By Luci Highfield

A number of factors in the relatively recent history of Aotearoa are critical to an understanding of labour law today.

In 1840 the Treaty of Waitangi (Te Tiriti o Waitangi) was signed between the Crown (made up of colonial representatives of the British monarchy) and a number of Maori tribes. Maori, who were the tangata whenua, or indigenous people, had lived in Aotearoa for many centuries prior to colonisation by the British, French, and other Europeans. Apart from Te Tiriti, colonisation reaped its characteristic consequences – wholesale theft of land; war, sickness and death; oppression of Maori society and culture including language.

Unions were quick to establish in the new colony with the first, the Benevolent Society of Carpenters and Joiners, established in 1842. Over the following decades many new unions formed, mainly based around trades.
On 15 May 1991, following the change to a conservative government, a new legal regime was introduced under the Employment Contracts Act (ECA).

The ECA opened the door to wholesale de-unionisation of many industries, such as those in the service sector, as employers forced workers onto individual employment contracts secured on a ‘take it or leave it’ basis. In the first two years of the ECA, the Service Workers Union lost half of its membership, over 40,000 workers.

During the 10 years of conservative government from 1990, many rural and urban areas were devastated by widespread restructuring, redundancies, casualisation, and outsourcing. No legislative protections existed to prevent these processes and the right to take a personal grievance for unjustified dismissal did little to alleviate the harsh circumstances in many instances, particularly once cases got to the Court of Appeal, which was commonly known for the a number of key right wing judges.

During this period, workers and their families were also hit with decreases in social security, schemes such as ‘work for the dole’, the privatisation of the accident insurance scheme, and market rentals for housing. Large increases in the levels of poverty, unemployment, crime, and health problems, coupled with poor economic performance proved the right wing ‘dream’ was a sham.

By the time a left-wing Labour Alliance coalition Government was elected at the end of 1999, the situation for workers was grim. Urgent action was needed to try and reverse the trends of 10 years and to address the 17 percent level of unionisation. The primary and principal solution came in the form of the Employment Relations Act 2000 (ERA), along with other industrial relations changes, such as health and safety, accident compensation, and parental leave.

Contemporary snapshot

In 2002 the landscape of employment relations law in Aotearoa, while far from picture perfect, has begun to improve for workers. The statutory minimum code has been subject to changes.
The statutory minimum code spans most employment related issues, including bargaining, unions, minimum wage rates and leave entitlements, health and safety, parental leave and accident compensation.
All ‘employees’ are covered by the minimum code legislation. ‘Employees’ includes all persons who have a contract of service as well as homeworkers who have a contract for service. It excludes volunteers, independent contractors, and prison workers.

New Zealand has not ratified ILO Conventions 87 and 98.

Employment Relations Act

The most significant piece of legislation is the ERA that sets out the rights and obligations of the parties to employment relationships (employers, employees, and unions) from the commencement of the employment relationship, through bargaining to the termination of employment.

The objects of the ERA are:
“ a) to build productive employment relationships through the promotion of mutual trust and confidence in all aspects of the employment environment and of the employment relationship –
i) by recognising that employment relationships must be built on good faith behaviour;
ii) by acknowledging and addressing the inherent inequality of bargaining power in employment relationships;
iii) by promoting collective bargaining;
iv) by protecting the integrity of individual choice;
v) by promoting mediation as the primary problem-solving mechanism;
vi) by reducing the need for judicial intervention; and
b) to promote observance in New Zealand of the principles underlying International Labour Organisation Convention 87 on Freedom of Association, and Convention 98 on the Right to Organise and Bargain Collectively.”
The changes between the ECA and the ERA as well as the key features, are illustrated in the chart in Appendix 2 [not included in this report]. The most important changes introduced by the ERA are those in relation to good faith, collective bargaining, and union rights.

Good faith

The inclusion of general statutory obligations of good faith are considered as mirroring the implied terms already existing in common law. However, their explicit inclusion in the legislation provides to some extent greater clarity and focus on the scope and meaning of the obligations.

The parties to an employment relationship are required to deal with each other in good faith and must not, whether directly or indirectly, do anything to mislead or deceive each other, or do anything that is likely to mislead or deceive each other.

While the ERA does not define ‘good faith’, it provides guidance on some matters where good faith applies, and cases under the ERA are still developing in relation to whether there are differences between the implied term and the statutory concept. What is clear though is that ‘good faith’ is more about process than substance – it is about whether the parties deal with each other in a fair and open way rather than a regulation of the outcome of that dealing or the quality of that outcome. For instance, good faith requires a fair process of termination in a redundancy situation but cannot save a person’s job from redundancy, nor can good faith require compensation to be paid for the loss of a job.

