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Employment Bill ripe for unintended consequences

Employment Bill ripe for unintended consequences

Tuesday, September 14th, 2004

Employment Bill ripe for court interpretation, 'unintended consequences' and legal fees blow out

Despite the positive spin emanating from Government and the Council of Trade Unions, the Employment Relations Law Reform Bill, will have 'unintended consequences' worse than the Holidays Act, the Employers & Manufacturers Association (Northern) says.

The Holidays Act was so poorly drafted it is being rewritten only months after becoming law.

"No one has answered the simple question why the Employment Relations Act 2000 needed the major overhaul represented by the Employment Relations Law Reform Bill," said Peter Tritt, Manager of EMA Advice.

"The changes being made under the ERLRB are even more significant than those made by the 2000 Act.

"Everyone knows the changes are designed to promote unions, to overcome the fact that employees freely choose not to join them.

"The bill will add 79 pages to a law already 191 pages long, another example of how the Government's is intent on adding legal complexity as it did with the Holidays Act.

"The bill's principal beneficiaries are the unions, the political parties funded by their subscriptions, and lawyers and judges who will make a feast of the vague and ill-defined wording in the law.

"The biggest loser is the concept of fairness and balance in employment law between employers and employees.

"With the bill the pendulum has swung too far in favour of unions and will need redressing through future law changes.

"The bill's main concerns for employers are:
* Vague and ill-defined definitions of good faith which will encourage judicial activism as judges set about establishing yet another definition of "good faith". This can only increase uncertainty. Employers can't know what "good faith" means until the term is interpreted by a court but then they could become liable for $10,000 fines for breaching it!

* The law takes good faith bargaining farther than in its birthplace - Canada and the USA - by requiring employers to have a genuine reason based on reasonable grounds to avoid a collective agreement. Again the judicial system will have to sort out what this means, and whether employers have reasonable grounds.

* Stating a simple truth, for example, that a multi-employer collective agreement holds no benefit for an employer, will probably be against the law, because by law collectives are deemed to be good.

* In yet a further departure from the successful North American practice, a state authority will be able to fix the terms of a collective agreement should it find the employer has breached good faith. Yet good faith bargaining is meant to be a process not an outcome, and the role of the state should not extend to determining the outcome from free bargaining between employers and employees.

* The threshold for proving a breach of the law's nonsensical passing on provisions has been lowered. Even more employers will be ensnared by substituting the word "and" with "or", which would make it easy for a union to prove the effect of undermining a union though an employer had no intention to do so.

* The proposed, and still secret, provisions permitting bargaining
agents' fees will intimidate reluctant employees into joining a

* Individuals' freedom of association - their right to belong or not
belong to a union - is under full frontal attack.

* Probationary arrangements are facing tougher prescriptive rules at a time when many small employers have difficulty complying with the complexity of the existing rules. New Zealand needs to join other comparable countries in allowing for grievance-free employment periods.

* Continuity of employment rules will take New Zealand down the
failed, heavily-regulated European path at a time when many
over-regulated European countries are moving in the opposite
direction to alleviate the damage that heavy regulation has
done their economies in terms of low growth and high

* Yet another new test for justifying a dismissal will require judicial interpretation and increase uncertainty while providing grist to the mill for judicially active judges.

"If anything, personal grievance law has lost balance, in favour of
employees, and needs redressing towards employers. This is the
message from the lone voice of Small Business minister John
Tamihere and his own Small Business Advisory Group, whose report
it seems counts for nothing in the bill."


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