New Zealand Amalgamated Engineering, Printing & Manufacturing Union Inc v Witney Investments Ltd [2007] NZCA 599; [2008] 2 NZLR 228 (21 December 2007)

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IN THE COURT OF APPEAL OF NEW ZEALAND

CA282/06 [2007] NZCA 599

BETWEEN NZ AMALGAMATED ENGINEERING, PRINTING & MANUFACTURING UNION INC

Appellant

AND WITNEY INVESTMENTS LIMITED (FORMERLY EPIC PACKAGING LIMITED)

Respondent

Hearing: 29 November 2007

Court: Glazebrook, O'Regan and Arnold JJ

Counsel: R E Harrison QC and J A Wilton for Appellant

T P Cleary and P Akbar for Respondent

Judgment: 21 December 2007 at 11.30am

_{JUDGMENT OF THE COURT}

A The appeal is allowed.

2. The answer to the question set out at [4] of this judgment is in the affirmative.

_{C There is no costs award.}

REASONS OF THE COURT

_{(Given by Glazebrook J)}

NZ AMALGAMATED ENGINEERING, PRINTING & MANUFACTURING UNION INC V WITNEY INVESTMENTS LIMITED (FORMERLY EPIC PACKAGING LIMITED) CA CA282/06 21 December 2007

Table of Contents

_{Para No}

Introduction [1] Background facts [7] Terms of the Plastics Agreement [15] The Employment Court decision [24] Interpretation of the key provisions [35] Common ground [35] Contentions of the parties [36] Discussion of key sections [39] Scheme and purpose of the statutory bargaining provisions [49] Contrary statutory indications [57] Agreement to join [64] Legislative history [68] Freedom of association [73] Conclusion [77] Result and costs [80] APPENDIX [82] Relevant legislative provisions [82] Legislative history of s 56A [100]

Introduction

[1] This appeal addresses the question of whether the statutory bargaining process contained in Part 5 of the Employment Relations Act 2000 (ERA) can be used to persuade employers to join existing collective multi-employer agreements as subsequent parties.

[2] The Employment Relations Authority held that it could – see Epic Packaging Limited v New Zealand Amalgamated Engineering, Printing & Manufacturing ERA AK AA25/06 8 February 2006 (Member Oldfield). By judgment of 21 July 2006, the full Court of the Employment Court held that it could not, in a decision now reported as Epic Packaging Ltd v New Zealand Amalgamated Engineering, Printing

& Manufacturing Union Inc [2006] NZEmpC 67; [2006] 1 ERNZ 617.

[3] The Employment Court’s decision was based on the interpretation of the key provisions dealing with subsequent joinder and collective bargaining in light of the scheme of the ERA, the legislative history, the object in the ERA of protecting the

integrity of individual choice and the principle of freedom of association. The Employment Court also rejected the argument that any agreement to join a collective agreement would itself be a collective agreement.

[4] The appellant Union sought leave to appeal against the Employment Court’s decision, which was granted by this Court on 8 December 2006, in a decision now reported as New Zealand Amalgamated Engineering, Printing & Manufacturing Union Incorporated v Witney Investments Ltd (formerly Epic Packaging Ltd) [2006]

1 ERNZ 1076, on the following question:

Can a union issue a notice under s 42 of the Employment Relations Act 2000 to initiate bargaining for an employer to join an existing collective employment agreement as a subsequent party?

[5] We deal with the issues in the appeal under the following headings:

(a) Interpretation of the key provisions; (b) Agreement to join;

(c) Legislative history; and

(d) Freedom of association and individual choice.

[6] Before moving to a discussion of these issues, we set out the background facts, the relevant provisions of the Plastics Agreement and a more detailed summary of the Employment Court decision. The main legislative provisions relied on by the parties and the legislative history of s 56A of the ERA are discussed in the Appendix.

Background facts

[7] Although Witney had sold its manufacturing business and divested itself of its employees before the release of the Employment Court decision, we set out the facts as they were put before the Employment Court. (In the particular circumstances of this case, this Court in its leave judgment decided that the appeal

would not be moot, despite Witney’s changed position – see at [3] - [5] of the leave judgment.)

[8] Witney, at the time called Epic Packaging Ltd, manufactured plastic packaging. About 20% of its employees were members of the Union but Witney’s employees were engaged on individual employment agreements. The Union is a party to a collective agreement, which was negotiated between two unions and a number of employers in the plastics industry (called the Plastics Agreement in this judgment). There were seven original employer parties to the Plastics Agreement and a number of subsequent employers have since joined it.

[9] In April 2005, the Union gave notice to Witney of its intention to bargain for a collective employment agreement pursuant to s 42 of the ERA – see Appendix at [89] for discussion of s 42. The stated intention of the bargaining was to obtain Witney’s agreement to become a subsequent party to the Plastics Agreement. This is in accordance with the Union’s preferred strategy. Where the Union has already negotiated and concluded a multi-employer collective agreement with a representative group of employers, it approaches other employers of union members who fall within the scope of the existing agreement’s coverage clause asking them to join the existing collective agreement as subsequent parties. The Union’s stated purpose in pursuing this strategy is to keep bargaining to a manageable size – see at [13] of the Authority’s decision.

[10] Witney contested the notice. Its position was (and remains) that a s 42 notice cannot be given with a view to bargaining for an employer to become a subsequent party to a collective agreement. That process is only available for the negotiation of new collective agreements, whether MECAs (multi-employer collective agreements), MUCAs (multi-union collective agreements), MEMUCAs (multi- employer, multi-union collective agreements) or SECAs (single employer collective agreements).

[11] Approximately three months after serving the s 42 notice (see Appendix at [89]) on Witney, the Union provided a proposed process agreement for the negotiations. In that agreement it was stated that each party to the negotiation has

the authority to reach a settlement, which will be subject only to the applicable union ratification process (see Appendix at [97] for a discussion of the ratification provisions in s 51).

