Three years on from the last general election, the law on collective bargaining remains the main area of employment law highlighted for change in National's pre-2008 election manifesto.

Over the last two decades, collective bargaining has seen sweeping reform between National's "hands off" approach enshrined in the Employment Contracts Act 1991 (ECA), and Labour's prescriptive regulation in the Employment Relations Act 2000 (ERA).

Formerly, collective bargaining was of course shaped by the old awards system, whereby centrally negotiated occupational or industry awards had blanket coverage across all businesses.

The case for deregulation

On coming to power in 1990, National viewed the awards system as rigid and uncompromising. Government policy favoured permissive or general framework legislation over detailed prescription to accommodate an increasing diversity of employment relationships and arrangements.

Thus, the ECA was born, introducing a new framework for industrial relations. Its stated purpose was to promote an efficient labour market and provide for freedom of association and freedom of choice. National policy advocated voluntary unionism; flexible bargaining arrangements (or in other words freedom to negotiate collective or individual contracts); and free choice of representation. Under the ECA, employees were free to join, not join or leave a union; parties to an employment relationship could determine what type of employment contract they wanted and what should be in it; and employment contracts would only cover those parties who had specifically signed them. Collective agreements were predominantly enterprise based, which was a major change from the earlier awards system. Generally, the bargaining process itself was deregulated and strike/lock out action in pursuit of multi-employer collective agreements was prohibited (to deter unions from re-establishing industry-wide deals). Under this regime, industry/occupational bargaining virtually disappeared in the private sector.

Prescription rules

A decade later, a Labour-led Government introduced new regulation to promote collective bargaining as the preferred means of determining working conditions. It was Labour policy that a union's role as a vehicle for workers' collective memory was key to sustained collective bargaining. Thus, Labour's reforms (which replaced the ECA with the ERA), bolstered union recognition and power with monopoly rights to bargain collectively, and regulated bargaining behaviour.

Most notably in relation to collective bargaining, the ERA introduced:

  • Automatic coverage for union-member employees falling within the coverage clause of a collective agreement;
  • Good faith bargaining;
  • Improved rights for unions to access workplaces;
  • Constraints on employers when communicating directly with employees during bargaining;
  • Anti-strike breaking restrictions;
  • The right to strike in support of multi-employer collective agreements (as well as all other collective agreements);
  • A "head start" for unions when initiating bargaining (allowing unions to initiate 60 days before expiry of an existing collective agreement, while for employers the period is 40 days); and
  • Enforceability of a collective agreement for up to 12 months after the agreement's expiry date where bargaining has been initiated beforehand (under the ECA, enforceability of every collective agreement would end on expiry).

A second Labour term fostered further regulation in 2004 largely intended to increase the influence and power of unions, targeting "good faith bargaining", passing on collectively agreed terms and conditions and business restructuring.

The 2004 amendments to the ERA expanded "good faith bargaining" by requiring parties involved in bargaining to conclude a collective agreement, unless there was a genuine reason not to do so, and to continue to bargain about unresolved matters even if they had reached a deadlock about a particular matter. Further, the 2004 reforms empowered the Authority to facilitate difficult bargaining (on a party's referral); to make recommendations about the bargaining process and/or provisions that should be included in the collective agreement; and where there was a serious and sustained breach of the duty of good faith, to determine a collective agreement and fix its provisions.

In addition, "passing on" conditions agreed in collective bargaining to individual employment agreements was outlawed if done with the intention of undermining the collective agreement and having that effect. Further, new constraints were imposed on employers restructuring the business where the restructure involved "vulnerable workers", and generally requiring all employment agreements to contain an employment protection provision.

Where to next?

Under the current Government, we have seen the employment law pendulum swing somewhat away from the highly regulated framework which has been in place since 2004, most recently with the raft of changes that came into force in April this year. (See our February update.)

Last month, the Prime Minister signalled further law change afoot if the Government is re-elected in November. Collective bargaining is one area ripe for change. The potential for disruption on the collective front was evident last year in the dispute over terms and conditions of workers on "The Hobbit" set. It begs the question which (if any) of the current regulatory "shackles" the Government might seek to unwind? Under particular scrutiny are likely to be the changes to the ERA enacted in 2004.

In its pre-election manifesto, National's employment policy included removing the current union monopoly on collective bargaining, with new rights for workers to bargain collectively with their employer (and be part of a collective agreement) without having to belong to a union. In practice, for example, this could be by way of a workforce agreement, negotiated by elected employee representatives on behalf of participating employees with the employer.

Earlier this year, the Labour Party announced diametrically opposed plans for a future government to return to an awards-type structure based on concerns that the ERA had not delivered on its objectives for collective bargaining. Under the proposals, a rights based legal framework would afford all workers access to (and coverage by) a negotiated industry agreement by extending standard terms agreed between unions and certain employers to all workers in that industry should they want to access them.

Also on the topic of collective bargaining, this month, the Court of Appeal upheld the Employment Court's ruling that the effect of a negative ballot by members after 6 employers initiated bargaining for a multi-party collective agreement was that the employer-initiated bargaining could not continue (Unitec Institute of Technology and ors v Tertiary Education Union). The Court held that the ballot requirement in section 47 of the ERA was a precondition to the continuation of employer-initiated bargaining, and that the union's subsequent initiation of bargaining for separate collective agreements with each employer was proper.