27th Industrial and Employment Relations Conference
Tuesday and Wednesday, 12 and 13 March 2013, Wellington
Future Directions: Anticipated Changes in 2013
by Bill Hodge, Faculty of Law, University of Auckland
I have been asked to discuss possible changes which we can expect to see in
the employment legislation in 2013. I have consulted the followed sources:
a Cabinet paper entitled “Employment Relations Amendment Bill 2012: Paper One –
Collective Bargaining and Flexible Working Arrangements”, over the signature of
Kate Wilkinson and dated 3 May 2012; a press statement on the website
“beehive.govt.nz” under the name Kate Wilkinson, and dated 30 October 2012. I
have also benefited greatly from two law firms’ newsletters, being Quigg Partners’
Newsletter of December 2012, entitled “Employment Law Changes Announced” and
the Minter Ellison Rudd Watts Newsletter of 29 January 2013, entitled “Employment
Law: The Year That Has Been and the Year Ahead.” Any evaluative comments in the
discussion that follows are my responsibility, as opposed to either of the law firms,
or Kate Wilkinson.
I will discuss the following issues: (1) section 33 of the Act, (2) opting out of
MECA bargaining, (3) the 30 day rule, (4) partial pay for partial strikes, (5) review
of s 4(1A) in light of the Wrigley v Massey decision and (6) Part 6A. If time permits, I
may comment briefly on the developments in OSH protection, although I do not
have enough information to make extensive comment.
1. Duty to conclude collective agreement
Let us begin with the easy one. You will recall that when the Employment
Relations Act 2000 came into force, s 33 provided as follows:
Section 33: Duty of Good faith does not require concluded collective
agreement
The duty of good faith in s 4 does not require a union and an employer
bargaining for a collective agreement--(a) to agree on any matter for inclusion in a collective agreement; or
(b) to enter into a collective agreement.
The current version of Section 33, as inserted and substituted by the 2004
Amendment, reads as follows:
Section 33: Duty of Good faith requires parties to conclude collective
agreement unless genuine reason not to
(1) The duty of good faith in s 4 requires a union and an employer bargaining
for a collective agreement to conclude a collective agreement unless there is
a genuine reason, based on reasonable grounds, not to.
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(2) For the purposes of subsection (1), genuine reason does not include –
(a) opposition or objection in principle to bargaining for, or being a party to,
a collective agreement, or
(b) disagreement about including in a collective agreement a bargaining fee
clause under Part 6B.
The Cabinet paper, quite rightly in my experience, notes that collective
bargaining can become “unnecessarily protracted and costly.”
As I understand the proposal, and if the Government is smart, the alteration
and amendment to s 33 will simply be a return to its original formula as set out
above, in the year 2000. Instead of “Back to the future” it will be “Forward to the
past.” It would be very awkward for the Opposition, certainly the Labour in
Opposition, to criticise its own drafting formula. There will also need to be
consequential changes to the Code of Good Faith - as the one in force at the moment
dates to 2005, it is time, in any event, for an update - and I refer in particular to
Section 3 of the Code.
In simple terms, the change reverses an assumption, or default position, that
there will be an outcome, as opposed to an impasse; the immediate consequence, as
a matter of law, is that judicial intervention may be less likely.
Of greater significance are the consequences of the change, in particular as to
whether bargaining has ceased or reached an impasse such that it can be said that
bargaining has concluded. The most relevant case is NZ PSA v Secretary for Justice
[2010] ERNZ 46, where the defendant purported to declare a cessation unilaterally.
In that case, Chief Judge Colgan said (at paragraph 48) that the Act (both the
definition of bargaining in s 5, as well as s 33) made it clear that “Parliament has
modified the common law position on contract negotiations to take account of the
particular position of collective bargaining in employment relations in New Zealand.”
The ratio of that decision would seem to be that, in spite of an impasse on
substantive issues in dispute, bargaining is not at an end if Department of Labour
(or Ministry of Business Innovation and Employment) mediators have not been
engaged, and then if the facilitation provisions of s 50A-50H have not been pursued.
So bargaining is not over if the parties have not been mediated and facilitated. Of
greater concern was the remark (at paragraph 66), perhaps in terrorem, by the Chief
Judge regarding the draconian provisions of s 50J:
“The statute provides mechanisms for the resolution of impasses, the
application of which in any particular case affects the question whether a
party or parties may conclude bargaining without entering into a collective
agreement. Although I accept that the extraordinary tests for fixing
bargaining under s 50J cannot be said in this case to exist currently, the
position would not necessarily be the same if either or both parties sought
facilitated bargaining under s 50C.”