[12] It was noted in the proposed process agreement that there was a parallel process in train for the renewal of the Plastics Agreement and that Witney would be kept informed of the progress of those negotiations. Once the renewal of the Plastics Agreement was settled, the Union’s primary claim was to have Witney become a subsequent party to that agreement and this was to be the subject of the negotiation. It was stated that, during this process, any variations under cl 2.2 (see below at [17]) could be addressed. The process agreement provides that the parties are to consider for a reasonable period, and respond to, any proposals made by the other party.

[13] Once agreement was reached, the process agreement envisaged that there would be a document drafted to incorporate the ratified terms of settlement and that Witney would be responsible for sending a copy of that signed agreement to the Department of Labour (in accordance with s 59 of the ERA) – (see Appendix at [98]).

[14] The Union also provided a copy of the Plastics Agreement to Witney at the time the s 42 notice was served. Before the Authority, the Union stated its willingness to provide to Witney the identities of all employee parties – see [20](iv) of the Authority’s decision. We also remark that union witnesses before the Authority indicated that they had used s 42 notices on previous occasions when seeking to join subsequent parties to the Plastics Agreement and to other MECAs – see at [4] of the Authority’s decision.

Terms of the Plastics Agreement

[15] The plastics industry is defined in cl 1.2 of the Plastics Agreement as companies whose primary purpose is the manufacture of plastics products, the supply of services to those manufacturers or the recycling of plastic products. The coverage clause of the Plastics Agreement (cl 1.3) states that the agreement covers employees whose work is described in the agreement (at cl 51) and who are

employed by an employer in the plastics industry who is a party to the agreement, and who are, or become, members of a union party to the agreement.

[16] Clause 2.1 provides that the Plastics Agreement may be varied from time to time by the Union, without requiring the agreement of any other party, to include further employers in the plastics industry who agree to become parties. Clause 2.1.1 provides that the s 56A requirement for subsequent employer parties to notify all existing parties of their intention to join may be fulfilled by way of a standard letter by the union parties to the Plastics Agreement – see discussion of the application of collective agreements to subsequent parties in the Appendix at [99].

[17] Clause 2.2 provides a general power of variation . It provides that the “parties agree that any clause may be varied by agreement between the employer, and the union party/ies with affected membership,” as long as certain process requirements set out in the clause are met, including a ballot of affected employees.

[18] A number of the provisions affecting either employer specific or employee specific terms and conditions of employment may be varied on a case by case basis by agreement between the “employer and the union party/ies with affected membership”. These include cl 13 (hours of work), cl 15 (overtime), cl 16 (meals/rest periods/wash up), cl 17 (meal allowances), and cl 19 (call backs and shifts). The process requirements of cl 2.2 must be met.

[19] The Employment Court (at [11] of its judgment) said that any variations (apart from under cl 2.1) require negotiation with, and the agreement of, other parties to the Plastics Agreement including, in particular, the other employer parties. This was not the view taken by the Union before the Authority or this Court or, indeed in the proposed process agreement – see above at [12].

[20] The Union’s position before this Court (and before the Authority) was that workplace specific “carve outs” could be made, under cl 2.2 and the clauses referred to at [18], by simple agreement between the Union and one or more particular employers (without the agreement of the other employers). Any joinder of the

Plastics Agreement could be conditional on the agreed carve outs applying to the employer from the effective date of joinder.

[21] That the agreement of all other employers may not be necessary seems consistent with the term “employer” being in the singular in cl 2.2 and with one of the objectives of the Plastics Agreement as set out in Part 1, being:

Allowing for flexibility for enterprises to depart from specified provisions through the operation of enabling clauses.

[22] The Union’s position before the Employment Court, however, was that there would be a two stage process; joinder and then subsequent negotiation for work place specific carve outs but that may well have been in response to an argument, either by Witney or the Court itself, that this is what the Plastics Agreement required

– see at [71] of the Employment Court’s decision.

[23] We remark that, if the statutory bargaining process is applicable to subsequent joinder and the Employment Court is right that workplace specific carve outs have to be agreed subsequent to joinder with all parties, then if the other parties’ concurrence to any workplace specific carve outs agreed with the Union was not assured that would no doubt constitute a “genuine reason” under s 33 to resist joinder (see Appendix at [93] for a discussion of s 33).

The Employment Court decision

[24] The Employment Court noted that the ERA does not provide explicitly that its statutory bargaining regime applies to the joinder of subsequent parties to an existing collective agreement as provided for in s 56A in particular (see Appendix at [99] for a discussion of that section). In these circumstances, the Court considered it necessary to discern the intent of the legislation.

[25] The Employment Court pointed to what it called an inevitable tension in the ERA between the object of promoting collective bargaining and that of preserving individual freedom of choice as set out in s 3(a)(iv). The Employment Court held that the object of the legislation, to promote collective bargaining, does permit

parties to use coercive tactics to achieve a collective agreement. In the Employment Court’s view, however, the object of protecting the integrity of individual choice requires an interpretation of the ERA that “favours the exclusion of coercion or compulsion as a means of obtaining agreement of parties to join in particular forms of collective agreements, including existing multi-employer agreements”.

[26] In the Court’s view, the object of promoting collective bargaining is supported by the statutory bargaining process initiated by a s 42 notice – see Appendix at [89]. The Employment Court held that the collective bargaining referred to in s 3(a)(iii) of the ERA is bargaining for a new collective agreement, which must contain or otherwise fix the terms of employment and have the form and content required by s 54 – see Appendix at [87]. To allow bargaining with regard to an already concluded agreement would not fit within the statutory scheme and, in addition, would not promote orderly bargaining as required under s 31(d) of the ERA.

