New Zealand: Employment law change creates more flexible labour market

Brief Counsel
Last Updated: 6 November 2014
Article by Pheroze Jagose, Marie Wisker, Doug Alderslade, Geoff Carter, Garth Gallaway and Vonda Hodgson

Most Read Contributor in New Zealand, September 2016

The Employment Relations Amendment Act, passed yesterday, will bring new flexibility to the labour market and will reduce the ability of unions to organise and to recruit.

The Act, which will come into effect four months after it receives the Royal Assent, is the first piece of legislation to be passed in the National Government's third term.

We summarise the main provisions.

Collective bargaining

Latest Statistics New Zealand figures have just over 27% of the workforce unionised and only 24% covered by collective agreements. A large proportion, if not the majority, of these are in the public sector. But there are segments of the economy where the unions remain relatively strong – in particular, the ports.

Changes include:

  • removing the requirement on employers to conclude a collective employment agreement (CEA), although it will still be against the duty of good faith to refuse to conclude a CEA simply out of an objection in principle to collective bargaining
  • creating a process to achieve this through application to the Employment Relations Authority (ERA) for a declaration that bargaining has concluded. If the ERA so decides, there will be a 60-day grace period before bargaining can be re-initiated. If not, the parties will have to wait 60 days before they can return to the ERA for another determination
  • allowing employers to opt out of multi-employer bargaining when the object of the bargaining is to sign the employer up to an already concluded CEA
  • removing the requirement that new hires, whether union members or not, be employed on the terms of any applicable CEA for the first 30 days, and
  • allowing both unions and employers to initiate collective bargaining within the same time frames.

Industrial action

Providing that where an employer or a union has initiated bargaining to replace a CEA within the term of the contract, the existing CEA will remain in force for up to 12 months after its expiry date (currently this only applies where a union has initiated the bargaining).

Introducing a right to reduce employees' pay during partial strikes. A partial strike includes refusing to accept particular tasks that are part of normal duties, working to rule, "go-slows" or breaking some aspect of the CEA – e.g. refusing to wear a work uniform.

Requiring advance written notice of any proposed strikes or lockouts. This must specify a start and end date and time or an event which would conclude the action. If the timeframe is over-run, a new notice will be needed. Any withdrawal of a notice is also to be in writing.

Flexible working arrangements

Extends the right to request flexible working arrangements to all employees (not just those with caring responsibilities) from the beginning of their employment.

Removes the limit on the number of requests an employee may make over a 12-month period.

Reduces from three months to one month the response time for an employer to consider a flexible working arrangement.

Allows employers to schedule rest and meal breaks to suit service or production continuity, as far as is reasonable, with the employer able to restrict breaks for work reasons and to determine break arrangements where agreement cannot be reached.

Clarifies that rest breaks must be paid.

Continuity of employment

Requires employees who have the option of transferring to the new employer to notify their current employer within five working days of receiving the transfer offer (or whatever longer timeframe is agreed between the two employers).

Requires the outgoing employer to provide the incoming employer with detailed information (employment agreements, wages and time records, holiday and leave records, gross earnings and personnel files, where they exist) as soon as practicable and before the restructuring takes effect.

Enables employers to negotiate an agreement regarding the apportionment of transferees' service-related entitlements, with a default formula where no agreement is reached.

Provides an implied warranty from the outgoing to the incoming employer that the workers' conditions have not been changed to adversely affect the costs attached to the business. Breaches of this provision may lead to damages being awarded in the courts.

Creates an exemption for employers with 19 or fewer employees, including franchises which operate at arm's length from the franchisor.

Disclosure of information and duty of good faith

Clarifies that the duty of good faith does not require the employer to provide an affected employee with access to confidential information about an identifiable person where that would involve "an unwarranted disclosure of the affairs of that individual".

Defines "confidential information" as information provided under a mutual understanding of secrecy (whether expressed or implied), as described in the judgment of the Employment Court in Massey University v Wrigley.

Timeframes for ERA decisions

Requires the ERA at the conclusion of an investigation meeting to provide either an oral determination or indication of the ERA's findings. Either must be followed within three months by a written determination.

The information in this article is for informative purposes only and should not be relied on as legal advice. Please contact Chapman Tripp for advice tailored to your situation.

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