If bargaining can be more easily terminated, unilaterally, the immediate
consequences would be that the collective agreement would expire, the
“continuation” as provided by s 53 would itself expire, and the union members,
hitherto covered by the collective would be covered by an IEA with the same or
similar terms and conditions. A strike would be unlawful, as there would be no
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collective bargaining afoot, and new employees would not be subject to a 30-day
rule (but see below). And the deduction of union fees at source may be regarded, per
the plain language of s 55 as imposed only in a collective, not an IEA, and otherwise
barred by the provisions of the Wages Protection Act 1983. Out of an abundance of
caution, an amendment to s 16 of the Wages Protection Act could protect employers
by making it unlawful to withhold union fees at source pursuant to a collective
agreement when that collective agreement has expired.
As a further incidental consequence, respecting a level playing field, s 53(2)
should be amended so that employer-initiated bargaining carries the same nonexpiry consequence as union-initiated bargaining. [The purpose here being that the
enabling provisions, and limits, on initiation should be the same for both parties to
collective bargaining.]
[Incidentally, following on from the remark above about the mediators, employed
by the Chief Executive of the Department of Labour (per s 144 of the Act), is it true
that the DOL mediators are being merged with the DBH tenancy and “leaky” home
mediators? Perhaps there is common ground between weather penetrating a
monoclad structure and an employment relationship problem, but I don’t see it. But
then, I have always objected, from the beginning of the ERA2000, to the
transformation of an independent office-holding mediation service into employees
subject to control by the Chief Executive, as employees, and of course, all the
consequences of union membership and collective action. I prefer mediators to be
independent and “in the middle”, not on one side.]
2. Multi-Employer Collective bargaining
At present, assuming the Union has completed the secret balloting process
under s 45, the Union may initiate bargaining under s 42 with more than one
employer, assuming that employees covered by their membership rule are
employed by each employer. By the way, as far as I know, no such ballot has ever
been known to fail, since the majority is determined not by a majority of the
workforce potentially to be covered nor by a majority of the union members to be
covered, but rather by a majority of the union members who are entitled to vote
who actually do vote (s 45(4)).
Therefore, at present, it is quite easy for the Union - at seven Universities, at
21 District health boards and so on – to initiate for a Multi Employer Collective
Agreement, or MECA. See cases such as NZ EPMU v Independent Newspapers Ltd
ERA, Wellington, WEA 132/01, 3 August 2001 and AUS v V-C, University of Auckland,
[2005] ERNZ 224. As I understand the law, it is not possible for an employer to
initiate with other employers for MECA bargaining.
As I understand the proposal, the law - although I do not see clearly which
section would in fact be amended - will be amended to allow an employer cited in a
s 42 MECA initiation to opt out of the MECA bargaining process.
Perhaps it would be simplest to add a new subsection, either to s 42, or in a
new s 42A, which would provide as follows:
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“Section 42A: Cited employer may opt out
(1) This section [or this subsection) applies to an initiation under s 42 by a union to
initiate bargaining with two or more employers.
(2) An employer cited by a union under s 42 to bargain collectively with the union
and one or more other employers may give to the union and to the other employer
parties notice that the employer does not agree to bargain collectively with other
employers.
(3) The notice must be in writing and signed by the duly authorised representative
of that employer.
(4) Where the initiation by the union is more than 60 days [BUT SEE BELOW}
before the date on which the relevant collective agreement expires, the initiation by
the union with respect to that employer shall be of no effect from the time that the
employer gives notice under subsection 2 of this section.
(5) Where the initiation by the union is within 60 days [BUT SEE BELOW} before the
date on which the relevant collective agreement expires, the initiation by that union
shall be deemed to be initiation of bargaining with that employer.
(6) In any case, whenever a union has initiated bargaining with an employer, that
employer may give notice to that union under s 42 of initiation of bargaining.”
NB: I have used the 60-day period because it is currently found in s 41(3), but, to
create a level playing field, that 60-day period may be reduced to 40 days (or the 40
day period for employers may be increased to 60), so that the time prior to expiry is
the same for both unions and employers.
3. The 30-day rule
If there is a collective agreement in place, one of the devices in the Act which
is plainly intended to gently herd new employees (being those who are not already
union members) into union membership is s 62, which requires an employer to do
the following:
 Inform the new employee that the collective agreement exists and covers the
work.
 Inform the new employee that she or he may join the union.
 Tell the new employee how to contact the union.
 Tell the new employee that if she or he joins the union, she or he will be
bound by the collective agreement.
 Whether she or he joins the union, for the first 30 days of employment, her or
his terms and conditions will be those of the collective agreement.
 Give to the new employee a copy of the collective agreement.
 And if she or he agrees, inform the union that she or he has become an
employee.
