Submission on the Employment Relations Amendment Bill 2018
1 Beneficiary Advisory Service (“BAS”) strongly supports this legislation and urges the select committee to adopt it.
2 Whilst supporting the legislation, we have some suggested changes.
Our status as submitters
3 BAS was set up in 1992 to promote and protect the legal, social and citizenship interests of people on benefits and low incomes. Our workers, both paid and voluntary, are drawn from this group and derive a wide range of skills and opportunities through the work they do. Our organisation also reflects the ethnic diversity of our clients, as our workers are of Māori and Pākehā/Palangi descent.
4 We are registered as a Charitable Trust under the name of the Christchurch Peoples Resource Centre.
5 Our primary service is to provide individual information, advice and advocacy for people who are experiencing problems in the benefit system. These problems range from simple entitlement questions to complex legal issues. We have dealt with many of the benefit reviews in Christchurch and we have helped to prepare cases for the Social Security Appeal Authority, the High Court and the Court of Appeal. People who are faced with social security problems are almost invariably referred to us if they contact other community agencies.
6 We have around 800 new clients each year and deal with clients from all over the country. This involves giving information and advice, direct negotiation with the Ministry of Social Development, assistance with applications, support with interviews, and representation at hearings. Our referrals come from other major agencies and a wide range of non-community sources. We are unique as a service in terms of a combination of perspective, knowledge and skills.
7 Our work frequently involves an interface with employment law. For example, our clients are variously either allowed to work part-time whilst receiving a social security benefit or expected to find work as part of their general work obligations; in some cases, our clients have been refused social security support because they have allegedly been dismissed for misconduct, or left work voluntarily, or purportedly refused “suitable” employment; in other cases, our clients have been sent to lengthy unpaid “work trials” as part of their work obligations; and so on.
8 When our clients are at work, or come off a benefit, they are more likely to move into the unstable, poorly paid, vulnerable work that has been encouraged by the incremental dismantling of employment protections over the past nine years. For example, as the Ministry of Social Development (“MSD”) pointed out in comments on the Employment Relations Amendment Bill 2013, repealing the 30 day rule under section 63 would “disadvantage young people, those exiting benefits for employment, and other vulnerable workers”. 
9 At this point, the child poverty we deal with when advising on social security issues is not necessarily mitigated. About 29 percent of poor children have at least one parent working full-time on a low wage. The wage/ work bargain makes no allowance for child poverty.
10 Here, the incremental dismantling of employment protection by National-led coalition governments was a cynical repetition of the brutal political equation underscoring the Employment Contracts Act 1991 and related benefit cuts. Legal protections for the poorest and most vulnerable groups in the paid workforce have been weakened whilst people receiving social security benefits have been forced to compete with those workers, under threat of harsh penalties. This further shifts the cost of a flexible labour market onto workers and particularly marginalised groups.
11 This bill directly addresses some, although not all, of the resulting problems.
“Back to the 1970s”?
12 We note the mantra that this bill, and associated proposals for reform, takes industrial relations “back to the 1970s”.
13 We observe, however, that most of the provisions of this bill simply reinstate the law as it operated for the first six years of National-led coalitions. During this time, the National Party claimed increasing employment growth and associated positive outcomes around employment. To argue against this background that the restoration of these provisions will lead to job losses, leave alone return the law to the 1970s, is nonsense.
14 Further, as officials noted in the background papers to this bill, overall, the changes broadly revert the law to the pre-2014 position and “since the change in the law, there has been little discernible effect that can be attributed directly to the regulatory changes.” 
Amendments relating to unions
15 We support the amendments relating to unions in Part 1 of the bill.
16 In particular, the reinstated right of entry to workplaces under clauses 5 – 8 is an important aspect of freedom of association and consistent with Aotearoa/ New Zealand’s obligations under ILO Convention 98 on the Right to Organise and Collective Bargaining and ILO Convention 87 on Freedom of Association.
17 The 2011 removal of the automatic right of entry to workplaces by the National-led coalition, even in cases of health and safety, was inconsistent with that obligation. It was also inconsistent, at the time, with research around union access carried out by the then Department of Labour in 2010. That research indicated that the right of automatic entry had not caused problems for most employers and most unions, who worked together to find appropriate times and circumstances for visits.
