union membership and collective bargaining at sites where there is some existing membership, they face significant challenges in expanding their role into smaller and medium-sized workplaces. Employees in these contexts often have no access to unions, have low understanding of the role of unions and collective bargaining, and often reported high levels of satisfaction with their employment arrangements. The passing of the expiry date for pre-ERA collective contracts has seen more collective contracts default to individual arrangements. These observations, combined with union expressions of frustration in attempting to promote the good faith and collective bargaining provisions of the Act, suggest legislative changes may be needed to more swiftly achieve the objectives of the Act.

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references Employment Relations Service. 2003. ERA Info. January 2003, 10. Waldegrave, T., Anderson, D. and Wong, K. 2003. Evaluation of the Short Term Impacts of the Employment Relations Act 2000. Wellington, Department of Labour. (see also www.dol.govt.nz)

notes 1 The views expressed in this chapter are those of the author and do not represent the views of the Department of Labour.

9

The Employment Relations Act according to Business New Zealand barbara burton

Introduction Business New Zealand is an amalgam of the New Zealand Manufacturers and the New Zealand Employers Federations and had not yet, at the time of the Employment Relations Bill’s introduction, seen the light of day. Providing a response to the new legislative proposals fell largely, therefore, to the latter Federation, which saw in the Bill ‘the potential for increases in labour and compliance costs, lower workplace flexibility and employment growth, and increased industrial action and litigation’ (NZEF 2000a: 1). The New Zealand Employers Federation was greatly concerned about some of the more interventionist aspects of the Bill – of which its continuity of employment provision is a prime example – but nevertheless accepted the general thrust of the legislation as government policy and committed itself to continuing consultation with the Government. The Act’s implementation has not seen those reservations disappear (and more could be said about subsequent and prospective legislative changes). Reservations, in summary form, concern the Act’s: • movement back from a reasonably flexible, enterprise-based system of industrial relations to a system of greater centralisation and increasing inflexibility; • shift in focus from the enterprise to multi-employer bargaining, with the potential to ‘encourage’ subsequent party membership regardless of market share or enterprise profitability; • inflexible view of where, in an industrial relations sense, the balance of power lies; • delivery of excessive employment protection; • limitation of collective bargaining to registered unions only; • prescriptive nature, resulting at times in inevitable failure to comply; 134

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• promotion of the amorphous good faith concept; • effect on productivity and sustainable economic growth.

The move to a more flexible industrial relations system There is no gainsaying that the New Zealand Employers Federation had worked long and hard to get rid of a rigid industrial relations system effectively in place since 1894. Yes, there had been changes, but to all intents and purposes the key features had remained more or less the same from the Industrial Conciliation and Arbitration Act 1894 to the Employment Contracts Act 1991 (ECA): unions had had a monopoly on wage bargaining; union membership had been effectively compulsory (sometimes absolutely and at other times in a de facto sense); employers had been covered by numerous, mainly craft-based awards negotiated at arm’s length from their enterprise; and demarcation disputes had flared where one union challenged another’s right to cover particular work. By the mid- to late 1980s New Zealand’s industrial relations system was becoming increasingly at odds with its position in the world – small islands, as far away from world markets as it is possible to be, and highly dependent on export growth and foreign investment. With the deregulation of its financial markets, the removal of agricultural subsidies and the freeing up of its ports, that system could be seen as a continuing anachronism. Employers, essentially, paid what they were told to pay. Bargaining for wages and conditions was something over which they had little if any control, and wage inflation was an inevitable consequence. The Employment Contracts Act 1991 changed all that by giving individual enterprises the right to a direct say in the bargaining process. It was not something that all employers appreciated, at least not at first. They were used to being told what to do. Employees, too, achieved a greater degree of independence. It was up to the individual employee to decide whether or not to join a union, henceforth referred to as an employee organisation. It was up to unions, divested of their protected status, to show they were needed. The decline in union membership There, of course, was the rub. An already visible decline in union membership (from 683,006 in December 1985 to 603,118 in May 1991, statutory compulsion notwithstanding) noticeably accelerated. Between the ECA’s coming into force and December 1999 the number of union members approximately halved, reducing to 302,405. Small wonder the union movement kept on looking to return to a more protected environment.

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And numbers are again on the increase (to 334,783 in December 2002). But so, too, is the number of unions (from 82 in December 1999 to 174 in December 2002) (May, Walsh, Harbridge and Thickett 2003: 3), doubtless reflecting the fact that under the ERA, unlike the ECA, only registered unions have the right to bargain collectively. Much of the growth in union numbers represents a growth in in-house unions operating at the enterprise level.

The shift to enterprise bargaining Enterprise-level bargaining was a major focus of the ECA and made a huge difference to enterprise productivity. Productivity statistics are remarkably deceptive. Statistically, productivity was at its highest in the late 1980s when job losses were accelerating. Unemployment peaked in the September 1991 quarter, with productivity figures declining as employment grew. This was a consequence of the ECA but not the consequence usually attributed to it. New workforce entrants were often less skilled than employees with greater workforce experience, while service sector growth made accurate productivity measurement that much harder. By contrast, many individual enterprises reported marked increases in productivity (NZEF 2000b). Under the ECA employers had, for the first time, gained the right to negotiate terms and conditions suited to their own enterprises and, not surprisingly, once some initial alarm subsided, were not slow to make use of their newfound freedom. Certain qualifications aside (due more to the way the Act was interpreted than to the language of the statute itself), the ECA fulfilled fundamental principles that the Employers Federation, in its subsequent ERA submission, found necessary to repeat. These included (NZEF 2000a: 1): • the provision of choice to employers and employees, both as individuals and within a collective, in respect of their relationships, their contractual arrangements, their representation, their freedom to associate and their conditions of employment; • concentration on the employer and employee as the ‘owners’ of their relationship whilst retaining the right of third party representation if so desired; • the retention of a realistic, but not damaging, set of minimum statutory procedures for managing the relationship and minimum conditions of employment; • voluntary unionism; • voluntary arbitration; • the elimination of demarcation; • sanctity of contract; • recognition of equal individual and collective rights;

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• minimisation of third party, i.e. government, intervention; • manageable compliance costs; • an enterprise focus. The Federation viewed these principles as fostering and supporting growth, entrepreneurship, competitiveness, employment productivity, harmonious relationships, skills enhancements and improved lifestyle choices. Its ERA submission acknowledged that there were some who alleged the ECA had given employers disproportionate power; nevertheless, it pointed out that a real imbalance would result if the pendulum swung back to an institutionally driven labour market where the emphasis was on power and arm’s length interventions rather than on co-operation and personal relationships.

The myth of the balance of power There is a degree of irony here for while employers saw the ECA as promoting necessary co-operation the Labour Party considered that statute had been ‘confrontational and litigious’ (Labour Party 2002) and, as its 2002 Manifesto shows, continues to do so. The Manifesto ‘acknowledges that there is not an equal balance of power between workers and employers’ and believes the best way to correct this imbalance is ‘to encourage the collective organisation of workers and to foster collective bargaining as the preferred means of establishing the rights and obligations of workers’. It may be that in some instances the scales do tip in the employer’s favour, but this is by no means the general rule, as the marginal increase in union membership from 17 per cent to 17.8 per cent of the employed workforce arguably demonstrates. In an initial Department of Labour evaluation of the ERA, 82 per cent of surveyed employers believed there was no inequality while 5 per cent of the remainder considered there was an imbalance in the employee’s favour (Department of Labour 2002: 28). Only 7 per cent saw an imbalance in favour of the employer and, probably, if asked, would have been referring to that elusive ‘someone else’ category;1 the imbalance, in other words, was in someone else’s organisation, not their own. Given a labour market where not only are trade and professional skills in short supply but many smaller employers (and 92.5 per cent of New Zealand employers have fewer than ten employees) carry disproportionate risk in terms of personal capital investment, the balance of power is often very much with the employee. Consequently, the ERA’s one-size-fitsall approach to industrial relations is often quite inappropriate in its effects. Employees can walk away from their jobs at any time, but terminating the

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employment of an unsatisfactory member of the workforce can be a very different matter.

The price of employment protection Not that the difficulties associated with employment termination can be blamed solely on the ERA. It was the ECA that first exacerbated the problem, foreshadowed by Labour Relations Act 19872 changes, by bringing all employees, from new entrant to managing director, under the aegis of the employment institutions. Judicial views of good employer behaviour did the rest, as witnessed by the statement of Goddard CJ in Finsec v AMP setting out the minimum requirements for procedural fairness but with the qualification: ‘What that procedure should be in any particular case is a question of fact and degree depending on the circumstances of the case, the kind and length of the employment, its history and the nature of the allegation of misconduct relied on, including the consequences which may flow from it if established’ ([1992] 1 ERNZ 280, 290). Small wonder employers have often felt the dice was loaded against them. In its Employment Relations Bill submission, Business New Zealand proposed (and has since continued to urge) the introduction of a salary bar above which statutory personal grievance and employment agreement provisions would no longer apply – the case under earlier legislation3 – recognising that excessive employment protection creates real disincentives to employing staff. For the same kind of reason probationary periods are also needed. It is true that the ERA makes provision for probationary periods as well as for fixedterm employment agreements, but it hedges both around with inflexible statutory protections. A probationary period should be just that – a period when, according to the Concise Oxford Dictionary, conduct or character is tested. In the employment context, this will involve not only an assessment of work performance but will also mean taking into account how well the employee has fitted into the position and the workplace. Many countries recognise the importance of allowing an initial period for testing whether a new employment relationship is likely to prove satisfactory in the longer term4 but a probationary provision such as the ERA’s, permitting access to personal grievance and employment agreement dispute provisions, is meaningless. With the unemployment of young persons, for example, registering much higher than unemployment in general, discouraging employers from offering what is often a first chance of employment is simply short sighted. It is not something any sensible employer is going to do if the consequence of failure could be the increased costs (in terms of both time and money) of legal action. A period of three months when ERA provisions

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do not apply to an employee on probation could well help overcome a currently perceived reluctance to give someone a go. Fixed-term agreement provisions are another matter of concern and will be even more so if current annual holiday proposals are implemented (see Holidays Bill, clause 27(2)). If a 6 per cent loading has been paid in anticipation that the fixed term will end in less than a year but the task in hand extends beyond that time, employers will face the double whammy of a second helping of holiday pay plus a paid holiday as well. As things stand, fixed-term employment already presents employers with difficulties. Better to forget about taking on another person and distribute the work to existing employees instead.

The collective bargaining focus And what about collective bargaining? That is something the ERA sets out to promote as one way to correct that assumed imbalance of power, the basis upon which the statute rests. But by limiting its use to registered unions, paradoxically the Act entirely excludes many small firms and their employees from the collective bargaining process. To become a registered union, a group of employees must first turn themselves into an incorporated society and to do that requires a minimum of fifteen persons (recall that 92.5 per cent of workplaces have fewer than ten employees). If those employees do not want to join an existing mainstream union, all they can have is identical individual agreements, no collective and no official bargaining agent. The exclusion of small organisations from the collective bargaining process is not, of course, accidental. Labour’s Manifesto appears to consider smallscale collective bargaining to be inefficient and not to be encouraged; rather, amalgamation into multi-employer agreements is favoured (see below). But that approach ignores the fact that an enterprise collective allows employers to take into account matters such as business profitability and market share. And small-scale collective bargaining is surely more efficient than identical individual bargaining, if that is what the parties must resort to otherwise. The ERA discourages small-scale collective bargaining but, at the same time, provides unions with the opportunity to negotiate multi-employer agreements with a number of named employers and then to indulge in a form of ‘subsequent party’ activity with employers not named in the concluded document. 5 This is not officially sanctioned subsequent party behaviour – section 49 of the ERA envisages subsequent party joinder as consensual, not coerced – but the ability of the negotiating union to threaten industrial action against such employers if they withstand its ‘invitation’ to join its multi-employer agreement too often sees subsequent parties added by default. It is an unpleasant form of coercion, quite different from the kind of good faith bargaining

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the ERA appears to contemplate. Coercion of this kind can lose employers their competitive advantage as well as damage their ability to communicate with their employees, engage in flexible workplace practices (often to the detriment of, in particular, women with dependants who are increasingly looking for a flexible work environment), their ability to manage workplace relations and, ultimately, their freedom to decide whether or not to associate with competitor employers. It is a regression to past inefficiencies that is not in anyone’s interest and a potent reason why strike action in support of multi-party bargaining should once again be unlawful. The 30-day rule is another exercise in inefficiency. Employees are quite capable of making up their own minds about whether or not to join a union and work under its collective agreement or whether, from the start, to have their own individual agreement. At the very least, they should be allowed to waive the statutory entitlement and choose to negotiate for themselves.

The difficulties of compliance All employment agreements, whether individual or collective, must now be in writing, but, contrary to legislative perceptions, employers’ anecdotal evidence indicates that individual employees are often reluctant to sign their individual agreement even when an employer repeatedly tries to find out why this should be. Unfortunately, such omissions turn the employer into an inadvertent law-breaker, a situation best alleviated either by applying the ‘in writing’ requirement only to employers with ten or more employees or, rather better, incorporating it in a Best Practice guide. Such a document could then offer practical assistance to knotty problems such as the employment of casual employees. Currently, each ‘casual’ engagement should be accompanied by a new written agreement, a requirement surely more honoured in the breach than the observance. As things are, for some employers the ERA makes noncompliance unavoidable. But since many employees are reluctant to sign their individual employment agreements, the simplest solution would be to return to the former status quo where oral contracts could be reduced to writing on request. Oral contracts have always been recognised and accepted by the courts. They are no less to be relied on than words on paper where the interpretation of the court may equally be found necessary. Similarly onerous is the requirement to provide every new employee with a copy of any relevant collective agreement, particularly so where many short-term seasonal employees are taken on, often for a very limited period. Availability on request is the simple answer, but, again, the ERA tends to promote non-compliance.

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The good faith concept Good faith is a cornerstone of the ERA but brings with it its own interpretive difficulties. It was for just this kind of reason that employers were hesitant about the inclusion of this concept in the ERA, viewing it as a reflection of employers’ existing obligations – an approach confirmed by the New Zealand Council of Trade Unions and the New Zealand Employers Federation in the Code of Good Faith bargaining before the ERA came into force and subsequently unchanged in the following review. 6 It was also the approach taken by the majority of the Court of Appeal in Coutts Cars Ltd v Baguley (see chapter 5, page 62, and chapter 6, page 83). The majority did suggest that the duty to deal in good faith could have impact in additional areas in negotiations for collective environments, but the point was not decided and, in any event, is covered by the Code of Good Faith. Why, therefore, should good faith mean that an employer must turn up and discuss individual clauses of a union claim when the employer’s position is that a collective agreement (in the case referred to, a multi-employer collective agreement) is not wanted? (NZ Amalgamated Engineering Printing and Manufacturing Union (Inc) v Independent Newspapers Ltd, WA 51/01, unreported.) And yet, that is the current interpretation at Employment Relations Authority level, even though the Act does not require a concluded collective agreement, either single or multi-employer. Amendment is needed to make clear that, although an employer must meet with any union initiating collective bargaining, listen to its reasons for wanting a collective agreement and be prepared to discuss the matter, that employer does not have to go through the time-wasting exercise of considering the detail of individual clauses if not persuaded that a collective agreement should apply. Good faith, according to one commentator, ‘provides the necessary lubrication that makes relationships run smoothly which will in turn increase productivity’ (Skiffington 2002: 2). This commentator, Lorraine Skiffington, also notes that the rules of good faith are ‘largely derived from case law’, but, unfortunately, case law is sometimes an inconsistent guide, as two recent decisions have demonstrated. In Carter Holt Harvey Ltd v National Distribution Union (Inc) ([2002] 1ERNZ 239), the Court of Appeal upheld an Employment Court finding that in denying union representatives access to the work area in circumstances where there was concern that picketing employees might target employees identified as performing the picketers’ work (the representatives were directed to meet staff members in the boardroom instead) the company had not acted in good faith. Contrast that finding with the conclusion (in favour of the union) of the Full Employment Court in Fogelberg v Association of University Staff (CC 5/03, unreported) that section 80(a) of the ERA ‘makes

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it clear that departures from good faith are to be expected in situations of strike and lockout’. That is a very liberal interpretation of the words of a section, which merely state that the requirement to deal in good faith ‘does not preclude certain strikes and lockouts being lawful’. It may be, at least in relation to collective bargaining, that perceptions of bad or good faith behaviour are very much influenced by the alleged offender’s identity. In any event, decisions such as these have little to do with the promotion of productivity.

The consequence for productivity Perhaps it is of some significance that the ERA’s section 3 (Object of this Act) does not promote productivity per se but ‘productive employment relationships’, not necessarily the same thing. That may be just as well since many provisions tend to be counterproductive in their effect. A few examples serve to illustrate. Writing to all employees who come within a proposed collective agreement’s coverage clause once the initiation of bargaining has been notified is time consuming and onerous, particularly for larger employers, many of whose employees will have opted already not to be covered by the agreement and won’t want to hear about it. A requirement to display such information in a prominent place – or places, if the employer had a number of worksites – would fulfil the same purpose just as effectively. Demands to use paid production time for formulating bargaining strategy and claims can, if met, also result in reduced productivity. The Act already provides for two paid union meetings a year that can be used for this purpose. Employers should not be expected to pay for non-production time beyond the four statutory hours provided by section 26. Then there is the prohibition on replacing striking or locked out employees other than with existing employees, except where safety and health is an issue. Just as reduced production time has its effect on productivity, so, too, the inability to replace employees engaged in industrial action has repercussions beyond the employer concerned. The prohibition doubtless reflects the ‘power imbalance’ view of industrial relations. But its consequences in terms of business lost and reduced profitability can be far more damaging to those involved than any presumed power imbalance the prohibition is intended to correct. It is the issue of balance which recent pro-ERA commentators have seemed eager to emphasise. And it is of some significance that statistics such as those showing an increase in work stoppages since the ERA’s advent cause such commentators considerable concern. Lorraine Skiffington, writing in the Employment Law Bulletin article quoted previously, counsels against reli-

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ance on such statistics and looks instead for qualitative data collection, asking ‘a range of participants how they feel about the workplace, about the relationship with others, whether they feel (emphasis added) the relationship is productive and why’. But that, as she allows, is a long-term exercise. Gordon Anderson (2003: 17), also writing in the Employment Law Bulletin, refers to the ERA as ‘a genuine attempt to reach a balance in industrial relations and employment law’. But, as the New Zealand Employers Federation said in its submission on the Employment Relations Bill, the remedy proposed for righting the perceived imbalance in employee/employer relationships was ‘. . . the promotion of restored union influence, an influence that in the past, has too often tended to exacerbate rather than help the resolution of workplace difficulties’ (NZEF 2000a: 3).

Conclusion The ERA is not a complete return to the past and, to an extent, meets a number of the principles espoused by the New Zealand Employers Federation and subsequently adopted by Business New Zealand. There is a degree of freedom of association, although no freedom to bargain collectively outside the union registration process; union membership remains voluntary, although the Act’s bargaining provisions and 30-day rule do their best to steer employees in the union membership direction; there is minimum overt government intervention, although increasing intervention via a rapidly expanding minimum employment code; arbitration is voluntary; mediation, while not without its problems, has proved reasonably effective; and to date there has been no noticeable resurgence of demarcation disputes. That said, the signs of a return to a more inflexible regime are not hard to detect, not only in the fact that multi-employer collective agreements can be extended via persuasion, gentle or otherwise, to enterprises that played no part in the bargaining process but also, as seems increasingly likely, through the imposition via the current ERA Review of further controls on employers’ ability to manage (likely changes in the area of contracting out are a good example). At a time when countries overseas are, in the interests of economic growth, increasingly looking to foster the individual enterprise, the ERA is moving New Zealand employment relations in the opposite direction. And increasing government compliance costs are not making matters any easier. The ECA allowed employers to manage the human relations aspects of their organisations and businesses just as they manage the financial and business planning aspects – to the benefit of employers, employees and the economy at large. That is not something the ERA prohibits. But it does inhibit it.

