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Transplanting Good Faith into New Zealand Labour Law: The Experience under the Employment Relations Act 2000

Author: Gordon Anderson LLM (Cant)
Associate Professor, Victoria University of Wellington Faculty of Law
Issue: Volume 9, Number 3 (September 2002)

Contents:

Transplanting Good Faith into New Zealand Labour Law: The Experience under the Employment Relations Act 2000

    Introduction

  1. The Employment Relations Act 2000 (ERA)[1] is the third major reform of labour law since 1987 and as with the last major reform, the Employment Contracts Act 1991 (ECA), it departs significantly from the philosophy and structure of the Act being repealed. This paper focuses on one aspect of the new Act - the introduction of a statutory obligation of good faith in the employment relationship. In this respect it contrasts sharply with its predecessor, the Employment Contracts Act 1991 (ECA), which implemented a strongly new-right vision of labour law that seriously undermined both the collective and individual rights of employees and significantly enhanced the powers of employers to deregulate and deunionise their workplaces.[2]

  2. The failure to give weight to internationally recognised principles on freedom of association was one of the most strongly criticised features of the ECA and the subject of an adverse report by the ILO Committee on Freedom of Association.[3] In opposition the Labour Party made it clear that it proposed a relatively moderate reform based on the core ILO principles but one which would introduce a much greater balance into labour law and industrial relations. The key to this reform is the statutory obligation of good faith.

    Key provisions of the ERA - the general good faith obligation

  3. Part 1 of the ERA is entitled "Key provisions" and combines the usual objects clause of a long title and a provision relating to "Good faith employment relations". These "Key provisions" present a clear statement of the Government's vision of employment and of the philosophy of the legislation to which mutual trust and confidence and good faith are central. In the Explanatory Note to the Bill the Government stated: "The principle of good faith underpins the Bill, both generally and specifically." As will be seen the Act makes it clear that good faith applies not only to the various processes and procedures put in place by the Act but to employment relationships as such.

  4. Section 3 sets out the following objects:

    "(a) to build productive employment relationships through the promotion of mutual trust and confidence in all aspects of the employment environment and of the employment relationship -

      (i) by recognising that employment relationships must be built on good faith behaviour; and
      (ii) by acknowledging and addressing the inherent inequality of bargaining power in employment relationships; and
      (iii) by promoting collective bargaining; and
      (iv) by protecting the integrity of individual choice; and
      (v) by promoting mediation as the primary problem-solving mechanism; and
      (vi) by reducing the need for judicial intervention; and

    (b) to promote observance in New Zealand of the principles underlying International Labour Organisation Convention 87 on Freedom of Association, and Convention 98 on the Right to Organise and Bargain Collectively."

    These are in marked contrast to those of the ECA - the major object of which was to "promote an efficient labour market" - and signal an approach that is based on and reflects the observance of the principles of ILO conventions 87 and 98.[4]

  5. The second section in "Key provisions", s 4 sets out the scope of the good faith obligations in some detail. Section 4(1)(a) imposes the general obligation that the parties to an employment relationship must "deal with each other in good faith." There is no definition of good faith as such although it is partially defined by paragraph (b), which provides that the parties must not do anything that misleads or deceives the other. It is, however, made explicit that this does not limit the general obligation in paragraph (a).

  6. "Employment relationships" are defined broadly in s 4(2) and include not only the obvious cases of employer - employee and union - employer relationships but those between a union and its members, between unions involved in joint collective bargaining or unions that are parties to the same collective agreement. In the case of collective bargaining the duty extends to the members of the other unions involved. Interestingly given modern employment practices there are two notable omissions from the list. First the set of relationships that apply where employees are technically employed by a labour supply company but for practical purposes are under the de facto control of the business that benefits from their work, and second the situation where the legal "employer" is a subsidiary company with little influence over group decision making.

  7. The matters to which the good faith obligation applies are defined in subs (4) although again it is made clear that these are examples only and not a definitive list. The list nevertheless includes most matters that are likely to have a significant collective impact on employees. Apart from the obvious case of collective bargaining the list includes consultations about "the effect on employees of changes to the employer's business"; "proposals that might impact on an employer's employees including proposals to contract out work otherwise done by employees or to sell or transfer all or part of the employer's business"; and "making employees redundant." The list thus includes most business developments likely to impact on an employee's job security.

