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Act should give equality of bargaining power

Finsec media release
Thursday, March 04, 2004
For immediate release

Act should give equality of bargaining power

"We want to see changes to the Employment Relations Act 2000 which would strengthen its key objectives," said Andrew Casidy, General Secretary of the bank workers' union, Finsec.

"The objectives are to acknowledge and address the inherent inequality of bargaining power in employment relationships and the objective, without which the first cannot be achieved, to promote collective bargaining.

"Our evidence is that the Act has made insufficient progress in meeting these objectives and that change is needed.

"The debate, we believe, should not be about what is good for employers, but whether the Act creates a better and fairer balance of rights and obligations for both employers and employees.

"Our employers are still able unfairly to pressure workers not to enter collective agreements. In our experience individual bargaining does not usually take place - most workers, whether on individual agreements or no agreements, get a take it or leave it offer and in the long term they fall way behind their colleagues on collective agreements.

"We see many weaknesses in the current act which allow employers to behave unfairly and in bad faith - for instance to prevaricate endlessly about reaching an agreement or to become unfairly litigious or to undermine the collective agreement in other ways.

"We are tired of hearing from employers that the Act is bad for them. Firstly there is no evidence to suggest that this is true. Secondly the Act must provide fair and good outcomes for all parties to the employment relationship - and this includes the community."


The Finance and Information Union



Finsec Incorporated

on the

Employment Relations
Law Reform Bill

PO Box 27 355

Tel: 04 385 7723

Submission to:

The Transport and Industrial Relations Select Committee

On the Employment Relations Law Reform Bill

12th February 2004

1. Finsec is a union of 8,500 members in the finance and information sector.

2. Finsec members negotiate around 35 collective employment agreements every year. It is important to note that nearly all employers 'pass on' the outcome of this collective bargaining to non–union members.

3. We support the NZ Council of Trade Unions’ submission on the Bill and will limit our comments to the issues of particular importance to members in our sector and a couple of more general points.

4. Two key objectives of the Employment Relations Act 2000 are to acknowledge and address the inherent inequality of bargaining power in employment relationships and to promote collective bargaining. There is evidence that the Act has made insufficient progress in meeting these objectives and that change is needed.

5. Clause 6 – Advice

We support this change but believe the proposed wording does not go far enough.

We frequently hear from members that managers seek to influence them not to be covered by a collective agreement or not to join the union.

An example of this is the National Bank manager who held up a collective and an individual agreement at a staff meeting, saying “this one costs $10.50 per fortnight” and "this one" (the individual agreement with almost identical terms and conditions) “is free”.

Experiences like this show that what is implied is often more significant than what is said. We propose that the wording in the Bill be changed from “to advise an employee not to” to “to seek to influence an employee not to”.

6. Clause 9 – Access to workplaces

We support the clarity the proposed changes would give to employers and employees. However, we are concerned that the language refers only to discussions “between an employee and a representative of the union”.

By applying to a single employee, this clause denies groups of members the right to talk to their union representative. It is an inherent part of working collectively that Unions seek to get a ‘common voice’ or a ‘common view’ from members. This is our main value to employers and is what gives us the ability to play a constructive role in maintaining harmonious relations in the workplace.

Accordingly, we propose that the wording in the Bill be changed to “between an employee or employees and a representative or representatives…”

7. Clause 10 – Requirement to conclude

We support the principle of this clause but are concerned that it opens the industrial process to intense legal action as employers seek interpretations favourable to them.

We are concerned that some courts will be prepared to interpret the phrase "genuine reason" in a strict legal context rather than an employment relationship one. A view may result that so long as an employer genuinely believed his own rhetoric then his reason is genuine.

In our opinion the wording needs amendment to ensure that an acceptable reason not to conclude a collective agreement is objectively significant and real and acknowledges the inherent inequality of bargaining power between the parties.

We propose the Bill be amended as follow:

(aa) “to provide that the duty of good faith in section 4 requires parties bargaining for a collective agreement to conclude a collective agreement unless there is an objective and significant reason not to.“

There would be a need for consequential amendments to clause 12 of the Bill.

8. Clause 15 – Grounds on which Authority may accept reference (facilitation)

There is a case to be made for new collective agreement bargaining provisions to be strengthened. In three years of trying to bargain collectively for members without coverage we have come across major corporate entities who refuse to conclude a collective agreement because they do not want to, or who bargain indefinitely because it means never having to agree.