As I understand the proposal, it is only the so-called “30-day” rule which will
be deleted. That could most conveniently be achieved by deleting s 62(2)(a)(v),
which currently reads :
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“[The employer must inform the employee . . . ] that, during the first 30 days of the
employee’s employment the employee’s terms and conditions of employment
comprise
(A) the terms and conditions in the collective agreement that would bind the
employee if the employee were a member of the union; and
(B) any additional terms and conditions mutually agreed to by the employee and
employer that are not inconsistent with the terms and conditions in the
collective agreement.”
Whether the other bulleted points, all found in s 62(2) are also to be deleted,
I do not know. The Cabinet paper expressly states that the employer will continue to
be obliged to provide a copy of the relevant collective agreement to the new
employee. As a necessary consequence, s 63 should be deleted in toto. For those of
you who do not have the ERA open on your tables, here is s 63:
Section 63 Terms and conditions of employment of new employee who is not
member of union
(1) The terms and conditions of employment of an employee to whom s 62
applies are determined in accordance with subsections (2) and (3).
(2) For the first 30 days after the employee enters into an individual
employment agreement, the employee’s terms and conditions of
employment comprise –
(a) the terms and conditions in the collective agreement that would bind
the employee if the employee were a member of the union, and
(b) any additional terms and conditions mutually agreed to by the employee
and employer that are not inconsistent with the terms and conditions in the
collective agreement.
(2A) However, the employee’s terms and conditions of employment do not
include any bargaining fee payable under Part 6B.
(3) If the work to be done by the employee is covered by more than 1 collective
agreement, subsection (2)(a) applies to the collective agreement that binds
more of the employer’s employees [in relation to the work the employee
will be performing] than any of the other collective agreements.
(4) No term or condition of employment may be expressed to alter
automatically after the 30-day period to be inconsistent with the collective
agreement.
(5) After the 30-day period expires, the employee and the employer may, by
mutual agreement, vary the individual employment agreement as they think
fit.
(6) For an employee who holds [[a minimum wage exemption permit]] under s
8 of the Minimum Wage Act 1983, the terms and conditions under
subsection (2) are subject to the terms of the permit relating to the wages to
be paid.
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While this may be seen as a boon to many employers, the consequences may
be deceptive. I have never seen the 30-day rule as propping up IEAs which would
otherwise be at a lower rate. In my view, individuals, and thus all employees, should
be treated fairly and in theory, receive equal pay for equal work. In addition to
fairness, an employer who appears to be driving down IEA rates of pay, in a two-tier
work force, is in danger of becoming a de facto union recruiting officer. In any event,
s 60 and s 60A require employers to bargain in good faith with individuals, and if
done properly, and timely, may result in passing on to the collective the fair pay
rates established in individual bargaining (which is usually swifter and more
efficient than collective bargaining.)
4. Partial pay for partial strike
Undoubtedly, someone sees this as easy to administer and easy to apply. I do
not. The Cabinet paper provides an elaborate mechanism, for a “proportionate pay
reduction”, including a dispute resolution process. Will the partial pay be governed
net, by outcomes? Is there an immediate loss of economic value to all partial
reductions of work? Could there be an economic measure of the quality of the work,
as opposed to the quantity? To take a simple example, assume those employed in a
teaching institution take partial strike action by continuing to teach, but not
marking or not releasing marks. Would all employees on an assembly line be
treated equally, in terms of partial pay, if only some of the employees were involved
in a go-slow? Many difficult questions arise here, and I do not see many clear
answers. I look forward to legal issues arising here. In any event, a partial pay
regime would not resolve the case of a union withdrawing a strike notice a moment
before the strike is to commence, the employer having made alternate arrangements.
In my view, if a union has given notice of a strike, pursuant to statutory requirement,
the union should be required to give notice that the strike will not go ahead: Mana
Coach Services Ltd v NZ Tramways and Public Passenger Transport Union [2008]
ERNZ 439. . The proposal does contain a reference to “secret strikes” and making
such strikes unlawful: See Postal Workers Association v NZ Post Ltd, 23 July 2007,
Auckland ERA, R Arthur, AA 215/07. .
I add here, for the sake of completeness, that from 14 May 2013, you may
have forgotten, provisions for a secret ballot prior to strike action kick into force:
see ss 82A and 82B, as inserted by the Employment Relations (Secret Ballots for
Strikes) Amendment Act 2012.
5. Amendment to s 4(1A) - reversing Vice-Chancellor of Massey University v
Wrigley and Kelly [2011] NZEmpC 37
Facts of Wrigley
Martin Wrigley and Terry Kelly were employed at the Palmerston North
campus of Massey University. Massey is made up of colleges, one of which is the
College of Sciences. Within that College there is an Institute of Natural Resources.
