Proposed Amendments to the Employment Relations Act announced

25 August 2015

The Employment Relations Amendment Bill was announced by Simon Bridges, Minister of Labour on 26 April 2013 and was introduced into Parliament on 5 June 2013. It has been referred to the Transport and Industrial Relations select committee for submissions and further consideration. The select committee is scheduled to report back on 5 December 2013. The final Bill will take effect four months after its final reading and on it gaining royal assent which realistically will not be until well into 2014. The main areas proposed for amendment are:

  • Removing the requirement to conclude collective bargaining;
  • Introducing the ability for an employer to opt out of a MECA, (Multi Employer Collective Agreement);
  • Introducing the ability for an employer to reduce employees’ pay when they take partial strike action;
  • Removing the requirement that new employees be covered by the terms of any collective agreement for the first 30 days of their employment;
  • Increasing access to request flexible working arrangements to all employees;
  • Significant amendments to Part 6A which covers provisions for ‘vulnerable workers’ during business transfer situations;
  • Clarifying the good faith requirements for disclosure of information;
  • Providing more flexible options to cover rest and meal breaks;
  • Specifying timeframes for the Employment Relations Authority to issue determinations.

A number of the proposed amendments will impact the obligations on the parties and the process of collective bargaining:

Proposed new s.33 – Duty of Good Faith does not require collective agreement to be concluded

The duty of good faith in section 4 does not require a union and an employer bargaining for a collective agreement –
“(a) to enter into a collective agreement; or
“(b) to agree on any matter for inclusion in a collective agreement”

The parties will still be obligated to bargain in good faith, which means reasonable efforts would have to be made to be constructive in attempting to reach settlement, but a related proposal would ensure parties are no longer be required to continue to bargain over issues when they have come to a standstill or have reached a deadlock.

Proposed new s.50K – Authority may determine that bargaining has concluded

As anticipated, the Bill also includes a process for parties to collective bargaining to apply to the Authority for a declaration that bargaining has ended. However, the Authority must consider if the parties have attended mediation or, if applicable, that parties have sought facilitation. The Authority must direct further mediation or facilitation before it investigates the matter unless it considers it unlikely to result in the parties resolving their difficulties.

Where the Authority does declare bargaining at an end, none of the parties to the bargaining may initiate further bargaining earlier than 60 days after the date of the declaration, without the agreement of the other party or parties concerned.

Amendment of current s.62 and removal of s.63 – ‘first 30 days’ rule

Currently where there is an applicable collective agreement in place, the terms and conditions of employment for all new employees for the first 30 days, must not be inconsistent with those of the collective agreement.

The Bill provides for the removal of this requirement and therefore the employer and the new employee would be able to agree on different terms.

While the removal of this provision may provide greater flexibility for employers and employees when employment commences, it will require careful management as an employee would still be able to join the union at any time and pick up the terms of the collective. Therefore where employees are hired on different terms of employment on an individual basis, care will be required to ensure there is no motivation for them to join the union and thus access the terms of an applicable collective agreement.

When bargaining can be initiated

The Bill proposes to amend the Act so that both union and employer parties can initiate bargaining at the same time. The current timeframes for initiating bargaining are different (60 days before expiry for unions and 40 days for employers). The Bill provides for both parties to be able to initiate 60 days before the expiry of the collective agreement.

Where there is more than one collective in force the parties will not be able to initiate bargaining before the later of the following dates:

  • The date that is 120 days before the date on which the last applicable collective agreement expires, or
  • The date that is 60 days before the date the first applicable collective agreement expires.

Continuation of collective agreement after specified date

Related to the latter point, a further proposed amendment would allow a collective agreement to continue in force for up to 12 months after it expires whether it is the union (current provision) or the employer who initiated the bargaining. Currently that only occurs if the union is the party that initiates bargaining.

Employer may opt out of bargaining for a multi-employer collective agreement (MECA)

This amendment would enable an employer to opt out of bargaining for a MECA, simply by giving notice to the union(s) within 10 days of receiving the notice of initiation. Currently there is no right to strike for a MECA.

Written Notice of all lawful strikes and lockouts is required

The Bill proposes that before employees may lawfully strike written notice of their intention to do so must be given before the time and date specified in the notice as the time and date on which the strike will begin. The notice must be in writing specifying the period of notice given, the nature of the proposed strike, including whether or not it will be continuous, the places where it will occur and the time and date on which it will begin and end. The same requirements will apply to notice of lockout issued by an employer.

In practice this may be of limited value because, except in the case of an Essential Service, there is no obligation to provide any minimum period of notice and therefore striking employees could simply hand over the notice at the start of their strike. However, the employees would need to ensure they comply with the notice in terms of the duration of the strike and what work will not be performed during the strike, or they run the risk the strike is unlawful.

