Bill will force firms to negotiate

By PAULA OLIVER

Employers will be obliged to negotiate multi-employer contract agreements (MECAs) under sweeping law changes the Government unveiled yesterday.

Two seemingly unrelated clauses in the Employment Relations Law Reform Bill require employers to not only attend at least one meeting to discuss a MECA - but to continue negotiating or risk being accused of breaching good faith.

The outcome of those negotiations should be an agreement, unless there is a "genuine reason" not to have one.

The change was yesterday labelled a major alteration to the industrial relations environment.

"A major change like this should have been clearly spelled out in the bill, rather than sitting like a smoking gun in a combination of seemingly unrelated clauses," said Business New Zealand chief executive Simon Carlaw.

Many employers opposed MECAs because they could raise wages across different enterprises and sectors, he said. Large-scale industrial action across whole sectors was also possible.

The MECA change is one of a raft of union-friendly provisions in the bill released by Labour Minister Margaret Wilson, which will amend the Employment Relations Act.

Unions claim the act has had little effect on industrial relations since it replaced the Employment Contracts Act in 2000, despite howls of protest from the business sector that it would make the sky fall in.

After a lengthy review, delayed partly by disagreement among Cabinet ministers, the bill was yesterday greeted with disdain by business groups and muted pleasure by unions.

It includes significant strengthening of the "good-faith" provisions the Employment Relations Act was founded on, and promotes collective bargaining.

There is a requirement that "parties bargaining for a collective agreement conclude a collective agreement unless there is a genuine reason not to".

Wilson said she wanted employers and employees to talk to each other and not take an adversarial approach to negotiations.

If an employer does take that approach, and is found to have made a "serious and sustained" breach of good faith, then the Employment Relations Authority can step in and set the terms of a collective contract. They will be binding.

Penalties by way of fines are also possible for breaches of good faith.

The effect of the requirement to conclude collective negotiations with a collective agreement has a flow-on effect for the section of the bill related to MECAs.

Though appearing relatively weak at first sight, a clause that requires employers to attend one meeting to discuss a MECA is more potent when read together with the strengthened good-faith provision.


Effectively it means that employers who do not want to enter into a MECA must continue to negotiate one if their staff want them to.

They must attend a first meeting to discuss matters such as the proposed coverage of the bargaining and arrangements for the representation of parties at subsequent meetings.

National Party industrial relations spokesman Roger Sowry said yesterday that employers were nervous because the bill gave unions the power to drag small employers into MECAs.

But Council of Trade Unions president Ross Wilson had a different view.

He said the overall bill made modest progress, but fell short of what unions had wanted.

The two areas he wanted to see strengthened even more were industry-wide bargaining (MECAs), and provisions against free-riding.

The bill does contain some relief for those worried at free-riding - the practice where employers pass on the conditions of a collective agreement to a person on an individual one.

It specifically states that employers cannot do that.

Carlaw said the clause threatened the rights of individually contracted workers to earn more than their collective-based peers.

"It will be hard for an employer to prove that he or she did not have this intention and to prove that the decision has not undermined collective bargaining," Carlaw said.

"The likely result is an erosion of the pay levels of those on individual agreements to the comparative benefit of those in collectives."

An employer would have to be able to show evidence that it genuinely negotiated with an employee to arrive at the individual agreement it did.

Business Roundtable executive director Roger Kerr last night labelled the employment bill as anything but a Christmas present.

Instead: "It's a lump of coal in a stocking for those who want to see New Zealand climb into the top half of the OECD."

Kerr said the Government had revived options it dropped in 2000 after heavy protest from employer representatives.

It meant a complicated law that would be a boon for the legal profession.

What happens next

Bill has its first reading in Parliament and is sent to a select committee.

Public, unions and business groups make submissions (expected to close early next year).

Select committee reports back to Parliament, possibly recommending changes.

Bill read a second time.

Opposition MPs are likely to try to change the bill during the next stage of debate, the committee stage. Government may also propose alterations.

Bill read for a third time and becomes law.

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