Thursday 20 July 2000 Speech Notes

How the ERB supports business
Address to Tauranga Restaurateurs Assn
Venue: Harbourside Brasserie, Tauranga

8.00am Thursday 20 July 2000

The Employment Relations Bill will make it easier for businesses to operate. You may find this an odd thing to say in view of the campaign against the Bill. But it is a fact.

Let me explain why. Here are some of the improvements which will help business:

 The new Mediation Service, which will provide rapid, professional support to resolve grievances by agreement before they snowball into costly litigation

 The requirement for unions and management to negotiate in good faith: this promotes responsible unionism and protects employers from unfair negotiating tactics, as well as requiring all employers to respond in good faith

 The even-handed and clear bargaining requirements which will help protect responsible businesses from being undercut by unscrupulous business competitors willing to underpay workers

 Union coverage is contestable – meaning employees can choose the union they want, or they can choose not to belong to a union

 Unions will be required to be democratic & accountable to their members.

In addition, the government has responded positively to the thoughtful and constructive submissions by business owners, managers, employees and unions seeking improvements in the Bill.

The select committee has yet to report, but the government has indicated that it will support changes to the Bill.

These include ensuring that:

 genuine contractors will not become employees. And if another law applies – this law will not override it.

 fixed-term contracts for fixed-term work can continue

 responsible communication from employers to their employees during bargaining will be protected; and day to day communication is enhanced by the good faith provisions. The only communications which are prevented are those which would break the underlying good faith provisions of the law.

 employers will no longer face confusion about their responsibilities to staff in the event of a business sale or merger

 the liability of directors under the Minimum Wage Act and the Holidays Act is limited to those very rare situations in which they have directed or authorised underpayments and the company is insolvent. Proceedings can be actioned only by a Labour Inspector – not by a union or employee.

 confidential information is safe from competitors. In negotiations employers and unions can ask the other party for facts to back up claims. But if it's not relevant it doesn't have to be revealed. And, if the information is of a commercially sensitive nature, it may be revealed only to an independent, confidential third party – not the union.

The campaign against aspects of the bill by some organisations has ignored the single most important historical fact about it. This point has also been largely ignored by many supporters of the Bill.

For most of the last century – and in some matters longer – New Zealand's system of industrial relations was based on compulsory unionism, compulsory arbitration and national or wide-area awards imposed or endorsed by a court.

The Bill has not gone back to the days when compulsory unionism, national awards, and compulsory arbitration were the three legs on which the system stood.

Employers, while they must bargain in good faith, must in the end agree to any changes in working conditions. And employees must win their case on their own – and not through the imposition of conditions on unwilling employers.

It was the fourth Labour government which began the process of removing the national award and compulsory arbitration system. National abolished compulsory unionism. Criticism of the Bill based on the theory that it will take us back to the so-called "bad-old-days" usually recalls incidents from the "bad old days" which relate to one or the other legs of compulsory unionism, national awards, and compulsory arbitration.

The introduction of the Employment Relations Bill by a Labour Alliance government means, in my view, that these props of the old system are gone for good. They will not return.

Future historians will see the Employment Relations Bill as the final dividing point between the old world and the new.

The Labour Relations Act of the fourth Labour government and the Employment Contracts Act of National will be seen as left and right vacillations about what I believe will become the new consensus of business and management, unions and employees.

I believe the Employment Relations Bill, at its heart, contains the elements which will take employment relations in New Zealand forward for decades.

As the Bill itself says: [it] "is based on the understanding that employment is a human relationship involving issues of mutual trust, confidence and fair dealing, and is not simply a contractual, economic exchange. This basis requires specific recognition in any regulation of the relationship – something not satisfactorily achieved by general contract law.

"The overarching objective of the Employment Relations Bill is therefore to build productive employment relationships through the promotion of mutual trust and confidence in all aspects of the employment environment.

"In order to achieve this primary purpose, the Bill specifically

 recognises that employment relationships must be built on good faith behaviour; and
 acknowledges and addresses the inherent inequality of bargaining power in employment relationships; and
 promotes collective bargaining; and
 protects the integrity of individual choice; and
 promotes mediation as the primary problem-resolving mechanism; and
 reduces the need for judicial intervention".

The Employment Relations Act is the way of the future. It will work in practice for business. It will work in practice for employees. Managers and unions will find that the great fear which has afflicted workplaces since 1991 will be removed. Good employers need not fear the force of judicial intervention over minor matters. Good employees need not fear for the consequences of expressing their opinions and associating freely with other New Zealanders.

Good faith and the honest and open communication that is its consequence will improve productivity and confidence throughout New Zealand business.

ENDS

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