Employment Relations Act

The Employment Relations Act is coming up for its first year anniversary. This time last year you couldn’t pick up a paper without reading widely diverging views as to how this legislation would change the face of New Zealand society. Now what do you read - nothing! What’s the story here, was Ms Wilson right in predicting that the new legislation would seamlessly integrate itself into our employment culture? Well, sort of. Here are some commonly asked questions and my own highly individual responses!

Does every employee have to have their own individual employment contract?

Yes, unless they are part of a union collective agreement. But this requirement only applies to those employed after 2 October 2000. If you were employed before then you either have an employment contract, or nothing at all (which is fine).

But this only applies to full time workers, right? I mean my teenager works part time, she doesn’t need one does she?

Wrong! The Act draws no distinction between full time and “casual” or “part time” workers.

Surely an employer doesn’t risk a $10,000 (maximum) fine because they don’t have every worker signed up to an individual employment agreement?

Well, yes. Having said that the Labour Department is not as we speak kicking in the doors of Ma and Pa businesses to check their compliance! In fact highly anecdotal evidence seems to suggest that less than 50% of all employers are complying. The reasons would seem to be clear. There is little public education of the legal requirements due to scanty resources being allocated to any advertising programmes. Also it’s another expense on small businesses (remember that something like 90% of all New Zealand businesses employ less than 12 people).

What about the Employers Federation and Business Roundtable fears that unions would take over all labour negotiation and resulting strikes would paralyse the country?

Well it hasn’t happened! There is one main reason. Union membership is not compulsory. If labour introduced compulsory unionism it would be signing its political death warrant. Paradoxically if a union has settled wages and conditions of employment in any industry then all workers benefit regardless of whether they belong to the union or not. This means that there is no direct incentive to pay union dues. In turn this leads to very under-financed and under-resourced unions who have a hard enough job meeting their members needs without proselytising for converts!

Why do we now have “agreements” instead of “contracts”?

I’m glad you asked that, because I have my own pet theory here! Margaret Wilson is apparently on record as saying that contracts are unduly legalistic and thus divisive. This from the former Dean of the Law School of Waikato University! Ms Wilson views the relationship between employer and employee as a human relationship, thus agreements are more appropriate. My view is that this is a very clever attempt to change, downstream, judicial thought and thus decisions in employment matters. At present we have what some might term a very conservative Court of Appeal. It takes what lawyers would call a “black letter” approach towards interpreting both statutes and contracts (as opposed to the more lateral approach taken when Sir Robin Cooke was President). It has not viewed the employment contract as being subject to any different approach, interpretation-wise, than any other contract. The Court has already reversed itself in finding that (broadly speaking) no payments are required to be made to an employee who is made redundant. The hope of the architects of this Act is that a more liberal (and employee friendly) approach will now ensue. It is all still a bit early to see if that will happen.

By way of conclusion it would seem that the two major administrative arms giving day to day effect to the new Act, the Mediation Services and the Employment Review Authority, are doing much the same job that the Employment Tribunal in both its mediation and adjudication roles fulfilled under the previous Act. Principles to be followed by employers in respect of procedural fairness remain the same. There have been changes and some of those changes will take a little while to impact. In all other respects it’s business as usual.