Changes announced to law on collective bargaining and flexible working

Dianny Wahyudhi, Solicitor and Deborah Doak, Senior Associate | Friday 18 May 2012

On Monday, Labour Minister Kate Wilkinson announced a number of changes to the Employment Relations Act 2000 (ERA).

Some of the changes reflect measures proposed by National in its election manifesto last year. These include:

• Removing the obligation in section 33 of the ERA to conclude a collective employment agreement (CEA) unless there is a genuine reason not to do so.

• Removing the requirement in section 63 that for the first 30 days of employment non-union member employees must be employed on terms of a CEA that would be binding if they were union members;

• Allowing employers to opt out of bargaining for a multi-employer collective agreement (MECA);

• Introducing a mechanism for partial pay reductions for partial strikes or situations of low level industrial action;

• Extending workers' rights to request flexible working arrangements.

In addition, further amendments announced this week in relation to collective bargaining include:

• Requiring parties in all industries to provide notice of a strike or lock out; and

• Aligning respective time limits for initiation of bargaining by unions and employers.

Changes to collective bargaining

The stated objective for change is to improve collective bargaining by increasing efficiency and fairness to both workers and employers. A number of the changes reverse previous Labour-led reforms which bolstered union power and regulated bargaining behaviour.

No requirement to conclude CEA

Section 33 of the ERA requires parties in bargaining, as part of their statutory good faith obligations, to conclude a CEA unless there is a "genuine reason" based on reasonable grounds not to do so.

A repeal of section 33 will mean a return to the position under the ERA before amendments to the Act in 2004. Parties will remain subject to good faith obligations in bargaining. These include requiring union and employer parties to:

• Use their best endeavours to conclude a bargaining process arrangement;

• Meet from time to time for bargaining;

• Consider and respond to the other party's proposals, and if the parties reach a deadlock on a matter, continue to bargain in relation to other matters;

• Recognise the role/authority of a party's representatives and not do anything likely to undermine bargaining or the authority of the other party in bargaining; and

• Provide on request information that is reasonably necessary to substantiate claims or responses to claims during bargaining.

It is unclear at this stage at what point during bargaining parties will be deemed to have sufficiently discharged their good faith obligations to terminate negotiations.

The right to opt out of bargaining for a MECA

Employers will be permitted to opt-out of bargaining for a MECA, and thus avoid bargaining with competitors and competitors' employees where they do not want to do so.

Removing 30 day rule

Section 63 of the ERA requires that for the first 30 days of employment, the terms and conditions of a non-union member must comprise the terms and conditions of a CEA that would bind the individual if they were a member of the union (as well as any additional terms that are not inconsistent with the CEA).

A repeal of this provision will enable employers with collectivised workers to bargain with new non-union member employees (who would be covered by a CEA if they joined the relevant union) for individual employment agreements at the outset of employment. This could include a term for a trial period. For many such employers, one effect of the 30 day rule under section 63 has been to prohibit trial periods for being inconsistent with the terms of an applicable CEA. After expiry of the initial 30 day period, a trial period is not available because the employee is no longer a new employee as required under the legislation.

Partial pay reductions for partial strikes

Under the law as it stands, union members in collective bargaining can engage in partial lawful strike action, for example, by refusing to answer emails, while continuing to receive full pay. Partial industrial action has been used tactically in the past as a means to create disruption while at the same time avoid incurring any loss.

National's election manifesto last year contemplated a new mechanism for an employer to apply for a determination as to the portion of pay that should be paid to an employee to reflect partial work performed.

Mandatory notice of strike or lock-out

Currently, only parties in "essential services" (as defined by the ERA) are required to provide written notice of strike or lock out action, as appropriate. A requirement to give notice of strike and lock out action will be extended to all industries, although it is not clear at this stage the period of notice (if any) that will be required.

Time limits for initiating collective bargaining

The Government intends to remove a union's statutory head-start under section 41 of the ERA for initiating bargaining. Currently, where there is a CEA in force, the union must not initiate bargaining earlier than 60 days before expiry of the CEA and the employer 40 days before expiry. Similar discrepancies apply where there is more than one applicable CEA in force.

Extending rights to request flexible working arrangements

Part 6AA of the ERA currently provides certain employees with a statutory right to request a variation of their working arrangements. To be eligible to make a request, an employee must have the care of a person, and must have been employed by their employer for at least 6 months. Flexible working arrangements can include a variation to hours, days and/or place of work.

Amendments will extend the right to request flexible working to all employees from day one of employment and without any requirement for caring responsibilities. The right will remain a right to request, and not a substantive right to, flexible working arrangements. Presumably, the statutory grounds available to employers for refusing a request will also remain.

The changes have been approved by Cabinet, and are expected to go before Parliament later this year.

For further information, please contact your usual Bell Gully adviser or:

Rob Towner
Partner

Tim Clarke
Partner

Dianny Wahyudhi
Law Clerk