Contemporary Mediation Practice

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Mediation and Collective Bargaining in New Zealand

Introduction

Collective bargaining disputes present special challenges for mediators. There are a number of parties at the table – union and employer advocates, employees and management – and other parties who aren’t present, such as the employees affected by the bargaining, chief executives and boards of management and sometimes government ministers. Mediators have to deal with a web of different needs and interests. Parties usually come to mediation after they have reached an impasse. Invariably, the issues between the parties are very difficult. There are big stakes in some disputes, for example, where a national strike is looming in public hospitals. Tensions are often high and relationships fraught. Thought must be given to repairing relationships after disputes have been settled.

Although there are a number of process requirements under New Zealand’s employment law, collective bargaining is essentially voluntary. Disputes can only be resolved by negotiation. Mediation is the main form of assistance provided by the state. Collective bargaining mediation has a long history in New Zealand. In 1909, the first conciliation commissioners took office. Although titles and functions have changed, the state has employed people to mediate in collective bargaining since then.

Drawing on our experience in the field, our paper covers three main areas:

The historical context and its relevance today.
The special challenges of collective bargaining mediation in comparison with other forms of workplace mediation.
The key attributes and interventions that mediators bring to collective bargaining disputes.

Historical context

For nearly 100 years, New Zealand had a highly regulated system of industrial relations. This was introduced by the Industrial Conciliation and Arbitration (IC&A) Act 1894. Although the arbitration system applied mainly to the private sector, employment relations in the public sector were also highly regulated. The Arbitration Court presided over the system and had the power to make binding awards setting wages and conditions.

Towards the end of the 1900s, the arbitration system faced mounting criticism from employers and unions. There was a rash of strikes, and militant unionists formed the radical “Red” Federation of Labour. One of the problems was that conciliation had become ineffectual in resolving collective bargaining disputes. Unions and employers took disputes straight to the Arbitration Court, which was swamped with work. The long delays in getting to the court exacerbated the problem.

In 1908, the Liberal government passed a major amendment to the IC&A Act that, among other things, established conciliation councils (made up of union and employer representatives) as a forum for collective bargaining. The councils were chaired by conciliation commissioners. These independent government-appointed officials were the forerunners of today’s employment mediators.

Three conciliation commissioners were appointed in early 1909 at a salary of £500 a year. The appointments of Patrick Hally (the chief Labour Department inspector in Dunedin and a former unionist) and James Triggs (the chair of the Canterbury conciliation board and a former businessman) were welcomed by employers and unions. The appointment of the third commissioner, Thomas Harle Giles (the principal of a commercial college), was met with suspicion and some hostility as he had no background in employment relations but was secretary of the Auckland Branch of the Liberal and Labour Federation. Auckland unions initially tried to bypass him, but once he started work, their hostility evaporated.^[45]

In the short term, the 1908 changes were successful in encouraging parties to resolve disputes by agreement and in relieving the delays in getting to the court. In the long term, the changes established conciliation as the main form of dispute resolution in collective bargaining. While the Arbitration Court issued general wage orders and set wage relativities, most settlements were reached in conciliation. Writing in 1960, Sir Arthur Tyndall, the longest-serving judge of the Arbitration Court, emphasised the importance of conciliation in the New Zealand system: “An analysis of the total of 2,000 awards made during the last 13 years shows that 75 per cent represent complete settlements by the parties. In addition, during the same period, 1,005 industrial agreements were made; so that out of 3,005 enforceable documents, only in 486 did the court have a direct hand in settling some of the terms.”^[46]

New Zealand’s industrial conciliation and arbitration system lasted from 1894 to 1991. There were major changes to the system during that time. For example, a conservative government undermined it by introducing voluntary arbitration at the height of the Great Depression. In contrast, the first Labour government (1935–1949) created a highly centralised wage-fixing system based on compulsory unionism and general wage orders issued by the court. By the mid-1960s, large cracks appeared in the system as a result of union frustration with the conservatism of the court and the growth of enterprise bargaining. The 1970s and 1980s were a see-saw of wage controls, confrontations and compromises between unions, employers and governments against a backdrop of growing economic instability with rising inflation and unemployment. Voluntary arbitration was reintroduced in 1984, and the court became increasingly irrelevant in wage fixing.

