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Employment Bill - new obligations on you

Employment Bill - new obligations on you, new fines, your rights removed

The Employment Relations Law Reform Bill is planned to become law in October 2004. In its present state it would give you as an employer 6 new obligations that you would have to comply with - or else face fines for breaching good faith. It would also restrict your rights and freedoms as an employer in 9 main ways. Business NZ will strongly oppose these provisions through the Bill's consultation process. We would like to hear your views on the Bill - please email your comments to

You the employer will have 6 new obligations:

1) Requirement to bargainYou will have to bargain over individual agreements - you won't be able to say: this is the job, take it or leave it. You will have to let each employee put forward alternatives, consider them, respond to them and make a genuine effort to reach agreement, or face a fine for breaching good faith.

2) Requirement to communicate, support You will have to display good faith when bargaining over individual agreements. Lack of evidence of bargaining will be grounds for a breach of good faith. Acting in good faith will require more than just 'fair dealing' - you will specifically be required to be responsive, to communicate, and to provide support to the other party, or face a fine for breaching good faith.

3) More hiring requirements When hiring a new employee you will have to consider any issues raised by them and respond to them over issues relating to collective and individual agreements, terms and conditions, redundancy entitlements and others - or face a fine for breaching good faith. 4) Requirement to give away information If you are proposing to make a decision that might affect employees, you will have to give them information about the proposed decision and give them the opportunity to comment before the decision is made or face a fine for breaching good faith. You will also have to consult their union/s or face a fine for breaching good faith. Consulting the union about your proposal in this way runs the risk of disclosing sensitive commercial information - the Bill does allow employers to withhold information, but good faith will require the reasons for withholding to be disclosed. There is no definition of 'proposal' in the Bill.

5) Requirement to plan for transfer You will have to put provisions in all employment agreements to say whether employees will transfer on the same terms and conditions, or else what entitlements they will get, if the business is sold or contracted out, or face a fine for breaching good faith.

6) Requirement to do union adminAny union member (not just those on a collective agreement) may require the employer to deduct their union fees from their pay and remit the fees to the union.

You the employer will have 9 rights and freedoms curtailed:

1) Requirement to settle When bargaining for a collective agreement, you will be required to settle a deal unless there is a good reason not to, or else face a fine for breaching good faith. What would constitute 'good reason' is not defined in the Bill.

2) Forced into multi-employer agreements If a union makes a claim for a multi-employer agreement, you will be required to meet least once to discuss the claim, or else face a fine for breaching good faith. As meeting once can be interpreted as entering into bargaining, this, in combination with the requirement to settle (see the point above) could mean employers forced into such collectives against their will.

3) Forced to keep bargaining When bargaining for an individual or collective agreement, you will be required to continue to meet and consider and respond to proposals on which agreement has not been reached even if the bargaining is deadlocked on a particular point, or else face a fine for breaching good faith.

4) Collective agreements imposed The Employment Relations Authority will be able to impose a collective agreement if an employer has breached good faith in a serious and sustained way in avoiding one.

5) Your right given to courts The test for a justifiable action (including dismissal) has been changed from what a reasonable employer would do to what is fair to both employer and employee. This can be very subjective; the likely outcome will be courts ruling on whether a dismissal was 'fair' in the circumstances. Effectively this will take away your right to make decisions about your business and give that right to the court.

6) Your right to set terms limited If you pass on the terms of a collective agreement to an employee on an individual agreement (unless the union has agreed to it) you may face a fine for breaching good faith. You may pay more to an employee on an individual agreement than to an employee on a collective only if there has been genuine good faith bargaining for the individual agreement. The test for whether the passing on of conditions was done in good faith include whether bargaining took place for an individual agreement and whether the employer consulted the union before concluding it. If you want to employ non-union employees on the same terms and conditions as union members doing the same work, you will have to get the agreement of the union to do so.

7) Your freedom of speech limited If you advise an employee against joining a collective agreement with the intention of undermining the collective, you are likely to face penalties for breaching good faith.

8) Entitlements imposed If you employ cleaners, laundry workers, caretakers or orderlies (and other occupations on the Government's list of 'vulnerable employees') and if you sell or contract out your business, you will be required to give them the right to transfer to the new employer on existing terms and conditions and the right to negotiated redundancy entitlements from the new employer if they are made redundant for reasons associated with the transfer. If your relevant employment agreements don't mention redundancy entitlements, and no agreement on this can be reached, the Employment Relations Authority can impose entitlements.

9) Your right to manage employees' time If you dock an employee's pay for any time spent away from their workstation in discussion with a union representative, you may face a fine for breaching good faith. There are no specified limits on how long they may talk.

Fines for breaches of good faith will be up to $5,000 for individuals and up to $10,000 for organisations.

Business NZ will strongly oppose these provisions through the Bill's consultation process. We would like to hear your views on the Bill - please email views and comments to

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