A Workplace revolution

By BRIAN FALLOW

WELLINGTON - Whether it is seen as a great leap backwards or a move to entrench best practice in industrial relations, the Employment Relations Bill represents a major change in the business environment.

Since the bill was introduced to Parliament last week, employers - or their lawyers - have been sifting through its language in search of fish-hooks.

The concerns so far are of the "What does this mean?" and "How will that work?" variety.

Some of those questions may be answered during the select committee process or by the code (or codes) of good faith to be drawn up by a committee of employer and union representatives under an independent chairman.

But given that this is a major change to the law and brings in new concepts, many issues of legal interpretation are expected to end up before the courts.

For example, the bill provides that during a lawful strike an employer may not require a non-striking employee to do the work normally performed by a striker, or hire anyone else to do it.

Employers Federation chief executive Anne Knowles says, however, that much will depend on how "require" is interpreted.

"If it means that you can call for volunteers, or you can have people whose [individual] contractual provisions are wide enough to include doing work as required from time to time, then there may be sufficient flexibility to enable an operation to keep going."

Central to the legislation is the idea of good faith in collective bargaining, and in employer-employee dealings generally.

Under good faith collective bargaining, a union can ask for information, including financial information, business plans and forecasts, which might reasonably be expected to be relevant to the bargaining.

"You cannot have proper negotiations unless you have disclosure of sufficient information to make the negotiation real," Labour Minister Margaret Wilson said.

"I decided we would phrase it this way so that it would make it quite clear it wasn't open slather, and we would then provide for the codes of practice. What I was hoping is that industries develop a code of practice as to how they will conduct their negotiating process, and as part of that they can get the protocols in as to the kind of information that may or may not be relevant."

In Canada, which has this system, unions can ask for sensitive information such as payouts to shareholders only if employers plead poverty, according to employment lawyer Tina Mitchell, of Morrison Kent, who has worked there.

"They can say, 'OK, justify that with financial documentation'."

Anne Knowles said the proposed code or codes of good faith might be able to sort out the issues before they ended up in court. She expected the federation would take part in the process.

"But there would need to be some talking, through, as to whether you are going to have principles of good faith that would apply equally across all enterprises, regardless of industry or size, or whether in certain areas a particular code might be required."

A code of good faith would not of itself determine whether a union or employer had acted in good faith, but the court or the Employment Relations Authority would have to take account of it.

Engineers union general counsel Andrew Little doubts the need for a code of good faith, and especially for industry-specific codes.

"Given that the legislation still contemplates a framework based on enterprise bargaining, even on an industry basis it is going to be hard to say what a particular enterprise ought to disclose. The ultimate test in the legislation is: 'Reasonably relevant for the purposes of bargaining.' I would have thought that can only be decided on a case-by-case basis in each enterprise."

Anne Knowles said the reference to planning and forecasting information was very vague, and employers were particularly concerned about their competitors getting hold of such information.

Margaret Wilson said improper disclosure of information to an employer's detriment would not only be bad faith, but the normal remedies for breach of confidence would also apply.

The information must not be disclosed to anyone who is not a party to the collective agreement, and a company is allowed to attach "reasonable" conditions to the use of the information.

A collective agreement will have to contain a coverage clause describing the types of work or employees its applies to.

This is so that employers can be required to notify new employees whose work comes within that coverage clause of the existence and terms of the collective agreement.

For some employers, however, coverage clauses are a throwback to the days of awards and demarcation disputes between unions. It is a concern which baffles the minister.

"We've got competitive unionism [already]," she said. "It is already in existence on the waterfront. I've talked to port and stevedore employers and I struggle to see how this [the bill] is going to make things worse."

The bill makes it legal to strike in a bid to get a multi-employer agreement, something forbidden under the present Employment Contracts Act.

The right to strike over a new agreement applies only once a contract has expired and the parties have been negotiating for 40 days.

Richard McIlraith, a partner at Russell McVeagh, said: "At the moment astute employers make sure their contracts do not all expire at the same time, so that they do not have the risk of being held to ransom by an entire workforce."

But there is a transitional provision that the expiry date of existing collective contracts can be brought forward to July 1 next year if the union members covered vote to do so.

This creates a one-off window of opportunity for unions seeking multi-employer deals or to widen the scope of single-employer con- tracts, according to Mr McIlraith.

However, the minister says that was not intended.

"Some employers were signing up 10-year contracts, if you can believe it, in an effort to evade the legislation. There is no deep Machiavellian plot to try to promote multi-employer agreements."

Mr Little said a lot of unions simply would not have the resources to take advantage of a synchronised July 1, 2001, expiry.

"I think the reality is [that] for a lot of unions they will allow existing agreements to expire on the expressed expiry date and start from there."

One provision expected to attract a lot of scrutiny in select committee is clause 66, on continuity of employment.

It says any collective agreement is to be treated as if it contains a provision to continue to employ every employee bound by the agreement for the life of the agreement, unless the employee is dismissed for just cause.

Anne Knowles said: "I would interpret this to be about the protection of people where there is no redundancy provision, because of the Court of Appeal decision that there is no legal obligation to pay redundancy.

"This is a way of getting round that, to say that if you haven't got a clause [in a collective agreement] that varies that provision and takes account of that situation, then you pay out to the end of the contract - plus another 12 months if a renegotiation has been filed."

The continuity of employment provision is an implied term of a collective contract, which applies unless the contract expressly excludes or varies it.

"I would suggest," said Mr McIlraith, "that the only way a union worth its salt would agree to get rid of this is for a very attractive redundancy provision ...

"There is nothing which says you musty pay redundancy, but you end up with a very enhanced ability for a union to negotiate increased redundancy provision, because every employer will want to contract out of clause 66, and the price is going to be enhanced redundancy enti-tlements."

* Monday: Dependent con-tractors and fixed-term con-tracts.