The Courts are also yet to clarify whether the good faith obligations are universal or mean different things in the variety of circumstances that arise. For instance, is the disclosure of information in a restructuring situation an obligation of good faith, in a similar way as it is an obligation in collective bargaining?

Collective bargaining

The only area where good faith is more prescriptive is in relation to collective bargaining.
The ERA provides a new and more regulated system of collective bargaining with a process framework where the requirements of good faith include:1 
i) a requirement to use best endeavours to enter into a bargaining process arrangement, setting out a process for conducting the bargaining in an effective and efficient manner;
ii) a requirement to meet from time to time for the purposes of bargaining;
iii) a requirement to consider and respond to each other’s proposals;
iv) a requirement to recognise the role and authority of the representatives, a prohibition on bargaining directly or indirectly with those represented in the bargaining and a prohibition on doing anything that does or is likely to undermine the bargaining or the other party in the bargaining;
v) an ability to request information, and if considered confidential, to appoint an independent reviewer to adjudicate over that information and its disclosure.

Unions registered under the ERA and employers can initiate bargaining unless there has been no collective agreement covering that work before, in which case only a union may initiate.

While a union can initiate bargaining for a collective agreement, an employer can still refuse to enter into a collective agreement and, for example, insist on individual agreements, provided the employer bargains in good faith. The coverage clause of any collective agreement is also a matter for negotiation.
Unions may initiate bargaining for a multi-employer or multi-union collective agreement provided a secret ballot of union members takes place with a simple majority determining the outcome.

If an impasse is reached during bargaining the parties are able to use the industrial weapons of strikes and lockouts, provided 40 days have passed since bargaining was initiated. Where worksites are considered to host ‘essential services’ such as emergency services and public utilities, 14 days notice of strike action is required.

Union rights

The third key area of change in the ERA is the inclusion of a number of union rights. These include:
i) the right of representation of members’ collective employment interests;2 
ii) the right to be parties to collective agreements;3 
iii) rights of access to worksites for the purposes of meeting union members and recruiting non-members;4 
iv) the right to have union fees deducted by the employer and remitted to the relevant union when covered by a collective agreement;5 
v) the right for each union member to attend two paid union meetings each year, each meeting of two hours duration;6 
vi) the right to have paid union education leave each year.7 

In addition, it is unlawful to discriminate against a worker on the grounds of their involvement in union activities, including being a delegate, making a claim against the employer, and taking union education leave. However it is lawful to discriminate against a worker for participation in strike action.

In order to be registered under the ERA, unions are required to be democratic, and be independent of and operate at arm’s length from the employer. Registration is crucial, because a union must be registered in order to collectively bargain and be a party to a collective agreement. It is not very difficult to register as a union, and therefore a concern exists that company- or employer-sponsored unions will obtain registration in order to undermine collective bargaining.

The ERA has seen the increase in the number of unions, with 167 unions currently registered in Aotearoa/New Zealand.

Other minimum code legislation

Holidays Act
The Holidays Act 1981 fixes a minimum of three weeks paid annual leave per year after the first year of employment. After six months employment, five days special leave is provided for the following twelve months of employment. Special leave can be used for sickness (oneself or a dependent child, parent or spouse) or bereavement of a limited range of relatives. The Act also provides for 11 statutory holidays which will be holidays on pay where the day falls on a normal working day for the worker.

Minimum Wage Act
The Minimum Wage Act 1983 provides for an annual review of the national minimum wage. Currently, the adult (age 18 years and over) minimum wage is NZ$8.00 per hour and the youth minimum wage (age 16 -17 years) is NZ$6.40 per hour.

Wages Protection Act
The Wages Protection Act 1983 prohibits any deduction from a worker’s pay without their consent.

Health and Safety in Employment Act
The Health and Safety in Employment Act 1992 requires employers to set up and maintain safe systems of work, including identifying hazards and prioritising the control of those hazards. The Act requires employers to provide information and safety equipment to workers and to record accidents.

Parental Leave and Employment Protection Act
The Parental Leave and Employment Protection Act 1987 provides for maternity, paternity, and up to 52 weeks extended leave. Prior to 1 July 2002 all leave was unpaid. However, following a decade of campaigning by trade unions and community groups, recent changes have introduced a 12-week paid parental leave entitlement to one parent, provided they have been employed with the same employer for 12 months prior to the birth or adoption of the baby and for a minimum number of hours. The payment is capped at NZ$325 before tax per week.
While the changes are a positive start, they fall short of the ILO standard of 14 weeks and the level of payment is just above the unemployment benefit.

