CONVENTION 98 NEW ZEALAND

Article 22 of the Constitution of the ILO

Report for the period 1 July 2006 to 31 May 2008
made by the Government of New Zealand on the

RIGHT TO ORGANISE AND COLLECTIVE BARGAINING CONVENTION, 1949 (No. 98) 

1. Please give a list of the legislation and administrative regulations, etc., which apply the provisions of the Convention.  Where this has not already been done, please forward copies of the said legislation, etc., to the International Labour Organisation with this report.
   
   Please give any available information concerning the extent to which these laws and regulations have been enacted or modified to permit of, or as a result of, ratification.

The Employment Relations Act 2000 (the Act) was amended in 2006 in relation to the application of Part 6A of the Act to specified groups of employees in situations where their employer loses a contract for services to a new contractor (subsequent contracting). This amendment does not directly relate to the right to organise or collective bargaining matters.

An updated copy of the Act can be found at the following link:
http://legislation.govt.nz/act/public/2000/0024/latest/DLM58317.html

2. Please indicate in detail for each of the following articles of the Convention the provisions of the above-mentioned legislation and administrative regulations., etc. or other measures under which each article is applied.
   
   If the Committee of Experts or the Conference Committee on the Application of Conventions and Recommendations has requested additional information or has made an observation on the measures adopted to apply the Convention, please supply the information asked for or indicate the action taken by your Government to settle the points in question.

Article 1

1. Workers shall enjoy adequate protection against acts of anti-union discrimination in respect of their employment.
2. Such protection shall apply more particularly in respect of acts calculated to:
   1. make the employment of a worker subject to the condition that he shall not join a union or shall relinquish trade union membership;
   2. cause the dismissal of or otherwise prejudice a worker by reason of union membership or because of participation in union activities outside working hours or, with the consent of the employer, within working hours.

   Please indicate how adequate protection against acts of anti-union discrimination in respect of their employment is ensured to workers.

There have been no significant developments in this area since the last report.

Article 2

1. Workers’ and employers’ organisations shall enjoy adequate protection against any acts of interference by each other or each other’s agents or members in their establishment, functioning or administration.
2. In particular, acts which are designed to promote the establishment of workers’ organisations under the domination of employers or employers’ organisations, or to support workers’ organisations by financial or other means, with the object of placing such organisations under the control of employers or employers’ organisations, shall be deemed to constitute acts of interference within the meaning of this Article.

There have been no significant developments in this area since the last report.

Article 3

Machinery appropriate to national conditions shall be established, where necessary, for the purpose of ensuring respect for the right to organise as defined in the preceding Articles.

There have been no significant developments in this area since the last report.

Article 4

Measures appropriate to national conditions shall be taken, where necessary, to encourage and promote the full development and utilisation of machinery for voluntary negotiation between employers or employers’ organisations and workers’ organisations, with a view to the regulation of terms and conditions of employment by means of collective agreements.

Please indicate any action taken to give effect to Articles 3 and 4.

There have been no significant developments in this area since the last report.

Collective Agreements

As of 31 March 2008, the Department of Labour’s collective agreement database contained 1470 active collective agreements covering 178,176 employees. Of the active collective agreements, there were 228 (15.5%) agreements covering 71,400 (40.1%) employees negotiated between one or more unions and one or more employees (multi-employer and multi-union collective agreements).

Assistance of Employment Institutions in Settlement of Collective Industrial Disputes

In the period from 1 May 2006 to 31 March 2008, the Department of Labour received 4592 applications for mediation assistance.  Available data provides that 7 of these applications concerned collective bargaining and the duty to bargain in good faith.

Employment Relations Education

Employment relations education has continued to assist in increasing employers’, employees’ and unions’ skills and knowledge of employment matters, including freedom of association and collective bargaining.

As with 2005 and 2006, applications in the 2007 funding round exceeded the available funding of NZ$2 million.  Thirty-one applications were received in the 2007 funding round and twenty applicants were successful.  Successful applicants included the New Zealand Council of Trade Unions, Business New Zealand, various individual unions and employer groups and training providers.  Thirty- seven applications have been received in the 2008 funding round. These are currently being considered.

Examples of ERE courses that have received funding include courses on good faith obligations during collective bargaining, understanding employment rights and obligations, health and safety in employment, and training in bargaining and negotiation skills.