18 The intention behind removing the right of access was clearly to hinder unions in their ability to organise. The results of that change have ranged from misuse of the notification and consent process to delay access and undermine collective bargaining,  to cases where union representatives have been followed, trespassed and even assaulted for attempting to exercise reasonable access rights. 
19 The restoration of the pre-2011 provisions will improve the ability of unions to perform an effective role in collective bargaining and support of their members and simply reinstates legal provisions that operated successfully under the original legislation. Proposed section 18A, entitling union delegates to reasonable paid time to represent employees, will enhance this objective (clause 4).
Amendments relating to collective bargaining
20 We support the amendment relating to collective bargaining in Part 1 of the bill.
21 For the most part, as noted above, the provision in Part 1 of the bill simply restores the law to the position that operated for the first six years of National-led coalition governments.
22 The relevant provisions, now reinstated, were originally inserted in 2004 after extensive research by what was then the Department of Labour, establishing that the original collective bargaining law was not effective for its purpose, particularly where low paid and vulnerable groups of workers were concerned.  These groups include a high proportion of Māori and Pasifika workers, young people, and those exiting social security benefits.
23 It followed inescapably that the real object of the National-led government in the 2014 amendments was to weaken collective bargaining and the negotiating position of the workers who relied on it.
24 We therefore support the clauses in Part 1 of the bill, on the basis that they are beneficial to the interests of workers, and particularly those on low pay, and consistent with the statutory objective of promoting collective bargaining.
25 The provisions are also consistent with Aotearoa/ New Zealand’s obligations under International Labour Organisation Convention 98 on the Right to Organise and Collective Bargaining. The changes made by the National-led government in 2014 were not consistent with this country’s obligations under that Convention.
Duty to conclude bargaining
26 We support the restoration of the duty to conclude bargaining, unless there is a genuine reason not to (clause 11). This removes the very real risk that employers will engage in the façade of negotiation commonly labelled “surface bargaining” to the detriment of the genuine collective bargaining encouraged by the legislation and the workers it is designed to protect. Challenging surface bargaining under the current regime would be prohibitively expensive and protracted. As noted, the changes made by the National-led government in 2014 were not consistent with this country’s obligations under International Labour Organisation Convention 98 on the Right to Organise and Collective Bargaining.
Initiation of bargaining
27 We support the reinstatement of the ability for a union to initiate bargaining (clause 12). The removal of this approach under the 2014 amendment created potential “gaming” scenarios around initiation and encouraged disputes about the technical initiation which would be costly and protracted in practice.
28 We support the repeal of sections 44A to 44C, which allow employers to opt out of multi-employer bargaining (clause 13). Allowing an employer to opt out of multi-employer bargaining before any bargaining has even taken place operates to negate the choice of employees and their unions as to the preferred form of bargaining. It could thus discourage confidence in collective bargaining. It also undermines the section 3 object of promoting bargaining and breached International Labour Organisation Convention 98 on the Right to Organise and Collective Bargaining.
Identifying end of bargaining
29 We support the repeal of sections 50K and 50KA (clause 14). These provisions, enabling the Employment Relations Authority to determine that bargaining has concluded, similarly discourage confidence in collective bargaining,  undermine the section 3 object of promoting bargaining and breach International Labour Organisation Convention 98 on the Right to Organise and Collective Bargaining. We note that the Government at the time was warned both by the Human Rights Commission and departmental officials that section 50K was in breach of the Convention. 
30 We support cl 15, amending s 53 consequentially on the repeal of the above provisions.
31 We support clause 16, amending s 54 so as to clarify the technical issue that arose under the Jacks Hardware decision.  This removes the possibility that, under the proposed new section 33, an employer could argue that insisting on unilateral individual wage-setting was a genuine reason not to conclude a collective agreement. Clearly, as the protracted litigation in Jacks Hardware illustrates, the ability to argue the exclusion of pay as a reason for not concluding an agreement would undermine collective bargaining. It would also further muddy the waters in relation to gender and ethnic pay disparities, contrary to the thrust of the new Government’s policy in these areas.
