Newsletter

June 2000 March 2000 September 1999

 
THE EMPLOYMENT RELATIONS ACT 2000?

 
On the 1st of August 2000 the Employment Contracts Act 1991 will be replaced by the Employment Relations Act 2000. The content of the new Act may yet be altered by the Select Committee and House Readings processes. However, despite the legislation making process, there is little doubt that the current draft of the Employment Relations Bill, is the framework for radical reform of employment relationships in New Zealand.

The proposed new legislation is not a simple reworking of the old law. It is a replacement policy which will have a significant social impact on both employers and employees alike. The sheer volume of the draft Bill containing 264 sections and 6 schedules on 187 pages, is a clear signal of substantial change. In particular there are a number of new obligations on employers.

Key Provisions

Some of the key provisions are:

• clear statutory direction in the application of specific legal tests to assist in deciding whether a person is an independent contractor or an employee;
• the provision of mediation services by the Labour Department to support successful employment relationships and the good faith obligations under the Act;
• a new Employment Relations Authority replacing the Employment Tribunal;
• the retention of the Employment Court; - retention and some extensions to the rules governing strikes and lockouts;
• a new view of fixed term contracts and probationary arrangements;
• an emphasis on collective bargaining, collective agreements and union involvement;
• benefits to employees that will encourage greater union membership;
• provision for increased rights of entry by unions to the workplace;
• a requirement that all dealings between the employer and the employee or his or her representative, must be carried out in good faith and without being misleading either directly or indirectly.

Good Faith Employment Relationships & Bargaining

These changes will have considerable impact on the employment relationship, but arguably the most significant impact will come from the obligation to ensure that employment relationships are dealt with in good faith.

The duty to conduct all dealings in any employment relationship on a good faith basis applies to all parties whether employer or employee or their representatives.

Situations where the duty applies includes:

• bargaining before entering into a collective or individual agreement, and during the term of the agreement;
• consultation with employees or their representatives on any proposed changes in the employer's business, including selling the business wholly or in part or contracting work out, and when the proposed changes will impact on the employees
• in any dispute arising during the term of a collective or individual agreement;
• making employees redundant.

What constitutes good faith is not defined within the proposed legislation, but the focus on good faith bargaining in collective agreement situations will no doubt have an impact throughout all employment relationships. Some of the requirements under collective agreements include:

• the setting up of a process for bargaining in an effective and efficient manner;
• a requirement that the parties meet from time to time to bargain;
• a requirement that the parties must consider and respond to proposals made by each other;
• recognition of representatives of either employer or employee;
• an obligation to provide information that might reasonably be expected to be relevant in the bargaining process.

The duty to act in good faith and to consult with employees or their representatives will no doubt require time and further resources by employers. Failure to comply with this legal obligation may result in serious consequences for the errant employer.

One possible onerous consequence of the obligation to consult with employees or their representatives on proposed work place changes is that the employer may be obliged to disclose commercially sensitive or confidential information in this process. The draft legislation does not provide any protection for the employer in this situation, although some argue that the confidentiality clauses in agreements will suffice.

Whatever form the new legislation takes, there will no doubt be radical change. I urge employers to take the time to familiarise themselves with the new legislation and the obligations and rights that flow from it.