Review of the Employment Relationship Problem Resolution System

Option 1.

Do nothing

Should the issues identified in this paper be considered minor or inconsequential, there would be no necessity to take further action.

Does not address the issues raised

Option 2.

Increase educational resources and support, including the possibility of the Department funding advice services and improvement of the Department of  Labour’s guidance for employers and employees on employment relationship problem resolution and termination of employment;

There is a need for educational materials about the employment relationship problem resolution system, including representation options and likely representation costs, which are well targeted to employees and employers (particularly SMEs). 

(Additional information on this option is provided below)

This option is likely to have fiscal implications.

This would be an effective tool for increasing access to justice, enabling all parties to be better informed and better able to effectively resolve problems.

This option would help address the issues raised in relation to SMEs, by providing them with targeted information about the system and their options.

Effectiveness depends on take-up of information, quality of materials and effectiveness of delivery.

Option 3.

Exploring the extent to which the quality of paid representation by employment advocates (excluding practising barristers and solicitors) could be better assured.  This would include exploring how to ensure that representation by advocates is high quality by requiring that advocates;

These options would involve setting enforceable standards to protect and promote the interests of their clients.

Note: These options would not apply to practising barristers and solicitors as they are already highly regulated.  These options would also not apply to advocates who act in an unpaid capacity (for example, family, friends or church contacts who are not paid for their assistance)

These options may be unnecessary given that any problems with employment advocates are probably confined to a few individuals.

a) be regulated;

a) Options for regulation vary from disclosure, or registration, or certification and licensing tasks to licensing.^[7]

This option would need to consider whether those who give informal employment advice without charging a fee would be covered by regulation

a) Regulation of advocates that included regulating fees would be consistent with the Law Commission’s suggestion for provision for fee review (together with provision around allowable conditional fee arrangements) for lay advocates similar to that in the Lawyers and Conveyancers Act for lawyers.^[9]

a) Any compulsory regulation is probably an excessive response to a limited problem.

b) belong to a relevant membership organisation, union or employers association

Options (b) and (c) Employment advocates may belong to a membership organisation such as the Employment Law Institute,^[8] which has a code of conduct. Membership is currently voluntary and employment advocates can be members, although the majority of members are practising barristers and solicitors. Employment advocates may also be employed by a union or employers association. 

Option (b) would restrict the right to represent people on employment matters to practising barristers and solicitors, paid advocates who belong to a relevant membership organisation or are employed by a union or employers association, or an unpaid advocate.

Further work is likely to be needed to explore whether the Employment Law Institute would be a sufficient and appropriate body for all advocates who charge fees to join, or whether a new membership organisation for advocates should be established as another option. Establishing a new membership organisation is likely to incur costs, some of which may be fiscal.

b) compulsory membership of one of these organisations may improve the professional standards of advocates. Employers and employees who use such an advocate would be able to contact these organisations if they had concerns about the ability or professionalism of their advocate.

b) this raises an issue of prima facie inconsistency with section 17 (freedom of association) of the New Zealand Bill of Rights Act 1990.  If this option was pursued it would be necessary to assess whether such a limitation could be justified under section 5 of the New Zealand Bill of Rights Act.

c) disclose they belong to a relevant membership organisation, union, or employers association, if requested by a prospective client

c) this requirement could encourage advocates to join a relevant membership organisation.

c) there is no evidence that advocates do not already disclose such details.  Those who use advocates from a union or employers associations would most likely have contacted their advocate through that organisation.  Those who use other advocates may not be aware of the relevant membership organisations, or think to spontaneously ask this question.  This requirement would need legislative amendment.

Option 4

Exploring the extent to which the quality of representation by advocates (i.e. excluding practising barristers and solicitors) could be better assured by  promoting to the public the use of advocates who belong to a relevant membership organisation, union, or employers’ association with professional standards and/or codes of ethics

Further work would explore options on how to effectively promote the use of such advocates.  This would involve engagement with the Employment Law Institute, unions and employers associations.

As per option 3(b) and (c), further work is likely to be needed to explore whether the Employment Law Institute would be a sufficient and appropriate body for all advocates who charge fees to join, or whether a new membership organisation for advocates should be established as another option. Establishing a new membership organisation is likely to incur costs, some of which may be fiscal. The further work could also explore ways to encourage more advocates to join these organisations.

Note: This option would not apply to practising barristers and solicitors, as they are already highly regulated.  It would also not apply to advocates who act in an unpaid capacity (for example, family, friends or church contacts who are not paid for their assistance)

Promoting the use of such advocates would have the same advantages as Options 3(b) and 3(c) above.

There is a risk that the government would be considered to be endorsing certain groups, who are not bound by any form of regulatory standard.

The effects on the freedom of association as affirmed in section 17 of the New Zealand Bill of Rights Act should be taken into account when exploring how to promote the use of advocates who belong to a relevant membership organisation or association.

Option 5.

Limit the right to be represented in  mediation^[10]

(This option is an element of the Employment Facilitation Process proposed by SBAG)

There is a spectrum of possibilities for limiting the right to be represented in mediation. Restricting, barring or regulating the presence of representatives in mediation may address concerns that representatives may unnecessarily escalate problems.  Available information does not support or disprove this suggestion.

Depending on the level of restriction placed on representative attendance, this option could have considerable operational implications.  These would arise if the restriction was conditional or discretionary.

Restricting the right to be represented in mediation may in some situations prevent problems escalating and could result in a less adversarial approach to resolving problems.