Provision of information
32 We support clause 17, under which a union can provide an employer with information about the role and functions of unions to pass on to new employees. This provision enables new employees, and particularly young or otherwise vulnerable employees, to become aware of the union, the collective agreement and how it may benefit them at a stage when they are being offered employment. This is the most useful time to provide this information, as opposed to the current requirement to provide limited information when the new employee enters into an individual employment agreement. The provision will operate to encourage informed and timely choice as to employment arrangements.
Amendments to Part 6 (individual employees’ terms and conditions of employment)
33 As with collective bargaining, the changes made to Part 6 (individual employees’ terms and conditions of employment) in 2014 operated to weaken terms and conditions of employment. We support and welcome their repeal.
34 We support clause 18, which replaces current section 62 with new sections 62 to 63AA.
The 30-day rule
35 The proposed new section 62 will once again cover new employees who are not union members by placing them on the same terms and conditions as union members for the first 30 days of their employment. This will protect vulnerable new employees from entering into individual employment agreements on unfavourable terms and conditions. It is consistent with the object in section 3 of recognising inherent inequality in power in employment relationships.
36 In this particular context, we note that the rationale for repealing the 30-day rule presented to the electorate in the National Party’s Employment Relations Policy 2011, was that the inability to agree to lesser terms in some areas, in return for a higher base salary, “can have the effect of lowering base salaries”. In stark contrast, the actual object as stated in the background Cabinet papers, was to enable employers to “offer” terms to new employees which were “less than those in the applicable collective agreement”,  thus facilitating a “race to the bottom” in terms of new hires and undermining the collective agreement.
37 We support proposed new section 63, which requires employers to provide new employees with basic information assisting with the choice between collective or individual coverage. This will assist informed choice, on the basis of an increased awareness of the options, and discourage potential discriminatory behaviour based on union membership.
38 Requiring the employee to make an active choice relating to coverage under the proposed section 63 will enable new employees to acquire a proper knowledge of the collective agreement and the union, so as to enable an informed comparison and more effective decision-making.
39 The proposed new section 63AA, requiring an employer to communicate the employee’s choice to the union, at the employee’s option, will enhance this framework. It will also operate to facilitate unions in meeting the needs of prospective new members effectively.
40 We support the consequential changes in clauses 19 and 20.
41 We support clause 29, restricting trial periods to employers employing fewer than 20 employees, insofar as it limits the current universality of the provision. We note that this restores the original trial period provision, passed under urgency in 2008, and operative from 2009. The trial period provision was extended to all employers in 2011.
42 The limitation to 20 or fewer staff, now repeated in clause 29, reflected the general definition of small to medium size enterprise (“SMEs”). The policy rationale for this restriction to SMEs in 2009 was that, in relation to procedural requirements preceding dismissal, small businesses often “face higher recruitment and dismissal costs relative to large employers” and are “more adversely affected compared with other sized businesses, as they are unlikely to have dedicated human resource procedures and personnel”. 
43 Although the National-led Government argued that trial provisions were intended to assist disadvantaged employees, this seems an inherently unlikely motivation given the overriding policy thrust of its employment legislation. To the extent that it might have been included in the policy impulse, it was convincingly laid to rest by the 2016 Working Paper published by the New Zealand Treasury. 
44 This paper found no evidence that the introduction of the 90-day trial period had significantly increased firms’ hiring and also found no evidence that the policy has increased the probability that a new hire by a firm is a disadvantaged jobseeker, such as a young adult, young Māori, beneficiary or recent migrant. The authors concluded that the main consequence of the policy was to reduce dismissal costs for firms and to increase uncertainty around job security for employees. We infer from the obvious nature of this consequence that the introduction of trial periods was aimed at achieving it.
45 A survey of employers then recorded that 27 per cent of employers had dismissed at least one employee during or at the end of the trial period.  In each case, the employee would have been left without a legal remedy or even explanation for unjustifiable dismissal, no matter how unfair the employers’ behaviour was. The resulting damage to their self-confidence, self-esteem and employment prospects does not require elaboration.
