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Brief Counsel

The Employment Relations Act changes in detail

02 November 2012

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Changes to collective bargaining and to the duty of good faith are at the heart of the package of amendments the Government plans to make to the Employment Relations Act 2000.

The reforms, which substantially deliver on National’s election policy commitments, are planned to take effect in the second half of next year.

Duty of good faith

The duty of good faith in section 4 of the Act will be amended to clarify that employers are not required to provide an employee with confidential personal information about another person, or evaluative material about the employee concerned, where the employer is proposing to make a decision that will, or is likely to, affect an employee’s continued employment.

This will limit the effect of the Employment Court’s controversial Massey University1 decision and will bring the Employment Relations Act largely back into line with the Privacy Act 1993.  It is a welcome move, although employers will continue to have significant good faith obligations in restructuring, dismissal, and sale of business situations.

Collective bargaining

The intended changes to collective bargaining have been widely publicised and include:

  • removing the requirement for parties to conclude a collective employment agreement, and enabling the Employment Relations Authority to declare that collective bargaining is at an end in certain circumstances
  • removing the requirement for all new employees to be employed on the terms of any applicable collective agreement for the first 30 days of their employment
  • allowing employers to opt out of multi-employer bargaining, and
  • allowing proportionate pay reductions where employees take partial strike action.

Missing from the mix is National’s 2008 policy commitment to provide non-union workers with the right to bargain and enter into collective agreements.

Part 6A – continuity of employment in a restructuring

The provisions protecting “vulnerable employees” (principally cleaners and food service workers) in business sale and restructuring situations will also be rewritten.  Many of these changes will fix known loopholes, and will create a more workable regime.

The changes include:

  • information-sharing requirements between the old and new employers 
  • a process requiring old and new employers to agree how to apportion liability for accrued employee entitlements (and a default arrangement which will apply where there is no agreement)
  • requiring employees to confirm whether they will transfer to a new employer within five working days (unless a longer timeframe is agreed)  
  • providing that small and medium businesses (those with fewer than 20 employees) will not have to comply with Part 6A, if they are the incoming employer, and
  • introducing an implied warranty, with remedies in the District Court, confirming that the old employer has not harmed or disadvantaged the new employer’s business (for example, by inflating employee entitlements before the transfer). 

More information on these and other changes is available here or by contacting the authors featured.

Footnote

1. Vice-Chancellor of Massey University v Wrigley & Kelly [2011] NZEmpC 37

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