[27] The Court considered it significant that the ERA specifically provides, in s 41, that, once an applicable collective agreement has been settled, the statutory bargaining process cannot be invoked to bargain again until a specified time close to its expiry. The Employment Court was also of the view that s 42 itself contains an indication that Parliament did not intend that notices initiating bargaining would apply in a subsequent party joinder situation. Section 42(1) provides that the union or employer initiating bargaining is to give to the “intended party or parties to the agreement” a notice. In this case, the other numerous employer parties to the Plastics Agreement were already in place.

[28] While accepting the proposition that a union could, during a process of statutory bargaining, which had been started lawfully, raise the issue of subsequent party joinder as long as it did so in good faith, the Employment Court held that such a claim would not be part of the bargaining for a collective agreement and thus coercive actions, such as strikes, would be unavailable in support of the claim.

[29] The Employment Court also rejected the Union’s argument that the need for a precursor agreement between the employer and the relevant union should be

implied into s 56A. The Court also considered that the words of s 56A are clear. The section enables an employer to become a subsequent party to an existing collective agreement without the consent of its employees.

[30] The Employment Court considered its conclusion (that the statutory bargaining process is not available in cases covered by s 56A) was reinforced by the application of s 6 of the New Zealand Bill of Rights Act 1990 (BORA) and the need to interpret the ERA consistently with an employer’s freedom to choose not to associate with other employers and/or unions. It was also reinforced by consideration of the principles contained in various international covenants, such as Convention 87 and Convention 98 (referred to in s 3(b) of the ERA). The Employment Court pointed out that Convention 98 refers to the promotion of machinery for the voluntary negotiation of collective agreements.

[31] Further, the Court considered its conclusion to be consistent with the legislative history of s 56A – see Appendix at [100] - [105]. The use of words and phrases at various stages of the legislative history, such as “voluntary”, “mutual agreement”, “willing employers”, and “if they wish to do so” was, in the Court’s view, inconsistent with any intention to allow “coercive measures” to be used to procure the joinder of subsequent parties. The Employment Court considered that, when Parliament used the word “may” in s 56A(1), it did not intend such outcome to be produced by coercion or, in particular, by the consequences of strike action.

[32] In the Employment Court’s view, this would be “unwilling” agreement, contrary to the “willing” agreement referred to at all stages of the legislative process. The removal by the Select Committee of the proposed cl 14 of the Bill on the grounds that it might be seen to compel employers to agree to MECAs was, to the Employment Court, an added indication that no use of the statutory bargaining process was envisaged.

[33] The Employment Court also found against the Union’s argument that a joinder agreement itself was a collective agreement as is defined in s 5 of the ERA - see Appendix at [85] for discussion of the definition of collective agreement. In its view, such an arrangement would not meet the requirements in s 54 nor come

within the definition of collective agreement, as it would not fix the terms and conditions of employees (as required to do in terms of the definition of “employment agreement” in s 5) – see Appendix at [85].

[34] Finally, the Employment Court rejected the Union’s submission that all potential issues between the Union and Witney would be available for negotiation under the statutory bargaining process. It considered that key elements, such as the identities of other parties to the Plastics Agreement, its coverage clause and its expiry date, would not be open for negotiation between these parties as they have been settled and agreed to previously by other employer parties to the Plastics Agreement and, without the consent of all other parties, cannot be altered.

Interpretation of the key provisions

Common ground

[35] It was accepted by both parties and by the Employment Court that, if the Union had nominated Witney as an employer party to the bargaining for the renewal of the Plastics Agreement, it could have initiated the statutory bargaining process with regard to Witney.

Contentions of the parties

[36] Witney submits that s 56A (see Appendix at [99]) contemplates an employer voluntarily deciding to join an existing MECA, provided the MECA allows that to occur and proper consultation with employees has occurred in accordance with s 4(4)(d) of the ERA. While Witney accepts that s 56A does not rule out a prior agreement with a union before the s 56A process is invoked, it submits that is not required by the statute. Section 56A allows a unilateral decision by the employer on joinder. In Witney’s submission, the voluntary nature of the joinder decision and the statutory scheme and purpose rule out any use of the statutory bargaining process to achieve any precursor agreement. There are, in its submission, a number of other indications in the statute that back up this conclusion.

[37] The Union submits that, while the issue of prior agreement or indeed consent to a subsequent party joinder is not directly addressed, it is inconceivable that s 56A could be utilised to permit an employer to opt unilaterally to join an existing collective agreement, without the prior agreement of its affected employees or the union. This means that, either there is a statutory lacuna with the ERA entirely silent on the matter of how such antecedent agreement is to come into existence or the Part 5 collective bargaining procedures may be utilised. In the Union’s submission, there is nothing in s 56A or the provisions dealing with statutory bargaining to exclude the application of the statutory bargaining process to achieve subsequent joinder. The purpose and scheme of the ERA, with its emphasis on good faith collective bargaining leads, in the Union’s submission, to the conclusion that it can be so used.

[38] We discuss first the interpretation of the key sections and the scheme and purpose of the statutory collective bargaining provisions. We then move to the particular statutory indications that Witney submits support the view that the statutory bargaining process does not apply to subsequent joinder.

Discussion of key sections

[39] Section 56A (see Appendix at [99]) is an empowering section (hence the “may” in that section). It allows subsequent joinder to an existing collective agreement where certain conditions are met and provides the procedure for effecting that joinder. We accept that, on its face, s 56A appears to allow an employer to decide unilaterally to join an existing collective agreement, thus automatically bringing within the ambit of the collective agreement all of its employees who are members of the union and under the coverage clause of the collective agreement.

[40] The Union submits, however, that a requirement for a precursor agreement should be read into the section. We do not need to deal with that submission for the purposes of this case. We would remark, however, that, even if allowed, unilateral action on the part of employers would be unlikely. An employer who decided to join an existing collective agreement without the concurrence of its employees and the relevant union could not expect to maintain harmonious relations with either the

union or its employees. Given that commercial reality, in most cases there would be precursor negotiations and agreement between the employer and the relevant union.