Partial pay deductions for partial strikes

Under the Bill, employers faced with partial strikes would be able to reduce the pay of striking employees by a proportionate amount or by deducting 10% of their wages for the period concerned.

A new s.95D provides a formula for employers to calculate the amount of any ‘specified pay deduction’ from striking employees. This will require identifying the usual hours of work of the striking employees and that part of the work they will not be performing during the strike from the information contained in the relevant strike notice. The employer must then estimate how much time the employee would have spent performing the work referred to on the day of the strike and calculate the time as a percentage of the employee’s usual hours of work.

Alternatively, the employer may choose instead to impose a 10% deduction regardless of whether the deduction calculated using the formula provided would have been more or less than 10%.

The Bill proposes amendments to the Good Faith obligations under section 4 of the Employment Relations Act in response to the decision of the Employment Court in Vice-Chancellor of Massey University v Wrigley [2010] NZEmpC 37. Presently s.4(1A)(c) of the Act requires an employer to provide information to employees relevant to the continuation of their employment in situations where the employer is proposing to make a decision that will, or is likely to, have an adverse effect on the continuation of that employment. This had led to confusion and concern from employers, panel members and applicants during selection and assessment processes as to the confidentiality of information, including evaluative information produced during the process.

The proposed provision amends s.4 to provide that an employer will not be required to provide access to confirmation information if that information is:

  • About an identifiable individual other than the affected employee;
  • Evaluative or opinion material compiled for the purpose of making a decision that may affect an employee’s continued employment;
  • About the identity of the person who supplied the evaluative or opinion material;
  • Subject to a statutory requirement to maintain confidentiality.

The Bill introduces the ability for an employer to place certain restrictions on breaks where it is reasonable and necessary having regard to the nature of the employee’s work.

The Bill would also change the Act to enable, in the absence of agreement, an employer to specify reasonable times and durations for breaks, having regard to their operational requirements or resources and the employee’s interests, which would enable them to maintain continuity of service or production.

A new s.69ZEA would enable an employer to agree to compensate an employee for a lack of rest and meal breaks where the provision of these is not reasonable given the nature of the work performed by the employee. The compensatory measure must be reasonable and if this includes time off work at an alternative time during the work period, the length of that time off must be for the same amount as for a rest and or meal break.

In response to a number of cases where the application of Part 6A during the sale or transfer of a business has resulted in confusion and dispute, the Bill proposes significant amendments in this area. These include:

  • Requiring employees electing to transfer to give at least 5 days’ notice to the outgoing employer of their intention to transfer; and that request must be in writing;
  • Requiring the outgoing employer to provide the incoming employer with detailed information on individual transferring employees. This will assist the incoming employer clarify the terms and conditions of transferring employees.
  • Apportioning liabilities for service related entitlements between employers. Currently the Act is silent on apportionment and this has led to a number of disputes where the transferring employee has accrued entitlements that the incoming employer is liable to pay. The amendment will enable the employers to negotiate the apportionment of entitlements and provide access to mediation and the Authority if they cannot agree. If the outgoing employer does not pay the apportioned liability the incoming employer may pursue this debt in the District Court.
  • Amending the process for changing Schedule 1A which specifies the employees to whom the continuity of employment provisions apply. Currently this can be changed by Order in Council by applying criteria that are difficult to assess objectively. In the future any change to the Schedule would need to be by an Act of Parliament.
  • Introducing an implied outgoing employer warranty to address concerns over the behaviour of outgoing employers. The amendment would provide an implied warranty by the outgoing employer to the incoming employer that they have not changed the work arrangements or terms and conditions of employment of any transferring employees for the purpose of adversely affected the business of the incoming employer.
  • Allowing subcontractors to make information requests under subpart 2, in relation to the costs of transferring employees. This will assist subcontractors who are required to employ transferring employees by providing knowledge of the costs and associated benefits of these employees.
  • Exempting small to medium enterprises (SME’s) from certain Parts of 6A. Incoming Employers employing 19 or fewer employees will:
    • Not be required to employ employees affected by restructuring or meet their entitlements;
    • Be able to make requests under subpart 2 of Part 6A regarding employee transfer costs;
    • Not be required to include “employment protection provisions” in employment agreements.
  • To establish eligibility for the exemption, SME’s with 19 or fewer employees would be required to provide a written warranty either during a contestable process or once they have been awarded the work, confirming that they and their ‘associated persons’ employ 19 or fewer persons. The ‘Associated persons’ limitation is to ensure larger employers do not set up SME’s to take advantage of the exemption.