Employment Relations Act to be repealed "Govt. gets an "F" for ERB"

National will repeal the Employment Relations Act and replace it with legislation that does not get in the way of small business and more jobs, National's Industrial Relations spokesperson Max Bradford said today.

"The select committee report on the Employment Relations Bill reveals only cosmetic changes. In effect only 8 out of 264 clauses have been altered.

"The Bill remains a radical and backward looking departure from the status quo. It goes against international trends in Europe, the Americas and Australia, where most countries are freeing up their labour markets.

"National has listened carefully to the thousands of submissions and will replace the Act with legislation that brings our employment law back in line with what is happening internationally and what is needed to create jobs and promote growth.

"National has won good changes to the independent contractor and fixed term contract provisions - but it took a fight to get them.

"We've marked the changes to the Bill out of 100 and the Government's only scored 20 out of 100. That's 20% and an "F" for failure.

"The Government failed the test with the Employment Relations Bill first time around. It gave itself a second chance in May when howls of opposition when the impact of the Bill set in. They have failed to make the grade.

"The Government has set up the country's biggest monopoly with this Bill. Unions will have greater monopoly powers than Telecom or the electricity companies.

"The Government tried to placate employers and employees with the promise of change. It has not listened and the Bill still makes it harder to do business."

Score-card attached. National's minority report from select committee available at www.dinosaur.org.nz

Employment Relations Bill Analysis of Changes made by Government

In May National highlighted 25 bottom-line changes needed to the ERB to minimise the negative effects of the Bill on the cost of doing business, on jobs, on choice for employees and harmonious industrial relations.

To give a clear picture of the significance of the Government's changes, each has been given a score out of four - to give a total score out of 100.

0 = nothing has changed to meet concern 1 = minimal change 2 = partial change but still major problems 3 = significant change but does not go far enough 4 = change agreed to

Our Score The 25 bottom-line changes

1. Independent Contractors: The current provisions are too far-reaching.

Clause 154 and Clause 6 (2) must be dropped to ensure current employment arrangements are safeguarded.

3 out of 4 The new Clause 6 now prevents contractors being made employees against their will. But it still has significant risks for employers as it allows contractors to turn around and seek a status change, plus it still downplays the actual agreement entered into at the time. Employers don't have much say on who their employees are, and who they can contact: the people they employ or contact have the real say along with the Employment Court.

2. Fixed Term Contracts: Allow fixed term contracts as provided for in the HAGG Court of Appeal decisions

3 out of 4 Gets close to the HAGG decision status quo but removes ability to have fixed term contract to test employee suitability. The clause is loose enough that increased litigation is possible if people dispute what "genuine reasons" are for having a fixed term contract.

3. Directors' Liability: Drop Clause 245 and instead toughen up Wages Protection Act and Commerce Act. ("sweatshops" adequately covered under the ECA, Minimum Wages Act and Holidays Act)

1.5 out of 4 Minimal change - the limited liability protection of a company is still removed and if a company goes insolvent with staff owed holiday pay, officers, directors and agents can still be held personally liable if they knowingly withhold payment.

4. Direct Communication with Staff: Remove constraints on employers talking to staff at any time.

1 out of 4 The changes do remove the direct ban on "communication with employees" but there are significant indirect barriers as employers can't "undermine the authority of the other party". It's possible simply telling the truth about what happens at negotiations could be challenged as a breach of Clause 33(1)(d)(ii) - the good faith bargaining provision.

5. Information Disclosure: The provisions must be constrained and limited only to bargaining. The Bill must specify the appointment of an expert third party to respond to requests for information from union officials. Provision needed to require unions to provide information about membership and financial status.

1.5 out of 4 Still carries the risk of confidential business information being disclosed to unions. The decision will be made by an "independent third party". Does not solve problem of stock exchange requirements (insider trading laws) and no effective penalties for breach of confidentiality which may be impossible to prove.

6. Good Faith Bargaining: Needs to be defined in legislation to ensure consistency and to avoid Bill's current reliance on negotiated codes between workplaces.

0 out of 4 Still no clarity at all in this area. Case law will take years to develop any certainty in this area during which time much litigation could be undertaken. In the meantime, everyone will have to walk on eggshells.

7. Employment Related Education Leave: Remove provision for employers to fund leave. Government should establish a central fund for unions and firms to tap into, or it should be paid for out of union levies.

0 out of 4 No change, other than one technical clarification of who qualifies. Adds to the cost of doing business and employing people.