  8. In assessing the potential impact of s 4 two questions need to be addressed. The first is what is the substance of the obligation and in particular does it add anything to the obligations dealing with employer - employee relations under existing law? The second, which follows from the answer given to the first, is whether the good faith obligation is likely to impact on the practical management of employment relationships? While answers to these two questions must still be tentative it appears that from the initial decision of the Court of Appeal that there will be an attempt to constrain the impact of the obligation as far as possible. Nevertheless it is still likely that there is the potential for a significant impact especially for employers who will need to ensure that their employment practices are expanded or refined to encompass the matters listed in s 4(4).

    Good faith in collective bargaining

  9. In addition to the provisions of general application in s 4 the Act imposes additional and more focussed obligations relating to good faith in collective bargaining. The obligation is, however, strictly an obligation as to process and not outcome. The Act is explicit that the duty of good faith does not require an employer and a union to either agree on any matter for inclusion in a collective agreement or to enter into a collective agreement.[5] The Authority is expressly precluded from fixing of terms and conditions of employment.[6]

  10. The basic obligations are set out in Part 5 although again the list is not definitive. The good faith requirements in relation to collective bargaining are an important innovation for New Zealand but such a requirement is of course well established in North America.[7] It should also be noted that bargaining is defined in broad terms[8] to include "all the interactions between the parties to the bargaining that relate to the bargaining" as well as actual negotiations and communications or correspondence that relate to the bargaining. The obligations appear to represent a distillation of the North American case law and particularly that of Canada.

  11. The core requirements

    The Act, in what seems to be a legislative attempt to distil principles developed by the courts in other jurisdictions, requires the parties to do "at least" a number of specific things for good faith bargaining[9] These have been supplemented by a Code issued by the Minister[10] based on the recommendations of a tripartite committee. While the code is not binding the Authority or Court "may" have regard to it in determining whether the parties have acted in good faith.

  12. Bargaining process and meetings[11]

    The parties are required as soon as possible after the initiation of bargaining to use their best endeavours to enter into an arrangement that sets out a process for conducting the bargaining in an effective and efficient manner. They are also required to meet each other from time to time for the purposes of bargaining. These obligations seem unlikely to cause significant difficulties except possibly when one party refuses to meet the other unless the threat of a strike or lockout is withdrawn. Such refusals were not uncommon under the previous law.

  13. To consider and respond to proposals made by the other party[12]

    Experience in North America suggests that so-called "surface bargaining" where one party goes through the motions of bargaining but with no intention of reaching an agreement may create problems and such cases are likely to involve difficult factual evaluations to determine whether or not there has been a breach of good faith.

  14. Not to undermine bargaining[13]

    This requirement contains three related obligations. The first requiring the parties to recognise the role and authority of the other's representative is unproblematic. The others are more contentious: a party must not bargain (whether directly or indirectly) with the persons represented by the other party and must do nothing "that is likely to undermine the bargaining or the authority of the other [party] in the bargaining." These provisions reflect a number of judicial decisions made under the ECA which were regarded as permitting employers to engage in practices that undermined either the union itself or the actual negotiations. The original Bill would have prohibited any communication and the Act's weaker form especially in relation to "communications" appears to have been the result of objections that it would have been an unacceptable limitation on freedom of expression.[14] The result is likely to be that aggressive employer communications strategies which were not uncommon under the ECA may need to be relitigated under in the new legislative context. In NZ Fire Service Commission v Ivamy [1996] 1 ERNZ 85 the Court of Appeal adopted an extremely restrictive approach to freedom of association and the right to bargain making them clearly subordinate to the employer's freedom of expression and it is yet to be seen if this will be modified under the ERA. Given the approach in Coutts Cars Ltd v Baguley, discussed below, one would not be optimistic of a major change in approach.

  15. Provision of information[15]

    The original Bill required disclosure of information "that might reasonably be expected to be relevant to (the other party's) participation in the bargaining", but this was amended during the Bill's passage to one to provide the other party with "information that is reasonably necessary to support or substantiate claims or responses to claims". An employer is permitted to provide information that it regards as confidential to an independent third party whose function is to decide whether the information substantiates the claim being made. To date this obligation does not appear to have caused problems.