Conciliation councils were one part of the system that did not change greatly. They continued to operate successfully, and as a 1981 thesis noted, “…the principles underlying the 1908 Act still form the basis for the present system of settling industrial disputes”.^[47] Conciliation commissioners – or conciliators as they were later known – played a central role in a highly institutionalised system. To initiate collective bargaining, a union had to create a dispute of interest with employers. The dispute was heard by a conciliation council made up of representatives of the union and employers and chaired by the conciliator. Collective bargaining took place within the council. The conciliator worked with the parties to encourage a settlement, kept the formal record of the negotiations and wrote up the terms of settlement. Conciliators were therefore involved throughout the bargaining. Their diaries were arranged so that they chaired a succession of conciliation councils for different industries and occupations throughout the year. The trend-setting negotiations at the start of a wage round might take several days or weeks, but most conciliation councils reached agreement in one to three days.

In 1970, an industrial mediation service was introduced, modelled on the United States Federal Mediation and Conciliation Service, in part in response to the high number of strikes. This was separate from the conciliation service, and mediators were meant to focus on rights disputes and personal grievances, not collective bargaining. In practice, there was a lot of overlap, and the two services were merged into a new mediation service in 1987. A distinct feature of the New Zealand system was that mediators often arbitrated. As one study put it: “When conciliators and mediators mediate, when the Conciliation and Mediation Services and the Arbitration Court arbitrate, even the matter of nomenclature can be a semantic nightmare. In theory, the distinction between mediation and arbitration is obvious. In practice, one form of intervention shades imperceptibly into the next.”^[48]

In 1991, the arbitration system was swept away by the Employment Contracts Act (ECA), which was passed by the newly elected National Government. It resulted in a move overnight from a highly centralised system of bargaining based on unions to a completely decentralised system designed to reduce the effectiveness of unions. Under the arbitration system, national collective agreements for industries or occupations were the norm, especially in the private sector. Under the ECA, individual contracts were prevalent and enterprise agreements were the main type of collective contract. In contrast to the radical changes it made to collective bargaining, the ECA continued employees’ rights to take personal grievances. These rights were extended to all employees and not just union members.

There was also a major change in the dispute resolution institutions. While the Employment Court (the successor to the Arbitration Court) continued, an Employment Tribunal (comprised in any particular case of one member) replaced the mediation service. The tribunal provided both mediation and arbitration, although there was a much clearer distinction between the two. The “med/arb” of the former system became infrequent. Occasionally, tribunal members mediated in collective bargaining disputes, but most of their work was on personal grievances and rights disputes. The expansion of personal grievance rights and the reduced role for unions led to an explosion in the number of cases. A large backlog developed. By 1999, waiting times were around three months for mediation and six months for arbitration in the main centres and 8–16 months for mediation and 11–22 months for arbitration in the regions.^[49]

One of the first moves by the Labour Government elected in November 1999 was to repeal the ECA and replace it with the Employment Relations Act (ERA). The key aim of the ECA was “to promote an efficient labour market”. In contrast, the main object of the ERA is “to build productive employment relationships through the promotion of mutual trust and confidence in all aspects of the employment environment and of the employment relationship”. Good faith principles are the main thread that runs through the Act.

The court continued, but the Employment Tribunal was replaced by a new mediation service, run by the Department of Labour, and an Employment Relations Authority to arbitrate on personal grievances and rights disputes. This separation strengthened the distinction between the functions of mediation and arbitration. One of the Act’s objects is to promote mediation “as the primary problem-solving mechanism” and reduce the need for judicial intervention. In an often repeated phrase, Margaret Wilson, the Minister of Labour who introduced the ERA, said that mediation services would be “free, fast and fair”.^[50]

There have been radical changes in New Zealand’s economy, employment relations and legislative framework over the last 20 years. However, this short historical overview shows continuity in important areas. First, mediation under different names has been the predominant form of state intervention in collective bargaining disputes for almost 100 years. Second, at times of industrial strife (1970) and too much legalism (1909 and 1999), governments have recognised that mediation is a much more effective dispute resolution mechanism than arbitration. Third, mediation has been supported by unions and employers, if not always by the lawyers.^[51] Fourth, state-employed mediators have the benefit of a long institutional memory of collective bargaining mediation.