Article 5

1. The extent to which the guarantees provided for in this Convention shall apply to the armed forces and the police shall be determined by national laws or regulations.
2. In accordance with the principle set forth in paragraph 8 of article 19 of the Constitution of the International Labour Organisation the ratification of this Convention by any Member shall not be deemed to affect any existing law, award, custom or agreement in virtue of which members of the armed forces or the police enjoy any right guaranteed by this Convention.

There have been no significant developments in this area since the last report.

Article 6

This Convention does not deal with the position of public servants engaged in the administration of the State, nor shall it be construed as prejudicing their rights or status in any way.

There have been no significant developments in this area since the last report.

3. Please state whether courts of law or other tribunals have given decisions involving questions of principle relating to the application of the Convention. If so, please supply the text of these decisions.

Since the last report there have been a number of decisions from the Court of Appeal, Employment Court and Employment Relations Authority that have considered aspects of the collective bargaining provisions and the obligation to bargain in good faith under Part 5 of the Employment Relations Act 2000.

Copies of the following cases are attached:

• Waikato District Health Board and Ors v The New Zealand Public Service Association Inc and Ors, unreported, 20 March 2008, AC 6/08
• Service and Food Workers Union Nga Ringa Tota v Auckland District Health Board & Ors (2007) 9 NZELC 98,980
• Christchurch City Council v Southern Local Government Officers Union Inc, unreported, Chambers, 16 February 2007, CA 276/05.
• NZ Amalgamated Engineering, Printing & Manufacturing Union Inc v Witney Investments Ltd (Formerly Epic Packaging Ltd), unreported, 21 December 2007, CA 282/06)
• National Distribution Union Inc v General Distributors Ltd, unreported, 16 February 2007, AC 7/07
• Spotless Services (NZ) Ltd and Ors v Service and Food Workers Union Nga Ringa Tota Inc and Ors, unreported, 17 March 2008, CA 704/07.

Status of an unratified collective employment agreement

Waikato District Health Board and Ors v The New Zealand Public Service Association Inc and Ors, unreported Full Court, 20 March 2008, AC 6/08 is a preliminary decision of the Employment Court (the Court) determining two issues relating to collective bargaining before the matter proceeds to a substantive hearing.  The first issue related to the status and effect of a written collective agreement, which had been signed by the employer and union parties but not ratified by the relevant union members.  The second issue questioned whether section 163 of the Employment Relations Act 2000 (the Act)) prohibit the Authority, or the Court, from granting the employer any remedies for non-ratification. 

The parties’ negotiations for a multi-employer collective agreement (MECA) were suspended pending the outcome of nationwide wage negotiations.  Those wage negotiations resulted in an agreement that the Union took to its members and had ratified.  The MECA negotiations were resumed and the wage negotiation agreement was incorporated into the MECA.  The Union signed the MECA but did not take it back to its members for further ratification. 

On the first issue, the Court found that a signed but unratified collective employment agreement was not a valid collective employment agreement.  Under section 54(1) of the Act a collective agreement has no effect unless it is in writing and the required signatures are present in the collective agreement.  The Court concluded that this requirement can not be read in isolation from the requirement in section 51 of the Act that a union must not sign a collective agreement until it has been ratified.  Unless it was ratified in accordance with the relevant ratification procedure notified to the employer(s) at the commencement of bargaining it will be of no effect, even if it is in writing, and purports to have been signed by the parties. 

On the second issue the Court found that how an agreement was ratified was not a matter an employer could interfere with as it was the sole province of a union and its members.  However, what was ratified and when, were matters governed by the Act and therefore an employer could have justiciable rights.  In this case the employer is not seeking to interfere with union rules but to ensure compliance with the legislation.  The Court found that the Authority is not precluded by section 163 of the Act from declaring that a collective agreement that has not been ratified is of no effect.  This is because an unratified collective agreement is not a collective agreement and is of no effect, therefore, section 163 does not apply.

Bargaining Process

Service and Food Workers Union Nga Ringa Tota v Auckland District Health Board & Ors (2007) 9 NZELC 98,980 involved proceedings removed from the Authority to the Employment Court (the Court). The plaintiff union’s members included employees of the 16 defendant District Health Boards (DHBs) and four defendant companies that contracted services to the Health Boards.  The union initiated bargaining with all the defendants seeking a multi-employer collective agreement (MECA).  All the defendants initially wanted single-employer collective agreements.  The Health Boards later signalled their willingness to be parties to a MECA but opposed the inclusion of the defendant companies.  The plaintiff submitted the defendants were acting contrary to law by refusing to agree to a MECA when the Act required parties to settle a MECA if stipulated for by the union.  The plaintiff further submitted that counter-initiation of bargaining by an employer against whom collective bargaining has been initiated by a union was not contemplated or permitted by the Act. 

