Alasdair Thompson: Employment reform bill biased toward unions

COMMENT

New Zealand's labour relations are about to bog down in a legal quagmire when the new applications for "good faith" come into play under the Employment Relations Law Reform Bill.

The British have resisted adopting the concept of good faith, and in North America there are codes encapsulating its principles which have many exemptions and a raft of case law offering varying interpretations.

Now, along comes New Zealand, expanding the meaning of what "the duty of good faith" is to become. We're to become the world's guinea pig once again.

Lawyers and business people alike say the definition of good faith in the bill goes way beyond the understood boundaries for how the term is generally applied in the industrial relations environment.

They say it is an attempt effectively to enshrine good faith in law when there is no law written anywhere yet which does enshrine it.

The present Employment Relations Act didn't define "good faith". It says codes of good faith may be developed in tripartite negotiations among unions, employers and the Government. In other words the parties must deal with each other in good faith and may agree on the codes to guide them in the bargaining process.

The new bill goes much further. Law firms such as Chapman Tripp say the concept of good faith has been given substantive content, far removed from the application of how it is to be understood. Now it is no longer a guide to the bargaining process but, other than in exceptional circumstances, requires a bargaining outcome which are is to be concluded collective agreements.

Moreover, says Chapman Tripp, in an analysis of the proposed bill: "The usual risk is that emanations of good faith in particular circumstances - for example, notification, consultation, consideration are liable to be mistaken for good faith itself, so that an obligation to act in good faith becomes an obligation to notify, consult and consider, whatever the circumstances."

The Government intends the "duty of good faith" in wage bargaining to be more than is already implied, by making the parties engaged in wage negotiations legally obliged to act toward each other with mutual trust and confidence.

But how can mutual trust and confidence, which is this expanded concept of good faith, be legislated into existence?

The strengthening of good faith by the new law is purportedly a result of the Court of Appeal decision in the 2001 case, Coutts Cars v Baguley which basically declared that the concept of good faith is indistinguishable from mutual trust and confidence and is the term used under common law.

As Chapman Tripp says, the Coutts case showed the requirement to act in good faith was present in employment law long before the Employment Relations Act.

The court identified that good faith did not impose standalone obligations. It qualified how dealings between the parties were to be conducted, and warned against prescribing for those dealings under the guise of good faith.

What we have in the new employment reform bill goes far beyond that. Under the guise of "good faith" it gives unions the right to express what workers want, whether the workers themselves like what is said on their behalf or not. And giving concessions to unions, it seems, is the only way an employer can undo a charge of bargaining in bad faith.

At best this is a one sided application of good faith; at worst it discriminates heavily against employers since it presumes they will always act in bad faith towards their employees unless and except a union is involved in wage negotiations to represent them. This presumption does not square with workplace reality.

* Alasdair Thompson is chief executive of the Employers & Manufacturers Association (Northern).