Collective bargaining mediation in comparison with other forms of workplace mediation

Personal grievances are the majority of disputes handled by Department of Labour mediators. They are also involved in helping to resolve conflicts in ongoing employment relationships, including collective bargaining disputes between unions and employers, and in promoting best practice in employment relationships.

There are several important differences between collective bargaining mediation and other forms of workplace mediation. These present special challenges for mediators.

Future focus

Personal grievance mediations usually focus on the past, the end of employment relationships and the legal rights of the parties.

Collective bargaining mediation is not just about the negotiation of wages and conditions for union members. It is also about ongoing relationships. These usually include the relationship between the employer and its staff, the relationship between the employer and the union, the relationship between the union and its members and personal relationships between the individuals concerned – the advocates and the bargaining teams.

Confidentiality

The general rule under the ERA is that mediations are confidential and without prejudice.

Collective bargaining mediations are not confidential as such. Private sessions between the mediator and individual parties are confidential, and the parties may agree to hold without prejudice discussions during the mediation. The parties may also have to agree on how to deal with sensitive commercial or personal information.

Time commitment

Personal grievance mediations often take half a day and usually take no more than a day.

Mediations about collective bargaining can take weeks and, in extreme cases, months before the parties reach a settlement. Negotiations affecting large numbers of workers and high profile disputes require a big time commitment on the part of the mediator.

Parties

There are usually only two parties to grievance and rights mediations, and a small number of individuals take part.

There are a number of parties in collective bargaining mediations, particularly those concerning multi-employer agreements. A large number of individuals can be involved. Mediators have to deal with a web of different needs and interests.

On the union side, those in the room include paid officials (an advocate and sometimes others) and workplace delegates. Outside the room are the union members covered by the agreement, who must ratify a settlement before the agreement takes effect, and the union leadership. The advocate, delegates, members and union can have different needs and interests. Sometimes more than one union is involved in the negotiations.

On the employer side, those in the room include an advocate (usually an HR manager or an external consultant, for example, from an employers’ organisation) and management representatives from different parts of the business (for example, finance, operations and HR). Outside the room are the chief executive and senior management team, the board of directors and sometimes foreign owners.

Public sector

In public sector negotiations, the State Services Commission may have to be consulted. In significant public sector negotiations, government ministers will be consulted. In multi-employer negotiations, there can be a number of employer parties with different needs and interests. For example, most collective agreements in the public health sector cover all 21 district health boards.

The law

Employment law is a crucial part of mediations about grievances and rights disputes, and the issues are usually straight-forward.

The law is largely irrelevant in collective bargaining mediations. There is no provision in law for arbitration in collective bargaining disputes, and the law on collective bargaining is focused largely on process issues. Agreement can only be reached by negotiation between the parties.

Litigation and industrial action are no substitute for negotiation. As Chief Judge G. L. Colgan put it during a major dispute: “During the course of the hearing I described … the intended strike action … as a sideshow to the fundamental issue that both [the parties] must come to grips with – the negotiation and settlement of a collective employment agreement … these are important issues that I am now determining but they are tactical issues … irrespective of the outcome of them, these parties are still going to need to sit down, bargain, settle, and have ratified, a collective agreement …”^[52]

Collective bargaining mediations can involve complex issues involving the claims at the bargaining table and the underlying needs and interests of the parties (including the parties outside the room). The stakes can be very high, for example, where a national strike is looming in public hospitals. In multi-employer negotiations and collectives covering thousands of workers, settlements can cost millions of dollars.

Outcomes

Mediations about grievances and rights disputes don’t always settle.

Collective bargaining mediations always end in agreement, even though the dispute may last many weeks and involve industrial action by the parties.

Important attributes of mediators in collective bargaining

In all workplace mediations, mediators must be impartial and be seen as such. They have to be good communicators who are able to empathise with the parties. They must be able to use appropriate techniques and strategies in each mediation.