46 In the case of social security benefits, given the absence of the right to raise any unjustifiable dismissal grievance in respect of a trial period dismissal, the applicant’s ability to deal with a finding of misconduct or voluntary unemployment under section 60H of the Social Security Act 1964 is significantly impaired. Clearly, the removal of the right to bring an action for unjustifiable dismissal leaves no scope for testing contested allegations around misconduct or voluntary unemployment for those on trial periods. In our experience, the existing internal policy guidelines  are inadequately understood and inconsistently applied by MSD case managers and the review and appeal process under the 1964 Act is slow-moving and labyrinthine.
47 The many other policy reasons for not adopting trial periods have been convincingly set out elsewhere and need not be repeated. 
48 Whilst we support any restriction of the current trial period regime, we submit therefore that the restriction in clause 29 does not go far enough. In our submission, there is simply no justification for removing the basic right to natural justice from any new employees, no matter that they are employed by a small to medium-sized employer.
49 We submit, instead, that sections 67A and 67B should be repealed in their entirety.
Amendments to Part 6A: Transfer of undertakings
50 Part 6A was originally introduced to protect some of this country’s most vulnerable workers – caretakers, cleaners, catering workers, hospital orderlies and laundry workers – against the risk of new contractors underbidding existing providers by cutting the wages and conditions of the existing workforce. Enabling existing workers to transfer to new owners on their existing terms and conditions was an essential element of this framework under Part 6A.
51 Many beneficiaries, and/or their partners, are dependent on this very type of employment, given the wide spread of hours which are available. A high proportion of these vulnerable workers are Māori or Pasifika workers.
52 The 2013 Review of the Operation of Part 6A concluded that the law was operating well and particularly in terms of providing job security and stability for employees who lack scarce skills and are at risk of unemployment. 
53 A subsequent review by the Department of Labour suggested that exempting small to3medium sized businesses would be likely to lead to “a breakdown in the exercising of the provisions at all”. 
54 Notwithstanding this, the 2014 amendments, which this bill reverses, took exactly that course. Again, it follows inescapably that the real object of these amendments was to further weaken the position of some of the most vulnerable workers in the country, again enabling them to be exploited in a further race to the bottom by successive contractors.
55 For this reason, we strongly support clauses 30 to 34, which reverse the 2014 amendments and restore key protections under Part 6A.
56 This measure protects workers who, by definition, are already vulnerable whilst levelling the playing field between SMEs and other businesses. It will also benefit workers indirectly by encouraging businesses to compete around productivity, rather than focusing on wage cost reductions.
57 In terms of provisions building on the original Part 6A, we support the extension of the required information to disciplinary matters under proposed section 69G(2)(e)(ii), which will enable employees to review this information and exercise a right of correction. We also support the revised 10 day time limit under proposed section 69G(1)(d), which will more effectively enable vulnerable workers to seek legal advice about transfer and to check transfer information for accuracy.
Amendments to Part 6D: Rest and meal breaks
58 We support clauses 35 to 37 of the bill which restore the right for workers to have fixed “reasonable and practicable” rest and meal breaks.
59 Those provisions were again replaced in the 2014 amendment by a permissive regime reliant on notional “agreement” between the parties. This had a predictably adverse impact on the very groups whom the original Part 6D was designed to protect. These included vulnerable workers in sectors such as service and manufacturing and particularly the young, alongside other vulnerable new entrants such as those transitioning from a benefit. For these groups, a regime for rest and meal breaks resting on managerial prerogative often left inadequate entitlements from the point of view of health and safety and general work/life balance. 
60 The inherent imbalance in power recognised by section 3 meant that the “flexibility” provided to employers after 2015 has impacted adversely on workers, and particularly vulnerable workers. The often imposed, but notionally “agreed”, breaks may not give adequate time to rest, refresh, and attend to personal matters during work hours. Further, fatigue arising from an absence of adequate breaks is a well-recognised health and safety risk.
61 Whilst breaks are required to be “reasonable” under the permissive regime introduced in the 2014 amendment, workers who “agree” to breaks before they begin work will not usually be able to assess how many breaks they will require and of what duration. Existing workers are unlikely to challenge the reasonableness of breaks due to uncertainty about what “reasonable” means in this context and reluctance to challenge the employer by raising a claim. Objective reasonableness is ultimately only determinable at the point of challenge and requirements for “reasonable and appropriate” breaks provide little practical protection when the groups most likely to be adversely affected are also the very groups least able to challenge such unlawful behaviour.