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references Anderson, G. 2003. ‘Editorial: Incremental Change in Employment Law’, Butterworth Employment Law Bulletin, 2, p. 17. Blackburn, R. and Hart, M. (2002). ‘Small firms’ awareness and knowledge of individual employment rights’, Report, Department of Trade and Industry Employment Relations Research Series, no.14, Small Business Research Centre, Kingston University, Kingston Hill, Surrey, England. Department of Labour. 2002. Employment Relations Act Evaluation Interim Findings Report. Unpublished, Wellington, Department of Labour. NZ Employers Federation. 2000a. Submission to the Employment and Accident Insurance Legislation Select Committee, May 2000. (Part A, Overview). NZ Employers Federation. 2000b. Submission to the Employment and Accident Insurance Legislation Select Committee, May 2000. (Part B, Economic Impact of the Employment Contracts Act). May, R., Walsh, P., Harbridge, R. and Thickett, G. 2003. ‘Unions and Union Membership in New Zealand: Annual review for 2002’, Working Paper 1/03, Industrial Relations Centre, Victoria University, Wellington. New Zealand Labour Party. 2002. Labour Party Manifesto. Wellington, New Zealand Labour Party. Skiffington, L. 2002. ‘A New Productivity Paradigm under the Employment Relations Act’, Butterworth Employment Law Bulletin, 1, p. 2.

court decisions Carter Holt Harvey Ltd v National Distribution Union (Inc) CA [2002] 1 ERNZ 239. Coutts Cars Ltd v Baguley [2001] 1 ERNZ 660. Finsec v AMP Soc Ltd [1992] 1 ERNZ 280, 290. Fogelberg v Association of University Staff CC 5/03, unreported. NZ Amalgamated Engineering Printing and Manufacturing Union (Inc) v Independent Newspapers Ltd, WA 51/01, unreported.

notes 1 An MRL Research Group study conducted in 1995 for the New Zealand Employers Federation found that those most likely to disapprove of the Employment Contracts Act 1991 were aged 55 and over, those not in paid employment or retired persons. 2 The Labour Relations Act 1987 allowed any member of a union, whether or not covered by a union-negotiated award or agreement, to use the Act’s dispute and grievance provisions. 3 The Industrial Relations Act 1973, where personal grievance and dispute provisions applied to union members only up to a negotiated cut-off point. 4 See, for example, Blackburn and Hart (2002: 32): ‘In most circumstances employees must have at least one year’s continuous service to be able to [take a complaint of unfair dismissal to the Employment Tribunal].’ 5 Compare, for example, with section 160(2) of the Labour Relations Act 1987. 6 Code of Good Faith, 1.4: ‘The existence of the Code does not imply that employers in general, or unions in general, act in bad faith in their dealings with each other.’

10

Employee experience of employment relationships under the Employment Relations Act tony waldegrave 1

Introduction This chapter draws on the New Zealand Department of Labour’s evaluation of early responses to the Employment Relations Act 2000 (ERA) (Waldegrave et al. 2003) to discuss employee and union experiences of employment relationships under this Act (see chapter 8, page 119). The ERA introduces new requirements for the conduct and formation of employment relationships. Key changes include a requirement for all aspects of employment relationships to be conducted in good faith, for formal employment agreements and for employees to have increased opportunity to be covered by collective agreement. Through the introduction of these and other changes the ERA aims to reduce the ‘inherent inequality in bargaining power’ that was seen to exist when the Act was introduced. Under the ERA, only unions can represent employees in collective bargaining. Unions gain greater rights to access, recruit and educate union members. Where a group of employees wish to be covered by a collective agreement, their union and employers are required to undertake collective bargaining in accordance with the requirements of the ERA. This chapter focuses on a range of employment relationship issues drawing mainly on perceptions of unions and employees across different types of workplaces and employment arrangements. Following consideration of the role of unions in New Zealand workplaces, it looks at the types, contents and processes of employment arrangements. The final section looks at the presence of good faith in relationships before discussing implications of findings for further change in the nature of employment relationships. 145

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Union activity The ERA was introduced at a low point of union membership levels in New Zealand. The ERA aims to promote freedom of association and collective bargaining. The ERA requires unions to represent employees in collective bargaining. Increased union membership is a necessary precursor to the promotion of collective bargaining. Union membership data collected over the first two years of the Employment Relations Act showed little early change in the presence and influence of unions in New Zealand workplaces since the introduction of the Act. The evaluation’s employee survey also found that few employees had seen change in the role of unions in their workplaces. Just over half of employees (54 per cent) who had been with their employer since before the Act came into force thought there had been no change in the level of union activity at their workplace since October 2000. The remainder were fairly evenly divided as to whether there had been more or less union activity. Employees who had joined a union since the Act came into force were much more likely to report increased union activity. In general, union members were more likely to report increased union activity at their workplaces than those who were not union members. A similarly high proportion of employees (51 per cent) felt that there had been no change in the degree of influence that unions had at their workplaces since the introduction of the Act. A small proportion (16 per cent) felt that unions had more influence under the ERA, and 22 per cent thought unions had less influence. These findings of little change in union activity and influence are consistent with data about how frequently unions have approached employers for access to employees under the Act. Under the ERA, unions have rights to access employees for union business purposes. Since October 2000, only 11 per cent of employers had received requests for access to employees. Almost three-quarters of all requests (71 per cent) were to employers at sites that already had union coverage before the ERA. Requests for access were received predominantly at larger and public sector sites. The incidence of requests received tended to increase with the number of union members at workplaces, as shown in Figure 1. Employers at smaller workplaces rarely received requests for access to employees from unions. Union efforts to access new workplaces were also found to be related to union size and structure. Larger unions, and particularly those that had paid officials, were much more likely to have approached workplaces where they did not already have members. Those unions that had accessed new workplaces were more likely to report that their membership had recently increased.

employee experience of employment relationships under the era 147 % sites receiving request for access g Request for Access eceivinunions % Sites Rrfrom

6 0 60

from Unions

40 4 0 60

54

20 2 0 29

00

3 None (n=963) (Est=60320)

1-24%

25-74%

75-100%

(n=358) (Est=4479)

(n=352) (Est=4269)

(n=232) (Est=4208)

Current Level of Union Membership

FIGURE 1: REQUESTS FOR UNION ACCESS BY LEVEL OF UNION MEMBERSHIP

Union membership levels The employee survey found that less a quarter of all employees (23 per cent) were members of unions, this rising to 34 per cent for Maori and 42 per cent for Pacific people. The following table shows union membership level by the number of employees at worksites. This data is presented for both single and multi-site organisations. TABLE 1: UNION MEMBERSHIP LEVEL BY EMPLOYMENT SIZE OF WORKSITE Employment Size of Work Site

Employees in Unions 75-100% 50-74% 25-49% Less than 25% Unable to classify

<10 10–49 50+ <10 10–49 Employees: Employees: Employees: Employees: Employees: Total single site single site single site multi site multi site (n=2004) (n=302) (n=327) (n=317) (n=167) (n=286) (Est=76568) (Est=35869) (Est=14250) (Est=1403) (Est=13609) (Est=8799) per cent per cent per cent per cent per cent per cent 6 4 2 85 4 101*

2* 2 2 90* 4 100

9 4* 1 84 2 100

16* 14* 7 60* 3 100

7 3 1 83 6 100

9 7 2 77* 5 100

50+ Employees: multi site (n=595) (Est=2111) per cent 11 15* 13* 55* 6 100

Source: Employee Survey * Some columns in this table do not add to exactly 100 per cent due to rounding

The highest levels of union membership were recorded for employees working in central government, professionals, and plant and machinery operators. Union membership was particularly low in the agriculture, wholesale

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and retail trade, accommodation and café services, and business and property services industries. Overall, only 1 per cent of all worksites reported having commenced union membership since the introduction of the ERA. Increases in union membership had more often occurred in larger and public sector workplaces. There were not significant gender differences evident in the data, but younger employees were far less likely to be union members than older workers. Of those employees who belonged to unions (n=387), more than threequarters (77 per cent) were members before the Act came into force, 11 per cent were first time members and 10 per cent had been a union member sometime before the Act came into force. Just 4 per cent of employees who had been with the same employer since before the Act had joined a union under the ERA. Overall, these data show that unions have gained relatively little new membership under the Act, and that membership recruitment has been mainly in areas where there was historically some union coverage. Reasons for joining and not joining unions Employees who had joined unions commonly said that they joined due to membership being common or accepted in their workplace. Some also joined because they believed that increased union membership was useful to collective bargaining. There were examples of groups of employees who did not want to join an existing union but still wished to be collectively represented in their workplaces. The ERA requires employees to be represented by a union in collective bargaining. In some cases, these groups of employees formed workplaceor organisation-based unions. Many employees in these unions expressed strong views about the differences between their unions and more established unions. One member of a small workplace based union explained: ‘. . . People are not members of the union because they are unionists. The union is an entirely pragmatic response to the change in law.’ Usually, members of workplace unions viewed their unions as ideologically different from more established unions. Some workplace union members felt that workplace-based unions could be more in tune with particular needs, for example: ‘. . .Those running [this union] come from [this organisation], they know what we want, they know us.’ Employees who were not members of any union commonly explained that they were not members because there was no union at their workplace. Some employees felt they could not join a union because there was general opposition to unions in their workplaces. Many employees saw little benefit in joining a union or did not know what unions did. Surprisingly, 4 per cent of

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non-union members were not even aware that they could join a union under an Act. For employees in the 18–24-year-old age group, lack of knowledge and lack of information about unions were the main reasons that they were not members. The case studies also found that employees in this age range often had little understanding of the purposes of collective representation. The surveys of employers and employees also looked at broader levels of interest at workplaces in external participation in workplace relationships. They found that there was generally little demand or interest amongst employers and employees for involvement of third parties in employment relationships. Even those used to dealing with unions expressed similar attitudes. Most employers (78 per cent) with employees who were union members stated that they preferred to deal directly with employees when dealing with employment relationship issues. More than three-quarters of employees (77 per cent) also stated a preference to deal with their employer directly about employment relationship issues. Only 12 per cent preferred to interact through their union. Despite a strong preference for direct interaction between employer and employees over employment relationship issues, employer views of union membership did not appear to be a major obstacle to employees joining unions. Around a third of employees thought that their employers supported union membership. A third did not know what their employer’s view of union membership was, while one in ten employees thought their employer was opposed to union membership. The Act did not appear to have dramatically changed employer attitudes toward unions. Most employees (62 per cent) thought their employers’ views on union membership had not changed. Almost one in ten employees thought their employer was now more supportive, and a similar proportion felt their employer was now less supportive. Those working in elementary occupations were more likely to feel their employer was less supportive of unions than previously (24 per cent). Education of union members An employment relations education fund was established under the Act to promote employee education about employment relationship issues. Training organisations are able to obtain funding on the basis that their course content is aimed at promoting the objectives of the Act. The evaluation found that unions had not used this fund to the extent they were entitled to. Most private sector unions interviewed felt that they experienced more difficulties than public sector unions in making use of the fund. They explained that this was due to their members being spread across more worksites, and

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having less flexible employment arrangements than employees in the public sector. However, some public sector unions had also found it difficult to obtain and use the funding available. Several health and education union spokespeople said that their efforts were continually frustrated by the need to negotiate cover for their members so that they could participate in employment relations education. Most smaller unions felt that the availability of Employment Relations Education Leave (EREL) had made next to no difference to their ability to recruit and educate employees. These unions explained that they did not have sufficient resources to calculate leave entitlements, negotiate cover for employees and organise courses for members to attend. Unlike larger unions, they did not have the resources to appoint co-ordinators to organise and run EREL programmes for their members. Overall, larger unions, while still concerned about the resources needed to use the fund, expected their use of the fund to increase, and expected positive outcomes to come from the programmes their members were attending.

Employment agreements and employee choices Agreement formation The ERA requires all employment agreements to be in writing and introduces processes for the negotiation and establishment of agreements. The employer survey found that the introduction of the ERA had resulted in increased formalisation of employment arrangements. Overall, 13 per cent of all employees had gained a formal agreement under the Act when they did not have one previously. The following table presents data on employees sighting and signing their employment agreements. TABLE 2: EMPLOYEE LEVEL OF SIGNING AGREEMENTS Employee awareness of current agreement Seen but not signed Seen and signed Not seen current agreement Not aware of being on an agreement Other

per cent* n=1565 11 66 14 7 3

Source: Employee survey data tables *total does not add to 100 due to rounding

While the majority of employees had at least seen their current agreement, almost a quarter of employees had either not seen their agreement or were not aware of having any employment agreement. Those most likely to have signed an employment agreement worked in larger and public sector work-

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places. The level of agreement signing was higher for new employees than for other employees (70 per cent versus 64 per cent). The case study research highlighted some of the reasons why smaller organisations may not use formal agreements. Often informal arrangements were explained to be more appropriate due to the particular characteristics of smaller workplaces. Employers and employees in these settings explained that their relationships were often not as formal as those in large workplaces and needed to involve high levels of trust. Some explained that working hours and activities needed to be quite flexible due to business and customer requirements. Most employers and employees interviewed were happy to have arrangements that were not highly formalised. An employer at a small retail store said that he had talked to his staff about having formal agreements, but that they didn’t care whether they had them or not. Similarly, one employee explained that if he felt comfortable about an employment arrangement then he wouldn’t see the need to sign an employment agreement. Employee choices between agreements Under the ERA, employees who are able to be covered by either a collective or individual employment arrangement must be informed of this choice and be given time to make an informed decision between agreements. The evaluation looked at employee experience of being offered different types of agreements, the choices they made and the reasons for their choices. The employee survey found that up to 42 per cent2 of employees may have been able to choose to be on either an collective or an individual employment agreement. (This is based on employees being asked whether anyone in their workplace who was currently doing the same job as them was covered by a collective employment agreement). However, just over a quarter (27 per cent) of new employees entering a workplace where a collective was available were offered a choice between a collective and individual agreement. Typically, new employees who had a choice of agreement chose the type of employment agreement that most of their colleagues were on. When asked why they chose this agreement, most said that they chose the agreement that they thought their employer wanted them to choose. Overall, only 7 per cent of employees had chosen to be on a collective agreement under the ERA. Twelve per cent of employees who could be covered by either type of agreement said that they had been approached by a union and encouraged to join a collective agreement. Sixty-two percent of these had joined a collective. Seeking advice The ERA requires employers to advise new recruits that they are entitled

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to seek advice on their employment agreement, and provide a reasonable opportunity for them to do so. Less than half (43 per cent) of new employees thought they were advised of the right to seek advice on their agreement before signing it. However, most were satisfied with the amount of information their employer had given them. Similarly, less than half (45 per cent) were told how much time they had to seek advice. For those that were told, the time given varied considerably, with 35 per cent being given up to a week and another 36 per cent up to a month. Almost all (98 per cent) were happy with the amount of time available. Only a small proportion of those surveyed actually sought advice on their agreement, but those that had been advised of this right were more likely to do so. Friends and family members were the source of advice for over half of these (57 per cent), followed by lawyers (17 per cent) and other employees (11 per cent). Few employees were aware that the Act provides employees with up to thirty days to choose between types of agreement. Unions felt that implementation of this rule by employers was variable and that it did not necessarily promote opportunity for employees to fully consider their options. Changing agreements Similar proportions of employees had changed from individual to collective agreements as had changed from collective to individual agreements under the ERA. Similar reasons were provided for changes in either direction. Four per cent of employees had changed from an individual to a collective agreement since the introduction of the Act. Common reasons for this change were union influence, employer influence, fellow employee influence and changes in their role that made them able to join the collective agreement. Just over a quarter (27 per cent) of those who had changed to a collective agreement reported major differences in the content of their old and new agreements. Five per cent of employees reported having changed from a collective to an individual employment agreement under the ERA. The most common reasons for this change were encouragement to do so or a belief that the move may improve pay or conditions. Almost a quarter (21 per cent) of those who changed to an individual agreement said that there were major changes in the terms and conditions of their old and new agreements. In some cases, employees identified poor union performance as part the reason for their move, for example, an employee in a large hospitality organisation explained: ‘. . . Most of those who came on board with me resigned because we can look after ourselves. We didn’t like the notices and the speaking out about our immediate bosses.’

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In addition to those who changed agreements, there were a further 15 per cent who said their employer had given them the option of changing agreements since October 2000. Collective agreement coverage Overall, just over a third (36 per cent) of employees reported being on a collective agreement at the time of the research. The rate for new employees (30 per cent) was slightly lower than the rate for those who had been with their employer since October 2000 (39 per cent). When agreement structure since the Act was compared with the agreement structure before the Act, there appeared to have been a slight overall increase in collective coverage. The evaluation also found that some collective contracts were replaced by individual agreements due to the Act’s requirement for union involvement in collective agreement formation. All collective contracts were required to expire or be renegotiated by July 2002. Since this expiry date, other collective contracts have expired and not been replaced with collective agreements. Terms and conditions: changes and satisfaction The surveys asked employees whether their employment terms and conditions had changed3 under the ERA. Over two-thirds of all employees (69 per cent) had experienced no change. Around a quarter (24 per cent) thought their terms and employment conditions were better, and 6 per cent thought they were worse under the Act. Those who joined a union since October 2000 were more likely to report improved terms and conditions (44 per cent). Of those who had an individual agreement both before and after the introduction of the Act, 15 per cent reported major changes in the content of their agreements, mainly due to employer-initiated changes. Most employees (83 per cent) were either very satisfied (31 per cent) or satisfied (52 per cent) with their current terms and conditions, while 8 per cent were dissatisfied. Employees on collectives were slightly less likely to be ‘very satisfied’ (19 per cent) and more likely to be ‘satisfied’ (52 per cent). Most union members were either ‘very satisfied’ or ‘satisfied’ with their unions performance. Bargaining power A key objective of the Act is to address the inherent inequality in bargaining power. When asked directly about this, most employers and employees stated that bargaining power was equal at their workplaces (68 per cent). Employees

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in the smallest workplace were more likely (76 per cent) than other groups to feel that bargaining power was equal at their workplaces. Most employees felt there had been no change in bargaining power under the ERA, although those that did see change tended to see it as slightly favouring employees. Overall, unions also felt there had been little change in bargaining power since the introduction of the ERA. Organisations that used only individual employment agreements may have had little impetus for a change in bargaining power. Unless agreements at these organisations had become more formalised under the Act, employees rarely felt there had been changes in bargaining power. One employee who had recently gained a formal agreement explained: ‘. . . the ERA didn’t change bargaining power much [at their organisation]. Most people here have the ability to bargain and are comfortable to. The change is that there is a way to bargain, if we needed to.’ Those who did not feel bargaining power was equal were more likely to feel it slightly weighed in the employers’ favour. Unions were asked about the effect of the ERA on their aims to achieve collective agreements, and the outcomes for employees through these agreements. Less than a third of unions thought the ERA had improved their ability to achieve new collective agreements where they did not exist previously. Two-thirds of unions thought that the ERA had made no difference to their ability to improve members’ wages. One in five felt the ERA made this easier, and one in ten felt it was more difficult. A slightly higher proportion of unions felt that their ability to improve other terms and conditions had improved under the ERA. Only a few unions (12 per cent) felt that their ability to get new types of agreements had improved under the ERA.

Good faith The requirement for all aspects of employment relationships to be conducted in good faith is a primary and overarching objective of the ERA. The evaluation sought the views of all parties to employment relationships of the extent to which their relationships were conducted in good faith. While the ERA provides specific information as to the conduct of collective bargaining in good faith, it provides more general guidance about how this applies to other areas of employment relationships. While unions and employers can be expected to have a more informed view about the legislative requirements in this area, it was more useful to seek employees’ perceptions of the general tone and conduct of employment relationships in the evaluation research. This information can be used to assess the potential need and opportunity for change in relation to the good faith requirement.