In collective bargaining, the following attributes are also important:

Patience and persistence. Collective negotiations can take a long time. The mediator must be able to last the distance and keep going when it seems there is no prospect of a resolution. They must be able to promote dialogue between the parties on the issues and discourage them from rushing to solutions too quickly.
Energy, flexibility, humour and confidence. Parties often come to mediation when they are at an impasse and when relations between them are frayed. The involvement of the mediator can change the dynamic of the negotiations. Mediators should be energetic in encouraging the parties to work for a settlement and give the parties confidence that they will eventually do so. They must also be comfortable in dealing with large groups of people ranging from workplace delegates to senior managers. A good sense of humour can help break the tension during difficult periods in negotiations.
Judgement and intuition. Mediators must know when to get involved in collective negotiations and when to stay out. They also need a good sense of timing so they can sense when to make a suggestion or encourage parties to move towards resolution. There is an old saying in collective bargaining that “no agreement should be reached before its time”.
The ability to establish credible relationships quickly. Mediators must not only be seen as impartial. They must establish a relationship of trust with parties, particularly in long-running negotiations. This helps build up a store of goodwill so that the parties keep the mediator informed about what is going on, so they can help prevent relationships deteriorate and so the mediator’s interventions will be accepted later in the mediation.
Knowledge of power relationships. An underlying issue in many collective negotiations is the relative power of the employer and the union. Mediators might encourage parties to take an interest-based approach to negotiations but they must also understand power relationships, which can be based on a long history of distrust between parties.
Knowledge of negotiation strategies, industrial relations, business and workplace dynamics. Mediators must understand the theory and practice of collective bargaining, relevant employment law and have a practical knowledge of industrial relations. They should also understand different types of businesses (for example, a small family-owned enterprise and a large government-owned agency) and how workplaces operate.

Some people believe that mediators must have industrial relations experience and/or in-depth knowledge of specific industries. We disagree. However, mediators must be able to absorb large amounts of information quickly and become familiar with particular businesses and industries. This can include understanding budgets and financial reports, performance appraisal systems, salary structures, roster systems and specific terminology and technical issues relating to particular industries.

Key interventions in collective bargaining mediations

Collective bargaining mediations are about ongoing employment relationships. Mediators should encourage parties to improve their relationships so they can resolve their disputes without third party intervention. In general, we should do as little as is necessary to help parties to get through an impasse in their bargaining.

In most cases mediators’ interventions in collective bargaining should be selective. They can take place at different stages of the bargaining process. For example, a mediator can be involved in training for negotiating teams in interest-based bargaining and can assist parties in working out a pre-bargaining process agreement (a requirement under the ERA). Mediators can also be involved in debriefings with the negotiating teams after bargaining has finished.

The most common interventions take place during bargaining. These include the following:

Taking control of the process. By giving a structure and direction to the bargaining process, the mediator allows the parties to concentrate on the issues in the negotiations. The mediator needs to have a sense of where the process is going and should regularly analyse the progress of the negotiations.
Modelling good behaviour. By behaving in a courteous and respectful manner towards the parties, the mediator can model good behaviour and encourage better personal relationships between negotiators. Mediators should aim at establishing good relationships with all the members of the negotiating teams, not only the advocates.
Keeping lines of communication open and monitoring the bargaining. In protracted negotiations in particular, the mediator should keep regular contact with the advocates to monitor the state of the bargaining. This is essential not just in keeping the mediator informed about each party’s thinking, but it also enables the mediator to keep lines of communication open, particularly at times of industrial action when there are no direct talks.
Promoting direct communication between the parties. This can be done on a number of levels. The mediator can chair face-to-face meetings between the negotiating teams. These can encourage members of negotiating teams to take a direct part in discussions and contribute their particular areas of expertise. The mediator’s techniques of summarising and reframing, using open questions and detoxifying language can help encourage discussion on the issues. The mediator might also call “short lineouts” (meetings of a few negotiators from each party) or discussions between the advocates. These could be without prejudice meetings. Discussions involving a smaller group can avoid the theatrics of discussion at the bargaining table and get to the heart of an issue. Mediators must always be conscious that prolonged “short lineouts” can leave those not involved feeling excluded and suspicious.
Calling bad behaviour when appropriate. Mediators should not be afraid of robust debate. The opportunity to vent frustrations and emotions, if carefully managed, can often lead to a more measured approach in the future. At the same time, mediation should be a safe environment for both parties. The mediator should call bad behaviour when appropriate.
Coaching the parties. The mediator has a very important role in working with the parties separately to encourage greater understanding between them and to help them move towards a settlement. In caucus, the mediator can “translate” the other party’s positions or interests and encourage negotiators to look at issues from the other party’s perspective. The mediator can help each party to generate options. This can include walking the negotiators through some negotiating steps, for example, how to frame and present an offer. The mediator can also float ideas and options, and they can talk with each party about the alternatives to a settlement and about the risks of industrial action and, occasionally, litigation.
Helping resolve divisions within teams. Divisions within negotiating teams can slow down progress in the negotiations and, at times, undermine them. Mediators must be sensitive to the different needs and interests of members of a negotiating team, for example, the union organiser’s concern to follow union policy and promote standard union claims and the delegates’ interest in particular workplace issues. Mediators should work with negotiating teams to encourage a realistic approach to the bargaining and to resolve internal differences.
Acting as a go-between. While direct dialogue should be promoted wherever possible, relationships between parties can deteriorate during collective bargaining and during mediation. At these times, the mediator can protect the parties from each other and keep communication lines open by shuttling between them. In discussions with each party, the mediator can test proposals by floating them as the mediator’s idea.
Summarising agreements between the parties and making sure agreement is reached on all issues. Mediators can help maintain progress by summarising agreements during the mediation and encouraging the parties to keep an accurate record of the negotiations. At the conclusion of the negotiations, the mediator should check that agreement has been reached on all issues. They should also check that the parties are clear on what will happen next. The union can brief the employer on its ratification process and discuss the timing of union meetings. The employer can brief the union on the process for getting sign-off from the chief executive or the board. The parties can discuss the information that will go to workers and how any media interest might be managed.

