Shelve The Employment Law Reform Bill – Here’s Why
Shelve The Employment Law Reform Bill – Here’s Why!
The Government’s proposed employment relations law changes will cost business millions of dollars, won’t “add value” to the economy and possibly breaches International Labour Organisation (ILO) collective bargaining conventions.
After benchmarking the Employment Relations Law Reform Bill’s provisions in some detail against key government economic objectives, Auckland Chamber of Commerce chief executive Michael Barnett predicts that the Select Committee charged to consider the Bill will be hard-pressed to find anything in the Bill that “adds value” to the existing Employment Relations Act in terms of helping New Zealand to: Grow an innovative/ productive economy; Improve the business environment; Reduce the cost of doing business; Lift the performance internationally of SMEs; and, Encourage work-life balance initiatives.
“But they will be presented with compelling evidence leading to an obvious conclusion – New Zealand’s best interests and those of the business community in particular would be well served by the Bill being withdrawn.”
A typical business employing 10 or more people will face costs between $20,000 and $36,000 to comply with the Bill’s provisions
A minimum of 15-to-20 days of employer-staff time inputs will be required for a small-medium business to comply, and much more for larger companies.
The Chamber submission sets out a table of typical costs and time businesses will face to comply with the 11 prescribed activity areas in the Bill. These can be viewed at www.b-vital.com/submissions.
“It gets worse. In future, any business requested to take part in a collective bargaining process must participate - unless they can show a “genuine” reason not to – and keep bargaining until a deal is done.”
The ultimate sanction for resolving any problems will be coercion by the Employment Relations Authority – take it or leave it.
If a business participates willingly, there will be costs. If they do not participate willingly, then they expose themselves to all the sanctions of the Bill plus associated time and costs to come up with a “genuine” reason not to participate.
“For small-medium businesses, the engine room of the economy, where the owner has crucial ‘hands-on’ involvement in running the business, and margins are tight – which will be in most cases – the costs have the potential to impact hard on its competitiveness.”
Mr Barnett: “The Chamber went to great pains to strongly resist coming to its conclusion about the Bill on the basis of ideology. We sought views of members through a survey. We sought legal opinion, and we researched findings on the basis of:
What are the reasonable questions members of the Select Committee would want answered in coming to a conclusion about the merits of the Bill and its contribution to building a better New Zealand.
The questions and responses are elaborated in depth in the Submission (and can be viewed on the website). The outcome has resulted in the Chamber being very confident in its view that the proposed legislation, if enacted as drafted will: Impact negatively on the cost of doing business; Stifle the flexibility required to adapt quickly to market changes; Reduce confidence to invest and employ relevant skills to implement strategies to achieve growth; Complicate and undermine the team working “atmosphere” that small-medium “family” owner-operator enterprises typically practice; and, Arguably breach the ILO Convention Article 4 in respect of collective bargaining.
Breach of ILO Convention C98? The case to withdraw the Bill, or at the very least, amend the Bill to remove the collective bargaining compulsions, is reinforced by benchmarking against the International Labour Organisation (ILO) C98: Right to Organise and Collective Bargaining Convention 1949.
Article 4 of ILO Convention C98 states that:
“Measures appropriate to national conditions shall be taken, where necessary, to encourage and promote the full development and utilisation of machinery for voluntary negotiation between employers or employers' organisations and workers' organisations, with a view to the regulation of terms and conditions of employment by means of collective agreement.”
The point: The proposal in the Bill to compel parties to conclude CEAs unless there is a 'genuine reason not to' and to empower the ERA to impose CEAs seems to go well beyond the “voluntary” negotiation set out by the ILO. The proposed changes are certainly not required by convention C98. Arguably they are in breach of it.
In reinforcing a request to the Select Committee to consider the overall benefits of the Bill against its costs to the economy, Mr Barnett said the timing of the Bill’s passage through Parliament is also unfortunate.
“With the economy entering a long-predicted period of forced adjustment reflected by a long-run rise in the value of the New Zealand dollar among other factors, there is a case for forcefully accelerating upgrade of the economy on all fronts, but especially in respect of tapping the growth potential of small-medium business. This Bill won’t help that task!”
“It’s for all these reasons that we have formed the view that the nation’s best interests would be served by the Bill being withdrawn and accordingly recommend that the Select Committee take this course of action,” concluded Mr Barnett.
If withdrawal is impracticable, however, the Chamber nonetheless makes clear in its Submission that it seeks to work constructively with Government to identify where the Bill could be improved. These suggestions are set out in a separate media release and can also be viewed on the Chamber website.