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Relationship quality Most employees (82 per cent) rated current relationships between employers and employees at their workplaces as very good (49 per cent) or good (34 per cent), with just 5 per cent rating employment these relationships negatively. Similarly, almost all (91 per cent) felt that relationships between employees were good or very good. Those at workplaces with people on different types of agreements were less likely to be as positive about the quality of relationships. Of employees who had been employed at their workplace before the Act came into force, more than two-thirds (68 per cent) thought there had not been any change in the quality of relationships between employers and employees under the Act. Twenty-two per cent reported an improvement since October 2000, and 8 per cent felt that relationships had worsened. When asked what a positive relationship in their workplace looked like, employees described these as characterised by: ‘give and take’ dynamics between employer and employees, approachable management, team approaches to tasks, inclusive decision making, a sense of trust and special or additional terms that were valued by employees. Negative relationships were seen to be characterised by: poor communication between management and staff, low levels of trust and low involvement of employees in decision making. Three-quarters of employees (76 per cent) felt there had not been any change in relations between employees since the Act, while 19 per cent felt they had improved. Only a quarter of employees (28 per cent) were aware of the good faith obligation of the ERA. Most (81 per cent) of these felt that their workplaces operated in good faith, similarly most unions felt employers that they dealt with acted in good faith. Employees typically constructed good faith to be about fairness, trust and honesty. Views of what good faith meant tended to vary by the size and structure of organisations. Employees in larger organisations that had collective agreements were more likely to describe good faith in terms of bargaining and how well employees were recognised for their performance. Employees in smaller organisations, and those that were not involved in collective bargaining, were more likely to discuss good faith in terms of how they undertook their work, and refer to the broader quality of employment relationships. A further indicator of relationships quality was the degree to which employees feel their employer involved them in workplace decision making. Around half of employees felt that their employer kept them informed ‘a lot’ about the business and future changes that might affect them. A third of unions felt that the good faith requirement had improved their relationships with employers, with about half as many feeling that the requirement had improved their relations with other unions and with employees.

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Bargaining in good faith Employees who had been involved in some form of negotiation of their agreement under the ERA were asked whether they thought the process used had been fair or unfair. Most employees perceived the process used to have been fair, although those involved in negotiations about a collective to cover their job were more likely to feel that negotiations were unfair. Unions were particularly concerned that some employers communicated with parties outside of bargaining about things that were being bargained over. In some cases, this involved assuring non-union members that they would receive terms and conditions that were at least as good as the collective agreement. While unions felt this did not conform to the good faith requirements, employers explained that they did this to treat all employees fairly. In a few cases, employees were also offered incentives to sign individual agreements. Unions felt that these actions undermined the value of unionisation and collective agreements, and subsequently limited their ability to represent employees. The most significant issue encountered by unions in their efforts to promote collective bargaining was the extension of collectively negotiated terms and conditions to employees who were not on collective agreements. This was found to be common in settings where collective agreements were in use. In some cases, parties had reached agreement to offer collectivised staff different conditions but unions felt that legislative change was urgently needed to enable achievement of the Act’s objectives.

Conclusion Over the short time the ERA has been in place, the majority of employees had seen relatively few changes, particularly those in small or medium-sized organisations that had not been approached by unions. Most employees felt, however, that they had good employment relationships. These good workplace relationships had not necessarily been achieved through the ERA objectives to promote good faith and collective bargaining. Employees in most cases preferred to deal with their employer directly about employment relationship issues and had very low interest in being represented by unions. Employees who had observed little change and reported poorer quality relationships were more often in the private sector, and employed on individual or informal employment arrangements. These employees were more likely to be unaware of the role unions could play at their workplaces. A smaller number of employees had experienced changes in their workplace due to requirements of the ERA. These tended to be in larger workplaces that had a history of collective agreements, and an established union presence. Many of them were public sector workplaces.

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Unions are an important part of the discussion for understanding the outcomes observed since the introduction of the ERA. It is assumed that under the ERA unions are key agents of change in enabling the objectives of the ERA to be met. The research indicates that some unions have not been able to effect as much change as they would have liked or had envisaged prior to the ERA coming into force. Several reasons for this emerged from the broader analysis undertaken on the ERA evaluation project. Most unions rely heavily on union levies to run their organisations. With the large declines in union membership, particularly over the period of the ECA, many unions may not have been sufficiently prepared or resourced for their expected role under the ERA. Many unions have therefore initially focused on workplaces with existing coverage, a history of unionisation, nonproblematic access, urban locations and a history of collective bargaining. The decline in union coverage, particularly over the period of the ECA, has meant some unions have had a small and narrow base from which to develop momentum. Some unions are dealing with a potential membership pool that has had no experience or exposure to unions at all. Consequently, maintaining coverage has been as much of an issue as increasing coverage in some cases. There have been changes in workplace attitudes and culture. Increasing the number of collectives and collective coverage may require more than time and resources for unions to access more workplaces. There are many employees who do not currently see why they should join a union and what they would get out of it. These are employees who more commonly work with good employers, mobile employees, shift workers and those who work where there is no union presence. Others are those in highly skilled industries where individuals perceive themselves as able to bargain effectively. There are also many new employees who are not aware of unions’ role. Unions reported ‘free-riding’, when terms and conditions in the collective are extended to those on individual agreements, as one of the major issues that needs to be dealt with to ensure their long-term survival. They felt that currently under the ERA there is little incentive for employees to join a union if terms and conditions are the same. New worksite unions have emerged. In the short term, the gains from belonging to a worksite union have been perceived to be good by employees (who tend to perceive better terms and conditions, and there are no illustrations of new unions not going well). In the longer term, it would be useful to explore whether employee needs continue to be met by worksite unions. Whilst overall levels of change have been small, there are some indications that where unions have been active there are some increases in levels of unionisation and numbers of collective agreements.

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There has been some ‘tidying up’ of employment relationships due to the requirements for different types of agreements and some employees have gained written agreements. The extent to which collective bargaining and coverage will increase seems highly dependent on the ability of unions to both adapt to workforce changes that have taken place over the last ten to fifteen years, and having adequate resources and strategies to work with workplaces and industries. It is also apparent from the research that there are a significant number of workplaces/firms who have good workplace relationships within the context of a highly individualised work culture. Of concern are the small group of employees employed at workplaces that could not be characterised as having ‘productive’ working relationships between employers and employees, and who have not made significant changes since the introduction of the ERA. Good faith, a cornerstone of the ERA, is not perceived to be enforceable or prescribed so there is little for unions to use to effect change. Employees at these workplaces are often on individual agreements, but they may also be unaware of their ability to belong to a union. These employees are less likely to experience the quality of relationships and related security and involvement that the ERA aims to promote. There was little in the research to suggest that this may change for these employees in the short term.

references Waldegrave, T., Anderson, D. and Wong, K. 2003. Evaluation of the Short Term Impacts of the Employment Relations Act 2000. Wellington, Department of Labour. (see also www.dol.govt.nz) notes 1 The views expressed in this chapter are those of the author and do not represent the views of the Department of Labour. 2 However, the proportion is likely to be lower due to indications from other questions that some employees did not accurately distinguish between a situation where a group of employees had similar conditions but no formal collective agreement, and groups being formally covered by a collective agreement. 3 Employees were not provided a definition of ‘change’ in terms and conditions.

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Trade unions and the Employment Relations Act robyn may

Introduction The three years since the enactment of the Employment Relations Act 2000 has seen much activity from, and change to, the New Zealand labour movement. Some of this change has been unexpected, some has been predictable and there is evidence of a degree of union renewal. This chapter aims to review the activities of New Zealand trade unions since the Employment Relations Act 2000 came into force and to examine the impact of that legislation, in the context of the current political and economic environment, upon unions. Following the approach used by Fiorito, Jarley and Delaney (2001), the chapter’s discussion is in the context of looking at unions as organisations. These authors proposed a framework of analysis which examines union environment, goals, strategies and outcomes. In examining unions in the United States, they ask, can ‘unions transform themselves in the face of strong environmental imperatives? Do they have the capacity to adapt to their environment or are they destined to fall victim to overwhelming environmental pressure?’ (Fiorito, Jarley and Delaney 2001: 232). These questions are highly relevant to an examination of New Zealand unions given the point they are now at in their history. New Zealand unions have emerged battered and diminished from the Employment Contracts Act era, but certainly not defeated. They now face new challenges under a nominally more union-friendly legislative and political environment, an environment that provides genuine opportunities for renewal. Environment – political, legislative and economic In October 2000 the newly elected Labour–Alliance Government replaced 159

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the Employment Contracts Act 1991 (ECA) with the Employment Relations Act 2000 (ERA), making good a promise that was a key part of party policy. The impact of the decade of the 1990s on New Zealand unions has been well documented, and it is widely argued that the ECA was a major contributor to the collapse in union membership and the decentralising of bargaining that occurred during the period (Harbridge and Honeybone 1996). In the eight years of 1991–99, union density as measured against the total numbers of wage and salary earners fell from 51.7 per cent to 21.4 per cent (May et al. 2002: 3). Collective bargaining coverage halved during this time, and the location of bargaining shifted firmly to the workplace, where it now remains, with single employer agreements now covering almost three-quarters of workers with collective employment agreements (Thickett et al. 2003: 22). During the debate surrounding the repeal of the ECA and the introduction of the ERA, New Zealand’s employer and business groups criticised the new Labour–Alliance Government for drafting provisions that offered trade unions a range of new protections. The critics of the ERA argued that the legislation would return unions to a position of power they had enjoyed prior to the advent of the era of the Employment Contracts Act, with a consequent return to high levels of strike activity. In the three years since the introduction of the ERA we have witnessed a slow but steady improvement in union fortunes. Yet, despite the rhetoric and fears of the employer groups, it is clear that the legislation has not created a single form of employee representation in New Zealand. Nor has the ERA created the kind of industrial unrest that was predicted would develop from a powerful union movement. The period of the ERA to date has seen moderate increases in union membership and a steadying of density, only moderate wage growth (despite low unemployment and skill shortages in many areas) and the continuation of low levels of industrial disputation. Where disputes have occurred, they are far more common in the public sector. It is significant that collective bargaining coverage has declined, despite the Act’s clear intention to promote collective bargaining (Thickett et al. 2003: 13–15) The first period of the ERA has been consistent with the CTU’s characterisation of the Act prior to its implementation. The ERA is ‘. . . not a return to the past. It does not return to any form of compulsion over union membership. It does not restore compulsory arbitration, national awards, fixed relativities or demarcations in union coverage. It achieves balance, rather than advantage, in employment relations’ (NZCTU 2000:9). On the face of it, the ERA provides unions with a number of opportunities for renewal through its promotion of collective bargaining, provision of access rights for unions and bargaining rights and information disclosure.

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The Act promotes collective bargaining by giving registered unions exclusive rights both to negotiate collective agreements and cover those workers whose employment conditions are specified by the collective. These two provisions, together with registration requirements that essentially hinge on a statutory declaration, have resulted in a potentially contradictory situation for unions (Barry and May 2002). Contradictory because the proliferation of small unions that has resulted potentially undermines and threatens the activities of large established unions, and the small unions themselves have only a limited ability to extract real benefits from collective bargaining. These provisions also have significant implications for the shape of the union movement. A striking feature of collective bargaining under the ECA was its separation of bargaining from union membership. The Act permitted workers, regardless of whether or not they were union members, to negotiate a collective contract without reference to a union. By 1999, 15 per cent of all employees covered by a collective contract were not represented by a trade union (Harbridge, Crawford and Kiely 2000: 16). The ERA did not permit this to continue and gave such workers three options: they could shift to an individual agreement with their employer, join an existing union or form a new union that would be permitted to negotiate a collective agreement under the ERA. There is evidence that the last option has been taken up with some vigour. During the first two years of the ERA, the numbers of unions in existence more than doubled, from 82 to 174 registered unions at December 2002 (May et al. 2003). Almost three-quarters of these newly formed organisations are enterprise- or workplace-based, and their existence poses a number of challenges for existing unions and for the CTU. Furthermore, there has been a 29 per cent decline in the number of employers who are party to collective agreements, partly due to the non-renewal of contracts/agreements and partly due to the non-renewal of some private sector multi-employer agreements (Thickett et al. 2003: 14). Legislative environment: The ERA and the problem of ‘free-riding’ Free-riding – the ability of a non-union worker to attain the same benefits as those secured by their union colleague without contributing to the costs of securing them – emerged as a problem for New Zealand unions during the ECA (Wilkinson, Harbridge and Walsh 2002: 2). The various provisions of the ERA relating to union activities and collective bargaining appear to have raised fresh concerns about free-riding, albeit of a different nature. Olson (1965) argues that the main function of a trade union is to provide a collective good, that is, collective bargaining. Under the ERA this is precisely the case, as only registered unions can negotiate collective agreements. Olson also

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discusses the possibility that the union could be allowed to enforce a closed shop so it can fulfil its bargaining functions and survive, although this would necessarily involve some loss of economic freedom for those who decided not to join the union (Olson 1965: 96). However, this is not the case in New Zealand. The various provisions of the ERA around freedom of association, undue influence, the 30-day rule and collective bargaining coverage rules give rise to a collision in the principles enunciated by Olson. The ERA states that the terms of a collective agreement apply only to the union members covered by it and to new employees for the first thirty days of their employment, by way of individual agreement (s 63). At the end of the 30-day period the individual agreement can be altered by mutual agreement. The ERA also promotes freedom of association (s 7) and prohibits undue influence on another worker to join, remain, leave or not join a particular union (s 11). Whilst free-riding is much more difficult to measure under the ERA than it was under the ECA (Wilkinson, Harbridge and Walsh 2002: 5), free-riding remains an issue of great concern to unions. The Engineers Union argues that the practice of employers passing on the benefits of the union-negotiated collectives to non-unionists ‘. . . is shortsighted; as more people leave the collective, the unions’ ability to negotiate a good agreement is diminished’ (Little 2003). The particular issue of automatic flow-on of union won benefits to nonunionists has been dealt with in a variety of ways. In the health sector, one district health board was reported as having kept non-union nursing staff waiting for a pay rise that was granted to union members following successful collective negotiations. In addition, union members in several government departments were recently awarded bonuses of between $600 and $800 as part of their collective settlements, as recognition of the union’s role in creating efficiencies in bargaining (Dominion Post 27 November 2002: 1). In Dairy Workers Union v Fonterra (ARC 57, Colgan, J. 8/12/02), both parties sought a ruling on the validity of a provision mutually agreed upon, and inserted into the collective agreement, which imposed a bargaining or agency fee on those workers not in the union but covered by terms and conditions the same as those of the collective agreement. The Court found that the imposition of such a bargaining fee was unlawful on a number of grounds. The decision is being appealed by the Dairy Workers Union. In December 2003, the Minister of Labour, Margaret Wilson announced key amendments to the ERA in the form of the Employment Relations Law Reform Bill. The Bill is expected to pass through Parliament by mid-2004 and may be changed as a result of this process. The Bill proposes only moderate changes to deal with the issue of free-riding. Essentially, any employer who intentionally seeks to undermine a collective agreement by passing on

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the terms and conditions of the agreement to non-unionists will be deemed to have breached good faith. However, as long as the employer undertakes genuine negotiations with the individual, the employer will be able to enter into an individual agreement in the same form as the collective agreement (Wilson 2003). Financial penalties, of up to $5,000 for an individual and $10,000 for an organisation, will apply to breaches of good faith. The option chosen by the Minister to deal with free-riding represents a very minimalist approach and one that it seems only employment lawyers will benefit from. Political environment In 2002, Labour was re-elected to power as a minority government. Arrangements were made with a new centre right party, United Future, to secure support for key legislation, following the demise of the Alliance and the breakdown in relationships with the Greens over the issue of genetic modification. This uneasy coalition is set to face some significant challenges in relation to industrial relations issues. For example, a private member’s Bill seeking a mandating of four weeks’ annual leave for all workers came before the House prior to Christmas 2002 and has been referred to a select committee. Labour’s public position has been that they would not seek to introduce the fourth week in this current term, and key MPs told unions they should campaign to win the condition at the workplace. United Future, whose campaign was based on ‘pro-family policies’, opposes the fourth week. Party leader Peter Dunne noted it would simply ‘load NZ businesses with extra compulsory costs’ (Dominion Post 22 November 2002: 5). Prime Minister Helen Clark subsequently announced that the minimum legislated annual leave entitlement is to rise to four weeks, effective from 1 April 2007 (Clark 2003). Currently, 8 per cent of all workers covered by collective agreements have no provision whatsoever for a fourth week of annual leave, 92 per cent of collectivised workers receive the fourth week, but the majority have to have five years or more service with their employer before they do so (Thickett et al. 2003: 46). The percentage of workers who receive four weeks’ annual leave without any service requirement has risen steadily from 10 per cent of workers on collective employment agreements in 1994 to 28 per cent in 2002 (Thickett et al. 2003: 45). The workforce covered by collective employment agreements is estimated to comprise around 20 per cent of the overall workforce (Thickett et al. 2003: 13). The United Future leader, Peter Dunne, has taken a similarly hard line on other union-related legislation. He voted against the ERA in the previous Parliament and described the Health and Safety in Employment Amendment Bill, which includes provision for recognition of work-related stress, as ‘on the lunatic fringe of law making with its extreme anti-employer bias’ (The Press

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16 October 2002: 11). The Health and Safety in Employment Amendment Bill passed through Parliament on 20 December 2002 and gives unions an opportunity to strengthen workplace representation, via its emphasis on workplace-based processes for health and safety matters. Political–social partnership? One very recent and highly significant development in union–government relations, and a possible marker of union renewal, is in the area of discussions on social partnership. Whilst not a new concept, ‘social partnership’ can cover a very wide variety of meanings and arrangements, ranging from framework agreements at government level to the negotiation of co-operative arrangements at the workplace (Heery 2002). In New Zealand, the focus from the CTU has been very much at the macro, governmental level. In November 2002 a CTU–government forum was held where the Prime Minister, senior ministers and union leaders from CTU affiliates met to discuss the concept and development of a ‘social partnership’ or ‘social compact’. Much was made of the shared goals of government and unions in the areas of technology and innovation, skill development and workplace organisation as the primary means for addressing improvements in productivity. The forum was a critical part of the CTU’s push to have influence and representation at all levels of government and to have such representation appropriately resourced. The CTU has taken a consistent soft-sell message to government and to business, and CTU President Ross Wilson has noted that ‘the real question for unions is whether business is ready to break from the policies of the 1990s and make the watershed change’ (Dominion Post 25 November 2002:12). In his address to the forum, the Deputy Prime Minister and Finance Minister Michael Cullen noted the Government’s interest in pursuing a ‘broad social consensus not only around the need for growth but on an acceptance that contributions to and rewards from growth are fairly shared’ (Cullen 2002: 3). Whilst he expressed no preference for the language used (whether it be a ‘compact’, partnership, contract or the like), what was favoured was a shared vision as to the path toward improved productivity. ‘Broad social consensus’ in this sense means unions are only one of many parties who may be consulted. It does not imply preferential access as the Australian unions had it during the Accord era in Australia. Further, unions may well be very cautious of adopting too much of the Accord-type model given the negative implications of this approach for Australian unions (see Peetz 1998). The CTU recognises the incremental path that it must take in restoring its influence. This development raises the CTU’s perennial prob-

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lem with resourcing. It is a very small organisation dependent solely on affiliates for its income, affiliates who are only just starting to build up their own resources again. Securing resources for representation will be key to the success of this strategy. Economic environment The economic climate thus far associated with the ERA has encompassed low rates of unemployment and inflation, reasonable growth and no evidence of wages explosion, despite the tight labour market and skill shortages in some areas. The year ending September 2003 saw unemployment at 4.4 per cent and tracking downwards, inflation (measured by the Consumer Price Index) was at 1.5 per cent and wages and salaries (including overtime) increased by 2.3 per cent (Statistics New Zealand 2003a and 2003b). Employment has been climbing steadily during 2001–03. Economic activity (as measured by growth in GDP) was 3.9 per cent for the year to September 2003 (Statistics New Zealand 2003c). This rather benign economic situation has had surprisingly little impact on employment conditions. Analysis of collective bargaining agreements has found wages growth of 2.5 per cent (similar to the overall increase in wages and salaries) and little evidence of improvements in overall conditions of employment (Thickett et al. 2003: 24, 84). As highlighted previously, whilst the ERA explicitly aims to promote collective bargaining (s 3), bargaining coverage has actually declined since the Act came into force (Thickett et al. 2003: 14).