Injury Prevention, Rehabilitation, and Compensation Act 2001
This act contains a basic principle of a ‘no fault’ scheme for personal injury by accident, whether the accident is at work or elsewhere and whether the person is an ‘employee’ or not.
If a worker suffers a work injury, the employer is required to pay the first week of compensation of 80 percent of the earnings lost by the worker. If the incapacity continues beyond the first week, the Government pays the weekly compensation.
Lump sum payments have now been restored to the accident compensation scheme, which is administered by the Government once again, although accredited employers can use private insurance companies to deliver the scheme.

Human Rights Act
The Human Rights Act 1993 provides comprehensive protection against direct and indirect discrimination based on sex, marital status, family status, race or colour, religious or ethical belief, ethnic or national origins, age, disability, employment status, sexual orientation, or political opinion.
The Act covers discrimination occurring in employment, education, access to public places, provision of goods and services, housing, and accommodation.
The Human Rights Commission includes a Race Relations Commissioner and will soon include an Equal Employment Opportunities Commissioner.

Equal Pay Act
The Equal Pay Act 1972 requires there to be equal pay between the sexes. Since 1991 the Equal Pay Act has rarely been invoked due to changes in that year.
The gender pay gap is still very real with women’s average weekly earnings 23 percent below men.

State Sector Act
The State Sector Act 1988 sets out additional obligations and rights for those in the core public service.

Industry Training Act
The Industry Training Act 1992 provides a scheme of industry training through Industry Training Organisations funded and monitored by a central board. The Modern Apprenticeship Training Act 2000 extends the training scheme to provide for funding and monitoring of apprenticeships.

Privacy Act
The Privacy Act 1993 sets out rights and restrictions in relation to the collection, disclosure, and use of personal information in many situations, including employment.

Dismissal

A worker may be dismissed for misconduct (theft, violence, etc), poor work performance, redundancy, or extended absence due to illness. A worker who has been dismissed has a right to take a personal grievance for unjustified dismissal. The onus is on the individual worker to take up that grievance with the employer.

A dismissal is unjustified if it is substantively or procedurally unfair or unreasonable.
In relation to redundancy dismissals, an employer must comply with any redundancy clause in the employment agreement, including process obligations and payment of redundancy compensation. However, the refusal to pay redundancy compensation or provide redeployment opportunities will not be unjustifiable if those matters are not included in the employment agreement.

Personal grievances are also available for discrimination, sexual harassment, racial harassment, unjustified actions causing the worker disadvantage in their employment, and duress in relation to union membership.8 

Where a worker considers they have a personal grievance, the worker must raise it with the employer within 90 days of the event giving rise to the grievance occurring. If unable to resolve the grievance through informal discussions, the parties are able to utilise mediation services through the Department of Labour. If the grievance is not resolved at mediation, the worker may pursue their claim to the Employment Relations Authority, which holds an investigative meeting and determines an outcome, including remedies. That outcome can then be appealed by way of ‘de novo’ hearing to the Employment Court. The Court of Appeal is the final stop, but can only be appealed to on questions of law.

Re-instatement is a ‘primary’ remedy for unjustified dismissals. This was changed from the ECA that did not prioritise re-instatement, and therefore made it very difficult to win. Additional remedies include re-instatement of lost wages, compensation for humiliation, loss of dignity or injury to the feelings of the worker, and compensation for loss of a benefit. Where a personal grievance of sexual harassment or racial harassment has been found to exist, the Authority may make additional recommendations to the employer.

Generally, personal grievances are the most common form of legal action taken by workers against employers in New Zealand.

Effectiveness of labour law

Labour laws in Aotearoa/New Zealand cover most workers to a reasonable degree. As we are still emerging from the 10-year period of right-wing dominated de-unionisation, progress is slow. Huge sectors of the workforce remain non-union, including many young workers, service and retail sector workers, homework-ers, and migrant workers.
The effectiveness of labour law in this country is undermined by inadequacies of the legislation.

Collective bargaining

i) inadequate sanctions for breaching obligations of good faith (at present a compliance order is the only remedy available);
ii) there is no requirement on an employer to agree to a collective employment agreement, and may insist on individual agreements;
iii) there is no special protection or assistance for first-time or greenfields collective bargaining, which can often be difficult and protracted;
iv) few minimum statutory requirements in a collective agreement, with no minimum redundancy process or compensation required;
v) collective bargaining can be undermined by the employer bargaining in parallel with non-union members or agreeing to individual agreements that are superior to the collective agreement;
vi) freeloading by non-union workers is not even discouraged by the Act, so bargains are consistently undermined by the immediate pass-on of those union negotiated benefits to non-union workers.