[41] In the absence of express prohibition in s 56A, there is nothing to stop employers and unions reaching agreements as to joinder, as Witney accepts. In any event in this case, cl 2.1 of the Plastics Agreement requires the involvement and agreement of the Union before there can be subsequent party joinder – see above at [16]. The real issue in this case is how any precursor agreement can be brought about and whether the statutory bargaining process is available. This requires an examination both of s 56A itself and of the provisions relating to statutory bargaining.

[42] There is nothing in s 56A to prohibit the reaching of an agreement for subsequent joinder by way of the statutory bargaining process. We consider that there is force in the Union’s submission that, if that had been the intent, one might have expected s 56A to have said so. This is particularly the case in light of the very strong emphasis on good faith collective bargaining under the ERA – see Appendix at [84] - [88].

[43] Moving to the provisions dealing with the statutory bargaining process, we begin with s 42. That section allows a union or employer to initiate “bargaining for a collective agreement” by giving a notice. The Employment Court held that this must mean bargaining for a new collective agreement and not joinder to an existing agreement – see above at [26]. Witney supports that finding. We do not agree.

[44] In our view, what the Union seeks to achieve in this case is a collective agreement between the Union and Witney. Therefore, in ordinary parlance, the Union wishes to bargain for a collective agreement. The preferred mechanism for achieving a collective agreement with Witney happens to be by way of Witney’s joinder to an existing collective agreement. That does not turn the negotiations into something other than negotiations for a collective agreement.

[45] If, as a result of the bargaining process Witney joins the Plastics Agreement, then there will be an applicable collective agreement between the Union and Witney

where none existed before. In that sense, any collective agreement to be bargained for is new, at least as between Witney and the Union. Of course, as the Union points out, the bargaining process may have a different result – either a separate collective agreement between Witney and the Union or conceivably no agreement at all. That the bargaining may not achieve what the Union wishes does not turn the negotiations into anything other than bargaining for a collective agreement either.

[46] As to the requirements of s 42(2), the notice in this case was duly signed. It identified the intended parties to the collective agreement as the Union and Witney. With regard to the intended coverage, the Union stated that it was seeking by way of this bargaining to have Witney become a subsequent party to the Plastics Agreement and set out the coverage clause of that Agreement (that it was to cover employees whose work was described at cl 51 of the Plastics Agreement) – see above at [15].

[47] Witney argues that the s 42 notice given identifies the parties to the bargaining and not to the collective agreement. The Union and Witney, however, are the intended parties to the joinder agreement (which itself will likely be a collective agreement (see below at [65] - [67]) and the intended parties to the “new” (in the sense described above at [45]) collective agreement between Witney and the Union. The reference to the Plastics Agreement would identify, in any event, by reference to the terms of that agreement, both the intended coverage (ie the coverage clause in the Plastics Agreement) and the intended parties (ie all the parties to the collective agreement). The Union has, in any event, accepted that it should give Witney the names of all the actual parties to the Plastics Agreement, including subsequent parties – see above at [14].

[48] It is true, as the Employment Court noted, that s 41 provides for certain time limits within which the Part 5 bargaining process cannot be initiated by way of a s 42 notice. There is no existing applicable collective agreement in force between Witney and the Union. This means that the time limits on the initiating of bargaining set out in s 41 do not apply. Section 41, therefore, cannot prevent Witney and the Union using the statutory bargaining process. Unlike the Employment Court, (see above at [27]) we do not see any need to read s 41 more widely than its terms require.

Scheme and purpose of the statutory bargaining provisions

[49] Apart from an employer’s right to freedom of association and individual choice, discussed below at [73] - [76], the Employment Court relied on aspects of the scheme and purpose of the statutory bargaining provisions in reaching its conclusion that the statutory bargaining process could not be used to seek employer joinder to an existing collective agreement. Witney supports the Employment Court’s reasoning.

[50] The first factor relied on by the Employment Court was that bargaining for a collective agreement must allow for bargaining on the terms and conditions of employment of the employees to be covered under the agreement. Where the bargaining is with a view to joining another agreement where those terms and conditions are already fixed, in the Employment Court’s view, this means an automatic restriction on bargaining – see above at [34].

[51] We do not accept that there is any restriction on what can be the subject of bargaining where subsequent joinder is sought. We accept the Union’s submission that a s 42 notice triggers a bargaining process that must be conducted in good faith. As the Union submits, collective bargaining under the ERA is not to be conducted as a “one way street”, or on a “take it or leave it” basis – see Appendix at [92]. Each side is entitled to put forward its own claims, and the bargaining on each side must address all such claims in good faith. This means that, contrary to the Employment Court’s view, all aspects of the potential collective agreement, including coverage, the identities of the parties and the expiry date, are up for negotiation.

[52] It is open in the course of bargaining for Witney to bargain for a different agreement (for example a SECA between it and the Union), as long as it does so in good faith, and the Union must respond to any such proposal in good faith. The Employment Court has held (and the Union accepts for present purposes) that the ERA shows no preference for a particular type of collective agreement and that it does not prefer multi-party to single party bargaining – see Toll New Zealand Consolidation Ltd v Rail & Maritime Transport Union Inc [2004] NZEmpC 64; [2004] 1 ERNZ 392 (EC), Association of University Staff Inc v Vice-Chancellor of the University of Auckland

[2005] NZEmpC 38; [2005] 1 ERNZ 224 (EC) and Service and Food Workers Union Nga Ringa Tota v

Auckland District Health Board EC WN WC18/07 1 August 2007 at [60] – [66].

[53] Next, the Employment Court considered that its conclusion that the statutory bargaining process was not available for subsequent joinder was supported by the necessity to ensure an orderly bargaining process – see above at [26]. The Union obviously considers that its preferred strategy does promote orderly and manageable bargaining. This is achieved by limiting the parties to the bargaining process for the original agreement, while allowing for individual workplace variations for subsequent employers (see above at [9]). Given that opinions can legitimately differ on this issue it must, at best, be a neutral factor.

