'Good faith' at the heart of employment reform bill

By COLIN JAMES

Workplaces should be places of co-operation, not confrontation. That is the message Labour Minister Margaret Wilson is trying to drive home in the Employment Relations Law Reform Bill, introduced yesterday.

So the bill focuses primarily on developing "good faith" bargaining in the wake of what she considers to be narrow court interpretations and employer circumventions. If employers don't get the message from this bill, more legislation will follow. If they flagrantly breach "good faith" they might be fined or have an agreement forced on them.

In the same vein the bill explicitly promotes collective bargaining and the role of unions, though Wilson said yesterday she was more interested in the 80 per cent of workers who are on individual agreements, for whom the bill tightens the minimum code.

The bill introduces a right for "vulnerable" workers to transfer on the same wages and conditions to a new employer who buys, takes over or contracts for a business or part of a business - that is, when there is a "transfer of undertakings".

The wide-ranging measure also updates the Equal Pay Act and gives more teeth for those with grievances. This is not pay equity, on which the nurses are attempting to hang their current case and on which a taskforce is due to report shortly.

Differences of opinion over the bill yesterday in part reflect a feature of the bill - its complexity. One of the difficulties in working out exactly how the bill will work will depend on how the various clauses fit together and interact.

The provisions most talked about in advance - and billed by Wilson yesterday as the "most significant" - are those covering a "transfer of undertakings".

An earlier draft of the bill proposing a general right of transfer to the new employer on the same terms and conditions was relitigated at a late stage.

There is no such general right in the bill as it stands. That right is confined to "vulnerable workers" - cleaners, food service workers, orderlies, caretakers and laundry workers in the education, health and aged care sectors and cleaners and food service workers in all industries. It will apply also to "succession contracts" - when one contractor for an activity that is contracted out is replaced by another.

If such workers are covered by a collective agreement that agreement will apply to the new employer.

Alternatively such workers may negotiate a redundancy agreement and, if necessary, get the Employment Relations Authority to impose one.

Other workers do not get a blanket right of transfer. But the bill does require employers and employees to agree on something to be written into all agreements covering the transfer of undertakings (but excluding succession contracts).

The core of the bill is the redefinition of "good faith" and the imposition of backstop remedies, including fines and/or imposed settlements.

The Government is unhappy that the courts have interpreted "good faith" as amounting to no more than the common law test of "mutual trust and confidence".

Instead, the new bill prescribes that a good faith arrangement is a "productive employment relationship in which the parties are, among other things, responsive, communicative and supportive". That novel legislative language - not easily capable of interpretation in the courts - is intended to drive home the co-operation message.

The bill's explanatory note says the aim is workplaces which will "support innovation, productivity and workforce skill development". That, the note says, requires "fair dealing" besides trust and confidence and "reasonable equality" between the parties, plus access to relevant information when there is a decision that is "likely to have an adverse effect on employees".

That "equality" applies to those on individual agreements. The bill specifically applies "good faith" to individual agreements.

And the notion is extended to personal grievances. When sacking an employee, employers will be required to take into account not only their own interest but the "legitimate interests" of the employee and must act fairly and reasonably "in all the circumstances".

"Good faith", as spelled out in the new bill, requires parties in collective bargaining not to walk away because one item cannot be resolved. They must continue to bargain on the rest.

They must also continue bargaining until they reach agreement unless there is a genuine reason not to.

There are no sanctions for moderate breaches of the new good faith provisions. Wilson said yesterday they were "clarifications", not legally actionable requirements.

But any party that is having serious difficulties getting an agreement will be able to go to the Employment Relations Authority (ERA), which will be able to intervene if a "serious and sustained" breach of good faith has undermined bargaining and/or if bargaining has been unduly protracted and/or if bargaining has been interrupted by "acrimonious lockouts or strikes" or and/or if a lockout or strike is threatened that is "likely to affect the public interest substantially".

The ERA can then make non-binding recommendations. But it can also, if it chooses, impose a settlement if the breach of good faith is "sufficiently serious and sustained as to undermine the collective bargaining", if all other reasonable alternatives have been exhausted and if it is the only effective remedy.

These are relatively high hurdles.

Fines will also be available for serious and sustained breaches of good faith: $10,000 for an employer and $5000 for an individual.

The bill is designed to attack other practices unions say have undermined collective bargaining.

So it will be a breach of good faith if an employer tells employees not to get involved in a collective agreement. This is deemed to undermine the collective agreement by weakening the union.

Likewise, if the employer passes on to individuals the terms and conditions of a collective agreement with the intention of undermining the collective agreement and actually undermining it.

These are also relatively high hurdles.

All of this is in part designed to promote collective agreements. That is partly to favour the Government's union constituency. Only 12 per cent of workers in the private sector are in unions, little improved from the days of the Employment Contracts Act. Only 20 per cent of workers are in collective agreements, again little improved.

A clause in the new bill allows collective agreements to specify advantages for those in the agreement over those outside it. The bill does not, however, accede to a union claim: for fees to be charged on those outside a collective agreement who benefit from it.

Put that together with the possibility individual agreements that have higher rates than the collective could be seen as undermining the collective and, Business New Zealand says, that might be a big disadvantage for those on individual agreements and drive them into unions.

The bill also promotes multi-employer agreements, on which unions have made slow progress since 2000. The parties are required to have at least one meeting when approached. It will be a breach of good faith not to - and, conceivably, if employers are too obstructive, they might incur penalties for a serious and sustained breach.

The bill also strengthens what Wilson calls the "minimum code" for the 80 per cent of employees who are on individual agreements.

An employer - big or small - will be required to give an employee a copy of the agreement under discussion, tell the employee he or she is entitled to independent advice, give a reasonable opportunity to get that advice and consider and respond to any issues the employee raises.

Failure to do that will carry a penalty.

A fast-track mediation procedure is introduced and the ERA will be able to facilitate discussions if the parties ask it (and strikes and lockouts will be permitted during that time - employers are forbidden to discriminate against union members who participate lawfully in a strike).

The bill consolidates and updates the private sector and public sector equal pay legislation. This is necessary because the Equal Pay Act is predicated on the long-defunct national award system and most alleged discrimination has no effective way of being challenged because it is blocked by privacy restrictions.

The principal change in what will become a new Equal Pay Act is that an employee who thinks she is being discriminated against may take this up with the employer and then. if unsatisfied, to a labour inspector, who can make a determination and award back pay and impose penalties for breaches.

This is distinct from pay equity.

One other change lengthens the 12-month time limit in which to take legal action so that it starts from when the complainant first knew about, or ought to have known about, the issue complained of.

Employment bill



"Vulnerable workers" can insist a new employer take them on when a business is sold or contracted out.

Definition of "good faith" is widened and a number of breaches specified.

Serious and sustained breaches of good faith can be punished or an agreement imposed by Employment Relations Authority.

Multi-employer agreements must be at least discussed.

Collective agreements will be able to specify advantages over individual agreements.

Employers sacking an employee must take into account the employee's interests.

Fast-track mediation is promoted.

Equal pay updated and labour inspectors able to take up allegations of discrimination.

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