Hon. Margaret Wilson
Tuesday, 8 August 2000 Speech Notes

2nd reading speech notes Employment Relations Bill
Mr Speaker, I move that the Employment Relations Bill be now read a second time.

I welcome the return of this Bill to the house because it marks one step closer to returning fairness justice and productivity to New Zealand workplaces.

Mr Speaker, I want to thank the Select Committee for the hard and meticulous work that they did on this Bill. I note that the Select Committee process on the Employment Relations Bill has been considerably more robust than that which accompanied the Employment Contracts legislation when that was passed through this House in 1991. That legislation was introduced just prior to Christmas, and the Select Committee effectively spent only two months considering the Bill.

This Select Committee has spent a full five months hearing and considering 2305 substantive submissions and hearing 391 oral submissions. 133 hours were spent hearing evidence and 36 hours were spent considering evidence. This Bill has been subject to the scrutiny of unions and employers, employees, industry associations, and all those interested. Changes have been recommended by the Select Committee as part of the normal processes of Government, and those processes have improved the Bill.

Of course it may be argued that it may have been improved further if the opposition was interested in promoting the economic well-being of New Zealand business instead of indulging in the politics of fear and anxiety and relying on an information campaign based on ideological cant instead of informed debate.

Mr Speaker, the Employment Relations Bill is a significant step into the future for New Zealand workplaces. The Bill is the first major legislative change to put effect to the Government’s policy programme to deliver a high skill, high-wage economy to the people of New Zealand.

This Bill will restore the balance in industrial relations which has been missing in the last ten years. The National Party’s Employment Contracts Act was not a balanced piece of legislation. It treated the employment relationship as nothing more than a commercial contract, ignoring the workplace reality that employers and employees are people. They must be able to work together and deal with each other with mutual trust and respect. That is what the Employment Relations Act will encourage.

The Employment Contracts Act did nothing for New Zealand’s economy. In the National Party minority report on this Bill, the most extraordinary statement is made that the only way to get higher productivity growth is at the expense of job growth. That demonstrates the National Party’s approach to the labour market – that the growth of casualised employment delivering low wages was more important than increasing our nation’s wealth. And that is what the Employment Contracts Act was associated with – stagnating productivity growth throughout the 1990s, casualised employment, and low wage growth for all but the wealthiest households.

This legislation, along with other policies being put in place by this Government, will reverse these trends.

The fundamental premise underlying the Employment Relations Bill is that the employment relationship is a human relationship, not just a contractual, or economic one. Human relationships that function well and efficiently are based on mutual trust, confidence and fair dealing. That requires that the relationship is based on a reasonable equality between the parties. Employment relationships inherently lack that equality, unless the employee has particular skills that are scarce in the labour market.

The Employment Relations Bill encourages employers, managers, unions and employees to deal with each other in good faith. While a specific statutory requirement for good faith is new, a number of employers and unions already put this into practice in their dealings with each other.

Some employers who have actually read the Bill, and who have started to prepare for the implementation of the legislation have now come to the realisation that their human resource practices are already in line with the policy intent of the Bill. These are employers who recognise the gains that can be made at the workplace by working co-operatively with unions who represent their employees, entering into genuine negotiations, and treating their employees fairly.

There have been, of course, complaints about provisions of the Bill by other employer groups who purport to be representing their members. Many of these relate to constraints perceived by employers on their ability to run their businesses. The Government and the Select Committee carefully considered these submissions, and have substantially addressed areas of practical concern, while maintaining the policy of the Bill intact.

Mr Speaker, I would now like to address the changes made to the Bill in the Select Committee.

The fundamental requirement for good faith is established in Part 1. Good faith is required between all parties to an employment relationship - that is, employees, employers and unions - both in their day to day relationships and in collective bargaining. The legislation sets out the basic requirement that is required in any good faith relationship: that the parties do not mislead each other. The Select Committee has recommended some minor changes to reflect the broad application of good faith.

Part 2 contains the interpretation of terms in the Bill. The Select Committee has recommended a number of technical amendments to clarify the policy intent of the Bill. Two particular changes have been included. Firstly, the definition of working day, which was widely misinterpreted, has been deleted.

More significantly, the definition of “employee” has been amended. The Bill now requires the Courts, in determining whether an individual is an employee or an independent contractor, to consider the nature of the relationship between an individual and the person for whom they are performing work. Any statement that the parties make to describe their relationship will be taken into account, but will not determine the true nature of that relationship. In addition, actions in the Court for determinations as to the nature of the relationship will be required to be taken by named individuals, rather than class actions that were previously included in the Bill.

In addition, the Select Committee has responded to submissions of a variety of individuals who were concerned that the Bill changed their status from an independent contractor to that of employee. The Bill now expressly excludes volunteers, Real Estate Agents and sharemilkers.

Changes have also been made within Part 4 of the Bill that deals with the recognition and operation of unions. Many of these changes simplify the provisions for union registration, as they replicated many of the requirements that unions will need to meet under the Incorporated Societies Act. The conditions related to access of union officials to workplaces have also been refined in response to submissions. The legislation now ensures that access to workplaces must be at a reasonable time, and in a reasonable way, having regard to normal business operations. Officials must also have regard to existing procedures and requirements relating to health, safety and security.

An amendment to the Bill has also been included to allow an exemption from union access to a workplace on the grounds of religious belief where there are no more than 20 employees and none of those employees is a union member. This change was not supported by Government members on the Select Committee, but was included by resolution of a majority of non-Government members.

Part 5 of the Act deals with collective bargaining processes, and is at the heart of the Government’s employment relations policy reform. The criticism of the legislation that it confers solely on unions the right to negotiate collective agreements is misguided. The Government is of the view that collective bargaining is a benefit that should only be conferred on those organisations that have demonstrated, through the registration process, that they are democratic, not discriminatory, and are independent of any employer.