  16. Other relevant matters

    The Act sets out a number of matters relevant to determining whether there is good faith bargaining. These include any agreement about good faith entered into between the parties and a general provision that provides:

    "(3) The matters that are relevant ....include...
      (c) the proportion of the employer's employees who are members of the union and to whom the bargaining relates; and
      (d) any other matter considered relevant, including background circumstances and the circumstances of the union and the employer.

    (4) For the purposes of subsection (3)(d), circumstances, in relation to a union and an employer, include -
      (a) the operational environment of the union and the employer; and
      (b) the resources available to the union and the employer."

  17. The intention of subs (3)(c) would seem to be to allow an employer to adopt a different approach to bargaining depending on the proportion of its workforce involved, a point that may well be relevant if the employer's conduct is challenged based on a different approach of the employer to different unions. For example, an employer dealing with a small group of employees, while obliged to consider their demands, might be entitled to reject any which might undermine or disrupt any agreement with the majority group of employees. Paragraph (b) would seem designed to allow the Authority to consider such matters as the size of the employer and unions, the level of expertise they might have access to and possibly the state of industrial relations in an industry. The overall intention would appear to be to allow the Authority and Court a broad degree of discretion if called on to enforce the good faith obligation and to take into account the overall context in which the bargaining takes place.

    Enforcement

  18. Given the broad nature of the obligations there is limited room for enforcement of the obligation of good faith other than as a rebuke as to process. The Employment Relations Authority and Court have jurisdiction to make determinations on "matters about whether the good faith obligations ... have been complied with in a particular case"[16] and is able to enforce these by a compliance order[17] which is similar to an injunction. Such orders are limited to process. Good faith may also be relevant in deciding whether there has been a lack of fair process in some situations such as in a personal grievance case. The difficulty for the Authority is the of ordering compliance with unclear obligations and breaches where it may be very difficult to establish the nature of the breach or to draft an order. While a refusal to meet, to supply information, or a breach of the duty not to communicate with those represented may be sufficiently certain to allow a compliance order to be developed, this is not necessarily the case where it is alleged that a party is refusing to "consider" proposals. Experience with "cease and desist" orders in North American jurisdictions, which are regarded as an empty remedy in many cases may provide an example of the difficulty of enforcing such obligations.

    Collective bargaining in New Zealand

  19. Before proceeding a brief description of the structure and nature of collective bargaining in New Zealand should be given. As is well known the incidence of collective bargaining fell dramatically during the period of the ECA to cover under 25 percent of the workforce. Over the same period any form of industry of occupational bargaining was largely destroyed with the result that by 2000 collective bargaining was almost entirely at enterprise level. While genuine collective bargaining continued during the 1990s it had no legal structure. A collective employment contract was, legally, a contract between an employer and more than one employee. Negotiation in any realistic sense was not required and the us of the word "collective" if it was not in a statute would have been vulnerable to a count of misleading advertising.

  20. A major objective of the ERA was to put the collective back into collective bargaining.[18] The main characteristics are:

    * Collective bargaining may only take place between a registered union/s and employer/s. A union, however, requires only 15 members to register but there is a requirement for unions to operate at arms length from an employer. As a result house unions are not difficult to register although there seem to be few cases of overt employer control over the many small unions that have registered - more mutual cooperation![19]

    * An important characteristic of the new system when contrasted with North America, and indeed elsewhere, is that there is no concept of a "certified bargaining unit" or the like to be found in the Act and no privileged rights are accorded to the majority union in a workplace. In principle, and sometimes practice, an employer may find that employees of a particular type are represented by more than one union[20]

    * Unions are permitted to bargain for multi-employer collective agreements but only if they obtain a majority vote of their members in each workplace. This form of bargaining is probably the most contentious and the one where unions have identified considerable difficulty in making progress.

    * It might be noted that in spite of a rapid growth in the number of unions the majority of organised workers[21] continue to be represented by a small number of unions.

    * Strikes and lockouts are permitted, and protected, when they take place in relation to collective bargaining but the Act maintains a strict policy of enterprise confinement - lawful strikes are confined to the workers whose conditions will be determined by the resulting collective agreement. Any form of secondary or sympathy strike is unlawful.