For example, we have tried for two years to negotiate a collective agreement with the ANZ Bank for ‘higher level’ employees – staff who are slightly more senior in terms of salary and conditions than others covered by the ANZ collective agreement.

We have had many meetings, attended several mediations and finally offered to collectivise the employees' current terms and conditions. The bank has put up stony resistance, saying that they do not believe a collective agreement is the appropriate basis for the employment relationship with this group. We do not believe this is a 'genuine reason' not to conclude an agreement and we think the further step of facilitation should be available.

This would provide an incentive to act reasonably and in good faith. It reinforces the need to try to reach a conclusion. It gives the parties a cheap, speedy and easily accessed option to pursue should mediation fail and the outcome of a facilitation (should this not be a settlement agreement) may allow parties to reconsider their positions.

We propose the Bill be amended to provide specific grounds for facilitation in bargaining for a new collective agreement where;

i) bargaining has been unduly protracted or
ii) extensive efforts (including mediation) have failed to resolve the difficulties that have precluded the parties from entering a collective agreement

9. Clause 15 – Grounds on which the authority may accept reference (determination)

We support the proposals but believe the threshold for referral for determination is too high. The Bill proposes that determination can occur if there has been a "serious and sustained" breach of the duty of good faith that has “significantly undermined the bargaining”.

We question whether a breach has to be “sustained” to significantly undermine bargaining and therefore warrant determination. A single event could irrevocably undermine bargaining e.g. an employer offers a financial incentive to employees to resign from the union and withdraw from collective bargaining. As drafted, such an action would not warrant determination because it occurred only once.

We submit that the wording ought to be changed from “serious and sustained” to “serious or sustained”.

10. Clause 16 – Ratification of Collective Agreement

This effectively gives unions an ability to ratify a collective agreement on behalf of members without the members themselves taking part in a ratification ballot.

We do not support this proposal for three reasons:

a) Members are the union and it is their right to make this decision.

b) Bargaining, and the satisfactory conclusion of it, are complex matters about which it is often not easy to make judgement calls. This clause could put the principals to bargaining in a 'no win' position with either the employer or union members, which would not promote harmonious industrial relations.

c) Employers must know that it is union members, not union officials, who must find what the employer offers acceptable.

11. Clause 19 – Breach of duty of good faith to pass on in individual employment agreement terms and conditions agreed in collective bargaining or in collective agreement

We support this proposal. All large employers in our sector pass on the outcome of Finsec member’s bargaining efforts. The Bank of New Zealand has gone so far as to write to staff on individual agreements telling them that this will happen!

Our members see this as inherently unfair. It forces them to bargain on behalf of all staff when they meet their employer, not just union members, and places limitations on their ability to bargain. Employers say, “If we give it to you, we have to give it to everyone”. It also allows those on individual agreements to get the benefits of collective bargaining when they choose not to contribute their ideas, industrial strength and money to the collective bargaining process.

Most employers argue that they do this to ensure that that no one is discriminated against because of their lack of union membership. We believe the real reason is to minimise the benefits of belonging to a union.

The benefits of collective bargaining are real. In sixteen years as a union official I have never met an employee (whose work would be covered by a collective agreement) who has been able to achieve anything other than minor differences through individual bargaining. Firstly, employers would not allow it. Secondly, individual bargaining does not take place. They get a take it or leave it offer.

We are concerned that the wording imposes a hurdle to proving a breach of good faith that is simply to high. In order to successfully argue a breach both the intent to undermine the collective agreement and actual undermining of it must be proven. This creates the absurd situation where an employer, who seeks to undermine the collective agreement but fails to do so, is not guilty of a breach. Conversely, an employer who succeeds in undermining the collective agreement but did not intend to would also not have breached the Act.

We see no reason for linking the two grounds and submit that the wording should be amended to provide for a breach on either basis.

We further submit that the Bill ought to be amended to provide a third basis on which pass on would be illegal. That is where the action of the employer would be “likely to undermine the collective agreement”. This has two key attractions:

a) It would be consistent with section 32 (1) (d) (iii) of the Employment Relations Act which requires that the parties not do anything that is likely to undermine the bargaining.

b) It would ensure that a proposed action could be tested before it takes place thereby providing the opportunity to avoid the damage done by any undermining of the agreement.

Both of which are consistent with the objects of the Act.

12. Clause 30 – Continuity of employment if employer’s business restructured

This is not a critical issue for most Finsec members as the majority of our collective agreements already have comprehensive terms and conditions to cover this situation.