Conclusion

Mediating collective bargaining disputes can be challenging but it is also professionally rewarding and enjoyable. There is a certain mystique about collective bargaining, but it is more apparent than real. Collective bargaining is another type of ongoing employment relationship that can be handled by employment mediators with generic skills. With appropriate specialist training, mentoring and co-mediation, experienced employment mediators are able to adapt to the special demands of collective negotiations.

References

1999 Briefing to Ministers, Department of Labour, Wellington 1999.

Employment Relations Bill, Report of the Department of Labour to the Employment and Accident Insurance Legislation Select Committee, Department of Labour, Wellington, June 2000.

James Holt, Compulsory Arbitration in New Zealand, The First Forty Years, Auckland University Press, Auckland, 1986.

John M. Howells and Susan H. Cathro, Mediation in New Zealand: The attitudes of the mediated, The Dunmore Press, Palmerston North, 1986.

Sir Arthur Tyndall, The New Zealand System of Industrial Conciliation and Arbitration, reprinted from the International Labour Review, August 1960, Government Printer, Wellington, 1960.

Grant Watson, Something more than a civil offence: Illegal strikes in New Zealand, 1906-08, MA Thesis, University of Auckland, 1981.

Hon. Margaret Wilson, ‘Free, fast and fair – a new Mediation Service for New Zealand businesses and employees’, media release, 13 July 2000.

Footnotes

[45] The New Zealand Gazette, January 28 1909, p. 203; Evening Post, 14 January 1909; Otago Witness, 20 January 1909; NZ Free Lance, 13 March 1909; James Holt, Compulsory Arbitration in New Zealand, The First Forty Years, Auckland University Press, Auckland, 1986, p. 86 and p. 95.

[46] Sir Arthur Tyndall, The New Zealand System of Industrial Conciliation and Arbitration, reprinted from the International Labour Review, August 1960, Government Printer, Wellington, 1960, p. 9.

[47] Grant Watson, Something more than a civil offence: Illegal strikes in New Zealand, 1906-08, MA Thesis, University of Auckland, 1981, p. 177.

[48] John M. Howells and Susan H. Cathro, Mediation in New Zealand: The attitudes of the mediated, The Dunmore Press, Palmerston North, 1986, p. 24.

[49] 1999 Briefing to Ministers, Department of Labour, Wellington 1999, p. 154.

[50] Hon. Margaret Wilson, ‘Free, fast and fair – a new Mediation Service for New Zealand businesses and employees’, media release, 13 July 2000.

[51] In its report on submissions on the Employment Relations Bill in 2000, the Department of Labour said: “A large number of submissions supported mediation as a means of providing effective low level dispute resolution, as it will be less legalistic and more accessible.” Employment Relations Bill, Report of the Department of Labour to the Employment and Accident Insurance Legislation Select Committee, Department of Labour, Wellington, June 2000, p. 146.

[52] Director-General of the Ministry of Agriculture and Forestry v. NZ Public Service Association Incorporated, unreported Employment Court judgement, No. WC 25/05, 29 November 2005.