    The judicial approach to good faith

  21. Given the approach of the Court of Appeal both individual and collective rights under the ECA it was always expected to be of interest to see if a more liberal approach would be adopted under the ERA. In some early cases decided under the ECA the Employment Court discussed the possibility of such a term encompassing negotiations for contracts of employment[22] but this approach was expressly rejected by the Court of Appeal in Tucker Wool Processors Ltd v Harrison [1999] 1 ERNZ 894 where the Court stated that: "The policy and wording of the 1991 Act make it clear that either party to the negotiation may in general proceed on a take it or leave it basis." The same reluctance to impose constraints on employer bargaining conduct was also evident in NZ Fire Service Commission v Ivamy [1996] 1 ERNZ 85. The same reluctance to impose constraints on employers was also apparent in cases concerning personal grievances and especially redundancy cases. In the leading case, Aoraki Corporation Ltd v McGavin [1998] 1 ERNZ 601, the Court of Appeal had placed emphasis on the fact that "The 1991 Act represents a substantial departure from the collectivist principles of previous industrial relations legislation in favour of a model of free contractual bargaining." In that and later cases the Court stressed managerial rights to make business decisions and took a very restrictive view of employee rights to be consulted about either a decision or its implementation. Given the restrictive approach of the Court of Appeal it might be noted that in enacting the ERA Parliament added a new paragraph to a long standing section concerning matters to be taken into account by the Court of Appeal on an appeal. The new paragraph provides that the Court must have regard to "the object of this Act and the objects of the relevant Parts of this Act."[23]

  22. In developing the nature of the good faith obligation outside the context of collective bargaining the courts have some precedents to fall back on. One such source is the term of mutual trust and confidence implied in contracts of employment. Such a term has been accepted since two Court of Appeal cases in 1985[24] and has since been applied in a range of employment situations, especially cases of constructive dismissal. The Court of Appeal has defined the term as requiring that:

    "employers will not, without reasonable and proper cause, conduct themselves in a manner calculated or likely to destroy or seriously damage the relationship of trust and confidence between employer and employee:"[25]

  23. Another source for constructing good faith is the established principles on the nature of "consultations". These principles would seem relevant to several of the matters covered in s 4(4) and given that good faith is likely to be concerned primarily with fair process these would seem to be particularly applicable. In Julian and others v Air New Zealand Ltd [1994] 2 ERNZ 612 the Employment Court identified a number of propositions, derived from its own and from High Court and Court of Appeal decisions, which it saw as part of a consultation process. These included, for example, that consultation is not a perfunctory process; that it requires the provision of "sufficiently precise information" and that the party to be consulted "be given a reasonably ample and sufficient opportunity to express views or to point to problems or difficulties" It was also held that there must be a "genuine effort ... to accommodate the views of those being consulted" and that even if a party has a working plan in mind it "must keep its mind open and be ready to change and even start afresh."

    The approach to the ERA

  24. To date there have been few decisions concerning good faith under the ERA. The Court of Appeal has, however, decided one appeal. In Coutts Cars Ltd v Baguley [2001] 1 ERNZ 660 the Court considered whether the ERA required a re-evaluation of the approach taken by the Court of Appeal in Aoraki Corporation, a view that had found favour with a full Employment Court. The Court of Appeal was less enthusiastic. The case in question was a personal grievance concerning a redundancy which would have been held to have been procedurally unfair under either the ECA or ERA and the facts are of little interest. Of more interest is the Court's approach to the new Act. Parts of the majority judgment (Richardson P, Gault J, and Blanchard J) are worth quoting to give a flavour of the Court's approach:

    "[39] ... The obligation to deal with each other in good faith is not so much a stand-alone obligation as a qualifier of the manner in which these dealings are to be conducted, and specifically (though not exhaustively) those dealings identified in s 4(4). We do not find in the new provisions a warrant to introduce into what is still a contractual relationship terms and conditions the parties have not agreed to but which the Authority or a court might think it fair to impose. That would be to detract from the process of bargaining the Act so clearly promotes and protects.

    [40] It has long been the law that the special nature of the employment relationship incorporates mutual obligations of trust and confidence. Those words are used in the first "Key Provisions" of the Employment Relations Act (s3(a)). In his separate judgment in Aoraki, Thomas J collected some of the authorities directed to the development of 'the mutual obligation of trust, confidence and fair dealing". He found that to be reflected in Art 13 of the Convention No 58 (International Labour Organisation Termination of Employment Convention).