Goals and strategy – peak council, affiliates and new unions At the outset, the goal of the union movement appears self-evident: unions are in the business of improving wages and conditions for their members. However, New Zealand’s union movement, defined as the 174 unions registered under the ERA and covering some 335,000 workers (at December 2002), spans an incredibly diverse set of organisations with an equally diverse set of goals, aspirations and reasons for being. New Zealand’s peak union council, the Council of Trade Unions (CTU), has thirty-four affiliates and speaks for some 88 per cent of all trade unionists in the country. The CTU is a very small operation in comparison with peak union councils in other countries, and it has less than ten full time staff. Its goals are very clear, and two in particular need to be mentioned. Increasing membership through an organising approach has been set as a very high priority. This is seen in the resources being spent on the establishment of an organising centre in Auckland for training organisers and pushing the message

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through affiliates (see May and Walsh 2002). Additionally, the CTU is also seeking to refine the organising focus with an emphasis on industry and industry policies and outcomes (see Goulter 2003). As with the Australian and British peak union counterparts, the ACTU and TUC, the CTU has adapted ideas developed in the USA (Bronfenbrenner et al. 1998) and has worked closely with the ACTU in developing resources and materials to support these strategies (May and Walsh 2002). Broadly, advocacy of the organising model involves a shift in union priorities and strategies away from servicing, toward member involvement and activism. In theory a radical shift, it is in reality a shift few unions outside of the US have accomplished (Heery 2002: 29, Crosby 2002: 144). However, Heery (2002) notes that the particular institutional features of the British industrial relations system do suggest that the organising approach is a suitable and appropriate strategy for unions. First bargaining is decentralised, giving importance to the level of organisation at the workplace, and, second, union security provisions are relatively weak (Heery 2002: 29). Both observations apply in the New Zealand context, suggesting that the CTU is pursuing the best strategy available under the circumstances. The second goal of the CTU is to improve access and influence within government. This is a project that senior CTU officials have worked steadily on since the Labour–Alliance Government came to power in 1999. Whilst this project is still evolving, the fact that the Government has begun talks on a ‘social compact’ with unions and others in society, as discussed previously, is evidence that the CTU is beginning to restore its influence within government. After a decade in the wilderness New Zealand unions are now claiming their place in the corridors of power once again. In terms of bargaining strategy, the CTU is encouraging affiliates to move away from the costly and resource-intensive site-by-site bargaining approach fostered by the ECA. Instead the CTU is pushing unions to consider more efficient forms of bargaining such as multi-employer or industry bargaining. Whilst some unions have had success, particularly in the areas of health and in some sectors within education, those private sector multi-employer agreements that currently exist largely pre-date the ERA. In the private sector, unions have found it extremely difficult to get employers to bargain on an industry basis. The ERA offers little assistance in this regard other than removing any legal barriers to unions taking action over multi-employer bargaining and broad good faith provisions. The CTU lobbied the Government to change this aspect of the ERA during the 2003 Review of the Act, and the Employment Relations Law Reform Bill offers some changes in this area. In an endeavour to strengthen the ERA’s aim to promote collective bargaining, the Bill requires, in the case of multi-party collective bargaining, relevant unions and employers to meet at least once after bargaining has been initiated.

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Failure to do so will constitute a breach of good faith. The Bill will also give the Employment Relations Authority new powers to make non-binding recommendations to assist the parties in certain circumstances (Wilson 2003). Analysis of collective agreements shows only small increases in the number of workers covered by multi-employer agreements, with most of the growth coming from the public sector, where government has publicly supported such bargaining (Thickett et al. 2003: 22). Affiliates The CTU represents eighteen of New Zealand’s twenty largest unions (although the twentieth largest union is a union with a membership of around 2000). Affiliates generally represent the well-established longstanding unions, each with their own particular cultures and history. If we examine the issue of organising and recruiting alone, a variety of approaches are apparent. Only two New Zealand unions would fully describe themselves as ‘organising unions’, having adopted the ideas into their organisations in the early 1990s (see Oxenbridge 1997, May and Walsh 2002). Other unions can be described as old-style bargaining unions, comprising a ‘pragmatic mix’ of both organising and servicing (May and Walsh 2002). These unions have bargaining at the core of their activities, meaning officials retain a central role and purpose that would not be the case in an organising union. In the public sector, the Public Service Association (PSA), which covers workers in core government, takes a ‘partnership’ approach to dealings with government. The parties have a framework ‘Partnership for Quality’ agreement, signed in May 2000, which informs all dealings between the two parties and codifies their mutual commitment to participation and quality. Recent developments already discussed in regard to the payment of bonuses for union members show that this approach has had some pay-off for the union. An interesting trend, given the above discussion, is the dominance of public sector union membership since the ERA. We now find that collective bargaining is five times more common in the public sector than the private sector (Thickett et al. 2003: 15), that 53 per cent of all unionists work in the public sector and that the three highest sectors of union density are in the public sector. Overall public sector density is 62 per cent (May et al. 2003). Likewise, multi-employer bargaining is far more common and increasing in the public sector (Thickett et al. 2003), and, unsurprisingly, the public sector is well represented in dispute statistics (Statistics New Zealand 2002). The public sector share of overall collective bargaining has increased to 50 per cent, in line with the public sector share of union membership (Thickett et al. 2003). In many respects, membership increases in the public sector were anticipated. The combination of pre-existing high levels of membership and density with

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labour force growth and encouragement of multi-employer bargaining by government has meant fertile ground for public sector unions. Likewise, high profile campaigns for improvements in pay and conditions in the health and education sectors have given those unions a visibility that has strongly assisted recruiting efforts. The growth in public sector unionism has not been matched by the private sector; indeed, public sector growth has only just kept overall membership numbers edging forward, such has been the scale of decline in the private sector. This trend matches that seen in other Anglo-Saxon countries: public sector unionism is the stronghold for both the British and American movements and public sector density in Canada is over 70 per cent. The other side to this discussion is the collapse of unionisation in the private sector. In 1991, one in three private sector workers belonged to a union (Harbridge et al. 1994: 3) while, in 2002, only one in eight private sector workers belonged to a union (May et al. 2003). This is exacerbated by the fact that the private sector labour force grew by 42 per cent over the same period whilst the public sector labour force shrank by 6 per cent (Statistics New Zealand 1991, 2003d). Essentially, where unions are growing, the labour force is in decline or at best steady and, where the labour force is growing (in the construction, retail and finance sectors in particular), the union movement has low levels of union density (see May et al. 2003). New unions Of New Zealand’s 174 registered unions (at December 2002), eighty are new unions representing a wide variety of new representational forms, and fiftyseven of these are enterprise or workplace based. These unions span the range of employer-sponsored organisations to genuinely independent, industry or enterprise unions and have an equally wide range of motives for their creation. In analysing these new unions, we have argued previously that the creation of various new forms of employee representation actually frustrates as much as it facilitates the objectives of the ERA, which include the promotion of legitimate unionisation and genuine collective bargaining (see Barry and May 2004). The goals of many of these new organisations are extremely limited, usually only comprising the negotiation of a collective agreement, although in some cases this is off the back of an established union’s hard work (Barry and May 2004). The small size and their very limited resources (some unions are not even charging dues) mean that few of these organisations will evolve in a way that has occurred, for example, in the US (Jacoby 2001), and most appear to have little affinity with the wider movement. Whilst these unions accounted for only 25 per cent of the growth in union membership over the three years of 1999–2002 (May et al. 2003), the fact

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remains they often directly compete for membership with established unions and do so on the basis of cheaper dues, compliant relationships with management and a purely in-house approach. Whilst the CTU takes a long-term view of these organisations, encouraging inclusion and affiliation where possible, the fact that many of these unions were established as a result of dissatisfaction with an existing union and that they aim to provide an alternative to that union means they will continue to pose a challenge to broader union strategy.

Outcomes Trade union membership is growing, and the decline in union density has ceased. In December 2000, just three months after the ERA was enacted, the first recorded increases in density and membership in over a decade were reported. Further increases were reported for 2001 and 2002, albeit at a lesser rate. Results for all three years mean that over 30,000 new members have been added to the ranks of trade union membership since 1999. Whilst this is not a huge increase, the fact that it arrests a long decline in membership and density, and that a growth of 10.7 per cent in the three years 1999–2002 is ahead of the growth in total labour force of 6.9 per cent for the same period, means it is an important result and evidence of a degree of union renewal. Significant too is the fact that numbers of trade unions have doubled since 1999, restoring New Zealand’s industrial relations landscape to that of a large number of small unions. What remains unchallenged, however, is the concentration of membership in the ten largest unions. Of concern for unions, however, is that the fact that membership remains stubbornly concentrated in the public sector and in manufacturing. Whilst these two sectors account for a significant proportion of the labour force (somewhere around 35 per cent), they are not sectors of growth into the future. These two sectors have provided much of the growth in membership in recent years. Those sectors growing at a faster rate than the labour force overall are the finance, insurance and business services sector and the retail, wholesale, restaurant and accommodation sector, which have low density levels of 5.4 per cent and 3.8 per cent respectively (May et al. 2003). The demographics of New Zealand’s employers may give some explanation as to why unions are failing to make the gains in membership required for pre-1990s density levels to return. Small employers dominate the industrial landscape, and this trend is on the increase. Fifty-five per cent of all fulltime equivalent jobs are in organisations employing less than fifty workers, up from 48 per cent of all full-time equivalent jobs in 1991. The percentage of full-time equivalent positions in enterprises employing more than 100 workers has dropped from 45 per cent in 1991 to 38 per cent in 2001 (Statistics NZ

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1991, 2001). Small workplaces are notoriously difficult for unions to organise, and bargaining coverage traditionally has been through multi-employer awards. The collapse of these multi-employer awards under the ECA and the lack of growth in multi-employer collectives under the ERA creates a serious difficulty, as negotiating on an enterprise basis in small workplaces has high transaction costs that unions are unable to sustain. Several other factors continue to work against unions returning their density levels to pre-1991 levels. Insufficient resources remain a serious constraint. The union movement is highly dispersed and still struggling with the decimation of the 1990s. The kinds of organising strategies currently being pushed by the CTU as the path for renewal are by their very nature resource intensive, requiring great commitment. The adoption of these strategies by the CTU’s affiliates has been limited. Established unions are under pressure from some of the new unions, who are in effect competing for membership on the basis of lower or, in one or two cases, no membership dues (Barry and May 2004). Cultural change of the type the CTU is trying to effect within unions takes time. Unions are slowly readjusting themselves to the new environment of the ERA, but many are bargaining in an ECA mode, site by site, an approach paradoxically favoured by many members and almost always preferred by employers. Whilst the ERA re-establishes union legitimacy, unions struggle with attempting to recruit a whole generation of New Zealanders who have grown up seeing the union movement marginalised. As a result, they do not see unions as relevant in a way that their parents might have done. There is evidence emerging internationally of an ‘incumbency effect’ (Diamond and Freeman 2001), that is, young workers are heavily influenced by their first experiences of work. As this is more often than not a non-union experience, this will be a significant factor in future decisions. Further, British research suggests that the failure to unionise new workplaces (those established since 1980) explains much of the decline of British trade unionism and paints a bleak future for unions in that country (Machin 2000). The legacy of their past, which includes the ECA but is rooted in a much longer term historical development, remains a huge challenge that is proving very difficult for unions to overcome purely through their own efforts. The individualisation of the employment relationship under the ECA remains thus far unchallenged by the ERA. Less than one-quarter of New Zealand workers are employed under the provisions of a collective agreement, although an unknown number have their pay and conditions based on an agreement negotiated collectively. Where collective bargaining does occur, it is more likely to be workplace based rather than industry based. A critical factor for the future of the New Zealand union movement is that evidence is beginning to emerge of

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a collapse of collective bargaining in the private sector (Thickett et al. 2003). However, it is not all doom and gloom for New Zealand’s union movement. The fact that it has emerged from the 1990s, diminished but nonetheless still alive, says something for its resilience. The foregoing discussion has pointed to a number of developments that hold promise for the future of the movement. The idea of a form of social compact with government is an exciting one and will do much to raise union legitimacy beyond that promoted by the ERA. Fine-tuning of the ERA, in the form of the Employment Relations Law Reform Bill, set to be enacted mid-2004, offers scope for new activity, particularly in the areas of strengthening collective bargaining and good faith provisions, where unions had sought change. The current environment offers unions opportunity for renewal. What remains to be seen is whether they can make the transformation that will allow take-up of those opportunities.

acknowledgement This work is part of a larger project which receives funding from the Public Good Science Fund administered by the Foundation for Research, Science and Technology (Contract no. VICX0301). Thanks to Pat Walsh for comments on an earlier draft.

references Barry, M. and May, R. 2004. ‘New Employee Representation: Legal developments and New Zealand Unions’, Employee Relations Journal (forthcoming). Bronfenbrenner, K., Friedman, S., Hurd, R., Oswald, R. and Seeber, R. 1998. Organising to Win. New Research on Union Strategies. New York, ILR Press. Clark, H. 2003. ‘All workers to enjoy 4 weeks annual leave’, Press Release, 8 November 2003. Crosby, M. 2002. ‘Next steps in union renewal’, in Forbes-Mewett, H. and Griffin, G. (eds), Unions 2002: Future Strategies for the Union Movement. Melbourne, Monash University. Cullen, M. 2002. Speech to Union–Government Forum, Wellington, 7 November 2002. Diamond, W. and Freeman, R. 2001. ‘Liking the workplace you have: The incumbency effect in preferences towards unions’, Working Paper 1125, CEP, London School of Economics. Dominion Post. 22 November 2002: 5, 25 November 2002: 6, 27 November 2002: 1. Fiorito, J., Jarley, P. and Delaney, J. 2001. ‘National Unions as Organisations’, Research in Personnel and Human Resources Management, 20: 231–68. Goulter, P. 2003. Speech to 2nd Australasian organising Conference, Sydney, 7 May 2003. Harbridge, R., Hince, K. and Honeybone, A. 1994. ‘Unions and Union Membership in New Zealand: Annual Review for 1993’. IRC Working Paper 1/94, Victoria University, Wellington. Harbridge, R. and Honeybone, A. 1996. ‘External Legitimacy of Unions: Trends in New Zealand’, Journal of Labour Research, 17(3): 425–44.

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Harbridge, R., Crawford, A. and Kiely, P. 2000. Employment Agreements: Bargaining Trends and Employment Law Update 1999/2000, Victoria University, Wellington Heery, E. 2002. ‘Partnership versus organising: Alternative futures for British trade unionism’, Industrial Relations Journal, 33(1): 20–35. Jacoby, S. 2001. ‘Unnatural extinction: the rise and fall of the independent local union’, Industrial Relations Journal, 40 (3): 377–404. Little, A. 2003. ‘Balance of power helps growth’, New Zealand Herald, 22 July 2003, p. C2. Machin, S. 2000. ‘Union Decline in Britain’, Discussion paper 455, CEP, London School of Economics. May, R. and Walsh, P. 2002. ‘Union Organising in New Zealand: Making the most of the new environment?’, International Journal of Employment Studies, Vol. 10 (2), October 2002. May, R., Walsh, P., Harbridge, R. and Thickett, G. 2002. ‘Unions and Union Membership in New Zealand: Annual review for 2001’, IRC Working Paper 2/02, Victoria University, Wellington. May, R., Walsh, P., Harbridge, R. and Thickett, G. 2003. ‘Unions and Union Membership in New Zealand: Annual Review for 2002’, IRC Working Paper 1/03, Victoria University, Wellington. NZCTU. 2000. Submission on the Employment Relations Bill, NZCTU, Wellington. New Zealand Herald. 23 March 2001. Olson, M. 1965. The Logic of Collective Action, Cambridge, Mass., Harvard University Press. Oxenbridge, S. 1997. ‘Organising Strategies and Organising Reform in New Zealand Service Sector Unions’, Journal of Labour Research, 22(3): 3–27. Peetz, D. 1998. Unions in a Contrary World, Cambridge, Cambridge University Press. Statistics New Zealand. 1991. QES, HLFS. [customised data set from Statistics New Zealand] Statistics New Zealand. 2001. Statistics New Zealand. 2002. Hot off the Press, QES, HLFS. [customised data set from Statistics New Zealand] Statistics New Zealand. 2003a. Hot off the Press, 15 October 2003. Statistics New Zealand. 2003b. Hot off the Press, 11 November 2003. Statistics New Zealand. 2003c. Hot off the Press, 19 December 2003. Statistics New Zealand. 2003d. Quarterly Employment Survey, 2003. The Press. 16 October 2002: 11. Thickett, G., Harbridge, R., Walsh, P. and Kiely, P. 2002. Employment Agreements: Bargaining Trends and Employment Law Update 2001/2002, Industrial Relations Centre, Victoria University, Wellington. Thickett, G., Harbridge, R., Walsh, P. and Kiely, P. 2003. Employment Agreements: Bargaining Trends and Employment Law Update 2002/2003, Industrial Relations Centre, Victoria University, Wellington. Wilkinson, D., Harbridge, R. and Walsh, P. 2002. ‘Labour Market Re-regulation and its Effects on Free-Riding in New Zealand’, ANZAM 2002, 4–6 December, Victoria. Wilson, M. 2003. Speech to the Employment Law Institute, 20 August 2003. Wilson, M. 2003. ‘Employment Relations Law Reform Bill – Questions and Answers’, Press Release, 4 December 2003. court decisions Dairy Workers Union v Fonterra, ARC 57, Colgan, J. 8/12/02.

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Introduction The Council of Trade Unions believes that equity and efficiency objectives can be achieved by labour market arrangements based on the promotion of collective bargaining. We do not see employment relations as an entirely separate category of labour market policy from (say) productivity, skill development, the use of technology and workplace organisation. We have argued for many years for a more balanced set of policies that more closely align economic, social, environmental and cultural objectives – by now a familiar list of ‘bottom lines’. We have advocated a mix of economic development and skill development policies that can build a high-wage, highskill, quality economy. Our criticism of the Employment Contracts Act (the ECA) was not just that it was brutally unfair on workers and unions, but that it was also economically bankrupt. We welcomed the Employment Relations Act (the ERA) in 2000 as a new start. It rejected the individualist, contract-based model for one that championed good faith processes to underpin productive employment relations. We said at the time that it was a modest law. In fact, it has been far too modest. The reality is that the labour market laws and practices in the circumstances of economic deregulation throughout the 1990s dealt a major blow to workers and unions and left a damaging legacy. In many ways it should be seen as having a ‘shock’ effect. The Employment Relations Act was too mild a response to deliver improvements in collective bargaining – particularly in the hostile private sector environment. The CTU argued, therefore, for a review of the Employment Relations Act so that it could be tested against its objectives. However, we do not see this 173

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Review in isolation from other reforms. The labour market has changed drastically in the last few decades. Issues such as paid parental leave, holidays, stress, and work–life balance require not only a public policy and employer response, but need to be at the forefront of a union agenda to grapple with the modern labour market. It now appears that the Employment Relations Law Reform Bill addresses, in a moderate way, a number of key union concerns.