62 For these reasons, we strongly support the reinstatement of the original rest and meal breaks provisions. The proposed provisions provide the necessary mechanisms to negotiate around desired flexibilities whilst maintaining a default position as a safeguard for employees who are likely to lack the necessary power to protect a minimal level of entitlement. They also provide a workable alternative for those exceptional cases where an exemption is required in proposed sections 69ZEA and 69ZEB.
63 We suggest one amendment. The proposed s 69ZH(2), which repeats the original drafting, states that where a person is “required” to take a “rest break” by, or under, another enactment that requirement applies in place of those provided for “rest breaks or meal breaks” under Part 6D. In Greenslade v Jetstar Airways Ltd , the Full Court observed that this provision “has the effect of negating not only a Part 6D rest break, but also a Part 6D meal break if there is any rest break requirement under another enactment, even if that rest break requirement is only minimal and manifestly inferior to the entitlements to rest breaks and meal breaks under Part 6D”.
64 In our view, the proposed subsection (2) to s 69ZH could be dispensed with altogether. If it were to be retained, it could be redrafted so as to state plainly that if a person is required to take a rest break or a meal break by or under another enactment, that requirement applies in place of the rest break or meal break, as the case may be, under Part 6D.
Amendments to Part 8: Strikes and lockouts
65 We support clauses 21 to 23, which repeal the ability of the employer to deduct pay from employees who are still performing broad employment tasks whilst engaging in partial strike action, regardless of the scope of the strike action. By way of illustration, the provisions have resulted in workers having a flat rate deduction from their pay for low-level action such as wearing union t-shirts in place of standard uniforms.
66 These changes to the law governing strikes in the 2014 amendment were clearly designed to undermine collective bargaining by making it more difficult to take industrial action during negotiations. Again, this weakening of workers’ bargaining position was clearly significantly detrimental to their interests, and particularly the interests of workers on low pay; inconsistent with the statutory objective of promoting collective bargaining; and in breach of Aotearoa/ New Zealand’s obligations under International Labour Organisation Convention 98 on the Right to Organise and Collective Bargaining.
67 The provisions would also predictably have caused disputes to escalate, to the advantage of neither party.
68 We submit that a further related change is needed to Part 8, by repealing the requirement to give notice of industrial action under section 86A and section 86B. The rationale for these provisions, when inserted in 2014, was tied firmly to the need to be able to calculate the proportionate pay deductions for partial strikes  which are now to be repealed. If retained, it is predictable that they will operate to encourage employers to engage in weakly arguable injunction proceedings as a delaying tactic,  and further prolong disputes.
Amendments to Part 9: Personal grievances, disputes and enforcement
69 We support clauses 24 to 27, extending the grounds for a discrimination grievance by:
- including an employee’s union membership, so preventing employers from dissuading employees from free choice;
- enabling union members to negotiate different conditions through collective association, and protecting them through a collective agreement recognising the benefits of that arrangement; and
- extending the time frame for consideration of union activities as discrimination, which should operate as a further deterrent to discriminatory behaviour.
70 Union membership is a crucial aspect of freedom of association, promoted by section 3 of the Act. The policies adopted by National-led governments over the past nine years have encouraged those employers minded to discriminate against unions to do so, through activities ranging from obstruction of union representatives to undermining collective bargaining. As illustrated by the case law, some employers have attacked unions and their members relentlessly, attracting strong criticism from the courts, including the Court of Appeal. 
71 We also support clauses 38 and 39, restoring the role of reinstatement as the primary remedy for a personal grievance. Reinstatement is the only remedy that fully recognises the lack of justification in dismissing an employee, by restoring them to their original job. This will also enhance to incentive to settle personal grievances.
72 We submit that a further change is required to Part 9.
73 In 2011, the test for justification of dismissal or other disadvantageous action in s 103A was changed from what a fair and reasonable employer “would” have done, to what a fair and reasonable employer “could” have done.