8. Personal Grievances: Remove provision that reinstatement is the primary remedy. It is unworkable and impractical.

0 out of 4 No change. Reinstatement of a hostile employee into a workplace can have hugely damaging effects on small business especially, and is now the primary remedy.

9. Collective Agreements: Allow non-union members to negotiate enforceable collective agreements without having to join the union.

0 out of 4 No change at all - unions still have a monopoly on collective agreements, which are treated preferentially under law. Contrasts with Australia where non-union collective agreements are now possible

10. Choice of Representative: Reinstate Clause 11 from ECA giving employees right to ban serious criminals from acting as their bargaining agent.

0 out of 4 No change.

11. Multi-employer Bargaining: Clause 53 should be dropped unless multi-employer bargaining is agreed to between parties, as it is now.

0 out of 4 No change. The combination of the power to strike for a multi employer agreement, and the "scab" provision in Clause 111 and the inability to bring in outside labour to resist a strike will force many employers into such agreements.

12. Union Entry to Workplaces: Constrain proposed far-reaching right of access to workplace. No right of access for recruitment. Recruitment should be undertaken outside business hours.

1 out of 4 Clarifies that private homes may not be entered but otherwise no significant change. Unions will still be able access the workplace to recruit etc. A significant 'power-to-pester' right for union officials.

13. Continuity of Employment: Remove Clause 66. Unheard of in other jurisdictions. Redundancy provisions should be part of contract negotiations.

1 out of 4 Removes clause which says employers must guarantee employment for term of collective + 12 months but inserts into Clause 65 new requirements which will hamper a being able to sell or transfer a business. This may make it more economic to close down than sell, thus destroying the value of goodwill.

14. Remove Prescriptive Process: The Bill is littered with inflexibility and prescription. These should be removed to allow employers, employees and unions to determine their own collective bargaining processes which are appropriate for their circumstances.

1 out of 4 At best some minor changes, but the Bill is still very prescriptive. 15. Bargaining Provisions for Collective Agreements: Current provisions open door for increased litigation and costs.

0 out of 4 There will still be a lot of litigation as people seek to determine what good faith is. No changes have been made to lessen this.

16. Individual Agreements: Remove onerous conditions on those moving from a collective to an individual agreement.

0 out of 4 No change to these provisions. "Unfair bargaining' will be a legal minefield for employers.

17. Strikes: Remove the prohibition on the use of employees during strikes and the constraints covering the use of outside workers during strike action.

Explicitly prohibit strike action for economic and social reasons.

0 out of 4 No change. Strikes will become more common, but never mind, the Government has appointed 43 mediators - that's treble the current number - to help mop up the mess.

18. Union Coverage: Remove potential for demarcation disputes through over-lapping coverage.

0 out of 4 No change. Unions can have over-lapping coverage clauses and employers may have to deal with dozens of unions all wanting site access, all wanting different contracts etc.

19. Union Monopoly: Include provision for unions to be subjected to the Commerce Act.

0 out of 4 Not added in.

20.Union Size: Increase minimum size of union to ten.

3 out of 4 Minimum size 15. Greater than the average number of employees in SMEs (small and medium enterprises) in New Zealand so SMEs will look elsewhere to recruit other members.

21. Ballot Provisions: Tighten up the ratification and multi-employer provisions. Ensure secret ballot and that all workers affected are balloted.

0 out of 4 Only change is that employers are notified of ratification process. If anything, the accountability of unions has been reduced by the changes

22. Penalties: Specify penalties for breaches and misdemeanours under the Employment Relations Act.

0 out of 4 Little change has been made so initial cases before the employment institutions will have huge uncertainty surrounding them.

23. Employment Relations Authority: Remove the new structure. It will promote more litigation. Retain the status quo, make the Employment Court a division of the District Court and ensure the Employment Tribunal is properly resourced.

0.5 out of 4 Still substantial problems in this area with no significant change. ERA is subject to "natural justice" rules. The Authority will have some powers normally reserved for the High Court yet will be made up of people who do not need legal training.

24. Mediation Service: Must be independent of Labour Department and independent of Government influence.

2.5 out of 4 Independence to be emphasised but conflicts of interest with Labour Inspectors not resolved.

25. Other Legislation: Amend to ensure Bill is consistent with the Commerce Act and Stock Exchange listing requirements.

1 out of 4 The changes to Clause 33 still allow for a third party to have information which has not been disclosed to NZSE, and could qualify as insider trading.

TOTAL SCORE

= 20/100 = 20% = "F" = Failure to Listen to Business

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