The Institute was made up of departments. Martin Wrigley was one of two senior
lecturers in the department of landscape management, and Terry Kelly was one of
four senior lecturers in the department of agricultural systems. In April 2009, staff
in the Institute were consulted about a proposal for a reduction in force (RIF), and
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in June of that year, staff were informed that the RIF would proceed, albeit in
modified form. Certain positions were to be eliminated. The two senior
lectureships in landscape management were to be eliminated and one new position
created. The four positions in agricultural systems were to be eliminated and three
new positions created. There was no external advertising, and a selection process
followed, choosing one of two incumbents in landscape management and three of
four incumbents in agricultural systems. I like to use the metaphor of a game of
“musical chairs” - when the music played, one of the landscape management chairs
was pulled away, as was one of the agricultural systems chairs. When the music
stopped, Martin Wrigley was left standing, with no place to sit, in landscape
management, while Terry Kelly was left standing in agricultural systems. They
were consequently made redundant.
I pause here to note that there was no challenge to the genuine nature of the
restructure, or the RIF. None of the judges (Chief Judge Colgan and Judges Travis
and Couch) suggested that perhaps Massey University might be better to do some
economizing in the College of Arts, and maybe reduce the numbers in Film Studies
or European Languages. In other words, there is no challenge here to the
prerogative of the employer to manage the enterprise, and to make the changes that
seem genuinely appropriate in the employer’s subjective judgement. [That means,
of course, that the Court of Appeal judgment in Hale [1991] 1 NZLR 151 (CA)
remains authoritative as to the employer’s prerogative to manage change and has
not been affected by s 103A. ] I might here sum up my view of the law of
redundancy, albeit a bit outside my brief - the law continues to allow the employer
to occupy the high ground of substantive decision-making, but, as counterbalancing compensation, the statute and the courts, through s 4(1A), have imposed a
very heavy procedural and consultation burden on employers.
The employees in Wrigley were provided (in July 2009) prior to the selection
process with the following materials:





The selection criteria.
The job description of the new position.
The composition of the selection panels (the head of the Institute, an HR rep,
and two colleagues).
The identities of the other candidates and their roles within the University.
Certain topics, which would give rise to questions asked at the interviews.
The panel members scored the candidates on a zero to five matrix plus an
overall evaluative assessment, including comments.
Martin Wrigley and Terry Kelly each scored the lowest in their respective
interviews and were not recommended for appointment.
Following the selection process, Wrigley and Kelly were provided with
 A typed version of the hand-written assessments.
 Scores awarded by each panel member on the matrix (without identifying
which panel member gave which score).
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
Feedback from the head of the Institute and the HR rep.
Both Wrigley and Kelly were then given the opportunity to make further
submissions. Taking those submissions into account, the final decision was taken
one step up, by the Pro-Vice-Chancellor of the College of Sciences. Wrigley and Kelly
were unsuccessful. Wrigley and Kelly sought further information, including all the
evaluative assessments of the successful candidates, and the identities of the
authors of the matrices and the assessments. The University resisted, on the
grounds that the material requested invaded the privacy of both the successful
candidates and the panellists.
The Court concluded that such material was “relevant”, by s 4(1A)(c)(i), such
material was “confidential” by s 4(1B), but, in spite of the confidential nature of the
documents sought, there was insufficient “good reason”, per s 4(1C), to withhold
such information.
The Court had this to say at paragraph 62:
“On this issue, we conclude that there is no reason to restrict the normal meaning
of the word ‘relevant’ in s 4(1A)(c). What is within the scope of s 4(1A)(c) in any
given case will, however, depend on the particular circumstances of the case. . . .
[I]f the employer is downsizing and selecting employees for dismissal on grounds
of redundancy, the process is likely to be a comparative one and information
about the other candidates will also be relevant. In both cases, the perceptions
and opinions of those involved in the process leading to a decision will be
relevant.”
The Court then went on to comment on the nature of information potentially within
the scope of s 4(1A)(c): “It must include not only information which is written down
or otherwise recorded but also information in the minds of people. “
As I understand the Minister’s position, aspects of this decision will be
reviewed in order to give greater protection to privacy rights of other persons
involved in the process. I have not seen any specific proposals, but I would guess
that greater privacy protection could be extended both to other candidates for the
vacancies, and to those who take part in the process and form views about the
respective merits of the candidates (including views which are not written down).
6. Part 6A:
This part of the act is much loved by lawyers. I will refrain from discussing the
fascinating litigation in this area - such as the “poison pill” at Auckland International
Airport: LSG Sky Chefs v Pacific Flight Catering Ltd, High Court, Auckland, CIV 2011404-277, 14 February 2012 – and leave that to the expert analysis of Peter Kiely, in
your programme for tomorrow. However, I will say that if the coverage of sub-part
1 of Part 6A is amended to exclude “small” employers, as the incoming (or new)
contractor, then we are likely to see further franchisation of the cleaning industry,
so that no contractor who bids for an existing contract will employ more than 20
employees.
Bill Hodge , 8 March 2013
wc.hodge@auckland.ac.nz
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