    [42] We do not see that the new statutory obligation on employers and employees to deal with each other in good faith introduces any significantly different obligation to that the courts have placed upon parties to employment contracts over recent years. Undoubtedly the duty to deal in good faith will have impact in additional areas such as negotiations and collective environments, but in the area with which we are presently concerned we consider the law already required the observance of good faith. There is no reason why the decisions on Aoraki and New Zealand Fasteners Ltd v Thwaites [2000] 2 NZLR 565 should not continue to provide guidance on the applicable principles.

  25. Only one judge, McGrath J, appeared to feel that the ERA required any significant re-evaluation of the case law

    [81] The Employment Contracts Act, now repealed, was a statute which provided, in substance, for freedom of contract to set the terms of employment. The Employment Relations Act also contemplates that the agreement of the parties is the underlying foundation for terms of employment but it also imposes a regulatory overlay. This is the duty of each party to deal with the other in good faith. It is a duty which goes to the manner in which the parties conduct themselves in the course of the relationship."

  26. The clear impression to emerge from this case is that from the perspective of the Court of Appeal it is "business as usual" under the ERA. In essence the Court of Appeal, with the limited exception of McGrath J, chose to read down both the overall objects of the Act and the good faith obligation as it affects individual contracts to amount to little more than a statutory formulation of the pre-existing common law term of mutual good faith and fair dealing. This approach means that the obligation will have a very limited impact and is unlikely to involve any substantive rights or any ability to counter abuses of contractual power. Although the Court of Appeal appears to downplay the importance of its statement in Aoraki that "the context in which [personal grievances] operate is sharply changed by the emphasis in the 1991 Act on contractual freedom" it seems clear to an outside observer that the whole approach of the Court of Appeal to employment law from the mid-1990s on was conditioned by this viewpoint and in particular by the implied view that the ECA incorporated a neo-classical economic approach to employment law that had little room for any doctrine or philosophy other than that of "pure contract law."

  27. While the ERA may not have been such a large shift in philosophy as some might have hoped it was, nevertheless, a very significant shift in the underlying philosophy of employment law. This is obvious from a comparison of the objects clauses of the two Acts. The Court of Appeal appears to have interpreted the shift in the narrowest possible of terms, emphasising for example that employment relationship are still derived from contract and holding first that its contractual approach under the ECA is still valid and secondly that good faith (at least in other than collective bargaining) is merely a restatement of the old common law. In doing so it glides over the fact that the Act talks of mutual trust and confidence to be promoted in "all aspects of the employment environment" and object 3(a)(ii) that the Act is intended to acknowledge and address inherent inequalities in bargaining power - an inequality that might be seen as being at its most acute when an individual employee faces redundancy. It also seems strange that the legislature should go to considerable trouble in setting out the nature of the good faith obligation in s 4 and making it clear that it extended beyond collective bargaining (which of course is specifically dealt with in s 32) if it only intended to restate the existing common law. A totally reasonable interpretation is that it was intended that the good faith obligation extend beyond the pre-existing common law and impose a more general standard of conduct that in some situations at least would impose substantive obligations. If this were so the alleged problem of the Court imposing new terms and conditions becomes largely illusory. The Court would be quite justified in imposing requirements that implement the statutory good faith obligation even if such obligations go beyond terms that might be implied at common law.

  28. While the Employment Court decision is not without problems its starting point seems the one to be preferred.

    "[50] ... the Act of 2000 requires something of a return to the collectivist principles of previous legislation and some discarding of the model of free contractual bargaining. In its place are the doctrines of good faith and the principles underlying ILO conventions 97 and 98. Also, the duty of good faith applies expressly when consultations are in progress. It, follows of course, that if an employer chooses to consult, even if not bound to do so, it must observe the dictates of good faith expressly required by the Act to be observed when consultation is being undertaken or a proposal is being made that can possibly impact on the employer's employees."

    Other cases

  29. There have been few other cases decided under the Act and some at least deal with particular issues. For example in Ports of Auckland Ltd v New Zealand Waterfront Workers Union Inc (2001) unreported AC 44/01 it was held that it is not a breach of good faith to issue a notice to strike during ongoing independent mediation designed to progress negotiations. The Court seems to have taken the view that the ERA provides a comprehensive code on when strikes are a lawful and that they are not prepared to introduce uncertainty into this by opening up a "good faith" restriction.

