Employment Relations Amendment Act 2014 - Effective 6 March 2015

12 August 2015

This legislation has had a very long gestation period.  The Employment Relations Amendment Bill was initially announced on 26 April 2013 and introduced into Parliament on 5 June 2013.  The Act will finally come into force on 6 March 2015, almost two years after it was first announced.

The Employment Relations Amendment Act 2014 changes the Principal Act by:

  • Removing the requirement to conclude a collective agreement and enabling a party to the bargaining to apply to the Authority for a declaration that bargaining has concluded;
  • Enabling an employer to opt out of MECA bargaining;
  • Requiring advance written notice for strikes and lockouts;
  • Allowing an employer to reduce the pay of employees when they take partial strike action;
  • Removing the requirement that new employees be covered by the terms of any applicable collective agreement for the first 30 days of their employment;
  • Enabling all employees to request flexible working arrangements for any reason;
  • Significantly amending Part 6A which sets out provisions for ‘vulnerable workers’ during business transfer situations, including an exemption for small employers employing 19 or fewer employees;
  • Clarifying the good faith requirements for disclosure of information when an employee’s employment is at risk;
  • Providing more flexible options to cover rest and meal breaks;
  • Specifying timeframes for the Employment Relations Authority to issue determinations.
Collective Bargaining Expand article
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Collective Bargaining

The Act will have a significant benefits for employers in respect of collective bargaining.

But note that even though there is no obligation to conclude a collective agreement, there remains an obligation to bargain in good faith.  That amongst other things, requires the parties to not deceive or mislead each other, to be active and constructive in establishing and maintaining a productive employment relationship in which the parties are, among other things, responsive and communicative; to provide information and so on.  The key point is that while the dynamics have shifted significantly in the employer’s favour, the reality is that both parties are still obligated to make reasonable efforts to conclude a collective agreement.

In our view few employers will seek a declaration that bargaining has concluded, simply because of the risk of having other requirements imposed on them.  For example, the Authority may declare that bargaining has not ended in which case the parties could be directed to further mediation, or facilitation in some cases, or some other measure.

The best advice is, if you think bargaining has ended then stop bargaining!  That includes not engaging in meetings or other actions which could be construed as meaning bargaining is in fact continuing.

The ability for an employer to opt out of MECA bargaining, including when cited as a subsequent party to an existing MECA will be welcome.  However, be aware there is a specified process to follow with reasonably tight time frames.  Once an employer has opted out, strike action is unlawful because at that point the employees would not be involved in bargaining for a collective agreement.

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Strikes and Lockouts Expand article
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Strikes and Lockouts

There are some very significant benefits for employers here, which should curtail strike action in most cases.

The fact that written notice of all strikes, including partial strikes, must be given should stop the actions that result from a rush of blood to the head.  The strike notice will have to be accurate and properly given, otherwise the union runs the risk the strike will be unlawful, thereby exposing the union and employees to a claim for damages.  That means the information on the strike notice regarding the start and finish times of the action, the employees who will strike and the work functions which will not be performed, will need to be carefully considered before the notice is given, much as is the case now with strikes in essential services.

There is a question mark around what constitutes reasonable notice in this context.  We suggest it would be inadvisable for a union to simply drop a strike notice on the reception desk on the way out.  Notice means prior warning of a fact; and one imagines the purpose of advising the Chief Executive of MBIE is so he/she may be able to do something to avoid the strike.  No doubt some early Court decisions will shed light on what is a reasonable period of notice in such situations.

A further benefit is that the ability to deduct pay for partial strikes should act as a considerable disincentive for that type of activity.  In the recent past the partial strike has become a popular form of action for some unions because significant disruption can be caused to the employer at no cost to the employees.  However, it is clear there will be opportunities for games to be played by unions who elect to take legal action in an endeavour to stop specified pay deductions.

Note that a partial strike is lawful on grounds of health and safety, where the employee is paid by piece work, where the strike action involves an overtime ban or a refusal to perform callouts for which the employee would otherwise receive a special payment and therefore pay deductions can’t be made in such circumstances.

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First 30 days of employment Expand article
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First 30 days of employment

Removal of the 30 days provision will provide greater flexibility for employers when hiring new employees, but that is no silver bullet.  Some creativity will be required in the design of the package offered to new employees, because at a later date the new employee has the option of joining an applicable collective agreement and accessing all the provisions of that agreement, simply by becoming a member of the union party.  Therefore a strategy based on hiring new employees on lesser terms than those of the collective is unlikely to be sustained.  However, there is considerable scope for creating more flexibility and simplicity in a package which the new employee considers to be better overall.

Note here that the employer is still obligated to advise the new employee that the collective agreement exists and covers work to be done by the employee, that the employee may join the union that is a party to the collective agreement, how to contact the union and so on.  The new employee must also be given a copy of the collective agreement.