The effect of these inadequacies is that union members may well be organised and bargaining collectively through their union, but still be unable to achieve a collective agreement. In the process of bargaining, the employer can use a raft of weapons, without fear of penalty, to undermine the bargaining including offering non-union workers the same or superior terms and prolonging the bargaining in high turn-over industries. Without minimum redundancy, hours of work, and security of employment provisions, the end bargain may be little better than was bargained under the ERA.

Strike action requires 40 days to have passed since initiating bargaining. In addition, the ERA needs urgent amendment to prohibit discrimination by an employer against striking workers.
Redundancy law in New Zealand is very harsh on workers. Many workers do not have any redundancy compensation in their employment agreements, and the negotiation or retention of provisions remains difficult.
Remedies for personal grievances are low and subject to a determination about contributory fault. These difficulties undermine the security of many workers’ employment, particularly union members, as it remains a relatively cheap matter for employers to rid themselves of union activists and others who fall from favour.
Inadequate leave entitlements including annual leave, paid maternity leave (below the ILO minimum), sick leave, and bereavement leave.

Absence of protective legislation for contract workers

Outsourcing or contracting out in New Zealand has become widespread throughout many industries, particularly the service sector. Through the 1990s contracting out became part and parcel of privatisation and liberalisation.
Contract workers are those who work for a business (‘a contract company’) that has a service contract of fixed duration with the principal or user enterprise in which the service operates, such as cleaners or catering workers employed by a contract company to work inside a hospital, where the hospital is a District Health Board, which is a separate legal entity from the contract company. Usually service contracts are decided by a competitive tendering process, where the cheapest tender is achieved through reductions in wages and/or conditions or in staff numbers performing the work.

As there is no employment relationship between the workers and the user enterprise, and there is no legal obligation on a new employer to employ any person, when one contract company loses a service contract, the workers are most likely to lose their employment. There is no legal obligation on either the existing employer to continue to employ the workers or on the incoming contract company to offer employment to the workers.
Thus throughout the 1990s, many service sector workers found themselves in a downward spiral of continual job loss, and wage and conditions reductions. Many contract workers have no redundancy compensation to cushion the blow of unemployment.

The New Zealand Council of Trade Unions (NZCTU) and the Service and Food Workers Union have been vigorously lobbying the coalition government to implement legislation that will require the incoming contract company to employ all existing workers on their existing terms and conditions of employment.

Over- and under-employment

The labour market has become more and more polarised, with some sectors becomingly increasingly over-employed, working long hours each day over more than five days per week, and under-employed, working in marginal casualised employment on an ‘as and when required’ basis. Casualisation was a deliberately created employment status to provide flexibility for employers and became rampant in the 1990s.

Stress

The issue of stress has more recently become a huge workplace issue with the increase in the expectations of the quality and quantity of work by employers. Through the 1990s many businesses downsized, and in many cases, this lead to one worker now performing the job that had once been performed by two or more workers. Technology advances, the introduction of performance-based pay systems, and the 24/7 nature of our society have also added to the stress associated with over- employment.

At present, there is a new health and safety bill, recently passed in Parliament that specifically identifies stress as a health and safety hazard, and comes into force on 5 May 2003. The Bill also provides for worker participation in workplace health and safety systems.

At the other end of the scale, many casual workers also suffer the stress of job insecurity. In addition, they do not generally receive minimum code rights, such as leave entitlements, and the ‘take it or leave it’ employment agreements make it virtually impossible to bargain terms and conditions of employment. As employment is insecure, many casual workers are not unionised, and take multiple jobs in order to meet financial commitments, and personal grievances are not available for unfair dismissals. There is no statutory regulation of the employment of casual labour.

Hot union issues

Freeloading remains a huge barrier to re-unionising workplaces. In addition, several generations have been born without knowledge of the past unionism, and there is a huge amount of work to do in re-educating young people about unions.

Unions have generally switched to a more campaign, organising focused approach.
NZCTU campaigns such as ‘Fairness at Work’ and ‘Get A Life’ are cross-union campaigns aimed at improving workers’ lives at work, at home, and in the community. These campaigns recognise the importance of leave entitlements, hours of work, job security, health and safety, and pay equity. The campaigns are also aimed at making unions relevant to workers. Other unions have specific campaigns.

Unions continue to struggle, but with another three years of a Labour-led coalition government now assured with improvements to the ERA possibly to be made, it is hoped that union density can be increased and long-term survival become more certain.

Notes
  1 Section 32 ERA
  2 Section 18 ERA
  3 Sections 5, 54 ERA
  4 Section 20 ERA
  5 Section 55 ERA
  6 Section 22 ERA
  7 Sections 70 – 79 ERA
  8 Section 103 ERA