Expect unions to soon impact your business

While union membership has been declining for a few decades, the balance of power is shifting back to unions. If you are an employer, you should be interested in the proposed “Fair Pay Agreement” system which will likely soon pass into legislation.

The intent of the legislation is described by the Labour Government as a way to lift wages of those on low to medium incomes, to “level the playing field” and to make a fairer system for workers. The National Party describes it as imposing mandatory union deals on workplaces. Regardless of your position on the political spectrum, this legislation will have significant impacts across the entire New Zealand workforce.

Who will be covered?

Any occupation can be covered by a fair pay agreement – cleaners, bus drivers, accountants, personal trainers, lawyers – the list goes on. Similarly, entire industries can be covered – such as all butchers and bakers in the supermarket/grocery industry, or all pickers and packers in the horticulture industry.

Effectively, once a union (or unions) has 1000 members (or 10%) support from a particular industry/occupation, or passes a public interest test – it can commence bargaining on behalf of all workers in that sector. Employers will be represented by representatives in negotiations. No detail has yet been released about how employer representatives will be selected.

What will the terms of the agreement be?

This will be up to the union representatives and the employer representatives.

It will be mandatory to reach agreement on normal hours of work, the coverage of the agreement, base wage rates, overtime and penalty rates. Other matters are mandatory to discuss, but not agree – such as health and safety requirements, training and development arrangements, flexible working, leave entitlements or redundancy.

How will the agreement be made and what impact will it have?

The agreement will be negotiated between the parties, who will receive funding and support from the Government to assist them in the process. If the parties cannot reach agreement – the Employment Relations Authority will step in and can refer the parties to mediation or facilitated bargaining. If that is unsuccessful, a party can apply for the Authority to “fix” the agreement.  

Once the negotiating union/employer representatives have agreed, it must be approved by a simple majority of both employee and employer voters. The negotiated agreement will then be the minimum standard for all employees in that industry/occupation.  

When are these changes coming in?

At the time of writing, the Fair Pay Agreements Bill is going through Select Committee. Submissions are open until Thursday 19 May 2022. The system is expected to commence shortly after the Bill has passed, at the end of 2022. The Government has indicated that it will ultimately be expanded to include contractors, but full detail about this has not yet been released. In the meantime, there will be penalties of up to $20,000 for an employer who tries to hire an employee as a contractor to avoid having to meet the requirements of a fair pay agreement.

Costs in the Employment Relations Authority

A further strengthening of unions has quietly occurred within the Employment Relations Authority. Usually when parties are in dispute, the successful party can get a costs award from the unsuccessful party, to help pay some of the legal costs the successful party incurred. This is a general presumption that applies in all levels of our court system, although each court and tribunal keeps a discretion over whether an order is made.

However, a new Practice Note advises that parties can expect no costs award to be made in an employer/union dispute before the Authority.  This is a significant change as unions can now initiate claims without fear of having to meet a costs award if unsuccessful.

Employers will need to choose the better of two options – settlement or unrecoverable legal fees with a public Authority determination. Which would you choose?

If you would like more information about the proposed Fair Pay Agreements Bill or assistance with a union dispute, contact Nick Mason or Sarah Thompson at Pitt & Moore – (03) 548 8349 or nick.mason@pittandmoore.co.nz and sarah.thompson@pittandmoore.co.nz.

Disclaimer: The information contained in this publication is of a general nature and is not intended as legal advice. It is important that you seek legal advice that is specific to your circumstances.

Topics: All Select

Sarah Thompson

Position: Senior Solicitor
Email: Sarah.Thompson@pittandmoore.co.nz
DDI: +64 3 928 0723