Wednesday, June 20, 2012

New Zealand - Government Proposes Collective Bargaining Changes

New Zealand: Government Proposes Collective Bargaining Changes

Michael Quigg and Tim Sissons, Quigg Partners

Against a backdrop of recent well-publicised industrial unrest, New Zealand’s National Party-led government has signalled some significant changes to the country’s collective bargaining laws to:
·    Remove the requirement on parties to conclude a collective agreement unless there are genuine reasons, based on reasonable grounds, not to.

  • Allow employers to opt out of multi-employer collective bargaining.
  • Allow ‘partial pay for partial strikes’.
  • Remove the requirement that new employees are covered by any applicable collective agreement for their first 30 days of work.
  • Remove the ‘head start’ provided to unions in initiating bargaining.
· Require notice of any strike or lockout.

The government has also recently passed legislation making it compulsory for unions to hold secret ballots when workers are voting on whether or not to strike.

Removal of the Duty to Conclude Bargaining
In 2004, the then Labour-led government amended New Zealand’s Employment Relations Act 2000 to require unions and employers bargaining for collective agreements to conclude an agreement unless there was a genuine reason, based on reasonable grounds, not to.
The current National-led government is now proposing to remove this requirement, which it considers has led to protracted negotiations in situations where agreement clearly won’t be reached.
The consequences of bargaining being at an end are significant: it will often mean that industrial action becomes unlawful. It may also bring with it the expiry of the relevant collective agreement and the shift of the employees formerly covered the collective agreement to individual employment agreements. This has the potential to increase employers’ bargaining power by allowing them to negotiate with employees on an individual rather than collective basis.
The proposal has led to some discussion as to New Zealand’s international obligations under International Labour Organisation (ILO) conventions, specifically ILO Convention 98, Article 4, which provides:
“Measures appropriate to national conditions shall be taken, where necessary, to encourage and promote the full development and utilisation of machinery for voluntary negotiation between employers or employers' organisations and workers' organisations, with a view to the regulation of terms and conditions of employment by means of collective agreements.”

Although it has been argued that the removal of the duty to conclude bargaining is inconsistent with this obligation, the general consensus appears to be that even without a duty to conclude, the Employment Relations Act 2000 contains sufficient measures to comply with this obligation. Indeed, there is some support for the proposition that the duty to conclude bargaining was itself inconsistent with ILO conventions in that it introduced a non-voluntary component into the bargaining process.

Multi-Employer Collective Bargaining Op-out
This proposed change again affects a provision introduced by the previous Labour-led government- in this case a provision allowing unions to bargain for a collective agreement coveringmore than one employer, known as a multi-employer collective agreement or MECA.
Under the proposed changes, it is expected that an employer which receives a notice commencing bargaining for a MECA would be entitled to opt out of such bargaining before it begins, and insist instead on bargaining for a single-employer agreement.
Partial Pay for Partial Strikes
Strikes can take any number of forms, from the wholesale cessation of work to ‘black bans’ and ‘go-slows’. Despite this variety, New Zealand case law has taken an all-or-nothing approach to the issue of pay: as long as the striking workers are performing somework, the employer has been faced with the choice of either suspending the workers (and not paying them) or allowing them to continue working (and paying them in full). Employers have voiced concern at this binary approach.
The proposed change would allow employers to offer partial pay when workers are partially striking.Although the change has intuitive appeal, finding an appropriate mechanism for determining the extent of the strike (and so the extent of the pay) may prove difficult.
30-day Rule
Currently, where an employee who isn’t a union member is employed in a role which is covered by a collective agreement, his or her terms and conditions of employment for the first 30 days are those of the collective agreement.If the employee joins the union, they continue to be covered by the collective agreement. If not, then they can enter into an individual employment agreement from the 31st day onwards.
The intention and effect of this ‘30-day rule’has been to encourage union membership- a core Labour Party policy. The current National Party-led government however is concerned that the rule weakens the negotiation position of employees who do not want to join a union - by the time they are able to negotiate the terms of an individual employment agreement, such employees have already accepted employment. The proposed changes would therefore remove the30-day rule and allow individual employment agreements to be entered into at the outset of employment.
Initiation of Bargaining

When a collective agreement is due to expire, the present system allows unions a head start in commencing bargaining for a new agreement: currently, a union can initiate bargaining 60 days before theprevious agreement expires, while employers cannot initiate bargaining any earlier than 40 days before expiry.

Indicating that it was concerned that the headstart created an imbalance in bargaining, the government has announced that it will level the playing field: in future the same (yet to be defined) time period will apply for both employers and unions.

Notice of Strikes and Lockouts

When bargaining is underway for a collective agreement, most union employees can currently strike without notice. Employers are similarly not required to give notice of lockouts. Advance warning is only required in respect of ‘essential services’like transport and power generation.
The government has now proposed that a requirement to give notice will apply across the board. The move is likely to be welcomed by employers (who will have the opportunity to make better alternative arrangements), but opposed by unions.
Secret Ballots
Not included within the proposed changes, but recently added to the statute books, is legislation making it compulsory for unions to hold secret ballots when workers vote on whether to strike. Most but not all unions already hold secret ballots when industrial action is being considered, but the amendment has formalisedthis into a strict requirement.

Next Steps

The proposed amendments are the most significant changes proposed to New Zealand’s collective bargaining arrangements since the election of the National-led government in 2008. With the changes now having received Cabinet approval, draft legislation (and the public debate which is likely to accompany it) is anticipated in the second half of the year.