The plaintiff’s first submission involved the interpretation of clause 6 of the Code of Good Faith for the Public Health Sector set out in the Act.  The Court concluded that Parliament intended the presumption that bargaining for collective agreements included bargaining for MECAs unless it was neither practical nor reasonable.  The clause used the word “support”.  The Court interpreted “support” to mean to have a commitment to, but not an absolute or irrevocable commitment or a commitment at all costs.  However the clause is subject to section 33 of the Act and so must be congruent with it.  If section 33 and the clause are in conflict, the clause must yield to it.  The Court found that section 33 of the Act did not go any further than to make it an incident of the duty of good faith in section 4 that a union and an employer bargaining for a collective agreement conclude such an agreement unless there is a genuine reason, based on reasonable grounds, not to.  At the end of bargaining, all that is required is a collective agreement which may include a MECA but, equally, may include a SECA or one of the other varieties of collective permutations that the Act allows.  The Court found that the lawfulness of counter-initiation is a matter of statutory construction.  If cross- or counter-initiation were allowed it would give rise to multiple bargaining processes all of which would impose on the parties to them obligations to conclude collective agreements.  That does not accord with the objective of promotion of orderly collective bargaining.

Good faith - direct communications with employees or employers rather than representatives during bargaining

As stated in the last report, Christchurch City Council v Southern Local Government Officers Union, unreported, Full Court, 7 September 2005, CC 12/05 was appealed to the Court of Appeal.  The appeal was concerned with the extent to which employers may communicate with their employees during the bargaining process, in circumstances where the employees are members of a union.  The appeal covered three broad issues; firstly to what extent section 32(1)(d) of the Act prohibited the council from communicating with its employees without the union’s consent, secondly whether the test of whether a party has acted in bad faith is subjective and thirdly whether section 32(1)(d) of the Act could prohibit communications prior to the initiation of bargaining.  The Court of Appeal formally dismissed the appeal but found that the Employment Court had erred in two respects.  Neither error affected the Employment Court’s conclusion that a number of the employer’s communications breached section 32(1)(d)(iii) of the Act by failing to comply with the duty of good faith. 

However, the Court of Appeal disagreed with the Employment Court’s interpretation of section 32(1)(d)(ii) of the Act. The Employment Court’s interpretation reintroduced a general ban on communications between employers and employees during bargaining which appeared to be inconsistent with the parliamentary intent of preventing communications only to the extent they undermine or might undermine the bargaining or the union’s authority in bargaining.  On the first issue the Court found that section 32(1)(d) of the Act prohibited the council from communicating with its employees only in so far as such communication amounted, directly or indirectly, to negotiation with those employees about terms and conditions of employment or such communication undermined or was likely to undermine the bargaining with the union or the union’s authority in bargaining.  In answer to the second issue the Court found that the test to determine whether a party to bargaining had acted in breach of good faith pursuant to section 4 and/or section 32 of the Act was neither wholly objective nor subjective, and those labels were not particularly helpful.  In terms of section 32 the court must apply the plain words of subsection (1), in light of the matters specified in subsections (3)-(5).  In answer to the third issue the Court found that section 32(1)(d) of the Act could not prohibit communications prior to the initiation of bargaining.

Subsequent party negotiations

Epic Packaging Ltd v New Zealand Amalgamated Engineering, Printing & Manufacturing Union Inc, unreported, YS Oldfield, 8 February 2006, AA 25/06, discussed in the last report, was appealed first to the Employment Court and then to the Court of Appeal (the Court).  The respondent changed from Epic Packaging Ltd to Witney Investments Ltd during the course of the appeals.  The Union sought leave to appeal on the question of whether a union can issue a notice under section 42 of the Act to initiate bargaining for an employer to join an existing collective employment agreement as a subsequent party.  In NZ Amalgamated Engineering, Printing & Manufacturing Union Inc v Witney Investments Ltd (Formerly Epic Packaging Ltd), unreported,21 December 2007, CA 282/06) the Court of Appeal allowed the appeal.  The Court found that a Union could issue a notice under section 42 of the Act to initiate bargaining for an employer to join an existing CEA as subsequent party. 