[54] Finally, we address the Employment Court’s view that the scheme of the ERA mandates the result that coercive action, such as a strike or lockout, should not be available to support negotiations for subsequent joinder. It considered that, although a union was entitled to raise the issue of subsequent joinder in the course of bargaining, no strike action in support of that demand would be allowed – see above at [28].

[55] In our view it is easy to postulate a situation where a union wishes an employer to join an existing MECA as a subsequent party but the employer wants a SECA on terms and conditions which differ from the existing MECA. On the Employment Court’s hypothesis, if the employer’s terms are unacceptable to the Union, presumably the union members can strike to support their demands for the different terms and conditions but not that those terms and conditions be achieved by joining an existing MECA. This introduces subtleties into the process which cannot have been intended.

[56] It would be surprising if strike action is lawful under s 83 in support of a claim for an employer to enter into a SECA on exactly the same terms and conditions as an existing MECA but not for the joinder to that existing MECA. The terms and conditions of employment and the obligations of the employer to the relevant employees would be exactly the same. Why the ERA would provide for one permissible way (ie subsequent joinder) of achieving particular terms and

conditions of employment to be denied the benefits (or detriments) of the statutory collective bargaining provisions (as a kind of statutory orphan) is unclear, particularly given the object of promoting collective bargaining in both ss 3 and 31 of the ERA.

Contrary statutory indications

[57] Witney points to a number of indications in the ERA which, in its submission, show that the statutory bargaining process was not meant to apply to subsequent joinder under s 56A. The first is that there is no provision in s 56A for a secret ballot of affected union members before bargaining is initiated, even though the end result of any bargaining for subsequent joinder would be a MECA. A ballot is required under s 45 before a union initiates bargaining for a new MECA and there is a specific requirement in s 56A for a ballot where there is a union (but not employer) joinder – see Appendix at [99].

[58] While the lack of provision for a union ballot in the case of employer joinder might be seen as a gap in s 56A, we do not see this as leading to the inevitable conclusion that the statutory bargaining process was not intended to apply. Bargaining itself would only be with one party (Witney). It may be that prior authorisation was not thought necessary in those circumstances. Further, post agreement ratification by affected union members will be required under s 51 (as recognised by the Union in its proposed process notice) – see above at [11]. This might have been thought to obviate the need for a ballot to be provided for in s 56A where there is employer joinder. As the Union points out, there is also a requirement for the employer to notify its employees of the bargaining under s 43 – see Appendix at [90].

[59] In any event, the result contended for by Witney fits much less easily into the scheme of the ERA, with its emphasis on ensuring individual employee choice through ballots, than that contended for by the Union. Under Witney’s hypothesis of unilateral joinder, an employer could join as a subsequent party to an existing collective agreement with no union or employee agreement at all, as long as there had been consultation with affected employees.

[60] Witney also relies on the position of s 56A in the Act as supporting its contentions. Section 56A is in Part 5 of the Act, which deals with collective bargaining. This in itself would tend towards the view that the provisions of Part 5 were meant to be applicable. It is true that s 56A is in a group of sections dealing with concluded collective bargains. This is unsurprising, however, as it relates to joinder to collective agreements that have been concluded.

[61] Further, Witney points to the ability to join bargaining under s 49 as supporting the view that the statutory bargaining process is limited to original collective agreements. In its submission, s 49 requires bargaining still to be in train and points against any bargaining for additional new parties once an agreement is fixed. In our view, s 49 is merely an intermediate step between the initiation of negotiations for an original MECA and joinder as a subsequent party. It does not rule out the statutory bargaining process in relation to the latter.

[62] Another point Witney relies on is the reference to future employees in s 56A(6) – see Appendix at [99]. It submitted that this was intended to cover situations where the employer might, in the future, employ employees whose work would fall under the proposed collective agreement coverage (eg a manufacturer expanding its operations). In Witney’s submission, the statutory bargaining process cannot apply to such situations as it would be impossible for an employer to satisfy the s 43 notification requirement. It would be unaware of who the target employees may be.

[63] We agree that the statutory bargaining process does not fit easily into a situation relating to future employees. An employer can clearly only give a notice to existing employees. We do not consider this suffices, however, to rule out the statutory bargaining process where there are existing employees.

Agreement to join

[64] The Union’s argument before the Employment Court was that any agreement to join the Plastics Agreement would, in itself, be a collective agreement. Thus any

negotiations with regard to that joinder agreement would be bargaining for a collective agreement. This submission was rejected by the Employment Court.

[65] Unlike the Employment Court, we consider that the written document provided for in the process agreement at the end of the proposed process (see at [13]) could itself be a collective agreement, provided it contained the minimum terms set out in s 54 and any other terms required under any other legislation. A collective agreement, as defined in s 5 of the ERA, is simply “an agreement that is binding on one or more unions; and one or more employers; and two or more employees”. A joinder agreement, such as is sought by the Union in this case, would fit this broad definition – see on this issue Roth “What is a Collective Agreement under the Employment Relations Act?” (2007) 3 Employment Law Bulletin at 19.

[66] For the reason set out below at [67], we do not have to decide whether the Employment Court was correct to hold that a collective agreement must contain terms and conditions of employment, although we comment that to require it to contain terms other than the mandatory terms set out in s 54(3)(a), some of which are terms of employment, seems to run counter to s 54(2) – see Appendix at [87]. It is also clearly contemplated in the definition of employment agreement that a contract of employment may contain additional terms over and above those in any collective agreement – see Appendix at [85].