  30. Perhaps surprisingly there have been few decided cases on good faith during collective bargaining and of those only one has reached the Employment Court. The others are decisions of the Employment Relations Authority and largely concern bargaining for a multi-employer collective employment agreement (MECA). This has been a particularly contentious area as unions attempts to obtain such agreements tend to have been resisted by employers accustomed to enterprise level agreements. Given that unions must ballot their members, and obtain majority support in each workplace before initiating bargaining, there has been a feeling that a refusal to engage in bargaining for a MECA breaches good faith. The Authority has consistently held that there is no requirement to agree to a MECA but that the employers concerned must approach negotiations with an open mind on the matter and properly consider arguments raised. It has also been held that the same obligation applies to unions - who, backed by a ballot of members, have tended to be resistant to agreeing to enterprise specific collective employment agreements.[26] In such cases the Authority has generally ordered the parties to resume bargaining and to properly consider proposals put forward by the other. These cases have generally not required any in depth legal analysis and the Authority has tended to take a common sense view: "The average person knows such behaviour when they see it" as the Authority stated in Independent Newspapers. In the same case the Authority stressed the stating point for analysis should be the Act itself rather than the North American case law from which the obligations in the Act were derived.

  31. The most significant case where the good faith obligations have been applied to constrain employer actions is the Employment Court decision in NZ Amalgamated Engineers Union Inc v Carter Holt Harvey Ltd (unreported, AC 53/02, 30 August 2002). This case concerned the plans of CHH to contract out maintenance work at its paper mill and in particular whether the process used by CHH constituted a breach of good faith. The Court began its decision by noting that "This is a case about process and who controls it." In this respect it noted the significant advantages CHH possessed enabling it to control the process - these it said "are the practical manifestations of 'the inherent inequality of bargaining power in employment relationships'" referred to in s 3(a)(ii) of the Act. The Court also noted that Parliament had effectively left it to the courts to decide the ambit of good faith. The facts of the case are complex but the essentials are that CHH took the view that a needed reduction in labour costs was unlikely to be achieved through bargaining due to the obstructive approach taken by the union and its members. Instead it sought to achieve this by contracting out the maintenance function. CHH plans to achieve this were developed over several months and during a period when no collective agreement was in place - bargaining having reached a stalemate. The Court's findings were:

    The Court granted compliance orders requiring proper consultation to take place over a one month period on both the decision to contract work out and, if necessary, on the implementation of any redundancies. The Court stressed that what was required was consultation and that CHH's right to make the final decision was not constrained.

    Conclusion

  32. The duty of good faith is clearly envisaged as the essential lubricant in the working of the ERA and of employment relationships. In this respect the ERA signals two major changes from the ECA - that strict contractualism is an inadequate mechanism to govern employment and that employment is an ongoing relationship that benefits from some guiding principles designed to facilitate its operation. The good faith requirements make it clear that employees are entitled to have their interests considered on an ongoing basis. The CHH case repeats a point made by the Employment Court in Baguley that "the employer wants to make a commercial decision, cannot postpone it indefinitely but can reasonably be expected to postpone it for a short time, long enough to accommodate the other factors" such as the need to consult and the like. Good faith does not stop decisions being implemented but it may require extra deliberation and proper consultation - not usually a bad thing in any event. Perhaps the most important observation that can be made in relation to the general impact of the good faith obligations is that it represents a return to what should be normal attitudes in any ongoing contractual relationship. The contractualist philosophy of the ECA and the behavioural patterns it encouraged should be recognised for what they were - reactionary and contrary to good industrial relations practice.

  33. In the case of the more detailed obligations applying to collective bargaining much the same can be said. The specified duties reflect good industrial relations practice that many employers already follow. They should present few difficulties and operate as guiding principles rather than the imposition of new burdens. In the case of anti-union employers the obligations may cause difficulties but that is neither surprising nor a cause for concern. Experience to date appears to suggest that collective bargaining has not expanded significantly and that some unions at least are finding continuing difficulties in persuading employers to enter collective employment agreements. This appears to be particularly the case in the service sector where organisational problems mean unions do not have the ability to strike effectively. The Act is about to be reviewed and some pressure form unions to strengthen the provisions on collective bargaining is expected.

  34. Overall, however, the duty of good faith is neither new or novel. It has been used in other jurisdictions and in practice has formed part of better industrial relations practices in New Zealand. Most importantly it signals a new approach to employment relationships that recognises that co-operation is needed for productive relationships. Tensions and arguments based on different interests and perspectives will continue but reality requires resolution and compromise of differences. The Act recognises that resolution is best achieved by good faith.