The Employment Contracts Act The introduction of the Employment Relations Act was a highly significant measure. For the CTU it was the culmination of nearly a decade of opposition to the Employment Contracts Act. That particularly partisan law only mentioned the word ‘union’ once – and that was merely in a transitional section. Unions saw the Employment Contracts Act as hostile to workers, to unions and to healthy employment relationships. It encouraged individual contracts despite the knowledge that the ILO recognises the vital importance of collective bargaining to deliver fair outcomes for workers. It allowed ‘take it or leave it’ bargaining. It abolished industry and occupational awards. Employers celebrated the fact that the ECA finished the job of removing what they identified as four ‘pillars of protection’ associated with the industrial relations system prior to the reforms: compulsory unionism, monopoly coverage of work (and so workers), blanket coverage and compulsory arbitration. The ECA removed the award system that provided minimum occupational or industry wages and conditions for many workers. The process for recognising and registering unions was abolished, and unions were regarded as incorporated societies. The ECA introduced changes in the structure, process and content of employment contracts. The structure tended towards individual contracts. The process undermined the role of unions and indicated many of what we call ‘bad faith’ elements of bargaining. The content changes were particularly evident in changes to hours of work, penal and overtime rates, service pay and other allowances. In 1990, there were approximately 720,000 workers having their minimum pay and conditions of employment determined by an award or a collective agreement. By 2000, the Victoria University contracts database identified contracts covering only 421,400 workers. There was a greater incidence of fixed-term contracts, contracting out and other flexible work arrangements. An emerging problem in this period was the existence of ‘sweatshops’ operating illegally. Some of these were using illegal immigrants, confiscating passports and avoiding minimum wage, tax

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and other liabilities. The Department of Labour investigated sixty-one such sweatshops in 2000. This confirms once again the problems of a labour market driven almost entirely by wage competitiveness at the cost of innovation, investment in skill and training, and quality. A publication from the Labour Market Policy Group, the Department of Labour, reporting on research into the effects of employment regulation in the accommodation, winemaking and brewing industries, found that ‘the conditions for starting employees in low-skilled positions were often set as a minima and presented on a “take it or leave it” basis’ (Whatman 1999: 61). In the case of Tucker Wool Processors Ltd v Harrison & Ors [1999], workers at a wool processing plant that was being sold wanted their union to negotiate their terms and conditions with the new employer. The employer did not negotiate with the union and offered contracts on a ‘take it or leave it’ basis. To keep their jobs the workers had to agree to an inferior contract, losing many of their old conditions and gaining many unreasonable new conditions. The Court of Appeal said that this was what the ECA was intended to do: ‘The policy and wording of the 1991 Act make it clear that either party to the negotiation may, in general, proceed on a “take it or leave it” basis’ (unreported, CA 260/98: 23). But there were many other cases. A timber worker, in 1993, fell asleep while driving home after several consecutive 17-hour shifts. After his death, the Coroner criticised the employer for structuring shifts in such a way. A major retailer who had consistently refused to negotiate collective contracts but, in order to lock out commission workers, initiated collective bargaining solely for that purpose. An employer, during a meeting between the union and senior management discussing union claims, had staff in eighty-two branches being shown a video outlining their new contract written solely by the employer and being invited into the office one by one to sign it. A worker in an industrial cleaning company, who had twenty-three years’ service and lost all service-related entitlements, had to sign an inferior contract, when the business was sold to a new employer. The government department where managers called staff and offered them a one-off payment on the basis of leaving the union and signing an individual contract. The home-care employer who insisted that every new client a worker takes care of is a new contract. To get the client, workers needed to sign the contract. A letter from a supermarket checkout supervisor to the Department of Labour spoke for many workers when it said that: As soon as the Employment Contracts Act came in everything changed in this place we were told – now he’d do it his way. First he got rid of the union, and some were threatened that if they belonged to the union they would be down the road. The contracts

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were never negotiated. We were called in one by one and given this printed document with a place to put your signature. Some of the young ones were not allowed to take their contracts home for their parents to read. The first year all of us who already worked there got penal rates. As people left or were sacked, the new ones went on to a flat rate with no set amount – they were all getting different wages. Within a year there was a 90 per cent rollover of staff. (National Distribution Union 1996: 14.)

An in-depth study (Conway 1999b) of a particular sector backs up this concern. A detailed time series database of wage rates in the supermarket sector revealed a fall in real wage rates from 1987 to 1997 of 11 per cent for those who worked Monday to Friday, with a 33 per cent real pay cut for those with a proportion of weekend work. The cuts were even greater for new and young workers, since the average figures ‘hide’ significant ‘grandparenting effects’ (that is, existing employees kept their entitlements but they were not offered to new employees). However, over time, the experience of workers starting a new job in the labour market conditions imposed by the ECA started to heavily influence the average trends for all workers. Thus, new workers were the first affected, but the effects eventually flowed on to all workers. A contributing factor to the deterioration in pay and conditions was the decline in union membership. The reduction in union membership in New Zealand in the 1990s has been the most extensive in the world. The table below indicates the fall. TABLE 1: UNION MEMBERSHIP DENSITY IN NEW ZEALAND, 1991 TO 2000 Per cent of total labour force December 1991 December 1992 December 1993 December 1994 December 1995 December 1996 December 1997 December 1998 December 1999 December 2000

35.4 28.8 26.8 23.4 21.7 19.9 18.8 17.7 17.0 17.5

Per cent of wage & salary earners 44.6 36.7 33.8 29.3 27.1 24.4 23.3 22.2 21.4 22.0

Source: May et al. 2001. Note: union membership had peaked at 44.7 per cent in September 1989.

Given that the ECA was intended to promote efficiency in the labour market, it was a major disappointment to its supporters that aggregate productivity statistics were so woeful. New Zealand fell in this period to twenty-third out of twenty-six developed countries in overall productivity. The percentage of labour productivity growth in successive years from 1993 to 1998 was: –0.9, 1.7, -0.4, -0.7, 1.1 and 2.4. This constituted an average of 0.5 per cent.

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Australia managed an average of 3.2 per cent from 1993 to 1998. From 1978 to 1990, the labour productivity rates in the two countries had been relatively similar. The gap steadily widened between 1990 and 1998, with Australia posting a 21.9 per cent increase and New Zealand just 5.2 per cent. The CTU has attributed this decline to the ECA only to the extent that it delivered a collapse in social capital – trust, loyalty and good faith in the workplace. That collapse resulted from employer attitudes and an obsession with reducing unit labour costs at the expense of investing in good workplace relationships and skill development (Hazledine 1998). Hazledine has argued that ‘the ECA (was) above all an instrument for destroying social cohesiveness’ (Hazledine 1998: 111) and in essence suggests that what has been lost is that concept of a ‘fair day’s work for a fair day’s pay’ which was part of the ‘social contract’ between employers and labour. The ECA failed both workers and industry. It was incompatible with the labour market requirements of a modern, productive, value-added economy. It did a lot of damage.

The Employment Relations Act The CTU catalogued the effects of the Employment Contracts Act – on workers’ pay and conditions, and on the economy. We supported, therefore, the new Employment Relations Act even though a fair number of our submissions did not get included in the Act. As unions said at the time, it was a modest law. It has now been shown to be far too modest. This is not necessarily a criticism of the Government or of the union stance at the time. There was a desire for a modern new law, and one that was built on ILO Conventions 87 and 98. Unions thought that this was a foundation for an enduring law – one that could largely survive political changes. However, to replace decades of industrial relations laws built on awards, arbitration and unqualified preference with a law based on the objectives of good faith and the promotion of collective bargaining was always going to be something of an unknown journey. In 2000, the key contrasts were between the fundamentally anti-union, individualist and contractualist Employment Contracts Act and a new law based on good faith relationships. In the event, unions expended considerable ‘political capital’ to make modest advances. When the Act was introduced three years ago, employer organisations predicted dire consequences for the economy and employment growth. In fact unemployment fell, employment grew strongly, economic growth improved significantly and household incomes increased. The prime objectives of the Employment Relations Act include the promotion of collective bargaining and also good faith relationships.

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Let’s look at the labour market reality and test it against those objectives. In August 2002, the Department of Labour reported to the Government that only 15 per cent of workers were covered by collective agreements. It had fallen to 12 per cent in the private sector. Many unions are engaged in repetitive enterprise bargaining. The incidence of multi-employer bargaining resulting in actual settlements has been minimal. And employers have found that good faith is more like a wet bus ticket and does not create a real disincentive to bypass unions and undermine collective bargaining. In one Auckland rest home, the union has been to mediation twenty times, but the employer still refuses to negotiate a collective agreement. Over 100 workers at a bank want to go on to a collective agreement like other union members, but their employer insists they remain on individual agreements. Another rest home employer has been giving wage increases to non-union staff and has said it will not give the same increases to those seeking a collective agreement. The fact is that, in the current labour market, income inequalities persist as much as ever. Employers are responding to labour market shortages by putting more pressure on existing staff. In many cases, they are not paying higher wages, or, if they are, they are paying ‘at the margin’. In other words, they might pay the next individual a bit more, but they are not addressing pervasive low pay. Wage rates in New Zealand (adjusted for the exchange rate) are about 25 per cent lower than in Australia. In September 2003, a Canadian research report revealed that New Zealand workers suffered a drop of 6.5 per cent in real hourly earnings during the twenty years from 1980 to 2001, the worst performance of the sixteen OECD countries in the study (Osberg and Sharpe, 2003: 22). By contrast, Japanese workers were up 69.4 per cent, UK workers 46.9 per cent, Canadian 39.5 per cent and Australian 28.8 per cent. It is fair to say that the impact of the wage freeze from 1983 was significant. But compared with the increase in wages in Australia through the 1990s, the increase in New Zealand was a fraction. In Australia, there has been much stronger labour market regulation, wages are 25 per cent higher than in New Zealand and their labour productivity is better than ours. If there were an award system, then the pay rates would be much higher in many industries. In many cases, unions find employers are not willing to genuinely negotiate to settle a collective agreement. Of course, it is never fair to generalise. Some employers continued to deal with unions in good faith throughout the 1990s and do so now. Some have adapted to the new legislation. But many have not.

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Review of the Employment Relations Act The Employment Relations Law Reform Bill – introduced in December 2003 – is a set of amendments that are required to ensure that the law meets its own objectives. The CTU sought four key changes to the Employment Relations Act. These were: • promotion of collective bargaining; • strengthening good faith requirements and consequences for breach; • restrictions on employers who pass on union-negotiated terms and conditions in such a way that it undermines collective bargaining; • protection for vulnerable workers in a sale, transfer or contracting out situation. Several political parties – Labour, Progressive and the Greens – all set out their support for such an approach in their election policy statements. The key elements in this review were therefore signalled publicly in mid-2002. In addition, the Department of Labour conducted a thorough review of the Employment Relations Act and, based on their findings, concluded that ‘freeriding by individuals on collective terms and conditions has become commonplace in many organisations’ (Department of Labour 2003: 46–49). The problems encountered by unions in endeavouring to use the current Act to promote collective bargaining were also noted. The CTU strongly supports measures in the Bill that more effectively promote collective bargaining. We support collective bargaining because research shows that it provides for better pay and conditions. A collective agreement is just the baseline, and individual terms can be agreed in addition provided they are no worse than the collective minimum. Of course, the very reason some employers don’t like collective bargaining is that they prefer to bargain one-on-one with workers, including new employees, as they believe this is better for the employer. Some workers cope well with this situation, but the protection of a collective agreement has been recognised by the International Labour Organization and the World Bank as providing better protection for workers. The Bill clarifies that it is a breach of good faith for employers to discourage an employee from involvement in collective bargaining. It also provides greater assistance to resolving negotiations by providing for third-party assistance, recommendations and a requirement to continue bargaining even if there is an issue that cannot be readily resolved, and settle a collective agreement unless there is a genuine reason not to do so. Of course, this is a far cry from the award system and arbitration requirements of previous employment

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laws. But it will hopefully mean that negotiations can at least be concluded. There is also a requirement for employers to be represented at an initial meeting on a multi-employer negotiation. But the Bill does not adequately promote multi-employer bargaining. The CTU supports the strengthening of good faith. The Bill introduces penalties for serious breaches. It is also clarified that good faith applies to all employment situations and is in addition to the implied duty of trust and confidence. This is a sensible clarification. Unions also support the ultimate remedy of determination of the terms of a collective agreement where there has been such a serious, sustained and significant breach of good faith that the only effective way of resolving the matter is for the Employment Relations Authority to decide. This is a very important signal to all parties that good faith is meaningful, that serious breaches have a financial consequence and that remedies are available for extreme cases. Unions also support the new provisions in the Bill that address the ‘freeloader’ issue. Unions operate in an environment where it is entirely voluntary to join a union. That remains. But is unfair for union members to pay fees, involve themselves in a bargaining process, attend meetings, maybe even sometimes lose pay to achieve some gains, and then see the employer say to non-union workers that they will get the same deal for free. The provision in the Bill is too weak to really address this matter, but it is a start. Unions recognise that sensible arrangements need to apply so that an employer can sort out pay and conditions for all staff, but the current practice of some employers is deliberately undermining collective bargaining. We also note ILO jurisprudence that allows employers and unions to voluntarily agree on union security arrangements such as union membership as a condition of employment or payment of a contribution to the costs of the bargaining unit from non-members. We believe that the Bill is deficient in not explicitly providing for this. A key provision in the Bill is the protection of vulnerable workers in a transfer situation. This has been a long-standing issue and is a common provision in many developed countries. The Bill simply means that, if the most economically sensible thing to do is to sell, transfer or contract out the business or part of the business, then this is not done entirely at the expense of the workers. Most employers want employees to transfer on the same or similar pay and conditions. If this cannot occur, most employers will compensate workers. But there are some workers who are not treated this way and have no protection. The Bill addresses this – even though the list of vulnerable workers is too restrictive. The CTU also has significant concerns about the inadequacy and nature of the proposed amendments to the Equal Pay Act.

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Employer reaction to the amendments A number of employer organisations are opposing these amendments. In essence, they are accusing the Government of talking about growth and innovation, but delivering increased compliance costs for small businesses. Despite the fact that nearly 60 per cent of the labour force are not employed by the 97 per cent of businesses with fewer than twenty workers (with 23 per cent of workers in firms of under five), the employer pitch has focused on small business. Of course, small businesses matter a lot. But we need a modern economy with statutory or collectively agreed minimum standards that can apply to all firms. The Government may need to look at information provision, capacity issues and other ways to address compliance issues for small firms. In terms of employer reactions, we know that some employers do not like the 30-day rule where, if there is a collective agreement, new employees cannot be paid less than the collective agreement for the first thirty days. Some employers really enjoyed the freedom they had under the Employment Contracts Act to entirely dictate to new and vulnerable workers what their contractual terms were. They would like that ability back again. Employers also do not like the arrangement under the Employment Relations Act which means that only union members are covered by collective agreements. But the quid pro quo for this in the Act is a very low compliance threshold for new unions. In fact, there were eighty-two unions at the end of 1999 and this increased to 174 unions by the end of 2002. Also, the reality under the Employment Contracts Act was that many employers drew up a ‘collective agreement’ and got individual workers to sign on (see Dannin 1997, Gilson and Wager 1998). There was no negotiation. The Employment Relations Act at least put an end to that practice. The employer organisations have been at fever pitch in their comments about multi-employer bargaining. Unions are locked into repetitive enterprise bargaining. Unions are not just bargaining agents. For example, one major union in 1990 negotiated seven awards and forty-two agreements. By 1992, that union had half the staff of 1990, half the members – but 770 collective contracts to negotiate. Another union went from thirty-two negotiations to 1800. How’s that for a massive increase in transaction costs? The Act promotes collective bargaining. The obligation to promote collective bargaining is clearly set out in ILO Convention 98, which New Zealand has ratified. A multi-employer collective agreement (MECA) is more of a collective than a single-enterprise document. So it is logical for the Act to promote MECAs. But the current ERA provisions are deficient as they set out processes for collective bargaining that do not anticipate MECAs. The requirement for an ‘effective and efficient process’ applies only to a single

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employer, not to the bargaining unit. A MECA can only be initiated after a democratic process that requires a ballot of members. Many workers currently choose to have an enterprise agreement – it is their say that counts. Employers are able to send representatives to negotiations. The current Act already has good faith tests that include issues of the proportion of the employer’s employees that could be involved. MECAs can accommodate schedules, enabling (permissive) clauses as appropriate so as to provide both an industry base and flexibility for individual firms. In Australia, 80 per cent of their workforce is protected in terms of base pay and conditions at least by multi-employer awards, and growth and productivity in that country is usually higher than here. There is no basis to the employer concerns. Nevertheless, some employers and opposition parties will no doubt continue to oppose the amendments to the Employment Relations Act. This is despite the fact that the ERA is closer to the Employment Contracts Act than its predecessor, the Labour Relations Act 1987. This would still be the case even if all the amendments suggested by the CTU were enacted. Of course, employer organisations say that if, in 2000, the Government had not listened to them and removed some hot spots the sky really would have fallen in. And now, in 2004, it really will fall in because of the amendments! Towards a high-wage, high-skill, quality economy Unions argue that amendments to the ERA will support sustainable economic growth. In fact: • real GDP per capita cannot rise without real incomes going up; • although employment growth and hours worked have grown, the Employment Relations Act is not delivering any real redistribution of income; • we need an employment relations environment that promotes a highwage, high-skill, quality economy; • a sustainable development approach requires that economic growth objectives include social mechanisms to ensure distribution of benefits; • better pay and conditions for ordinary workers result in household expenditure that will boost growth and employment. Unions are also saying that, just as there is a long and damaging legacy from the privatisation programme, the excessive deregulation in the state sector and the economy generally, the underinvestment in skills, the failure to invest in modern infrastructure and so forth, there is also a long legacy from the Employment Contracts Act.

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The labour market of today bears a close resemblance to that of the 1990s in some respects. It is true that unemployment is down and investment in skills is up, and these are hugely important. Unions recognise that the Government has genuinely delivered across a whole range of employment policies. We have seen modern apprenticeships, more funding for industry training, regular increases in the minimum wage, paid parental leave, and health and safety changes. This has created a much more positive environment that supports improved minimum entitlements, partnerships based on common industry objectives, co-operation around skill development and a much higher level of union–employer dialogue on key issues. But collective bargaining, which can deliver wage increases and improved conditions for large groups of workers, is being constrained by an inadequate law and sustained employer resistance reminiscent of the 1990s. The scale of labour market deregulation we experienced in the 1990s is very difficult to reverse. Employers have many options (casuals, fixedterm contracts and so forth) to avoid minimal re-regulation. The removal of awards and arbitration has meant that many issues that would normally be pursued through collective bargaining spill over into minimum code issues across the whole economy. And unions get bogged down in enterprise bargaining with high transaction costs and low density. The 2002 review of union membership and collective bargaining noted that: The individualisation of the employment relationship under the ECA remains thus far unchallenged by the ERA. Less than one quarter of New Zealand workers are employed under the provisions of a collective agreement, although an unknown number have their pay and conditions determined by an agreement negotiated collectively. Where collective bargaining does occur it is more likely to be workplace based rather than industry based, leaving many unions, especially in the private sector locked into an inefficient site-by-site bargaining mode. (May et al. 2003: 323.)