[67] In this case, any joinder agreement would no doubt refer to the Plastics Agreement and any agreed workplace specific carve outs under cl 2.2. It would thus contain by reference the terms of employment insofar as they appear in the Plastics Agreement. It would therefore be a collective agreement even under the Employment Court definition. This means, as noted above at [47], that the bargaining for that joinder agreement would itself be bargaining for a collective agreement between Witney and the Union. This is no doubt why the proposed process agreement envisaged that any joinder agreement would be sent to the Department of Labour in accordance with s 59 of the ERA – see above at [13].

Legislative history

[68] Both parties called into aid the legislative history leading to the introduction of s 56A to support their interpretation of the statutory provisions – see Appendix at [100] - [105] for a description of the legislative history.

[69] What the legislative history shows conclusively is that no return to the pre Employment Contracts Act 1991 situation, under which employers could become subsequent parties to awards and industrial agreements involuntarily and by operation of law, was under contemplation. Employers were not to be forced into collective agreements, either as an original or a subsequent party. There was, however, no need to have resort to the legislative history to reach this conclusion. It was quite clear from the wording of s 56A.

[70] The Union does not suggest that there can be any compulsion, except where the requirements in s 50J are met, essentially where the statutory obligations of good faith have been seriously breached – see Appendix at [101]. Further, it is significant that the words and phrases relied on by the Employment Court in the course of the legislative history (eg “voluntary” and “willing” – see above at [31]) were not carried through into s 56A. That section is couched simply as an enabling section – see above at [39].

[71] It also seems clear from the legislative history, as the Union points out, that subsequent joinder was intended to be as a result of mutual agreement between a union and an employer (although this requirement was also not carried through explicitly into s 56A). We refer, for example, to the then Minister of Labour’s speech on the introduction of the Bill – see Appendix at [102]. The legislative history like s 56A itself, is, however, silent on how that mutual agreement might be reached. Whether the statutory bargaining process could be invoked to support a claim for subsequent party joinder is not addressed directly. Nowhere is it explicitly stated in the course of the legislative history that the statutory bargaining process is excluded. Equally, nowhere does it say that it is allowed.

[72] As pointed out by Mr Harrison QC, this means that the legislative history provoked its own interpretation dispute that was the same as the point of statutory interpretation this Court was called upon to decide. The legislative history cannot, in these circumstances, be of assistance in resolving that statutory interpretation issue.

Freedom of association

[73] The Employment Court considered its conclusion to be reinforced both by the s 3(a)(iv) object of promoting individual choice and the employer’s right to freedom of association under the ERA and BORA.

[74] We accept the Union’s submission that, when s 3(a) as a whole is read, it is apparent that s 3(a)(iv), where it refers to the integrity of individual choice, is referring to the integrity of choice of an individual employee and in particular that employee who seeks to remain outside collective action and collective participation in the workforce. It is not a principle that is designed to protect employer integrity of choice. The ERA places strong and central emphasis on promoting collective bargaining, on the position of unions as representatives of collective interests and on supporting collective relationships. Due to this focus, we also accept the Union’s submission that it is erroneous to see the protection of “the integrity of individual choice” as a value inherent in the ERA which can derogate from its provisions dealing with collective bargaining.

[75] We also accept the Union’s submission that the freedom of association value in the ERA itself is designed to protect employees’ freedom of association, to the extent provided for in Part 3 of the ERA. The ERA expressly deals with freedom of association in relation to employees. It does not do so in relation to employers or unions in the context of their employment relationships generally and collective bargaining in particular. Mr Harrison was prepared to accept, for the purposes of this case, that employer freedom of association is protected under the BORA, although he noted competing principles of international law, particularly as embodied in ILO instruments. He argues, however, that any employer freedom of association must be seen as having been overridden by the statutory bargaining provisions in the ERA. These provisions impose conduct duties on those who are

subject to them and provide participants with a range of remedies, both institutional

(such as under ss 50A – 50J), and ultimately by way of strike or lock out action.

[76] We agree that any freedom of association of an employer (or indeed union) must cede to the requirements of the statutory bargaining provisions in the ERA where they apply. Any restrictions on freedom of association for employers and unions are a function of the statutory bargaining process. Both parties agree that the statutory bargaining process applies to negotiations for an original collective agreement. It was conceded, as it had to be, by Witney that bargaining for joinder and joinder itself mean no greater incursions into Witney’s freedom of association than multi-party bargaining for and entering into a new MECA. This disposes of the argument. There is no reason to read down the plain words of Part 5 solely in relation to subsequent joinders, but not in relation to original MECAs, which is what the Employment Court did.

Conclusion

[77] For the reasons explained above, we conclude that s 56A allows subsequent joinder to existing collective agreements where negotiations (whether inside or outside the statutory bargaining process) have resulted in an agreement by an employer or union to join an existing collective agreement. We also conclude that any agreement to join an existing collective agreement is likely in itself to be a collective agreement. We do not need to decide, and have not decided, whether there has to be a precursor agreement between a union and an employer before s 56A can be invoked, but we anticipate that, in practice, there would usually be a precursor agreement so that any necessary carve-outs can be agreed prior to joinder.

[78] The conclusion that the statutory bargaining provisions can be used to persuade an employer to join an existing collective agreement is supported both by the words of the statutory bargaining provisions themselves and the scheme and purpose of the ERA with its emphasis on good faith collective bargaining. In our view, any statutory indications to the contrary are not strong enough to lead to a different conclusion.

[79] In reaching our conclusion, we did not find the legislative history of assistance. The question of whether or not the statutory bargaining process could be used is not addressed in the course of the legislative history. We also considered the reliance placed by the Employment Court on an employer’s freedom of association and individual choice misplaced. The individual choice referred to in the objects section (s 3(a)(iv)) of the ERA) is an employee’s freedom of choice and not that of an employer. As to freedom of association, there is no greater incursion into an employer’s freedom of association in bargaining for joinder to an existing MECA than there is in bargaining for a new one. As it was accepted by Witney that the statutory bargaining provisions applied to bargaining for a new MECA, this disposed of the point.