74 This reinstated a test introduced under the Employment Contracts Act 1991, which had markedly restricted the Employment Court’s ability to reach its own conclusions on justification. For example, and remarkably, in introducing the test of what a fair and reasonable employer “could” have done, the Court of Appeal had observed that a dismissal might be seen as “harsh” but also fair. 
75 In 2004, the select committee considering the amendment of that year examined the substituted test of what a fair and reasonable employer “would” have done. The majority correctly took the view that determining objective fairness required a court to draw its own conclusions on the facts and that the guideline of asking what a fair and reasonable employer “would” have done reflected this reality. 
76 In our submission, therefore, the test of justification should be restored to that inserted in 2004, a test which asks what a fair and reasonable employer would have done.
Written submission only
77 We do not request to be heard orally on this submission.
 Our postal address is: Christchurch Community House, 301, Tuam Street, Christchurch Central 8011. Telephone (03) 377 3560 or (03) 377 8787. Email: email@example.com. Facebook: @BeneficiaryAdvisoryService. Website: http://www.bas.org.nz.
 MBIE, Regulatory Impact Statement 2013 paragraph 84
 Jonathon Boston and Simon Chapple, “New Deal for Kids, available at http://www.noted.co.nz/archive/listener-nz-2014/new-deal-for-kids/
 MBIE, Departmental Disclosure Statement, para 5.3 available at http://www.mbie.govt.nz/info-services/employment-skills/legislation-reviews/employment-relations-amendment-bill
 NZ Meatworkers Union Inc v South Pacific Meats Ltd  NZERA Christchurch 21.
 NZ Meatworkers Union Inc v South Pacific Meats Ltd  NZERA Christchurch 121 and NZ Meatworkers Union Inc v South Pacific Meats Ltd and Michael Anthony Talley  NZERA Christchurch 13..
 Department of Labour, Evaluation of the Short Term Impacts of the Employment Relations Act, November 2003..
 See, for example, the facts in AFFCO NZ Ltd v NZ Meat Workers Union Inc  NZEmpC 17.
 See the background material summarised in Mazengarb’s Employment Law (loose-leaf ed) at paragraph [ERA50K.13]).
 First Union Inc v Jacks Hardware and Timber Ltd  NZEmpC 230 (under the “old”.section 33, now to be reinstated)
 Office of the Minister of Labour, Employment Relations Amendment Bill 2012: Paper One – Collective Bargaining and Flexible *Work Arrangements, paper for the Cabinet Economic Growth and Infrastructure Committee, 3 May 2012 (emphasis added).
 Employment Relations Amendment Bill 2008 (explanatory note) at 1, 7.
 Nathan Chappell and Isabelle Sin, The Effect of Trial Periods in Employment on Firm Hiring Behaviour, available at http://motu-www.motu.org.nz/wpapers/16_10.pdf and http://www.treasury.govt.nz /publications/research-policy/wp
 Evaluation of the Short Term Outcomes of the 2010 Changes to the Employment Relations Act and the Holidays Act (Ministry of Business, Innovation and Employment, June 2013), available at http://www.dol.govt.nz/publications/research/short-term-outcomes-2010-changes-era-and-ha-pdf.
 Jeff Sissons and Bill Rosenberg, “90-Day Trial periods: Nostrum or Panacea?”  ELB 18.
Department of Labour, Report of the Advisory Group on Contracting Out and Sale and Transfer of Business to Minister of Labour, April 2012.
 Department of Labour, The Findings of the Review of Part 6A of the Employment Relations Act 2000, October 2012.
 As recognised in Cabinet paper dated 20 August 2009, Proposed Amendments to Rest and Meal Break Provisions, Tracker No. 09/88038, para 13.
  NZEmpC 23.
Office of the Minister of Labour, Employment Relations Amendment Bill 2012: Paper 1 – Collective Bargaining and Flexible Working Arrangements, 3 May 2013, 24.
 As in Lyttelton Port Co Ltd v The Rail and Maritime Transport Union Inc  NZEmpC 13.
 AFFCO New Zealand Ltd v New Zealand Meat Workers Union Inc  NZCA 482.
 W&H Newspapers Ltd v Oram  3 NZLR 29. .
 Employment Law Reform Bill as reported from the Transport and Industrial Relations Committee, Commentary, 16.