The Court concluded that section 56A of the Act allows subsequent joinder to existing collective agreements where negotiations (whether inside or outside the statutory bargaining process) have resulted in an agreement by an employer or union to join an existing collective agreement. The Court also concluded that any agreement to join an existing collective agreement is likely in itself to be a collective agreement.  The Court found that its conclusions were supported both by the words of the statutory bargaining provisions themselves and the scheme and purpose of the Act with its emphasis on good faith collective bargaining. In our view, any statutory indications to the contrary are not strong enough to lead to a different conclusion.

“Passing-on” collectively bargained terms of employment to non-union employees

As stated in the last report, Service & Food Workers Union Nga Ringa Tota Inc v Air New Zealand, unreported, L Robinson, 27 September 2005, AA 382/05, and Tertiary Institutes Allied Staff Association Inc (TIASA) v Unitec Institute of Technology, unreported, J Scott, 16 December 2005, AA 487/05 were both removed to the Employment Court.  A decision on either case has not been forthcoming from the Employment Court. 

In National Distribution Union Inc v General Distributors Ltd, unreported, Full Court, 16 February 2007, AC 7/07 the Employment Court (the Court) dealt with the issue of “passing on” collectively bargained terms and conditions to other employees or unions not covered by the collective bargaining or collective agreement.  The proceedings were removed from the Employment Relations Authority for hearing in the Employment Court at the first instance.  The defendant operated three supermarket chains throughout New Zealand.  The plaintiff union had members who worked for the defendant in a variety of positions receiving a range of remunerations under a collective employment agreement (CEA).  The CEA included pay increase and bargaining fee clauses.  A significant number of employees who were on individual employment agreements opted out of paying the bargaining fee.  The defendant made a wage offer to the non-union employees who had opted out of paying the bargaining fee.  The CEA provided for union members to receive a wage increase of 60 cents per hour.  The defendant paid non-union members a 5% or 5.2% wage increase, which worked out as an increase of between 57 and 63 cents per hour.  The plaintiff alleged the wage increases were in breach of section 59B(2) of the Act and thereby of the duty of good faith in section 4 as it was done with the intention of undermining the collective agreement and had that effect. 

Firstly the Court concluded that the wage increases given to non union members were not the same or substantially the same as a term or condition in the CEA.  The parties had agreed that the wage increases were not the same so the issue became whether they were substantially the same.  The Court concluded that Parliament had intended for there to be a higher or more precise standard of sameness than was the case in this instance where the Court found that the wage increases were similar. 

Secondly the Court assessed whether the defendant acted with the intent and effect of undermining the collective agreement. The Court found that the defendant did not pass on the wage increases to non union members with the intention of undermining the collective agreement within the meaning of section 59B of the Act.  The Court found that intent to harm the plaintiff did not need to be the primary purpose but it had to at least be a concurrent or activating purpose.  The necessary intention to undermine the collective agreement would not be proved if the undermining was an incidental, albeit known or foreseen consequence of the employer’s acts or omissions for some other purpose.  The Court concluded that the defendant did not breach section 4 of the Act as it did not do anything to mislead or deceive, or that was likely to mislead or deceive the plaintiff.  The wage increases were not the same or substantially the same.  The wage increases were not made with the intention of undermining the collective agreement and did not have the effect of undermining the collective agreement.  The wage increases did not breach the collective employment agreement between the parties. 

Strikes and lockouts

In Spotless Services (NZ) Ltd and Ors v Service and Food Workers Union Nga Ringa Tota Inc and Ors, unreported William Young P, Ellen France, Baragwanath JJ, 17 March 2008, CA 704/07 the Court of Appeal granted leave to appeal two judgments of the Employment Court; Service and Food Workers Union Nga Ringa Tota Inc v Spotless Services (NZ) Ltd Colgan CJ, 27 July 2003, AC 43D/07, and Service and Food Workers Union Nga Ringa Tota Inc v Spotless Services (NZ) Ltd, unreported, Colgan CJ, 26 November 2007, AC 50A/07.  Leave to appeal was granted on the question of whether the following conclusions of the Employment Court were erroneous in law: firstly that the lockout was unlawful and not within section 82 of the Act, secondly that the subsequent notices to employees issued by Spotless in any event invalidated the lockout; and thirdly that the employees’ financial relief should be calculated on the basis that were it not for the lock-out notices they would have been on strike pursuant to strike notices given by the union.

4. Please supply any general observations which may be considered useful with regard to the manner in which the Convention is applied.

There have been no significant developments in this area since the last report.

5. Please indicate the representative organisations of employers and workers to which copies of this report have been provided.

New Zealand Council of Trade Unions
Business New Zealand