  35. In the end, however, the good faith obligations are sufficiently broad that their application will depend heavily on the judicial interpretation of the Act and especially the interpretation of the Court of Appeal. On the basis of the one decision to date there is no indication that this Court has adapted to the philosophy of the ERA with the same enthusiasm as it adopted that of the ECA. The Court of Appeal's decisions over the past decade have tended to be heavily focussed on the commercial needs of employers and the "right" of an employer to manage its business - an essentially unitarist view of the employment relationship. There is no indication that this is likely to change significantly and for this reason the good faith obligations may well be less influential than intended by supporters of the legislation.

Notes

[1] For a detailed analysis of the Act see Mazengarb's Employment Law, Vol 1, Butterworths, Wellington 2000 or Butterworths Employment Law Guide (5th edition), Butterworths, Wellington, 2000. A symposium on the ERA can be found in (2001) New Zealand Journal of Industrial Relations 26(1).

[2] On this process and its outcomes see G Anderson 'Individualising the Employment Relationship in New Zealand: An Analysis of Legal Developments' and S Oxenbridge 'The Individualisation of Employment Relations in New Zealand: Trends and Outcomes' in, Employment Relations: Individualisation and Union Exclusion, eds S Deery and R Mitchell, Federation Press, Sydney, 1999.

[3] ILO Committee on Freedom of Association, Case No 1698: Complaint Against the Government of New Zealand, Official Bulletin, Vol 77, Series B, No 3 p39.

[4] The Government is currently consulting with the ILO on ratification of these conventions. Restrictions on the right to strike and especially the failure to allow any form of lawful secondary, sympathy or political strikes may cause problems.

[5] Section 33.

[6] Section 161(2).

[7] It is not proposed to comment in detail on problems such as surface bargaining and the like that have arisen in other jurisdictions. No doubt such problems will arise in New Zealand but any until they have been dealt with any comments would be very speculative. For a broad treatment on the possible implications of good faith bargaining for New Zealand see G Davenport and J Brown, Good Faith in Collective Bargaining, LexisNexis Butterworths 2002.

[8] Section 5.

[9] Section 32(1).

[10] The code can be downloaded from: http://www.ers.dol.govt.nz/act/code.html

[11] Section 32(1)(a) - (b).

[12] Section 32 (1)(c).

[13] Section 32 (1)(d)(i) - (iii).

[14] Which is guaranteed in the New Zealand Bill of Rights Act 1990 s 14. Additionally s 4(3) of the ERA provides that "communicating to another person a statement of fact or of opinion reasonably held about an employer's business or a union's affairs" is not a breach of the good faith obligation.

[15] Section 32(1)(e).

[16] Section 161(1)(f).

[17] Section 137(1)(a). A compliance order is a specific statutory remedy similar to an injunction.

[18] For a speculative comment on the new era see Harbridge R, Walsh P and Wilkinson D (2002), Re-regulation and Union Decline in New Zealand: Likely Effects, New Zealand Journal of Industrial Relations 27(1) 65-78.

[19] Barry M and May R (2002) United We Stand, Multiplied We fall: New Unions and the New Zealand Employment Relations Act (Paper delivered at 16th AIRAANZ Conference: available from http://www.mngt.waikato.ac.nz/depts/sml/airaanz/conferenceproceedings.asp) discusses the nature of newly registered smaller unions.

[20] In such situations the Act does allow an employer to require unions to bargain jointly.

[21] Union density is currently about 22 percent.

[22] Unkovich v Air New Zealand Ltd [1993] 1 ERNZ 526.

[23] Section 216 (b).

[24] Auckland Shop Employees Union v Woolworths (NZ) Ltd [1985] 2 NZLR 372 (CA) and Marlborough Harbour Board v Goulden [1985] 2 NZLR 376 (CA).

[25] Auckland Electric Power Board v Auckland Local Authorities IUOW [1994] 2 NZLR 415 at 419.

[26] National Distribution Union v Sawmill Services Ltd (unreported, AA 134/01, 17 Sep 2001) and NZ Amalgamated Engineers Union Inc v Independent Newspapers Ltd (unreported, WA 51/01, 3 August 2001)

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