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Employment Relations Law Reform Bill - 1st Reading

Employment Relations Law Reform Bill

Hon Margaret Wilson, Minister of Labour
11 December 2003

Mr Speaker, I move that the Employment Relations Law Reform Bill now be read a first time. I propose that this Bill be referred to the Transport and Industrial Relations Committee, with an instruction that the Committee present its final report within six months.

Mr Speaker, as promised, this Government has reviewed the Employment Relations Act. The review showed the Act is working well, but could be improved. This Bill addresses those areas where the Act can be strengthened to better achieve its key objectives of promoting good faith, collective bargaining and the effective resolution of employment relationship problems.

The Bill also provides protective measures for employees affected by the sale, transfer or contracting out of businesses. Finally, it updates equal pay legislation to reflect the changes made to the employment relations framework.

Good faith

Mr Speaker, the review of the Act showed uncertainty exists over the good faith obligation and when and how it applies. The lack of penalties for breaches of good faith also encourages some parties to flout their good faith obligations.

The Bill clarifies that good faith is a broader concept than the common law obligations of mutual trust and confidence, and that addressing the inherent inequality of power in employment relationships goes beyond focusing on bargaining power alone. It confirms good faith applies to individual bargaining situations, and that there must be genuine negotiations over individual employment agreements.

Stronger incentives for parties to act in good faith are provided by the introduction of penalties for serious and sustained breaches of good faith.

Collective bargaining

Mr Speaker, the legislative incentives for settlement of collective agreements have been relatively weak, and unions have faced significant practical barriers in organising employees collectively. The Bill seeks to reduce these barriers while still preserving the freedom of individual choice.

The Bill also directly addresses the issue of "free riding" – the practice of employers automatically passing on collectively bargained terms and conditions to employees employed on individual agreements.

The test will be whether an employer intended to, and did, undermine the collective bargaining process or outcome. If so, it will be a breach of good faith for the employer to pass on the same or similar terms and conditions as those in a collective agreement, either being bargained for or settled.

The emphasis will be on the bargaining process, both individual and collective, used by the parties rather than the outcome. Unions and employers will not be prevented from agreeing that collective terms and conditions may be passed on to employees employed on individual agreements.

The Bill provides a new form of assistance to overcome impasses in collective bargaining and facilitate settlement wherever possible.

It also makes explicit the principle that collective bargaining should result in a collective agreement unless there is a genuine reason why it should not.

The Bill will also facilitate the settlement of multi-employer and multi-union collective agreements. Other unions and employers will be able to easily join an existing collective agreement where the original agreement allows this to occur.

Effective resolution of employment relationship problems

There has been some uncertainty about the interaction between the personal grievance provisions in the Employment Relations Act and the intent of the Act to balance issues of fairness to both employers and employees.

The Bill makes it clear an employer must consider and balance the legitimate interests of both the employer and the employee in deciding whether a dismissal or other action is justified, and the action and how it was done must be fair and reasonable to both parties in all the circumstances. This is not a radical revamp of dismissal law. It draws from existing case law and fits well with good human resource practice.

The Bill also strengthens the mediation and Employment Relations Authority processes.

Change of employer situations

Under the Bill, special protection will be given to specific groups of employees who are particularly vulnerable in change of employer situations and lack effective bargaining power, such as cleaners and food service employees. These employees will have the right to choose to transfer to the new employer on their current terms and conditions of employment.

Other employees will also be given protection through a requirement for their employment agreements to contain an “employee protection provision”. These provisions will describe what steps the employer will take to protect employees affected by a sale, transfer or initial contracting out of business.

Equal Pay

The Bill also introduces a new Equal Pay Act to replace the Government Service Equal Pay Act 1960 and the Equal Pay Act 1972. The new Act will update the law on equal pay and cover both government and private sector employees.


Mr Speaker, this Bill introduces a good balance of practical and realistic measures that will strengthen the Employment Relations Act and further promote productive employment relationships and practices.

I commend this Bill to the House.


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