Hopefully, some employers are now starting to recognise the damage created by their employment and market practices. An example of the legacy of underinvestment in training and low rates of pay can be seen in the transport sector. It is estimated that there will be a shortage of 4000 drivers by 2005 and 10,000 by 2010 if current recruitment trends continue. Pay, conditions and pressures on drivers were highlighted as key factors (Dominion Post 21 April 2003). But this very underinvestment in skill development alongside major labour shortages is part of the context that has resulted in unions arguing for such rights as longer paid parental leave, better work–life balance and the flexibil-

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ity of working arrangements that suit workers rather than just employers. Unions are arguing for sustainable workplaces in the context of sustainable businesses. This will occur if the emphasis shifts towards valuing staff, recognising their contribution, investing in skill development, better use of technology, and a recognition that quality employment and productivity outcomes emerge from a decent work environment. The road transport freight sector mentioned above is typical of many deregulated sectors in the economy. In April 2003, a major new study of labour market issues affecting truck drivers was released (Oliver et al. 2003). It was prepared for the Road Transport Forum NZ, New Zealand Forest Owner’s Association Inc and the Log Transport Safety Council. The report said that unless action is taken to meet the increasing shortfall the driver shortage will grow significantly. This would have a major impact on the New Zealand economy, especially as the level of skill required to be a driver is similar to that required by number of other sectors in the economy who are also experiencing major labour shortages. The report acknowledges that the highly competitive nature of the industry and the strength of the sector’s major clients have a major influence on the commercial health and long-term sustainability of the transport industry. The result is a general lowering of standards to the lowest common denominator. This affects the sector’s ability to maintain acceptable standards of health and safety, road safety and staff welfare, and the pay and conditions that support the staff recruitment and retention rates required to meet the service demands placed on the industry by customers. The report says that the pressures on the industry often lead to: • purchasers of truck transport services taking a short-term view leading to haulage rates being squeezed below those required to maintain the general health of the transport industry and its long-term sustainability; • established truck transport operators taking a short-term and unrealistic approach to tendering for work; • many new entrants to the truck industry being undercapitalised and not fully appreciating the economics of sustainable truck operation, which leads to them being willing to undercut the cartage rates needed for sustainable operation. The report also says that action is required to ensure all transport operators price their cartage contracts at a rate that the sustainable in the long term. The key issues are low pay and long hours. The CTU believes that the labour market is dysfunctional because there are industry problems that require industry solutions. The labour market is

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disaggregated into small enterprise bargaining units. Enterprises need to be competitive within industries – but if they adopt a lowest common denominator approach, as in the trucking sector, the results can be disastrous. How many more industries have to reach a crisis point before employers look at sustainable options – such as industry minimum standards, multiemployer agreements, industry-wide investment in skills, partnership with unions and so forth? We have had a labour and skills shortage for nearly two years, but pay rates and conditions are not really responding. We have high hopes of the ERA, once it is amended. But unions do not expect legislation to provide all the solutions. We recognise that unions have to be modern, relevant and strategic. They need to be part of economic development and industry training initiatives. But they also need a legal environment that genuinely provides for collective bargaining so that the benefits of economic growth can be shared.

A wider public policy context for employment relations Changes in labour market legislation and regulations are increasingly being recognised as part of a broader agenda. In the last few years, we have seen increasing reference to terms such as economic transformation, inclusive economy, innovation economy, knowledge economy, knowledge society, social development, sustainable economic development and the triple bottom line. These all represent a critique of the view that least-cost competitive conditions would create private profits and investment that would trickle down to and through society as a whole. There is also increasing recognition that labour, education and employment issues are crucial to the development of a value-added economy. Knowledge is an infinitely renewable resource provided we invest in it. The importance of human capital has, to some extent, the potential to act as a counterweight to the pressures of finance capital. Unions support the concept of lifelong learning. We are at the heart of developments in workplace learning. For unions, there are opportunities to promote best practice workplaces, quality of working life solutions, remuneration systems and other proposals which mean that workers are able to use the knowledge they have in the workplace (see Wilson 2003). Formal tripartite structures, centralised bargaining and industry structures/ associations have been largely swept aside since the 1980s. But there is renewed interest in a social dialogue, new forms of tripartism and other forms of broader engagement. It is fair to say that there is some caution on all sides, but the fact that such ideas are being discussed indicates a shift to a much more co-operative atmosphere.

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In the state sector, there has been the Public Service Tripartite Forum (which grew out of the Public Service Association Partnership for Quality), the Aged Care Forum and the recently established Tripartite Health Forum. In the private sector and wider economy, unions are involved in numerous tripartite initiatives including: the Wood Processing Strategy; the Textile, Clothing, Footwear and Carpets Strategy; Nelson/Marlborough Seafood Cluster; Growth and Innovation Framework Taskforces (information, communication, technology; biotechnology, and creative industries and design); the Growth and Innovation Advisory Board; and the negotiated greenhouse agreement process. Two particular initiatives are in partnership with Business New Zealand and the Government. One is Skill NZ. This is the new Skill NZ (the name left behind by the old organisation, which has been incorporated into the Tertiary Education Commission). An agreement has been signed between the Minister and Business NZ and the NZCTU to work jointly on the promotion of skill training and working with agencies that can be persuaded to play a vital role in improving access and removing blockages. The other initiative is a tripartite dialogue on productivity issues. This process needs to actively involve our respective constituencies, but so far the focus has been areas of common concern. Another project is the CTU Industry Training Project, which includes the elements of capacity building, alignment with government policy and improving union engagement with employers and Industry Training Organisations around a critically important area. The CTU ACC Health and Safety Joint Venture between the CTU and the Accident Compensation Corporation (ACC) is another variation on a similar partnership model. The CTU has worked with other stakeholders to promote modern apprenticeships. These are models that could be extended to other policy areas. So a feature of the new approach in the post-deregulation phase is a strengthening of partnerships, and a recognition of the union movement as a legitimate social partner. Another vital area is economic development in a sustainable development framework. The CTU has long been a champion of economic development policies. In 1992, the New Zealand Council of Trade Unions published a booklet entitled A Quality Future: Working Together for Growth in New Zealand. This publication promoted a policy framework for long-term sustainable growth with a priority for job growth. It identified the following commonalities in successful nations and enterprises: • an emphasis on co-operation and consensus; • recognising competition and change as a challenge; • changing technology;

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quality at all levels; less hierarchical management; flexibility in the face of a constantly changing world; an educated and engaged workforce; innovation and creativity at all levels.

The report stated that the CTU wanted to ‘work with others in the community to build an economy which is environmentally sustainable and in which respect for people, their cultures and their rights can be guaranteed’ (NZCTU 1992: 3). At that time, the CTU argued for better monetary policy, positive measures to stimulate economic growth such as research and development, more industry training, decent work practices and new quality standards. The CTU advocated an industry policy (similar to the economic development programme implemented since 2000) and for social policies based on fairness and personal security. We continue to encourage unions to engage on these issues. But there are still many barriers to effective union engagement. One of the main ones is capacity. Unions recognise the need to combine engagement with industry sector strategies, skill development, articulating industry issues and promoting the need for minimum standards through wider collective bargaining arrangements. But for this to occur, and for more of a partnership approach to emerge, there needs to be a stronger resource base, a more mature response from employers, and a government bureaucracy that recognises workers and unions as part of industry. The CTU has been concerned that unions are marginalised in the economic development process. As noted by Conway (1999a), we saw at that stage a risk of industry policy developing a new relationship between government and business that could be characterised as corporatism minus the unions. He argued that: When there was a more centralised labour relations system, the delivery of numerous policies (e.g. incomes policy) necessarily involved some form of union co-operation. A new labour law replacing the Employment Contracts Act will not necessarily put unions back in that position. Things really have changed in so many ways. But union co-operation with industry policy will be important. Industry training initiatives, speeding up the innovation process, improving the depth and quality of social capital, transitional processes as industry composition changes, and a balanced focus on employment growth alongside higher wages rewarding enhanced skill, will all rely to some extent on union co-operation and initiative. (Conway 1999a: 171.)

If anything, we underestimated this risk. Industry policy in particular, and economic development policy in general, has been colonised by many latter-day

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opportunists who never supported these policies throughout the late 1980s and 1990s. Unions have successfully argued for greater recognition and participation in industry development processes, but we need to do more to deepen the involvement of members and workplace representatives in this process. These initiatives illustrate the fact that unions understand that, although we will continue to advocate redistribution in the context of collective bargaining, we also advocate policies and practices which invest, in the medium and long term, in skill development, technology, more productive work practices, design and innovation, physical and intellectual infrastructure, and participative arrangements that will deliver higher paid and more secure jobs.

Conclusion The Employment Relations Act was a modest law designed to promote collective bargaining and good faith relations in the labour market. It is designed to complement a more inclusive approach to economic development that puts investment as the heart of a modern economy. But this is investment in people and their skills, in quality human relations at work, as well as technology, infrastructure, marketing and so forth. The Employment Relations Act needed to be reviewed to meet its objectives. Perhaps many did not realise the damaging legacy of the Employment Contracts Act. The evidence is clear. In the public sector, a more co-operative employer approach, well-resourced unions and better processes of engagement are delivering good results. In the private sector, in many cases, employers are trying to undermine the Employment Relations Act. However, there are also many areas of co-operation emerging of a broader nature – around skills, productivity and sustainable development. I am therefore optimistic that we can build from this point so that unions across the economy can effectively bargain for a fair share of today’s resources, as well as be part of strategies to build sustainable industries underpinning a modern, quality economy. This will develop an environment that can nourish not only decent work but also productive, innovative businesses.

references Conway, P. 1999a. ‘Industry Policy’, in Eichbaum, C. and Harris, P. (eds), The New Politics: A Third Way for New Zealand? Palmerston North, Dunmore. Conway, P. 1999b. ‘An Unlucky Generation? The Wages of Supermarket Workers Post-ECA’, Labour Market Bulletin, 1999: 23–50. Dannin, E. 1997. Working Free: the origins and impact of New Zealand’s Employment Contracts Act. Auckland, Auckland University Press.

the era: a ctu perspective Department of Labour. 2003. Union Research Report: A Component of the Evaluation of the Short Term Impacts of the Employment Relations Act 2000. Wellington, Department of Labour. Dominion Post, 21 April 2003. Gilson, C. and Wagar, T. 1998. ‘From Collective Bargaining to Collective Contracts: What is the New Zealand data telling us?’, New Zealand Journal of Industrial Relations, 23(3): 169–80. Hazledine, T. 1998 Taking New Zealand Seriously: The Economics of Decency. Auckland, HarperCollins. May, R., Walsh, P., Thickett, G. and Harbridge, R. 2001. Unions and Union Membership in New Zealand: Annual Review for 2000. Industrial Relations Centre, Victoria University, Wellington. May, R., Walsh, P., Harbridge, R. and Thickett, G. 2003. ‘Unions and Union Membership in New Zealand: Annual review for 2001’, New Zealand Journal of Industrial Relations, 28(3): 314–25. National Distribution Union. 1996. Shortchanged: Retail Workers and the ECA. Auckland. New Zealand Council of Trade Unions. 1992. A Quality Future: Working Together for Growth in New Zealand. Wellington, NZCTU. Oliver, R., Baas, P., Ludvigson, T. and Bolitho, H. 2003. Driver Recruitment/ Retention in the Heavy Truck Transport Industry, Wellington, April 2003. Osberg, L. and Sharpe, A. 2003. An Index of Labour Market Well-being for OECD Countries, Centre for the Study of Living Standards, Canada, September 2003 Whatman, R. 1999. ‘Case Study Research in the Accommodation, Wine Making and Brewing Industry’, Department of Labour Occasional Paper Series, 1999/4, Wellington. Wilson, R. 2003. ‘The role of unions in building an innovative and productive society’, University of Auckland Business Review, 4(2): 10–22.

court decisions Tucker Wool Processors Ltd v Harrison & Ors, (unreported), CA 260/98.

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Beyond the Employment Relations Act: the wider agenda for employment relations and social equity in New Zealand nigel haworth

The replacement of the Employment Contracts Act (ECA) by the Employment Relations Act (ERA) has been the principal employment relations measure introduced since 1999.1 The ERA is the most significant measure in a broad reform strategy linking employment relations outcomes with broader vision of social equity. Neither the ERA nor the broader strategy commands a consensus. Business community representatives have expressed great anxiety regarding the potential effects of the strategy on workplace relations and productivity, and on the expectations of the community at large. The Council of Trade Unions (CTU) is broadly supportive, but wishes reform to proceed more quickly, whilst fearing a poll-driven backsliding. Similarly, there is little political consensus, particularly following leadership changes in the National Party. The lack of consensus goes deeper than the employment relations and social equity issues. It encompasses deep divisions about the economic model that New Zealand should follow, and how employment relations should contribute to the achievement of economic goals. The focus of this chapter is a series of discussions, measures or commitments around the employment relations and social equity agendas, in place or proposed at the time of writing. They include: • the adopted position on labour standards and trade and on the International Labour Organization (ILO); • health and safety legislation; • emerging proposals providing protection for employees during the sale and transfer of enterprises, or when business activities are contracted out; 190

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introduction of paid parental leave; proposed legislation covering holiday entitlements; discussions about pay parity and equal employment opportunity; an emerging public debate, sponsored by the Government, about work–life balance.

An assessment of these issues shows that the Government is seeking to put in place a comprehensive platform of measures designed to: • replace definitively both the arbitration and contracts-based models of the past with a model based on trust, successful bipartite relationships, reciprocity in terms of rights and responsibilities, and a commitment to voluntarism; • improve economic performance by promoting inclusive partnership between employers and employees; • build a contemporary tripartism to support the new model and, in the process, meet New Zealand’s international obligations to the ILO; • provide protection for vulnerable employees by means of minimum employment standards and, where necessary, targeted interventions. These measures contribute to the Government’s efforts to construct a national Human Capability Framework (see Tipples 2004) that intersects with other initiatives, such as the Growth and Innovation Framework (GIF) and the work of the Tertiary Education Commission (TEC). In short, the Government has launched a wave of regulatory initiatives and the employment relations reforms are key components in this comprehensive shift in public policy.

Efficiency and social equity through a social democratic approach The Government’s approach to employment relations reflects an explicit commitment to a modern social democratic tradition that recognises the importance of a strong, internationally competitive economy, yet rejects the view that competitiveness can only be achieved by unitary imposition within the employment relationship. In this, the Government is firmly in tune with Sengenberger when he wrote: The role of labour standards . . . is two-fold: they have to ensure that competition is not primarily based on squeezing labour but rather on promoting the productive capacity of the workforce, thereby improving chances for competing through better products, processes and market opportunities. To achieve this, depressive, downward-tending competitive forces have to be curbed by way of a general minimum floor

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to wages and terms of employment, as well as the assurance of compliance with set standards (Sengenberger 1990: 8).

The Government also couches its employment relations reforms firmly in the broader context of achieving social equity. The purpose of an efficient economy and productive workplaces is not simply to further individual aspirations, but also to provide the material resources for a cohesive, participative society. To quote Labour Party policy: Labour believes that economic policy should aim to promote sustainable and balanced economic development in order to create full employment, higher real incomes and a more equal distribution of income. Labour believes that for truly sustainable economic growth there needs to be public confidence that the products of growth are fairly distributed. A number of initiatives have improved fairness in economic life: an improved industrial relations framework (the Employment Relations Act, changes to ACC, an increase in the minimum wage and extension of the adult rate to 18 and 19 year olds, and occupational health and safety legislation), a more progressive tax structure, improved security for those in retirement, a more secure funding path for health, fees stabilisation and an improved student loan scheme, housing reform (Labour Party Economic Policy 2002).

Clearly, the Government holds the view that, the stronger the partnership and inclusion, the greater the likelihood of sustainable economic growth. This position – the dialectic between material wellbeing and inclusion – contrasts markedly with the dominant view between 1984 and 1999, which held that appropriate social outcomes were those which flowed sequentially from dynamic, entrepreneurial and primarily individualistic economic activity. The relationship between the ERA and its associated measures and the notion of social equity is a defining difference between 1984–99 and post-1999 New Zealand governments. It is also a defining point of difference between New Zealand’s political parties. Whilst they are not the focus of this discussion, the measures discussed here are also buttressed by an array of related initiatives addressing such issues as innovation and growth, employment creation (including active regional and sectoral components), person-to-job matching, school-to-work transitions, training and upskilling, superannuation and saving. Thus, the Government has packaged measures to provide improved protection for employees in a much broader, ‘whole-of-government’ approach to growth and equity. The two dominant features of the Government’s employment relations interventions are worker protection in general, and protecting the vulnerable worker

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in particular. These emphases reflect the Government’s belief that general protection was eroded under the ECA and that the erosion was particularly damaging for a layer of vulnerable workers (for example, the low paid, the casualised, the ‘highly flexible’ young, old and female labour force). Overall, the post-1999 governments have been extremely active in the broad area of employment relations policy. Party manifestos have been one driver of action; pressure from the union party has been another. A third factor was the energy and principled commitment of the then Minister of Labour in many of the areas discussed below. 2 If one accepts that the success of governments depends substantially on a combination of clear policy goals, political vigour sufficient to drive through measures and a capacity to communicate the purpose of new measures, then the employment relations area has been a highlight of the post-1999 governments. On the other hand, the employment relations reforms have clearly been very controversial and recent media coverage has provided limited support for the Government’s reform zeal. In general, the views of employer and employee representative bodies differ markedly about the appropriateness and viability of the Government’s employment relations agenda. For the employers, the Government’s agenda is contradictory and therefore impracticable, for economic growth is fundamentally threatened by a rebalancing of power between employer and employee. A rebalancing such as that proposed by the Government, suggest the employers, particularly threatens the small and medium-sized enterprise (SME) base of the New Zealand economy, which is unable to bear the costs of new regulation. Regulation, or ‘increased compliance costs’, undermines entrepreneurial energy and commitment, deters foreign direct investment and promotes dependency. In this view, the post-1999 labour regulation environment has been driven by a series of retrograde steps that have undermined the progress made in the period of ECA-led deregulation. The Government is either pandering to its main constituency (organised labour) or is in the grip of a dangerous, anachronistic ideological fervour (represented surprisingly often by the demonised erstwhile Minister of Labour, Margaret Wilson). For employee bodies, the message is broadly the converse of the employers’. The CTU argues strongly that the 1990s were marked by sustained erosion of worker protections, and that the post-1999 governments were required, as a matter of utmost priority, to reverse that process. Some key markers have been set in place to measure progress towards a fairer balance of power. The ERA is key, but action on holidays, health and safety, and contracting out/sale of enterprises are also important. For the unions, the concern is that the rebalancing will not be sufficient or will be too slow in coming. The important difference between employer and employee bodies is that the

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former stand firmly in opposition to the general thrust of government policy, a stance we will illustrate below, whilst the latter are broadly either ideological supporters or prisoners of the Government’s agenda and, importantly, understand that any potential alternative to this model currently on offer will be less preferable. Employee organisations are substantially bound up in the classical dilemma of union–party collaboration under social democracy. This dilemma is very real for the leadership of the NZCTU, which faces significant pressure from its membership to negotiate prompt government action to meet union expectations.

Meeting international labour standards There is a complex interplay between the Government’s commitment to New Zealand’s successful integration into the global economy, its commitment to improved labour market protections and the driving political force behind those commitments. The commitment to tripartite labour standards promotes successful economic performance whilst providing protection to vulnerable workers. This commitment has much in common with the Sengenberger argument noted above. It also reflects recognition that the 1995 complaint to the ILO about the ECA (which, despite protestations to the contrary by the government of the day, produced a report that soundly condemned the ECA for its breaches of core labour standards) required New Zealand’s house to be set in order in terms of its observance of international labour standards. Hence, the ERA and its collateral measures should be seen as a conscious effort on the part of the post-1999 governments to meet international labour standards (see Roth 2001). As we see elsewhere, meeting international obligations – be they related to labour standards, the Kyoto arrangements on the environment or the UN and Iraq – is something of a touchstone for this government. Thus, the emphasis on meeting international labour standards is unsurprising. This effort has at least six significant aspects. First, the ERA is itself designed to meet not only domestic requirements but also the standards laid down by the ILO. Thus, the Act meets the requirements of the two key bargaining conventions on freedom of association and freedom to bargain collectively. It is instructive that many of the formulations used by the then Minister of Labour in her account of the 2003 review of the ERA’s operation emphasise the importance of collective bargaining and the settlement of collective agreements, whilst reserving criticism for actions that undermine such procedures. It is also interesting to note that the notion of ‘good faith’ is central to many ILO measures, including the 1998 Declaration on Fundamental Principles and Rights at Work. Likewise, changes proposed in the Reform Bill in late

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2003 seek to promote collective bargaining, and reduce the incidence of ‘freeriding’ and the potential for excessively protracted bargaining. Second, the Government moved in 2003 to ratify ILO Convention 98 on Collective Bargaining, one of the ‘core’ conventions promulgated by the ILO. The Minister argued that ratification reinforced the philosophy underpinning the ERA. Third, the Minister made a conscious effort to support the work of the ILO (an effort noted positively in Geneva within ILO circles). Moreover, New Zealand has made important contributions to the development of the Decent Work agenda, one of the two central planks of a reinvigorated ILO (the second is the 1998 Declaration on Fundamental Principles and Rights at Work). In particular, the idea that the Decent Work agenda be translated into National Action Plans, able to be subjected to scrutiny by the tripartite actors and other interested parties, was an initiative introduced by New Zealand’s incumbent Minister at the thirteenth Asian regional ILO conference. Fourth, the Government has established – through the Ministry of Foreign Affairs and Trade (MFAT) – a protocol laying out the desired procedures to link its trade arrangements with the observance of labour standards in partner countries. The impact of the protocol remains to be seen, and in general expectations are muted. There are grounds to believe that MFAT officials are less than enthusiastic about its introduction into trade negotiations. Technical trade specialists tend to view such linkages as at best difficult to achieve and an unfortunate allocation of scarce resources, and at worst the potential cause of severe distortions in the global economic system. Fifth, the Government is explicitly using tripartism (the quintessential ILO process) as a preferred means of developing shared approaches to employment relations change. A key example is the use of tripartite (or bipartite) advisory groups as a way of defining issues for further consideration or legislation. As is usually the case with tripartism, neither of the parties (employers and workers) feels entirely vindicated by the process. It may be that, in New Zealand’s particular historical circumstances, the employers feel they are relatively disadvantaged by such an explicit return to tripartite practice. Finally, there has also been a modest but significant increase in resources devoted to international issues within the Department of Labour, involving a doubling of responsible staff (from two to four). With this increase in resources has come an expectation that the Department of Labour will extend its international activities beyond the traditional focus on the ILO. In all these areas, the government is signalling a commitment to the international standards and practices that are the hallmark of the ILO’s labour standards regime.