Also be aware that if an existing collective agreement requires new employees to be offered the collective for the first 30 days of employment, then you will be obliged to comply with that as the Act does not trump superior provisions in a collective agreement.

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Trial Periods Expand article
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Trial Periods

The Act has clarified a grey area concerning the lawfulness of trial periods for employees bound by a collective agreement.

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Flexible Working Expand article
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Flexible Working

These changes to flexible working do no more than what most employers already do.  From the start of employment all employees have the right to request flexible working arrangements, not just those with caring responsibilities as was previously the case.  An employee may make a request at any time (previously the limit was one request per year), which must be in writing setting out certain information about the change proposed, including whether the change is to be permanent or temporary.   The employer must deal with a request as soon as possible but no later than one month after the request is made (previously was 3 months).

Somewhat ironically, where an employee is covered by a collective agreement their working arrangements may not be inconsistent with the collective agreement, which means that in many circumstances union members will be denied the opportunity for flexible working arrangements they may want.

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Restructuring and Vulnerable Workers Expand article
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Restructuring and Vulnerable Workers

This part of the Act is complex and best avoided unless you’re into restructuring involving vulnerable workers, in which case specialist advice should be sought! The changes are in response to a number of cases where the application of Part 6A during the sale or transfer of a business had resulted in confusion and dispute.  The key changes are:

  • Small employers, those employing 19 or fewer employees, will be exempt from this section of the Act,
  • The outgoing Employer must provide affected employees with certain information about the restructure at least 15 days before it occurs.
  • The employees electing to transfer must give at least 5 days’ notice to the outgoing employer of their intention to transfer; and that request must be in writing;
  • The outgoing employer must provide the incoming employer with “Employee Transfer Costs Information” concerning the overall costs and working arrangements of employees affected to assist the incoming employer make decisions regarding its restructure proposal.
  • The outgoing employer must provide the incoming employer with “Individualised Employee Information” on transferring employees to assist the incoming employer clarify the terms and conditions of those individual employees.
  • Liabilities for service related entitlements must be apportioned between employers and there are rules as to how that should be done.
  • The outgoing employer automatically gives an implied warranty to the incoming employer that it has 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.
  • Incoming employers will be able to make information requests under subpart 2, in relation to the costs of transferring employees, to be fully informed of the costs and associated benefits of those employees.
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Good faith and Disclosure of Information Expand article
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Good faith and Disclosure of Information

The Employment Court’s decision in Vice-Chancellor of Massey University v Wrigley [2010] NZEmpC 37 caused employers to be concerned about the information required to be provided to an employee in respect of decisions likely to have an adverse impact on the continuation of their employment (such as restructuring or dismissal situations).

Employers are likely to be disappointed with the limited changes to the Act.  Whereas the Bill provided an exception in respect of disclosure of “evaluative or opinion material compiled for the purpose of making a decision about the continuation of employment of an employee”, the Select Committee was opposed to an employer withholding such material or information identifying the person who compiled it, because it believed in situations where an employee’s employment is at risk, the need for the employee to see and be able to respond to such material outweighs confidentiality regarding the person who supplied the material.   For example an employee in a disciplinary situation should know who is making a complaint against them.

The net result is that employees affected by restructuring or dismissal situations are entitled to confidential information about themselves, which also includes evaluative material provided about them in circumstances where there is a mutual understanding of secrecy.

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Rest and Meal Breaks Expand article
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Rest and Meal Breaks

The former prescriptive approach to breaks simply did not work and there were many examples of unions proposing practices which did not comply with the law because that’s what their members demanded.

However, removal of the prescriptive approach should not be taken to mean that employees are not entitled to breaks.

The starting position is that all employees are entitled to reasonable rest and meal breaks (one 30 minute unpaid lunch break and two paid 10 minute rest periods in each eight hour day has been the typical approach).  However, an employer may put restrictions on breaks where that isjustified by the nature of the operational environment and the employer’s resources.

In that case the restrictions must be offset by reasonable compensatory measures, which could range from taking the break later in the day, being paid for all hours on site and taking breaks as and when circumstances allow, or knocking off early, or payment in lieu of breaks not taken.

But note the starting point is the employment agreement.  If it contains express provisions for breaks then employees are entitled to those breaks, unless compensatory measures aremutually agreed in exchange for certain restrictions.  Stand by for some Court cases on this one also!

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Authority must give oral determination Expand article
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Authority must give oral determination

At the conclusion of an investigation meeting the Authority must give its determination on the matter orally, or give an oral indication of its preliminary findings. The oral determination must be recorded in writing as soon as possible but no later than one month after the hearing.

Where an oral indication of preliminary findings is given, the Authority must give an indication of its likely findings and state any relevant findings of fact or law necessary to explain its likely conclusions.  The written determination must be given as soon as practicable but no later than 3 months after the hearing, or 3 months after the date on which the Authority received the last evidence or information from the parties.

The Authority may reserve its determination in which case the written determination must also be given within 3 months.