The Employment Relations Act Gets a Makeover

The Employment Relations Act Gets a Makeover

In the March 2013 edition of Employment News, we mentioned that the Government was to introduce a new Bill to amend the Employment Relations Act 2000 in several areas.  That Bill has come to pass, and is currently being considered by Parliament.  Below we set out in brief the key aspects of the Bill.

Collective Bargaining

There are a number of changes to the collective bargaining process included in the Bill.  In short:

  • Removal of the requirement for the parties to conclude a collective agreement;
  • Permitting employers to initiate bargaining at the same time as unions;
  • Allowing employers to opt out of multi-employer bargaining by serving an opt out notice on other intended parties within 10 days of receiving the initiation of bargaining notice;
  • Allowing the Authority to determine whether bargaining has concluded or make recommendations that the parties continue bargaining.  If the Authority does determine that bargaining has concluded, there will be a 60-day stand-down period before bargaining can be initiated again;
  • Removal of the 30-day rule – should the Bill pass, then a new employee who is not a member of a union no longer needs to be employed on terms of the applicable collective agreement for the first 30 days of their employment.  However, the employer must still inform that employee that the collective exists, that it covers their work (and provide a copy of the collective), and that they can join the union.

Strikes and Lockouts

Previously, only those in “essential services” had to provide written notice of a proposed strike or lockout.  The Bill extends this requirement so that all proposed industrial action needs to be notified in advance.

The Bill also proposes that employers may be able to deduct the pay of employees on a partial strike.  A partial strike would be a situation where the strike does not wholly discontinue the work.  In that situation, the employer may be able to deduct pay (unless the strike is on health and safety grounds) by reference to the time on strike or a fixed 10% deduction.  The employer must give notice of the deduction.

Flexible Working Arrangements

The Bill proposes extending the right to request flexible working arrangements to all employees, and not just those employees who are responsible for the care of a person.  Such a request may be made from the first day of employment.

Further, there is no limitation on the number of requests that an employee can make.  Employers do need to respond to these requests within one month, although the Bill does not change the reasons for which a request can be declined.

Continuity of Employment

Part 6A of the Employment Relations Act is a vexed question – causing headaches for employers and employees alike.  The Bill proposes several changes to Part 6A, the most significant of which is to exempt employers with 19 or fewer employees from its purview.  That is, where such an employer takes over the business/contracts of another company, the employees of that other company will not be able to transfer their employment to the ‘new’ employer as of right.

The phrase “employer” is defined in the Bill to include all “associated persons” – e.g. subsidiaries, franchises, associates, and holding companies – so that larger employers cannot exploit this exemption by creating several separate entities, each with 19 or fewer employees.  Further, the incoming employer must provide a warranty to all other employers affected that it (including those associated persons) employs 19 or fewer employees.

Other changes to Part 6A in the Bill include:

  • A requirement that vulnerable employees make their election to transfer in writing within five working days
  • The outgoing employer must provide certain information to the incoming employer before the restructuring takes effect, including:
    • Total wages, hours, number of employees, cost of entitlements;
    • Individualised employee information such as personal records, wage/time/holiday records, and disciplinary records – but only for employees who elect to transfer
  • The incoming and outgoing employer can negotiate to apportion the costs of any transfers.  If they can’t agree, then the default position will be that the outgoing employer is liable for anything usually paid out on termination, while the incoming employer will be liable for costs of service-related entitlements that are not paid out on termination
  • The outgoing employer will provide an implied warranty that it has not, without good reason, changed the work or employees’ terms and conditions to the incoming employer’s disadvantage.

Good Faith

In response to the Employment Court’s decision in Massey University v Wrigley, the Bill proposes changes to the requirements that an employer disclose evaluative or opinion material in determining an individual’s suitability for employment.

The Bill attempts to bring the duty of good faith in section 4 in line with the Official Information Act and the Privacy Act by granting employers some right to withhold information that is:

  • About identifiable individuals other than the affected employee;
  • Evaluative or opinion material that may adversely affect the continuation of an employee’s employment;
  • About the identity of the person who supplied the evaluative material.

Rest and Meal Breaks

The Bill proposes changes to rest and meal breaks.  Currently, the law is prescriptive and allows 10 or 30 minute rest and meal breaks.

The Bill aims to be more flexible – employers will be able to impose restrictions on rest and meal breaks if reasonable and necessary (or if those restrictions are reasonable and agreed between the parties) and relate to working during the break, or remaining on the premises.

If breaks cannot be provided, then they can be replaced with reasonable “compensatory measures” such as time off, or changes to start and finish times of work.

Employment Relations Authority Determinations

One feature of the Bill that the Government had not foreshadowed prior to its introduction is the requirement that the Authority provide an oral determination or an oral indication of its preliminary findings at the conclusion of the investigation meeting.

Further, unless there are exceptional circumstances, the Authority will then have three months to confirm its oral determination in writing or issue a final written determination.

The aim is to not only speed up the Authority’s decision-making process, but also provide the parties another opportunity to consider their positions and resolve the matter before a final written determination is issued.  Whether this is by settlement negotiations or a return to mediation will be up to the parties.

What Happens Next?

The Bill was introduced into Parliament on 26 April 2013 and passed its first reading by a vote of 61-58 on 5 June 2013.  It has now been referred to the Transport and Industrial Relations Select Committee, which has now called for public submissions.  Anyone interested in making a submission must do so by 25 July 2013.  Following that, the Select Committee will consider submissions and the Bill with a view to reporting back on 5 December 2013.

As the numbers suggest, the vote was narrow, with National relying on the single votes of ACT and United Future to get the Bill to Select Committee.

We expect that Select Committee will recommend by a narrow majority that the Bill proceed – but after that, the Bill’s progress will depend on the composition of Parliament early next year.  It is always possible that MPs retire or resign – and, of course, the two MPs who are currently facing some legal and/or political pressure to do so are the ACT and United Future Members who helped National shepherd the Bill across the line at First Reading.

Nevertheless, as this is a Government Bill, and one of the National Party’s pre-election promises from 2011, we ultimately expect the Bill to become law at some point in 2014.  In any event, we will keep you updated of any developments.

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