A carefully drafted bargaining process agreement (BPA) can assist parties to work through difficult situations in collective bargaining, with minimum disruption to the workforce and the business.

Earlier this month, the Employment Court ruled that union members could not begin strike action without first attempting to settle new terms in mediation in accordance with a provision of the parties' BPA (NZ Professional Firefighters Union v NZ Fire Service Commission).

The statutory duty of good faith in bargaining requires parties to use their best endeavours to enter into a BPA as soon as possible after initiation of bargaining. A BPA for this purpose is described as an arrangement that sets out a process for conducting bargaining in an effective and efficient manner. The object is to encourage parties to contemplate potential issues and obstacles before they arise and agree on a process to address them.

The above decision highlights the significance of BPAs and the importance of including in a BPA appropriate provisions to protect the employer's position, even if this involves a process of negotiation with the union(s).

BPA provisions for employers

Practical day-to-day issues commonly addressed in BPAs include the identities of negotiating teams and advocates, proposed frequency and venue of meetings, payment for employees attending, the negotiation process and authority to reach agreement. Further, a union can satisfy its statutory obligation to notify other parties of the procedure for ratification of a collective agreement by its member employees, by including a provision specifying the ratification procedure in a BPA.

Prudent employers will also want to consider providing for other potentially controversial aspects of bargaining, including:

  • The right to communicate directly with employees subject to the obligations of good faith bargaining. Such communications should be limited to factual issues, for example, regarding an offer or claims, and/or explanation as to why an offer or claim is reasonable (expressing an opinion reasonably held);
  • Provision of information and associated costs in accordance with section 34 of the Employment Relations Act 2000 (ERA), which regulates the process for exchanging requests for information. Further, it is important that all information exchanged during bargaining is treated as confidential and not disclosed to anyone outside of bargaining (in accordance with section 34(7)).
  • Requirement for the union(s) to take any offers to their members, and an obligation on the union(s) to support any settlement reached in bargaining when presenting it to members;
  • Provision for passing on terms and conditions negotiated in a collective agreement to individual employment agreements or other collective agreements with the union's agreement. Passing on in the absence of the union's agreement could amount to a breach of good faith;
  • The process for resolving a dispute or impasse in bargaining, including a requirement to attend mediation to resolve any outstanding issues prior to giving notice of, or taking, industrial action;
  • Nothing is agreed until everything is agreed;
  • The process for concluding bargaining, including the identity of the party responsible for drafting an agreement from agreed terms of settlement, and a requirement that the collective agreement itself (rather than terms of settlement) must be taken to members for ratification;
  • Agreement to adhere to the terms of the BPA.
  • If parties to collective bargaining fail to agree on the terms of a BPA, they must continue to bargain in good faith and endeavour to ensure that bargaining is effective and efficient in accordance with the provisions of Part 5 of the ERA and Code of Good Faith in Collective Bargaining.

No strike action before mediation – the facts of the FSC case

The BPA agreed between the Firefighters Union and Commission included a clause requiring the parties, in the event that bargaining ceased to make progress, to attend mediation prior to giving notice of (or taking) industrial action.

However, when the parties failed to reach agreement, the union issued notices of intended strike action without first undertaking mediation.

The Court held that as a matter of good faith the union should be held to the process to which it had agreed in the BPA. The Court left open the question of whether the BPA in this case was a legally enforceable "agreement" or simply an "arrangement" as it was not required to determine the issue in this case. However, the Court commented that in principle a BPA could amount to a legally binding contract.

Turning to the specific mediation provision in the BPA, the Court ruled that the parties were required both to attend mediation and make genuine attempts to settle their differences before giving notice of intended strike action. On this basis, the union's strike notices were in breach of the BPA, and could not be acted upon. The Court issued a compliance order requiring the union to attend mediation before issuing any further notices of strike action.