The mediator’s role in mediation was strengthened by the Employment Relations Amendment Act (No 2) 2004.  Mediators now have statutory support to assist in controlling the process and can address any power imbalances.

It is likely that some parties on both sides would hesitate to use mediation if they could not be represented.

Representatives can enhance mediation and/or prevent an employment relationship problem from escalating.

This option would not address any issues associated with a representative’s activities outside mediation.

Option 6.

Limit, restrict or regulate costs and remedies available in mediation and litigation

(This option is an element of the Employment Facilitation Process proposed by SBAG)

This option may encourage the participants to focus on the substance of the issue and may mean a shift in focus to seeking more non-financial remedies (such as reinstatement, an apology, a reference or an agreement not to speak badly of each other).

The limiting of remedies may be appropriate where a case rests on procedural flaws.

This option would discourage meritless and vexatious claims, and may focus proceedings on resolving and remedying the cause of the problem, possibly encouraging the preservation of the employment relationship.

Restricting remedies may discourage the involvement of any unprofessional representatives.

Restricting costs and remedies may increase injustice, as claimants may not receive a settlement that fairly reflects the wrong suffered.

The limiting of remedies where a case rests on procedural flaws may raise considerable definitional issues.  In practice it can be very difficult to separate procedural from substantial issues.

A ‘one size fits all’ approach may not be appropriate given the diversity of employment relationship problems.

Option 6A

Assess whether provisions in the Act for reducing remedies to reflect substantive justification and contributory conduct are effective.

If this option is considered, the work would need to include a review of the relevant provisions of the Act.

Depending on the outcome of this further work, it may address employer concerns that cases are decided on minor process flaws rather than substantive issues.

As outlined in option 5 above this option is likely raise considerable definitional issues.

Note that under the Act it is already possible for remedies to be reduced if the actions of the employee contributed towards the situation that gave rise to the personal grievance (section 124)

Option 7.

Develop of a Code of Employment Practice relating to employment relationship problem resolution

The Act allows for codes of employment practice.  Cabinet has noted suggestions for the approval process of such codes but the matter has not progressed.  A Code of Employment Practice could codify ‘best practice’ employment practices and raise the profile of these for employers, representatives and employees.

A Code would provide elaboration and guidance for the parties on their legal requirements, but would not provide a “safe harbour” in the sense that  unjustifiable decisions can still be challenged on substantial grounds.

A Code could have a specific focus for small businesses.

The Authority may have regard to any Code developed.

(Additional detail on how a Code would be developed is provided below)

A Code of Employment Practice would support educational initiatives and establish standard practices in the employment relationship problem advice area.  It may help address access to justice issues and costs of representation. Development of a Code would support other initiatives such as increased provision of education and support resources.

A Code may be perceived as mandatory instead of providing guidance.

There may be a perception that a Code will increase focus on procedure rather than substantive issues.

Option 8.

Assess how the provisions relating to a “[mediator] decision by authority of the parties” (section 150 ERA) could be strengthened to encourage its use in cases where an agreement cannot be reached and to discourage the unreasonable withholding of consent by either party

The NZCTU believes this provision that if section 150 was more widely promoted and used it could allow for minor matters to be dealt with in a timelier and less expensive way.

Further work would give the Department better understanding of the issues surrounding the use of section 150 and would allow for options around section 150 to be developed 

This further work could include a consideration of whether it would be appropriate for the Authority to have the power to conduct binding mediation/arbitration between parties, as an alternative or supplementary approach to section 150.

Greater use of this provision would allow minor matters to be resolved quickly and cheaply.

No disadvantages identified

Option 9.

Increasing the capacity of the Department of Labour to deliver mediation services and improve the capability of its mediators to respond to improve services, as identified in the Department’s Mediation Practice Development Project (strengthening mediation practice)

This option would provide additional mediation services of a higher quality. Delays of several weeks before reaching mediation are common. The Department’s analysis and research shows the median time to settlement is five months (which includes any time spent trying to resolve the problem before contacting the Department’s mediators). 70% of employers reported being satisfied with the process in the Department’s mediation service, and 55% with the outcome.

Research shows both parties seek early resolution.

This option will have fiscal implications.

This option would reduce delays in reaching Departmental mediation. More timely access to the Department’s mediation service may contribute to lower settlement costs at mediation (due to lower levels of lost wages), and higher levels of satisfaction.  It may also prevent employment relationships deteriorating further or positions becoming entrenched due to delays in resolution. A shorter time to mediation may contribute to lower legal fees for parties.

Early resolution would reduce the social costs of resolving the problem.

No disadvantages identified

Option 10.

Explore options to reduce the time taken in the investigation and determination of cases in the Employment Relations Authority, including by considering changes to Authority processes to expedite employment relationship problem resolution and improve the effectiveness of the system in meeting its objectives

Members of the Authority currently deliver determinations between two weeks and some months after the hearing. Delays are attributable to workload, delays in receiving submissions and responses from the parties and so on. Options for reducing the time taken in investigation and determination could involve Members reaching oral determinations on the day of the hearing, the establishment of a short finite time frame for written determinations, or the possibility of the Authority conducting binding mediation/arbitration between  parties, as an alternative or supplementary approach to section 150.  Legislative amendment may be necessary depending on the degree and nature of the options.

Research shows both parties seek early resolution.

If feasible options are identified this may led to: likely lower settlement costs due to reduced levels of lost wages and likely lower legal fees for both parties.

Early resolution would reduce social costs.

If feasible options are identified this would have operational workload implications for the Authority in the short term, and possible implications for the workload balance between the Department’s mediation services and the Authority.