Result and costs

[80] For the above reasons, the appeal is allowed. The answer to the question set out at [4] of this judgment is in the affirmative.

[81] The case was treated as a test case before the Authority and the Employment Court and no costs were awarded. Neither party asked us to award costs in this Court. We therefore, like the Authority and the Employment Court, make no costs award.

Solicitors:

EPMU, Wellington for Appellants

EMA Legal, Wellington for Respondent

_APPENDIX

Relevant legislative provisions

[82] Under s 3(a) of the ERA, one of the two objects of the Act is to build productive employment relationships through the promotion of good faith in all aspects of the employment environment and the employment relationship. This is to be achieved by recognising that employment relationships must be built not only on the implied mutual obligations of trust and confidence, but also on a legislative requirement for good faith behaviour; by acknowledging and addressing the inherent inequality of power in employment relationships; by promoting collective bargaining; by protecting the integrity of individual choice; by promoting mediation as the primary problem–solving mechanism and reducing the need for judicial intervention.

[83] The second object of the ERA is set out in s 3(b). It is to promote the observance in New Zealand of the principles underlying the International Labour Organisation (ILO) Convention 87 on Freedom of Association (“Convention 87”) and Convention 98 on the Right to Organise and Bargain Collectively (“Convention

98”).

[84] The core legislative requirements for good faith in employment relations are set out in s 4. Under s 4(1)(a), the parties to an employment relationship set out in s 4(2) are required to deal with each other in good faith. The employment relationships set out in s 4(2) include an employer and his or her employees, a union and an employer, a union and a member of the union, a union and another union that are parties to or bargaining for the same collective agreement and an employer and another employer where both are bargaining for the same collective agreement. Unlike for unions, s 4(2) does not provide that employers who are parties to the same collective agreement are in an employment relationship.

[85] A collective agreement, as defined in s 5 of the ERA, is an agreement that is binding on (a) one or more unions; and (b) one or more employers; and (c) two or

more employees. Under s 5, an employment agreement is defined (in (c) of the definition) as including an employee’s terms and conditions of employment in (i) a collective agreement; or (ii) a collective agreement together with any additional terms and conditions of employment.

[86] Also in s 5, bargaining “in relation to bargaining for a collective agreement” is defined as meaning “all the interactions between the parties to the bargaining that relate to the bargaining” and includes:

(i) negotiations that relate to the bargaining; and

(ii) communications or correspondence (between or on behalf of the parties before, during, or after negotiations) that relate to the bargaining.

[87] Section 54 of the ERA provides that a valid collective agreement must be in writing and signed by each employer and union that is a party to it – see s 54(1). Under s 54(2), a collective agreement may contain such provisions as the parties mutually agree on. However, s 54(3)(a) provides that a collective agreement must contain a coverage clause, a plain language explanation of the services available for the resolution of employment relations problems (including a reference to the 90 day period in s 114 of the ERA), a clause providing how the agreement may be varied and the date on which or the event which triggers the expiration of the agreement. It must not contain any provisions that are contrary to law or inconsistent with the ERA – see s 54(3)(b).

[88] Collective bargaining is dealt with in Part 5 of the ERA. This has its own objects clause in s 31. Relevant objects include to provide for the core requirements of the duty of good faith in relation to collective bargaining, to promote orderly collective bargaining and to ensure employees’ prior confirmation of proposed collective bargaining for a multi-party collective agreement.

[89] The initiation of collective bargaining is dealt with in ss 40 - 42. Under s 40(1) bargaining for a collective agreement may be initiated by one or more unions with one or more employers or, subject to the restrictions in s 40(2), by one or more employers with one or more unions. Section 42(1) of the ERA allows a union or

employer to initiate bargaining for a collective agreement by giving a notice. Under s 42(2), the notice must be in writing and signed by the union or employer or its authorised representative, it must identify each of the intended parties to the collective agreement and identify the intended coverage of that agreement.

[90] Section 41 sets certain restrictions on the initiation of bargaining for a collective agreement, essentially limiting the initiation of bargaining to a defined period before the expiration of a current collective agreement. There is a requirement under s 43 for an employer who receives a notice initiating bargaining for a collective agreement to notify its employees (as soon as possible or within 10 days after receiving the notice) whose work would be covered by the proposed coverage clause.

[91] Under s 45 a secret ballot must be held of affected union members if a union proposes to initiate bargaining for a multi-party collective agreement. Section 49 provides a procedure for joining the bargaining for a collective agreement after bargaining has been initiated. A union or employer must comply with all requirements, such as secret ballots, before joining the bargaining and all other parties to the bargaining must consent to the joinder.

[92] Section 32 deals with the specific requirements for good faith bargaining for collective agreements (as required by s 4). Under s 32(1)(a), the first step required of the parties to collective bargaining is that they use their best endeavours to enter into what is commonly known as a “process agreement” which sets out the agreed procedure for the bargaining. Section 32(b) requires the union and the employer to meet from time to time for the purposes of the bargaining. Under s 32(1)(c) the parties must consider and respond to any proposals made by each other. Section

32(1)(e) requires the parties to provide each other with information that is reasonably necessary to support or substantiate claims or to respond to claims made for the purposes of the bargaining. Section 34 deals explicitly with procedures for the exchange of information, including mechanisms to deal with confidential information.

[93] In 2004, a key change was introduced to s 33. The old s 33 provided that the duty of good faith in collective bargaining did not extend to a requirement to conclude a collective agreement. Under the new s 33, there is a positive obligation on a union and employer bargaining for a collective agreement to conclude an agreement unless there is a genuine reason, based on reasonable grounds, not to do so. Section 33(2) provides that a genuine reason does not include “opposition or objection in principle to bargaining for, or being a party to, a collective agreement”. See also the object set out in s 31(aa).