A key object of the Act is to promote collective bargaining, and to encourage bargaining in good faith. An interim committee to develop the Code of Good Faith has already been established and has had a fruitful first meeting. The Select Committee has, however, suggested some amendments to the Bill to address concerns raised in submissions.

Firstly, the procedural requirements for bargaining have been considerably simplified. In addition, the prohibition on employers communicating with employees directly about matters relating to the terms and conditions of employment of their employees has been deleted. The original clause was perceived as having the potential to include communication on matters unrelated to bargaining. The clause has been replaced with a provision requiring both unions and employers to refrain from any action which would have the effect of undermining either the bargaining process, or the role or authority of representative parties. The intent of this is to constrain the sort of bargaining behaviours seen in cases that required Court intervention under the Employment Contracts Act.

Thirdly, important changes have been made to the requirements for information disclosure. The Select Committee heard many submissions from employers concerned that they would be required to provide to unions information that they regarded as confidential. On a suggestion from employers, that information may now be provided to an independent and mutually agreed third party. That person will be required to assess whether the information is, indeed confidential, and if it is, will be able to answer questions about the information in such as way as its confidentiality will be protected.

I wish also to draw to the attention of the House the controversial issues related to Clause 66. This is an issue that raised considerable debate in the Select Committee. The original intent of Clause 66 was to prevent employers from undermining collective employment agreements by contracting work out or selling their business during the life of a collective agreement. During the course of the Select Committee, attention was drawn to the situation of employees whose employment, or wages and conditions are compromised, as a result of contractual arrangements changing during the life of a collective employment agreement.

This Government agrees that the position of employees in this situation is indeed worthy of improved protection. However, a solution to the problem is not readily apparent, in the face of the diversity of labour market arrangements and business structures that have developed over the past decade. The Government intends to consider the issues in greater detail in the context of the minimum code review, and is currently entering into a process for doing this with interested stakeholders.

However, for the majority of straightforward business changes, the Select Committee has recommended that collective employment agreements should include a clause dealing with the rights and obligations of employees and the employer if the work of any of the employees is contracted out, or the business (or part of it) is transferred or sold during the period that the agreement is in force.

Part 6 deals with the terms and conditions of those employees on individual employment agreements. While critics of the legislation have focused on the collective agreement provisions, the Bill continues to provide protection for those employees who choose not to join a union, or where no collective employment agreement is in place. Where a collective employment agreement exists that covers the work to be performed by a new employee, for the first 30 days they will be covered by its terms. After this, the employer and employee can agree to whatever terms they see fit and negotiate an individual employment agreement.

Another of the key sources of contention for submitters was the provision for fixed term agreements. Again the Select Committee has reduced the prescriptive nature of the provision while maintaining its purpose. There must be a genuine reason for the fixed term arrangement at the start. Employers will be required to explain to employees that the agreement will last for a fixed term only, and the reasons for this arrangement when they enter into the agreement. This maintains the requirement for good faith in setting up a fixed term agreement, and ensures that such agreements cannot be used to undermine employment obligations.

An entitlement to paid employment relations education leave is provided in Part 7 of the legislation. This provision offers support for collective bargaining and the good faith requirement, and will be particularly useful when the Bill first comes into effect. This will be a period when there is a significant need for education to help all parties with the cultural change. The most significant change recommended by the Select Committee in relation to this Part is to ensure that the legislation makes it clear that entitlement for leave accrues only to “eligible” employees – that is, union members covered by an applicable collective employment agreement, or in bargaining for a collective agreement.

Few changes have been made in the Select Committee to the strike and lockout provisions, and the provisions contained in this Part are not significantly different from those contained in earlier legislation. Clause 111 was the most controversial, and submissions reflected some confusion over its effect. The Select Committee has recommended a clarification to the legislation to make it clear that an employer is not prevented from using existing employees to do the work of striking employees as long as those employees are requested to do the work, are free to choose not to, and agree to do the work.

The personal grievance provisions provided in Part 9 are very similar to those of the existing legislation. In line with the intent of the Bill to maintain and support successful employment relationships, reinstatement becomes the primary remedy for unjustified dismissal. The requirement to provide information to employees about how to resolve employment relationship problems is to be made more practical, involving a requirement that provision be made in employment agreements about information on services available to deal with such problems.

The provisions of Part 10 of the legislation have not been subject to significant change by the Select Committee, and the Government is making substantial progress in setting up the new institutions envisaged by the draft legislation. The Select Committee has recommended some technical changes, largely to preserve the original policy intent. The most significant of these is to preserve the confidentiality of mediation processes.

Lastly, Mr Speaker, the Select Committee has suggested some technical amendments surrounding the transitional arrangements that will lead us into the future of employment relations legislation for New Zealand. Most significant in these changes are those related to those Directors of Companies deliberately avoiding responsibilities for the payment of minimum wages and minimum holiday entitlements where the company has no funds or has become insolvent. It is a protection that has become particularly necessary in the context of cases like the recent sweatshop cases in Auckland. The Select Committee has proposed that it be redrafted to clarify the situations in which it can apply and that proceedings can only be actioned by Labour Inspectors, not by unions or employees.

The Select Committee's recommendations will address many of the concerns of employers and clarify many other points. However, the principles of the Bill remain unaltered, and the Government is firmly committed to the change of culture that they entail. I believe, however, that most employers who already have good and productive relationships with their employees will find that the Bill supports those relationships. The Bill is intended to foster change in those areas where such positive relationships do not exist. I hope that the passing of the Bill will enable employers and their employees, with the assistance of their representative unions, to get on with operating their workplaces in a constructive way.

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