What’s driving employer fear over the Labour Government’s
verbose 200-page Employment Relations Bill (ERB) is the central role unions will play in future wage bargaining. While aimed at protecting the most vulnerable workers, employers remain suspicious that corresponding resurgence in union power will drive an unnecessary wedge between them and their staff.
Included in raft of issues that employers are unclear on are two overarching imponderables: 1) will the bill get passed relatively intact? And if so, 2) will it herald the return of the pre-1991 era when key industries were the target of industrial action, and usually when it caused maximum disruption?
With former unionist Graham Kelly chairing the select committee that’s reviewing the ERB, Peter Tritt, EMA’s (Northern Region) manager employment relations, says it’s reasonable to expect the bill to pass virtually as is.
Fears could be founded
He says employer fears on the second count are also well founded. What the proposed bill does, says Tritt is restore the union monopoly over negotiating collective contracts that the Employment Contracts Act (ECA) removed.
“The ERB won’t have much impact on white collar workers, save individual contracts becoming individual agreements. But it replaces the flexibility of the ECA with highly prescriptive regime of collective bargaining for major industrial employers, especially those that already have union presence.”
Equally vexing for employers says Tritt is the bill’s lack of clarity regarding key interpretations. The most nebulous? Establishing what constitutes code of good faith required when unions and employers negotiate. In other words, how do you mandate for it and what information will both parties need to disclose?
Fronting up with good faith
So what exactly is good faith bargaining? The Government expects this to be driven by the principles of natural justice. These include, full information, making sure there is representation, and having people actually talk to each other. But to ensure both parties imbibe the spirit of natural justice, codes of practice will be developed for each industry sector (with employer and union input).
The ERB is designed to “de-legalise” the employment process by keeping lawyers out of the picture. Ironically though, Richard McIlraith, partner with Russell McVeagh, says the almost inevitable outcome will be an increase in the litigation over the next two years.
He suspects that much of the Employment Court’s time will be spent dealing with two key areas:
1) Establishing what constitutes breaches of natural justice under good faith bargaining and establishing the true meaning of colloquial terms used in the bill;
2) Widening the already fertile ground for grievances once the law is extended to cover indirect sexual and racial harassment.
McIlraith believes new employer obligations under the ERB will encourage more not less grievances. Why is this? Schedule two of the bill requires the employer to advise departing employees of their right to lodge grievances. It also expends their rights to do so (under mitigating circumstances) from 90 days to six years.
He says despite plans to replace the Employment Tribunal with new decision-making body, the Employment Relations Authority (ERA), the only acid test on how the new framework is expected to work will be more, not less cases before the Employment Court and the Court of Appeal.
While able to call evidence and witnesses, the ERA will take on additional functions beyond the role of the present Tribunal, such as processes for strikes and lockouts.
Mediators appointed throughout the country will be authorised to empower negotiations under the new act. But with plans to halve staff numbers to around 15, human resource consultants Greene Hanson doubts whether it will have sufficient resources to handle additional workload inherent with any new law. Especially as there are currently delays of up to one year in having cases heard by the outgoing tribunal.
Show me what you know
So what exactly are employers’/unions’ new obligations under the era of good faith bargaining? The concept here is simple enough. Employers and unions are required to exchange relevant information during bargaining. What the ERB doesn’t prescribe is what happens if disclosure becomes so commercially sensitive and/or possibly unlawful.
For example, when management contemplates selling the business or where the Securities Act and NZSE rules prohibit public disclosure prior to issuing an investment statement where public float is imminent.
The $64,000 question says McIlraith is how much financial, business planning and forecasting information employers will have to disclose. literal interpretation would see an employer opening the books to the union every time it entertained further restructuring, cost efficiencies or made any proposals that may impact staff directly.
Trojan horse tactics
“The cynic could be forgiven for concluding that this bill is effectively trojan horse for having union officials on their boards which happens in the US. The bottomline is that CEOs and their boards are going to have to be prepared to disclose information to unions. In addition being costly exercise, this will take up lot of valuable management time.”
What employers need to come up to speed with and quickly, says McIlraith, is realisation that the ERB reverses the ECA ruling which removed union monopoly over negotiating contracts.
The real danger, says McIlraith, is that employers will misunderstand how the proposed bill fosters what he calls “creeping union presence” that’s expected to reverse decade-long fall in membership numbers. Under the ECA, only 20 percent of the workforce opted for union membership. But under the ERB, McIlraith expects that number to rise significantly and quickly.
Here’s why. For example, if on 10 August three secretaries within company X go to management asking to negotiate collective agreement, collective agreement will follow to maintain good faith under the proposed bill.
This means that any new secretaries employed by this company after collective agreement has been established must be employed on terms and conditions no less than that provided for in the collective agreement for period of 30 days… whether they become union member or not. During that time they must also be introduced to the union and the agreement that’s currently in place.
After the 30 days, the individual can opt to join the union or enter an individual agreement. And therein lies the catch, says McIlraith. The employer must provide notice to all parties and sufficient time for the new staff member to seek independent council on the provisions proposed. But as in ILO-accepted terms, only union can negotiate collective agreement as only union is considered to be true collective.
Furthermore, only union can agree to vary collective agreement. Meantime, only union members are covered by collective agreement and are able to take strike action or vote on whether their workplace should be party to multi-employer arrangement or not.
Standing outside is lonely
“No union worth its salt will watch any staff employed under an individual agreement once collective agreement is in place. The reality is, once an agreement is in place the pressure to join the union will be entwined in the process,” says McIlraith.
Also entwined within the ERB, suggests Tritt, are hidden government agendas. The most obvious one? Anyone covered by collective contract is guaranteed employment for the life of the contract (prescribed for maximum three years) unless dismissed for just cause.
The way Tritt sees it, this provision is an entry point for agreeing on redundancy where there are no legal obligations to pay it. transitional provision under the bill means the expiry date of existing collective contracts can be brought forward to 1 July next year if union members covered vote to do so.