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Contracting out, and sale and transfer of business The proposed amendments of the ERA – the Reform Bill announced in December 2003 – take forward one of the most contested aspects of the original Employment Relations Bill. This relates to the protection of workers facing restructuring as a consequence of the sale or transfer of a business or because of the contracting out of business operations. Since 2000, the Government has been under pressure to move on this issue, a pressure led particularly by the Service Workers Union but also by the CTU. The crux of the issue is that, in the 1980s and 1990s, many workers were affected by restructuring and found themselves severely disadvantaged as a result of the change of ownership of businesses or contracting out of services. This situation was exacerbated by the absence of any statutory redundancy provision. Moreover, some workers – in the cleaning and health services sectors, for example – were identified by the unions as being particularly vulnerable to the disadvantages of changed contract arrangements. Some workers have faced multiple reassignments of contracts, with adverse effects accruing with each reassignment. This is a worldwide phenomenon to which many jurisdictions have responded, most notably in the case of the European Union’s Acquired Rights Directive. It is also technically very complex and highly charged politically. The Employment Relations Bill included the controversial clause 66, replaced in the Act by sections 54(3) and 4(4)(d), requiring a clause in all collective agreements to cover the rights and obligations of the parties when sale, transfer of ownership or contracting out is mooted, and imposing good faith requirements on the parties engaged around such issues. Employers broadly felt that this was sufficient coverage of the issue; the unions disagreed strongly. Moreover, the unions believed that they had an explicit political commitment by the Government to improve the protections provided to workers in these circumstances. A bipartite ministerial advisory committee (including non-aligned experts) established to advise the Minister on ways forward came up with two diametrically opposed positions, reflecting a fundamental split between the employer and union parties. Employers felt that any move beyond the existing sections of the Act would be profoundly damaging to economic performance and management prerogatives (particularly in an economy with a high density of SMEs). The unions disagreed, arguing that further protection was needed to reduce the adverse effects of restructuring on wages and conditions, and to protect large numbers of very vulnerable workers. Thereafter, the issue was subjected to further analysis by the Department of Labour, leading to the proposal contained in the December 2003 Reform Bill. The Bill provides particular protection for certain (vulnerable) workers (for example, cleaning services, food services, caretaking and laundry in the

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education, health or age-related residential care services). These workers may elect to transfer to a new employer on the same terms and conditions and then bargain for redundancy provision if subsequently made redundant by the new employer. If redundancy agreements cannot be reached, then it is proposed that redundancy entitlements will be determined by the Employment Relations Authority. In the case of other categories of worker, the Reform Bill proposes steps the employer will need to take to protect employees affected by a sale, transfer or initial contracting out of business. Cabinet papers indicate the scope of concern felt by a number of portfolios about the proposed measure and its impact on labour market performance and on SMEs. Although the Bill was delayed in part because of the concerns about this measure, the Minister was obviously able to convince colleagues of its importance. The CTU’s attitude to the measure is summed up by a comment from CTU President Ross Wilson: ‘Changes . . . are modest but useful proposals to what’s always been a modest law.’ Unions recognise that the Government has steered a careful course on a controversial issue and, if not meeting expectations entirely, has gone as far as it is able or willing. In line with their opposition to any amendment of the existing relevant sections of the Act, employers see the measure as the imposition of worker entitlements on employers and, therefore, as a significant constraint on managerial prerogative.

Health and safety The Health and Safety in Employment Amendment Act 2002 (amending the 1992 Act) seeks to establish a more effective regime, based on constructive employment relationships around health and safety (H&S) at the workplace or site level and the systematic management of potential hazards. Whilst the employer is understood to have the primary responsibility for ensuring a safe working environment, employees are also expected to contribute to that environment by working with employers on the basis of good faith and increased level of employee participation. The employee participation dimensions of the Act are important. Companies with thirty or more employees (on single or multiple sites) must put in place a formal participation mechanism. Companies with less than thirty staff must do the same if an employee or union requests such an arrangement. The key changes brought about by the Act are in the areas of coverage, employee participation and enforcement. The coverage changes involve a variety of new requirements, for example, ships, aircraft crew and the rails system are brought under the Act, as are mobile staff, volunteers, ‘loaned’ staff, staff in training and work-experience staff. The Act extends coverage to stress and fatigue as potential work hazards and to companies engaged in

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the plant rental business. Further coverage measures relate to the provision of protective clothing. In terms of employee participation, over and above the measures noted above, the Act establishes an annual entitlement to H&S training of two paid days. It also allows trained H&S representatives to issue hazard notices where a hazard is identified but the employer either refuses to discuss the hazard or to take steps to deal with the hazard within a reasonable time. Hazard notices are understood to be a communication tool promoting dialogue between the parties. The right to refuse hazardous work is also provided for. Changes in the enforcement procedures associated with the Act include an extension of the time limitation on bringing an action under the Act, the introduction of an infringement offence regime and the prohibition of opportunities to insure a company against fines issued under the Act. Responses to the Act vary across the parties. Business New Zealand has a number of concerns about the possible implications of the measure and speaks of ‘employers . . . waiting with bated breath’ to see how the changes will develop. Particular concerns are raised about the introduction of stress as a workplace hazard and the possibility of ‘a barrage of stress claims at the slightest hint of changed work practices or when a deadline is imposed, or even when something occurs in an employee’s personal life over which the employer obviously has absolutely no control’. There is also a fear that the employee participation measures will reduce managerial responsibility. Employers criticise the increased size of possible fines and the use of spot fines by OSH Inspectors, introduced by the Act. On the other hand, employers appear to welcome the renewed emphasis on H&S and, in particular, the stress placed on communication between the parties at workplace level (Business NZ 2003a). The CTU broadly supports the Act, having seen a number of its criticisms of the 1992 legislation addressed in the amendment. The CTU’s position is marked by a number of key premises: New Zealand has a bad H&S record, which requires a more effective legislative intervention; many workplaces will be unaffected by the changes as they have already sought to improve their H&S record; the employee participation dimensions of the Act are particularly important for building a workplace-level co-operative partnership around H&S; the Act brings New Zealand more closely into line with overseas H&S provision (Wilson 2003).

Holidays There has been for some time a consensus in New Zealand that the existing holidays legislation (Holidays Act 1981) is complex and often difficult to

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understand and implement. Also, during the Labour–Alliance Government between 1999 and 2002, the charged issue of a fourth week of annual leave grew in response to trade union and Alliance pressure. If all the parties agreed that the legislation needed to be simplified, they did not agree about the terms to be guaranteed by the simplification. Nor was there a consensus for the fourth week of annual leave. Hence, the simplification of the holidays legislation became the focus of a ministerial advisory group in 2001, in turn leading to the replacement of the 1981 legislation with the Holidays Act 2003, whilst the issue of the fourth week continued as a political challenge until it was resolved in late 2003 with the announcement of a fourth week of annual leave from April 2007. The intentions of the 2003 legislation are couched in terms of improved and more consistent entitlements, an improved basis for calculating holiday entitlements and clear and separate entitlements for sick leave and bereavement leave. The new provisions became active in April 2004 (except for the fourth week of annual leave). Sick leave entitlements will be five days per year after six months’ continuous service, able to be accrued up to a maximum of twenty days. Bereavement leave will be available on the basis of three days for a close relative and one day where the employer accepts that an employee has suffered a bereavement. The nub of the complex public holiday issue is that henceforth all employees working on a public holiday will be entitled to time and a half and a day’s alternative holiday. A range of related changes brings order to the treatment of Waitangi and Anzac Days, the timing of Christmas and New Year for leave purposes and the cases of workers who normally work weekends. Employer views on the new provisions are predictably critical. They suggest that the proposed measures do not take into account either company level arrangements dealing successfully with holidays or some key legal decisions relating to public holidays. The proposed regime will, asserts Business New Zealand, add to compliance costs (for example, time and effort involved in complex holiday-related calculations). Small business will be particularly hard hit by these additional compliance costs. The additional fourth week is portrayed as anticompetitive, erosive of productivity and as an electoral bribe ‘dangled just beyond the next election’ (Business NZ 2003c and 2003d). Not surprisingly, the CTU takes a different view. The new arrangements are seen as a fairer minimum standard of holiday provision, meeting more closely the work–life balance needs of New Zealand workers and the needs of families. A better work–life balance will, in the view of the CTU, promote improved productivity over time (NZCTU 2003a).

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Work–life balance Since mid-2003, the Government has set in train a programme designed to develop family-friendly and other policies that promote work–life balance.3 The commitment to this area of activity was signalled in the Speech from the Throne on August 2002. In part, the programme builds on ongoing work in the Department of Labour on the future of work, which has as its focus changes in the economy, the workplace, the workforce, and work–life balance and associated training requirements. This focus reflects growing overseas interest in the future of work (see Wilson 2004). In August 2003, the Minister announced the integrated work programme for family-friendly policies, based on an inter-agency steering group and associated wide consultation. The advantages deriving from family-friendly policies and an appropriate work–life balance are understood in terms of individual, social and workplace benefits. Individuals achieve greater wellbeing inside and outside work. Social cohesion is consequently promoted. A particular focus of the programme is people who are likely to be vulnerable to the extent that they face particular challenges (for example, low income families, people in precarious or non-standard work, people with disabilities and sole parents). Employers gain in terms of reduced turnover and absenteeism, and increased productivity and profitability. For the Minister, a key benefit for people is found in wider life choices and greater control over personal, family and social circumstances. Equally, the idea of work–life balance is complex and relatively new. To be achieved it will require the input and co-operation of all the parties. The Government intends to consider policy options derived from the work of the steering group in mid-2004. This is an area of policy in formation, but it is one that has attracted mixed responses from employers and trade union bodies. Employers have commended the development of work in this area and have praised the use of an inter-agency approach (Business NZ 2003b). However, they have signalled that they fear the development of a ‘one size fits all’ prescription that does not reflect long experience in the private sector of work–life balance issues or the needs of individual enterprises. In noting these concerns, employers suggest that other policy initiatives by the Government have been too broad brush (including the introduction of four weeks’ annual leave, the time and a half provisions for public holidays and the introduction of paid parental leave). The CTU takes a more fulsome view, praising the work–life balance focus as long overdue. The CTU points to its own studies which highlight ‘work [dominating] . . . life to an unhealthy degree’ (NZCTU 2003c). This is an area likely to attract further attention when policy options come up for consideration.

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Pay equity June 2003 saw the announcement of the terms of reference for a Pay Equity Taskforce, charged with looking at ‘factors that contribute to the gender pay gap [that] apply in particular parts of the public service and public health and education sectors, and . . . [a] five year plan of action to address pay and employment equity’. Whilst the taskforce is looking at the public sector only, it is expected to provide a model for implementation of similar policies in the private sector. The taskforce is to report to a Ministerial Reference Group, chaired by the Minister of Labour and involving Women’s Affairs, State Services, Finance, Health and Education. The former Minister took a strong view that pay equity contributes to broader social equity, itself a core value of the Government. She also took the view that the state sector should lead by example, thus showing the way forward on pay equity to the private sector. Pay equity sits alongside other policies such as equal employment opportunity, paid parental leave (see below) and the broader work–life balance in the search for social equity. The CTU, leading a pay equity campaign, shares many of the Minister’s views and has offered strong support to the taskforce. In contrast, private sector employers have taken an equally strong counter position, in part based upon their exclusion from the taskforce’s membership. The case for exclusion rests on the state sector focus of the taskforce. This suggests that there is no necessary reason for private sector employer involvement in state sector matters. The case for inclusion rests on the argument that any pay equity measures brought into the state sector will have an automatic flow-on effect in the private sector. Employers point to the health services and education sectors as examples of sectors in which the flow-on is inevitable. They also take the view that pay equity measures are likely to inhibit economic growth and are simply a return to the failed equity policies of the Labour Governments of the 1980s. Paid parental leave The campaign for paid parental leave in New Zealand emerged from the early 1990s in the light of criticism of the existing 1987 legislation. Subsequently, post-1999, debate about paid parental leave was driven by the Alliance in what became a complex debate about the proposed length of leave, how it was to be funded (through taxation, by employers or by a payroll tax) and the payment quantum. In the event, female employees became entitled to up to twelve weeks’ paid parental leave from mid-2002, provided certain criteria are met (for example, she must have worked for the same employer on average at least ten hours a week for at least twelve months up to the expected

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delivery date). The payment is transferable to the spouse, is available to same sex arrangements and, from July 2003, was paid at the rate $335 per week. The scheme is funded from taxation and is targeted at approximately 20,000 working mothers. In mid-2004, about 4000 people were receiving the benefit at any time. By any standard, the introduction of paid parental leave constitutes a significant social and employment policy intervention. The scheme is estimated to cost around $60 million a year, a sum that a government noted for its prudential approach to expenditure allocated only after careful consideration. The CTU takes the position that this is a start upon which further progress should be built. They point to international comparisons and ILO recommendations supporting a more generous scheme (NZCTU 2003b). Not surprisingly, the employers were pleased that the funding of the scheme came from taxation (and was not imposed directly on employers). However, there were concerns expressed about the effect of the scheme upon the overall tax burden. In general, employers felt that the 1987 legislation, providing protection for existing jobs during parental leave and other protections, was adequate and there was little need for the new measures (Business NZ 2002).

Conclusion This discussion has established that the ERA sits at the centre of a much larger employment relations project. The project has multiple goals. First, it seeks to reform and modernise an employment relations system that, in the eyes of the Government, had become hostage to an unsuccessful neo-liberal agenda. To achieve its end, the Government has been activist, intervening legislatively to achieve its ends. Second, the Government is committed to a social democratic approach to employment relations that is consistent with sustainable economic growth. This captures a shift in thinking about economic growth. The ECA model assumed that growth was driven primarily by the commercial decisions made by management at company level. The role of labour was to adapt to these decisions by tailoring skills and expectations to those decisions. The present Government’s project reasserts a view that partnership between employers and employees at a number of levels may contribute to growth (at company, sector and national levels) and that organised labour has a legitimate right to build that relationship around collective bargaining, rather than individual contracts. Third, it seeks to promote effective tripartism and bipartism as the basis for inclusive, effective problem-solving. The advisory group model is a case in question. The continuous support of a voluntarist approach – for example, voluntary unionism and limited direct involvement in bargaining – is another important example.

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It is clear that the current employment relations reform project does not go unchallenged. Challenges emerge from many quarters. Opposition political parties sustain strong criticism, marked notably by a strong personalised focus on the responsible Minister. Employers are concerned that the move from the ECA model will have an adverse impact on managerial prerogative and growth. To quote the New Zealand Business Roundtable: Investors are very responsive to employment law. Bad legislation . . . [will] affect productivity, growth and employment. New Zealand has already lost some of the competitive edge it achieved for labour market flexibility (NZBR 2003).

Similar views are expressed by Business New Zealand. If such views are not unsurprising, they also cannot be ignored, as the Government is concerned to maintain good relations with the business community. Hence, a second source of criticism of the employment relations model is found in government itself. Whilst the introduction of the ERA was strongly supported within government, other measures within the broader project have been subjected to critical appraisal. For example, the revisions of the ERA and associated measures (such as that in relation to contracting out) were held up in Cabinet for a time as ministers with business-related portfolios debated the effects on business expectations and performance. The CTU and its members have tempered their support for the broader project with concerns about the speed and scope of change. Not surprisingly, the CTU has sometimes found itself in complicated circumstances. It has sustained close and effective contact with a ‘friendly’ government and seeks influence on policy development across a range of government portfolios. This requires the usual calculations about where and when to impose pressure. For CTU members in particular sectors, the immediate importance of particular issues often outweighs the strategic exercise of influence, and results in the need for deft footwork by the CTU leadership. The effect of these pressures is a trade union view that is broadly very supportive of the Government’s employment relations project, but that on occasions generates pointed criticism of it. The measures, including the Reform Bill announced in December 2003, may well mark the culmination of the broad, post-1999 employment relations project in terms of major initiatives.4 This may be the case for two reasons. First, the key elements of the project are now in place and, in the future, we can expect to see fine-tuning of existing measures, rather than the introduction of major new initiatives. The exception to this is likely to be in the area of pay equity. Second, the Labour Party’s attempt to become the natural party of government (and its consequent desire to control the political centre) suggests

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that further controversial measures in the employment relations area will be eschewed, unless the growth and/or social equity outcomes of proposed measures are striking. However, given the range of measures introduced, in train or under consideration, future commentators will undoubtedly view the post-1999 period as one of the most striking periods of employment relations innovation in New Zealand’s history.

references Business New Zealand. 2002. Submission to the Social Services Select Committee on the Parental Leave and Employment Protection (Paid Parental Leave) Amendment Bill, Wellington, February 2002. Business New Zealand. 2003a. ‘Health and safety in the workplace’, Media release, 6 May 2003. Business New Zealand. 2003b. ‘Work–life balance: one size won’t fit all’, Media release, 20 August 2003. Business New Zealand. 2003c. ‘Holidays “gift” brings unease’, Media release, 24 October 2003. Business New Zealand. 2003d. ‘Holidays bill to increase costs and workload for employers’, Media release, 26 November 2003. James, C. 2003. ‘The political year belongs to a man of quiet strength’, New Zealand Herald, 16 December 2003. Labour Party Economic Policy. 2002. (http://www.labour.org.nz/policy/jobs_and_ economy/economic_policy_2002/index). NZ Business Roundtable. 2003. ‘ERA tinkering in anti-business and anti-growth’, Press release, 20 August 2003. NZ Council of Trade Unions. 2003a. Submission to the Transport and Industrial Relations Select Committee on the Holidays Bill. Wellington, May 2003. NZ Council of Trade Unions. 2003b. ‘Paid parental leave needs to be expanded’, News statement, 30 June 2003. NZ Council of Trade Unions. 2003c. ‘Work–life balance policies long overdue’, Campaign document, 19 August 2003. Roth, P. 2001. ‘International Labour Organisation Conventions 87 and 98 and the Employment Relations Act’, New Zealand Journal of Industrial Relations, 26(2): 145–69. Sengenberger, W. 1990. ‘The Role of Labour Standards in Industrial Restructuring: Participation, Protection and Promotion.’ ILO Discussion Papers, New Industrial Organisation Programme, DP/19/1990. Tipples, R. 2004. ‘The Human Capability Framework – An Important and Useful Framework for Understanding the Labour Market’, New Zealand Journal of Employment Relations, 29(1): 3–20. Wilson, R. 2003. ‘Counting the Cost of our Health and Safety Record’, Dominion Post, 28 April 2003. Wilson, M. 2004. ‘Have your say in work–life balance’. (www.beehive.govt.nz/ViewD ocument.cfm?DocumentID=18927)

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notes 1 At the time of writing, a select committee is about to consider a controversial amendment bill – the Employment Relations Law Reform Bill (the Reform Bill). The final form of the Reform Bill is still unknown. 2 ‘In Labour it is Margaret Wilson who most keeps principle in focus. She provokes certain men to trade commonsense for fury and causes no end of trouble between the cabinet and business. But a cabinet benefits from a principled minister because it gives true believers reason to go on believing’ (James 2003). 3 Work–life balance is defined by the Government as ‘the interaction between paid work and other activities, including unpaid work in the family and community, leisure and personal development’. 4 Minister of Labour Margaret Wilson left the Labour portfolio in early 2004. While hailed as a victory by many opponents of the reform programme, it could also be seen as ‘a job completed’.