However we recognise the importance of it to workers in other sectors as many of our members have friends and family, particularly young family members, whose are exposed to such situations.

It is a basic issue of fairness that the law does not allow employees to be treated as ‘just another chattel’ to be disposed of as the business sees fit. It is important to note that employers would not be required to take on staff they do not need and so they retain their right to determine the structure of their business.

It would provide either that an employee transfers with the same terms and conditions of employment or, if there is no role for them after restructuring, that they have a right to redundancy compensation.

This balances the needs of the business against the needs of the employee, guarantees that employees who transfer will not be disadvantaged and offers compensation for the job loss and its socioeconomic consequences. This is only fair.

We believe all employees should have the protection of subpart 1 of the Bill regardless of ‘category’. In the alternative, the Bill should be amended to make it easier for groups of employees to fall within the coverage of subpart 1. The criteria used need to be expanded to focus, not on the work done by the employee, but on their level of vulnerability and the imbalance of power in the employment relationship.

For example, an employee working for a telecommunications contractor may well have good terms and conditions of employment. However, the longevity of that employment is constantly in question because of the behaviour of the contracting company in repeatedly calling for new tenders for the same work.

13. Clause 35 – Codes of employment practice
We support the ability for codes of practice to be agreed between employers and unions, but are concerned that they are not forced upon unwilling unions or employers.

This would be inconsistent with the Act which currently takes a light–handed approach to regulating both the content of agreements and the basis of employment relationships.

Where the parties are unwilling, a code is likely to create hurdles to developing good relationships and practices.

Further, there is the issue of whether it is appropriate for Ministers of the Crown to be able to regulate the detail of relationships between employers and unions at anything other than a macro level.

We propose that the Bill be amended to allow the Minister to gazette codes of employment practice as agreed between specified parties only.

14. Clause 35 – Codes of employment practices relating to the health sector

In our view it is inappropriate for a Minister to have an ability to be involved in such matters at a micro level. As well, a significant conflict of interest exists in this clause because the highest representative of the Crown in the sector (the employer) is charged with gazetting the code.

We reject the argument that this is justified because of the public interest issues that could arise. Experience shows that health care unions take a responsible approach in such circumstances.

We also submit that as the health sector is classified as an ‘essential industry’ there is time available to the parties to ensure such concerns are dealt with.

Finally, we are worried at the precedent this might set for other sectors, as it is easy to find a public interest issue in any industrial dispute.

We propose the removal of the proposed new clause 100(d) from the Bill.

15. Clause 37 – Test of justification

We support the proposed changes but submit that clause 103 (A) (2) is not necessary. We are concerned that the clause is too focused on the process an employer must go through in objectively considering their actions. Employers ought to consider what a reasonable and fair action is in the circumstances of that case and not just balance the employee’s interests with their own.

16. Part 2 – Equal Pay

We do not support the repeal of the existing Acts for the following reasons:

a) There has been no consultation about such a move, or prior notice that this issue was even being considered as part of the ERA review.

b) Repeal would leave no legislative references to equal pay for work of equal value.

c) While we acknowledge the debate about whether the existing legislative regime provides for taking a case on this matter, the message sent by removing any reference to equal pay for work of equal value diminishes the importance of the issue.

17. Variations Provisions

Though the Bill does not address this matter it is an area that needs some comment.

Most employers in the sector have sought our agreement to variation procedures that allow groups of employees covered by an existing collective agreement to vary that agreement as it applies to them without all other employees covered by that agreement being entitled to participate in the ratification procedure.

Only last month TSB Bank (with assistance from the Employer’s and Manufacturer’s Association) pursued proposals for such a clause in negotiations with Finsec members.

This procedure would allow the creation of a new type of collective agreement that applies to some and not others.

During the tenure of the Employment Contracts Act 1991 such actions were legal and we saw many employers in our sector behave in this manner. The worst was WestpacTrust in whose agreement was a provision requiring any employee relieving in a higher graded position for more than 80 working days to be permanently promoted to that higher grade.

In almost every instance where the employer foresaw this occurring (including parental leave situations) the employee was offered the role (and the additional income that came with it) provided they varied the collective agreement and gave away their entitlement to a permanent promotion.

This illustrates the ease with which an employer can undermine the collective agreement and render deals made at the bargaining table irrelevant.

We believe the Bill should be amended to make it clear that such a variation procedures are illegal.

18. Finsec wishes to appear before the Select Committee to speak to this Bill.


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