Tea Time?: What the Changes to the Employment Relations Act Actually Mean
BY FIONA WU
On the 11th of December 2018, the Employment Relations Amendment Act 2018 received the Royal Assent and was officially passed into law. It was the cumulation of a longstanding promise by the Labour Party to reform employment policy and deliver fairer outcomes for workers. Workplace Relations Minister Iain Lees-Galloway argues these amendments essentially restore the system to where it was when Labour was last in government in 2008. Many National MPs disagree with this, however, and say it takes New Zealand much further back to the days of peak union power in the 1970s.The changes have taken effect in two stages, the first being the day after Royal Assent on the 12th of December 2018, with the remaining changes taking place in May. There are four key areas of amendment:
- Section 43 reinstated prescribed meal and rest breaks;
- Sections 7-13 strengthened collective bargaining and union rights;
- Section 40 restored protections for vulnerable workers regardless of the size of their employer; and
- Section 36 limited 90-day trials to businesses with fewer than 20 employees.
Prior to the ERA Amendment Act, there were no prescribed minimum break times. The requirement was simply that they must be reasonable and appropriate for the duration of the employee’s work period. Timing of breaks had to be either agreed with or specified by the employer. Essentially, this meant employers did not need to give rest and meal breaks at all. New Zealand Council of Trade Union’s president, Richard Wagstaff, said these laws were not justified and they were also “exploitative and unfair.” Although many employers did continue to arrange breaks, Wagstaff argued the laws allowed particularly pernicious and unscrupulous employers to remove them, especially from vulnerable workers. The ERA Amendment Act gives workers the right to take an unpaid meal break for work over four hours. This means an eight-hour work day now must include two 10-minute rest breaks and one 30-minute meal break, while a four-hour work day must include one 10-minute rest break, which will be paid. These changes took place on the 6th of May 2019. These changes have very strict criteria, providing exceptions only for some workplaces where it is not practical for workers to take breaks at the same time, such as in essential services. Wagstaff has endorsed these changes, saying that rest breaks benefit workplaces by helping employees work safely and productively. Lobby groups such as Business NZ, however, were vehemently opposed to these changes, calling it “harmful and oppressive” for employers.
What is collective bargaining?
Collective bargaining is the process by which a union bargains for a collective group of employees for changes, such as better work conditions and higher wages. This is done on the basis that it is much harder to refuse a demand from twenty employees than one. During the course of collective bargaining, parties can use strikes and lockouts as tools to advance their bargaining aims. Under previous law, both union and employers had a duty of “good faith” in collective bargaining, meaning that they should negotiate with an intention of achieving a mutually acceptable outcome.The ERA Amendment Act made a large number of changes which strengthened the position of unions, both generally and in relation to collective bargaining. There were varying times set for these changes to take place.The changes that took effect on the 12th of December 2018 were:
- Union representatives can now enter the workplace without consent, provided the employees are covered under, or bargaining towards, a collective agreement.
- Businesses can no longer opt out of bargaining for a multi-employer collective agreement (MECA) if asked by a union. A MECA is used where there is more than one employer party, for instance multiple District Health Boards abiding by the same employment provisions.
- A union can initiate bargaining 20 days ahead of an employer.
- Pay deductions can no longer be made for partial strikes.
The changes which took place on the 6th of May 2019 are:
- The duty to conclude bargaining has been restored. This elevates the duty from “good faith” and now requires that a result must come out of bargaining.
- Pay rates must be provided for in a collective agreement.
- Employers will need to allow for reasonable paid time for union delegates to undertake their union activities.
These aspects of the changes were perhaps the most controversial and one of the reasons for the National Party’s allegations that it is an echo of the 1970s, commonly regarded as the heyday of union power.
Vulnerable Industry Employees
The Employment Relations Act specifies a list of vulnerable industries, which mostly pertain to cleaning services, food catering services, caretaking and laundry services in certain sectors. People employed in these industries are termed ‘vulnerable workers.’The changes to the ERA allow for vulnerable workers, if their work is affected by restructuring, to transfer to a new employer in the industry on their current contract terms and conditions, regardless of the size of their employer. The changes also include a longer notice period for employees to choose to transfer to the new employer. The rationale for this is that vulnerable employees are employed in sectors in which restructuring occurs frequently, where their terms and conditions of employment tend to be undermined by restructuring and who have little bargaining power. These changes can be seen to somewhat ‘level the playing field’ for these employees.
The changes to the trial period was the change that attracted the greatest media attention, in part due to the sheer number of people the issue affects. Previously, the 90-day trial period permitted all employers to dismiss new staff within the first 90 days of their employment without having to provide any reason to the employee. The employee was unable to raise a personal grievance claim for unfair dismissal. These changes, which took place on the 6th of May, restricted the 90-day trial period to businesses with 19 or fewer employees, to restore protections from unjustified dismissal for most employees starting a new job. Businesses with 20 or more employees can continue to use probationary periods to assess an employee’s skills, which puts an employee on notice that their performance is being monitored and lays out processes for managing performance issues and terminating employment if such issues are not resolved. The rationale for the 90-day trial period it that it reduces risks for businesses when hiring a new employee and incentivises employers to take chances on prospective employees they may not otherwise. However, a recent Treasury report has noted that, while the existing evidence is limited, it narrowly leans towards these trials causing more harm than good. The flexibility provided for employers is true - with employers dismissing roughly a quarter of the employees within the trial periods - but are outweighed by the damage to workers’ morale, which may make them more risk-averse.
The Jury’s Out on This One?
The Employment Relations Amendment Act is the Labour Government’s flagship workplace relations policy. It would be correct to say that it mostly reverses policy changes made under the last National-led Government, with the addition of some provisions to make life easier for unions bargaining with employers. Most of the provisions will be familiar to these who were working at the time of the last Labour Government. The National Party and business lobbies fought an extended campaign against the bill, contending that it forces extra costs on businesses. Despite the changes made, Wagstaff said the bill was not everything the unions had wanted, but they accepted the reality of coalition Government. Business NZ largely welcomed the changes, though its head, Kirk Hope, expressed some concern about the ban on 90-day trials for large businesses. He argues that the requirement for employers to reach agreement on bargaining demands would constitute a breach of international law.Despite the vigorous discussion and media attention, these changes are largely not radical, and with the bulk of the changes only coming into effect on May 6th, its effect on the country and the employment landscape are obviously yet to be felt.
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 Employment Relations Act 2000, s 69ZD.
 Employment Relations Amendment Act, s 43.
 ERA Amendment Act, s 8.
 ERA Amendment Act, s 15.
 ERA Amendment Act, s 14.
 As above n 11, s 19 (1).
 As above n 11, s 6.
 Employment Relations Act 2000, sch 1A.
 ERA Amendment Act, s 40.
 As above n 14.
 Henry Cooke “What the upcoming employment law changes actually mean,” above n 1.
 As above n 19.