[94] Sections 50A – 50J allow for a process of facilitated bargaining whereby parties in serious difficulties in concluding a collective agreement may seek the assistance of the Employment Relations Authority. Under s 50H, the Authority is empowered to make recommendations about the process the parties should follow to reach agreement and/or the provisions of the collective agreement the parties should conclude. Although such recommendations are not binding, each party is required to give them consideration. Parties must also, during facilitation, deal with the Authority in good faith – see s 50I.

[95] The Authority also has power, under s 50J, to fix the provisions of a collective agreement if the criteria in s 50J(3) are met:

(3) The grounds are that—

(a) a breach of the duty of good faith in section 4—

(i) has occurred in relation to the bargaining; and

(ii) was sufficiently serious and sustained as to significantly undermine the bargaining; and

(b) all other reasonable alternatives for reaching agreement have been exhausted; and

(c) fixing the provisions of the collective agreement is the only effective remedy for the party or parties affected by the breach of the duty of good faith.

[96] The collective bargaining process is linked to the provisions dealing with strikes and lockouts. Under s 83, strikes or lockouts are lawful, if not unlawful under s 86 and if they relate to bargaining for a collective agreement that will bind

each of the employees concerned. Under s 86(1)(a) strikes or lockouts are unlawful if they occur while a collective agreement binding the participating or affected employees is in force and, under s 86(1)(b) for at least 40 days since the initiation of bargaining.

[97] Section 51 deals with the ratification of agreements by union members. Under s 51(1) a union must not sign a collective agreement or a variation of it unless that agreement or variation has been ratified under the procedure notified under s 51(2). Section 51(2) provides that, at the beginning of bargaining for a collective agreement or a variation to it, a union must notify the other intended parties of the procedure for ratification by the employees.

[98] Section 59 requires a copy of a collective agreement to be provided by the parties to the Chief Executive of the Department of Labour as soon as practicable after they enter into the agreement.

[99] Section 56A was added to the ERA in 2004 at the same time as the repeal and substitution of s 33. Section 56A(1) provides that an employer, which is not party to a collective agreement, can become a party if the agreement so provides that an employer may become a party to the agreement after it has been signed by the original parties. Certain conditions must be met, including that the work of some or all of the employers and employees (which includes, under s 56A(6), future employees) comes within the coverage of the collective agreement, that they are not covered by an existing collective agreement and that notice is given to all the original parties. If a union is to become a subsequent party to a collective agreement there is an added requirement. A secret ballot of affected members must be held and a majority must vote in favour of joinder – see s 56A(3)(c).

Legislative history of s 56A

[100] In early 2003, there was a review of the ERA resulting in a paper by the Cabinet Economic Development Committee Review of the Employment Relations Act: Overview of proposals for legislative fine tuning 31 March 2003. On the subject of subsequent joinder to a multi-party collective agreement, the

recommendation was that the ERA be amended to provide for the voluntary joinder of union and employer parties to existing collective employment agreements, where the parties to the original collective agreement had negotiated an enabling provision in the agreement to allow this to occur.

[101] In Appendix 2, at [77] of the Cabinet paper, it was said that the decision to seek joinder to an existing collective would be solely by the mutual agreement of the employer and union concerned. There would be no citing in. (This was a reference to the pre-Employment Contracts Act position – see for example s 134 of the Industrial Relations Act 1987.) It was stated that, where the employer does not agree, no joinder would be possible.

[102] Cabinet accepted the recommendations and the Employment Relations Law Reform Bill was drafted and introduced. The Minister of Labour, the Hon Margaret Wilson, on the introduction of the Bill, stated that the Bill would facilitate the settlement of multi-employer and multi-union collective agreements. She said (11

December 2003) 614 NZPD 10667:

Other unions and employers will be able to easily join in existing collective agreements where the original agreement allows that to occur and all parties agree.

[103] The Bill’s explanatory note (no. 92-1) in relevant part stated:

The promotion and encouragement of collective bargaining is a key object of the Act. However, practical incentives for the parties to bargain and settle collective agreements can vary, whilst unions face administrative barriers in organising employees collectively, particularly in multi-party bargaining. ...

The Bill also allows subsequent union and employer parties to join existing collective agreements, where the parties to the original agreement have negotiated an enabling provision to allow this to occur. ...

Clause 14 inserts a new section 48A in the principal Act relating to the first meeting of multi-party bargaining for a collective agreement. The new section imposes an obligation on each party to the bargaining to attend, at least, the first meeting to the bargaining. ...

Clause 18 inserts a new section 56A in the principal Act. The new section specifies when and how an employer or union who are not original parties to a collective agreement can become parties. ...

The Bill will also facilitate the settlement of multi-employer and multi-union collective agreements. Other unions and employers will be able to easily

join in existing collective agreement where the original agreements allows that to occur and all parties agree.

[104] The Bill was sent to the Transport and Industrial Relations Select Committee. A majority of the Committee in the report to the House recommended the deletion of cl 14 – see Employment Relations Law Reform Bill, no. 92-2 at 7. They considered that cl 14 had contributed to a perception that employers would be compelled to enter into a multi-party collective agreement. In addition, it could potentially detract from the existing good faith obligations in s 32 of the ERA (which include entering into a bargaining arrangement and to meet from time to time for the purposes of bargaining). These apply to MECAs in the same way as they apply to SECAs. Addressing cl 18, the Committee advised that the majority considers that cl 18 (the proposed new s 56A) enables willing employers and unions to join pre-existing collective agreements.

[105] The Department of Labour’s report to the Select Committee on the Bill, ER/DOL/5A, dated 22 July 2004, noted that submissions opposing the clauses considered variously that they would compel employers to enter into multi-employer collective agreements, that they could enable strikes in support of subsequent party clauses, that they would mark a return to national awards, and that the proposed provisions were ambiguous and uncertain. The Department’s comment on the clause was that the aim of this clause is to provide a clear process for employers and unions to become parties to existing collective agreements if they wish to do so.