Contributors

Barbara Burton is the legal adviser of Business New Zealand. Business New Zealand is New Zealand’s leading business organisation formed in 2001 with the amalgamation of the New Zealand Manufacturers and Employers Federations. It retains the latter Federation’s status of most representative employer organisation and contributes to tripartite working parties and international bodies. Andrew Caisley is a founding partner of the specialist employment law firm Kiely Thompson Caisley. He has appeared regularly in all industrial and employment forums from the Mediation Service to the Court of Appeal from 1989 onwards. He was counsel in the leading Court of Appeal decision on summary dismissal for serious misconduct. He lectures regularly at postgraduate level at the University of Auckland. Alan Geare has been a Professor of Management at the University of Otago since 1987. He has been a manager, union secretary, member of the Employment Tribunal, and works as a consultant to companies and unions. Raymond Harbridge is Dean of the Faculty of Law and Management, La Trobe University, Melbourne, Australia. He holds a fractional appointment as Professor of Employment Relations at Victoria University of Wellington, New Zealand. Nigel Haworth is Professor of Human Resource Development at the University of Auckland. His primary research interests are in the impacts of economic internationalisation on employment relations, particularly in relation to regional integration and labour standards. He has been a close observer of and occasional participant in the policy debates surrounding the Employment Relations Act since its introduction. John Hughes teaches law at the University of Canterbury. He has practised as an employment lawyer and is the author of several employment law books. He is also a member of the editorial board of the Employment Law Bulletin and the New Zealand Journal of Employment Relations. Robyn May is a Senior Research Fellow at the Industrial Relations Centre, Victoria University of Wellington. She is responsible for the management of a long-running and extensive database of collective agreements and the collection of statistics on union membership and activity. Recently, this research has also examined capability development at the individual, workplace and institutional level. Ian McAndrew is a Senior Lecturer in the Management Department at Otago University. He is a former member and Chief of the Employment Tribunal, and now has a private mediation, arbitration and negotiation training practice. 206

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Julie Morton is a PhD student and a tutor in industrial relations and human resources in the Management Department at Otago University. Her current research is on workplace bullying. Erling Rasmussen is a Senior Lecturer at the Department of Management and Employment Relations, University of Auckland. He was previously a Policy Advisor at the Industrial Relations Service, Department of Labour in Wellington. He has worked in the private sector in the United Kingdom and he has also been an academic researcher in Australia, Italy and Denmark. Colin Ross has recently completed a B Com (Management and Employment Relations) and a Grad Dip (Quality Management) at the University of Auckland. He was employed for 23 years in the New Zealand Fire Service in a number of operational, training and management roles. Glen Thickett was previously a Research Fellow at Victoria University of Wellington’s Employment Institutions Project, where he analysed trends in collective bargaining and union membership in New Zealand. Glen has several degrees from Victoria University of Wellington, including a Master of Arts in Public Policy. Tony Waldegrave is a Senior Evaluation Analyst in the Research and Evaluation Team of the Department of Labour’s Labour Market Policy Group. Tony has worked for the Department for the past four years since working as a researcher at the Ministry of Justice. He is a member of the Australasian Evaluation Society and Executive member of the New Zealand Psychological Society. Pat Walsh is Pro Vice-Chancellor, Research and Dean of the Faculty of Commerce and Administration at Victoria University of Wellington. He was the head of the Victoria Management School from 1997 to 2002. Margaret Wilson, former Minister of Labour 1999–2004, currently holds the positions of Attorney General, Minister of Commerce, Minister Responsible for Treaty of Waitangi Negotiation and Associate Minister of Justice. She has previously held the position of Professor and Dean of Law at the University of Waikato School of Law where she taught and researched employment law and public law. Ross Wilson was elected president of the CTU in 1999, after holding the post of vicepresident for eight years. Ross is qualified as a barrister and solicitor. His first union job was as Assistant General Secretary of the National Union of Railway Workers. He went on to be National Secretary of the Harbour Workers’ Union and the first National Secretary of the Rail and Maritime Transport Union. Ross is a member of the Government’s Growth and Innovation Advisory Board and a member of the Australia–New Zealand Leadership Forum.

Index ACT Party, 23

agency/bargaining fees, 43 Alliance Party, 13, 14, 15, 23, 160, 166, 199, 201 annual leave, 31, 34, 37, 50, 139, 163, 199 award system, 11, 48, 81, 174, 178, 179, 183 Baguley v Coutts Cars Limited, 61–2, 82–3. See also Coutts Cars Limited v Baguley bargaining, 1. See also collective bargaining employee power, 153–4 enterprise-level, 42, 134, 136–7, 139, 178, 183, 185 history, 10–13, 99–102, 135 ‘inherent inequality’ in, 3 Benge and Hallinan v Attorney-General, 73 bonus payments in collective settlements, 43, 162, 167 Brickell v Attorney-General, 72–3, 74 Business New Zealand, 32, 134–44, 186, 198, 199, 203. See also employers; New Zealand Employers Federation business sale or transfer, 34, 35, 175, 180, 196–7 Carter Holt Harvey Ltd v National Distribution Union, 84, 85, 86, 90, 92, 141 Cartwright v Attorney-General, 73–4 casualisation of work, 12, 16, 140, 183, 193 Clark, Helen, 1, 23, 163 clock hours, 49–50 Code of Good Faith, 79, 81, 88, 128 collective bargaining, 2, 3, 4–5, 15, 17, 22, 23, 39–58, 78, 93, 119–25, 160, 170. See also good faith; multi-employer collective bargaining Business New Zealand viewpoint, 139–40 core requirements, 87–90 coverage, 41–5, 81, 122–4, 131, 153, 158, 160 CTU viewpoint, 178, 179–80, 183 employee perceptions of process, 128–31 employer willingness, 126 industry approach, 184–5, 187–8 media reports on, 25–7, 35 private sector, 26, 40, 44–5, 57, 123, 131, 171, 178, 183, 188 public sector, 25–6, 39–40, 44–5, 57, 93, 123, 130, 131, 156, 167–8, 188 SMEs, 4, 93, 139, 170 compensation, monetary, 60, 64, 70–1, 72, 73, 75, 112, 113–4 compliance costs, 3–4, 12–13, 16, 23, 31, 35, 37, 137, 181, 193, 199 compliance difficulties, 140 compliance orders, 92 conciliation and arbitration system, 1, 2, 3, 4, 10–11, 18, 19, 99, 183 consultation, 82, 86–7, 90, 94 contracting out of business operations, 34, 175, 180, 196–7 contractors, independent, 16, 24 Contractual Remedies Act 1979, 92–3 Council of Trade Unions. See New Zealand Council of Trade Unions Court of Appeal, 62, 63, 68–9, 72, 75, 77, 81, 83–7, 88–9, 90, 92, 93–4, 141, 175

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Coutts Cars Limited v Baguley, 62, 82–5, 86–7, 89, 90, 92, 94, 141. See also Baguley v Coutts Cars Limited Dairy Workers Union v Fonterra, 35, 162 Department of Labour, 16, 81, 103, 107, 113, 115, 116, 119, 128, 137, 145, 175, 179, 195, 196, 200 dismissal, 99, 104, 106, 107, 108 constructive, 72, 84, 112 justifiability of, 60, 61–2, 67–70, 76 unjustifiable, 64, 69, 82, 100, 111 disputes. See also strikes and lockouts effect of ERA, 18, 27–9, 53 history, 10–11 public sector, 28–9, 160, 167 Dunne, Peter, 163 economic growth and employment relations, 12, 13–14, 173, 177, 182, 184, 185–8, 190, 192, 196, 202–3 education sector, 22, 25, 26, 28, 166, 168, 201 employees experience of ERA, 145–58 perceptions of bargaining process, 128–31 probationary period, 138–9 employers. See also Business New Zealand collective bargaining and, 119–25 good faith and, 125–8 may not discourage employees from collective bargaining, 35–6, 44, 95 position under ECA, 2, 3 pro-employer shift of test for justification, 67, 68–9 reaction to Employment Relations Law Reform Bill, 36, 181–2 response to paid parental leave scheme, 202 response to pay equity policies, 201 response to work–life balance policies, 200 tripartite relationships, 11, 14, 15, 164–5, 171, 185–8, 195 Employers and Manufacturers Association, 27, 31, 32, 114 employment agreements, 42 casual employees, 140, 183 collective, 5, 25, 27, 41, 119, 121–4, 129, 151–3, 154, 157 employee choices, 150–4 fixed-term, 24, 138, 139, 183 individual, 26, 43, 119, 121–2, 127, 129, 140, 151–3, 154, 158, 163, 178 multi-employer collective, 4, 25–6, 32, 35, 36, 40, 42, 44, 93, 124–5, 132, 139–40, 166–7, 170, 181–2 30-day rule, 140, 143, 152, 181 written, 121, 125, 140, 158 employment contracts collective, 5, 16, 41, 42, 48, 122–3 fixed-term, 24, 174 individual, 16, 175 Employment Contracts Act 1991, 1, 2, 3, 4–5, 11–13, 23, 53, 56, 61, 64, 66, 70, 77, 78, 83, 88, 89, 93, 190

index Business New Zealand viewpoint, 135–8, 143 CTU viewpoint, 173, 174–7 institutions, 100–2 Employment Court, 18, 25, 61–2, 64, 70, 72, 73, 74–5, 81, 82–3, 85, 86, 87, 90–1, 92–3, 100, 102, 111, 141 employment relations co-operative approach, 3, 9–10, 14, 19, 23, 137, 202 economy and, 12, 13–14, 173, 177, 182, 184, 185–8, 190, 192, 196, 202–3 employee experience of, 145–58 flexibility, 134, 135 history, 2–4, 10–13, 99–102, 135 individualisation, 12, 16, 170, 173, 174 public policy, 1–2, 9–20, 185–8, 190–205 social equity and, 190–205 Employment Relations Act 2000, 2, 3, 4, 9–20, 59–60, 61, 77, 78. See also specific aspects of the Act, e.g. collective bargaining; good faith Business New Zealand viewpoint, 134–44 CTU viewpoint, 173–89 employee viewpoint, 145–58 historical context, 10–13 media perspective, 21–38 policy objectives, 15–18 political context, 13–14 Employment Relations Authority, 18, 54, 61, 64–7, 70, 75, 80–1, 95, 98, 103, 104–5, 114–5, 117, 193, 197 assessing, 111–4 caseload, 106, 111, 115 process, formality, representation and legalism, 112–4 Employment Relations Bill, 22–4, 89 Employment Relations Education Leave, 150 Employment Relations Law Reform Bill, 2, 4, 15, 35–6, 43–4, 57, 63, 69, 77, 94, 109, 117, 162, 171, 174, 179, 194–5, 196–7 Employment Tribunal, 64, 66–7, 70, 98, 100–3, 104–5, 107, 111–4 enterprise-level bargaining, 42, 134, 136–7, 139, 178, 183, 185 Equal Pay Act 1972, 180 Fair Trading Act 1986, 80 fairness, 59, 60, 62, 69, 128–9, 138, 155, 156 Fesolai v Air New Zealand Limited, 65 Fogelberg v Association of University Staff (Inc), 91, 141–2 Fonterra, 25, 26, 35, 162 ‘free-riding’ of non-union members, 34, 35, 36, 40, 42–3, 57, 89, 94–5, 130–1, 157, 161–3, 180 Gilbert v Attorney-General, 71–2, 74 good faith, 9, 15, 17, 26, 27, 43, 44, 57, 60–3, 75, 76, 77–97, 125–8, 134, 166, 177, 194, 196, 197 awareness of requirement, 125 Business New Zealand viewpoint, 141–2 CTU viewpoint, 180 employee experience of, 154–6, 158 enforcement, 92–3 framework for, 79–80 impact in workplaces, 125 relevant standard for assessing, 85–93 role of the courts, 80–5

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Green Party, 14, 163, 179 Hadfield v Green Rebel Limited, 70 Health and Safety in Employment Amendment Act 2002, 3–4, 31, 74, 163–4, 197–8 health sector, 22, 25–6, 28, 32–3, 36, 162, 166, 168, 196, 197, 201 High Court, 72–3 Holidays Act 1981, 50, 52, 198–9 Holidays Act 2003, 4, 34, 51–2, 139, 199 Human Rights Act 1993, 80 income inequality, 12, 34, 178. See also pay equity independent reviewers, 127–8 individualisation of employment relationship, 12, 16, 170, 173, 174 Industrial Conciliation and Arbitration Act 1894, 10, 69, 99, 135 Industrial Conciliation and Arbitration Amendment Act 1970, 99, 100 Industrial Relations Act 1973, 99–100 information, access to, 18, 87, 89, 90, 94, 126–7, 132 International Labour Organization, 4, 174, 180, 194–5, 202 Convention 87, 17, 23 Convention 98, 17, 23, 119, 179, 181, 195 Keating v NZ Bloodstock Limited, 64–5 Labour and Labour-led governments, 9, 11, 13–14, 15, 31, 59, 78, 159–60, 163, 166, 193, 199, 203–4 labour market deregulation, 12, 23, 135, 183, 193 flexibility, 11, 23, 134, 135, 193 fragmentation, 16, 33 Labour Party, 22–3, 35, 103, 137, 139, 192 labour productivity, 9, 10, 12, 13, 16, 135, 136, 142–3, 176–7, 186, 191, 199 Labour Relations Act 1987, 4, 11, 64, 65, 78, 99, 138, 182 labour standards, 194–5. See also International Labour Organization leave, 50–2. See also annual leave; parental leave; sick leave legal representation/services, 13, 15, 67, 107, 108, 112–4 mediation, 17, 18, 81, 90–1, 103–4, 114 collective bargaining disputes, 103, 110, 116, 117 in Employment Tribunal, 101–2 litigation risk approach, 102, 103, 108–9 ‘med-arb’ process, 100, 101, 109, 110, 117 preventative assistance, 103–4, 106, 107, 108, 110, 116–7 Mediation Service, 31, 54, 65, 98, 99, 100, 101, 103–4, 105, 115–7 assessing, 106–10 workload, 106 multi-employer collective bargaining, 4, 25–6, 32, 35, 36, 40, 42, 44, 93, 124–5, 132, 134, 139–40, 166, 170, 181–2 National and National-led governments, 11–12, 13

210

index

National Party, 23, 24, 36–7, 190 New Zealand Business Roundtable, 13, 23, 32, 203 New Zealand Council of Trade Unions, 15, 23, 24, 29, 30–1, 36, 39, 141, 160, 165–7, 170, 190, 193, 194, 197 affiliates, 167–8, 169 perspective on the ERA, 173–89, 203 response to Health and Safety in Employment Amendment Act, 198 response to Holidays Act 2003, 199 response to paid parental leave scheme, 202 response to pay equity policies, 201 response to work–life balance policies, 200 ‘social partnership’ initiatives, 164–5, 171, 185–8 New Zealand Employers Federation, 13, 15, 134– 44. See also Business New Zealand New Zealand Fasteners Ltd v Thwaites, 71 New Zealand Public Service Association Inc v Auckland City Council, 86, 87, 93–4 NZ Amalgamated Engineering etc Union v Carter Holt Harvey Ltd, 27, 81, 82, 87, 88, 92 overtime payments, 47, 48, 49 parental leave, paid, 31, 52–3, 183, 201–2 Parental Leave and Employment Protection (Paid Parental Leave) Amendment Act 2002, 52–3 pay equity, 37, 180, 201, 203. See also income inequality public sector, 35, 201 penal rates, 49–50, 176 personal grievances, 2, 12–3, 16, 33, 53, 60, 61, 64, 70–1, 99, 107, 111–2, 138 Ports of Auckland v New Zealand Waterfront Workers Union Inc, 90–1 private sector collective bargaining in, 26, 40, 44–5, 57, 123, 131, 171, 178, 183, 188 disputes in, 29 redundancy provisions, 54–6 tripartite initiatives, 186 unions, 30, 147–8, 149–50, 166, 167, 168, 183 wage changes, 45–6 productivity, 9, 10, 12, 13, 16, 135, 136, 142–3, 176–7, 186, 191, 199 public sector collective bargaining, 25–6, 39–40, 44–5, 57, 93, 123, 130, 131, 156, 167–8, 188 disputes, 28–9, 160, 167 pay equity, 35, 201 redundancy provisions, 54–6 tripartite initiatives, 186 unions, 30, 120, 127, 147, 148, 149–50, 167–8, 169 wage changes, 45–6 Radio New Zealand Limited v Snowdon, 74–5 redundancy, 54–6, 61–2, 82–5, 107, 196, 197 Reeves, William Pember, 3, 10 reinstatement, 60, 64–6, 75, 107, 112 service sector, 4, 34, 196 sick leave, 11, 16, 51, 52, 199 skilled labour, 13, 16, 23, 173, 175, 177, 182–5, 186

shortages, 22, 25, 32–3, 37, 45–6, 160 small and medium-sized organisations (SMEs), 3, 4, 31, 37, 93, 131, 137, 139, 151, 154, 169–70, 181, 193 social equity, 190–205 ‘social partnership’ initiatives, 164–5, 171, 185–8, 195 stress, 28, 35, 37, 60, 71–5, 163, 197, 198 strikes and lockouts, 24, 26, 142 effect of ERA, 27–9 health sector, 28, 32–3 lawful under ERA, 90–1, 93, 95, 140 Maritime Strike 1890, 10 ‘sweatshops’, 174–5 trade unions. See unions training, 13, 22, 25, 28, 33, 37 transport sector, 22, 25, 29, 183, 184, 185 tripartite relationships, 11, 14, 15, 164–5, 171, 185–8, 195 Tucker Wool Processors Ltd v Harrison & Ors, 175 unemployment, 22, 33, 34, 136, 138, 160, 165, 183 unions, 2, 3, 4–5. See also collective bargaining; ‘free-riding’ of non-union members; good faith; New Zealand Council of Trade Unions bonus payments to members, 43, 162, 167 education of members, 149–50 history, 10–11 effect of ECA, 12, 29, 119, 135, 136, 137, 160, 161, 162, 166, 170, 174–7 effect of ERA, 15, 17, 19, 24, 29–32, 34, 35, 42, 44, 89, 119–21, 131–2, 134, 136, 139, 145, 146–50, 157, 159–72, 177–89 in SMEs, 4, 169–70 private sector, 30, 147–8, 149–50, 166, 167, 168, 183 public sector, 30, 120, 127, 147, 148, 149–50, 167–8, 169 reasons for joining and not joining, 148–9 tripartite relationships, 11, 14, 15, 164–5, 171, 185–8 voluntary membership, 2, 202 workplace, 148, 157, 168–9 Victoria University Industrial Relations Centre, 34, 40, 41, 53 W&H Newspapers v Oram, 68–9, 70 wage movements effect of ECA, 23, 176 effect of ERA, 26–7, 33–4, 45–7, 160, 165, 178, 182–5 Wellington City Council v Body Corporate 51702, 78, 85 Wilson, Margaret, 9–20, 22, 27–8, 35, 37, 162, 193, 194–5 Wilson, Ross, 31, 36, 164, 173–89, 197 work casualisation, 12, 16, 140, 183, 193 flexible, 140, 151, 183–4, 193 non-standard, 4, 16, 35 work–life balance, 35, 37, 183, 199, 200 working time, 47–50