Swain Paul: Employment Relations Law Reform Bill — Second Reading 
Swain Paul: Employment Relations Law Reform Bill — Second Reading 
[Volume:620;Page:15820] 
Hon PAUL SWAIN (Minister of Labour) 
: 
 I move  
That the Employment Relations Law Reform Bill be now read a second time 
. I would like to thank the members of the Transport and Industrial Relations Committee for their comprehensive work on the bill. The select committee received 354 substantive submissions and heard 202 oral submissions. This bill has been closely examined by employers employees unions industry associations and other interested parties. The select committee has carefully considered their submissions and as a result recommended a number of practical improvements and I draw members’ attention to the following key amendments recommended by that committee. 
The commencement date is now 1 December 2004 as a result of the committee’s work. In good-faith areas the bill clarifies that good faith is a broader concept than common law obligations of mutual trust and confidence and confirms that good faith applies to bargaining for individual agreements. The select committee has also recommended a number of amendments to better define the duty of good faith. These amendments include removing the specific requirement for employers and employees to be supportive of each other in recognition of the fact that the parties are entitled to pursue their own interests and bargaining in other situations. 
The provisions relating to employers’ good-faith obligations to provide information to employees and give them an opportunity to comment on it have also been amended. The intent of these provisions is that employers should provide information to their employees on decisions that will or are likely to adversely affect the continuation of their employment. The select committee has recommended that employers will not be required to provide information on routine operational decisions and will not have to provide information where that would unreasonably prejudice their commercial position—a clearly sensible recommendation. 
In relation to whether employers and employees have acted in good faith over individual bargaining the fact that employers and employees may have differing resources and capabilities may now be taken into account. A similar provision already exists for collective bargaining. This is a sensible amendment because it recognises that employers may have differing capacities and resources to engage in good-faith bargaining and that approximately 80 percent of New Zealand employees are employed on individual agreements. 
In regard to free-riding or passing on the bill aims to prevent employers from undermining collective bargaining by automatically passing on collectively bargained terms and conditions to employees not covered by the collective agreement. The risk of undermining collective bargaining is higher during the bargaining process. The select committee has therefore recommended amending the bill so that it would be a breach of good faith if during bargaining an employer passed on the term or conditions reached in that bargaining where this is done with the intent or has the effect of undermining the collective bargaining process. 
After collective bargaining has concluded the test for a breach of good faith would be higher. An employer would be in breach of good faith at this point only if he or she passed on the collective terms and conditions with both the intent and the effect of undermining the collective agreement. 
The select committee has also recommended clarifying that employers are not prevented from providing all employees with the same terms and conditions of employment—[ 
Interruption 
]—an issue that the National Party has difficulty in comprehending so I will read it again. The select committee has also recommended clarifying that employers are not prevented from providing all employees with the same terms and conditions of employment. These amendments make it explicit that the outcome of different sets of bargaining may be the same or similar—provided of course that employers and employees have bargained in good faith. 
On bargaining-fee arrangements: the select committee has recommended that I move an amendment to the bill to allow for bargaining-fee arrangements to be negotiated where it is agreed that the terms and conditions of a collective agreement are to be passed on to non-union members on individual agreements. Non-union employees who do not wish to pay the bargaining fee will of course be able to opt out of the arrangement. I agree with this recommendation and I have released a Supplementary Order Paper which has now been tabled proposing that where a union and an employer agree on a bargaining-fee arrangement affected employees would take part in a ballot to decide whether the bargaining-fee arrangement should operate in their workplace. In practice that means that where a majority of those balloted support such an arrangement all non-union employees falling within the coverage of the collective agreement would be given the same terms and conditions as those covered by the collective agreement in return for paying a bargaining fee. Employees who do not want to pay a bargaining fee will be able to opt out of the arrangement. Strikes and lockouts over bargaining-fee arrangements will be prohibited. 
The issues surrounding concluding a collective agreement were also discussed by the select committee and it has recommended that the bill give more guidance on what could be considered to be a genuine reason not to conclude a collective agreement. A genuine reason must be based on reasonable grounds and this does not include opposition or objection in principle to collective bargaining or collective agreements. 
What about multi-employer collective agreements or “MECAs” I hear members ask. Amendments have been proposed to the provisions relating to multi-employer collective agreements. The select committee has recommended removing the specific requirement to attend the first meeting of bargaining for such agreements. This was obviously an issue that was raised at the select committee. A number of employers had concerns about it and came to see me about it and the select committee quite wisely has recommended that the first meeting for bargaining for a— 
Dr Wayne Mapp 
: You actually made it tough by another device. 
Hon PAUL SWAIN 
: That is not a bad idea and the member on the select committee hopefully will agree with it. The existing good-faith obligations will continue to apply to bargaining for multi-employer collective agreements as well as to bargaining for single-employer collective agreements. 
What about restructuring situations and continuity of employment? The select committee has recommended clarifying the schedule that lists a group of employees who will receive employment protection in sale-of-business or restructuring-of-business situations. The term “food services” has a broader reach than was intended and the select committee has recommended rightly that it should be replaced with the term “food catering services”. This change ensures that the protections— 
Simon Power 
: This will not work. 
Hon PAUL SWAIN 
: Of course it will work. This change ensures that the protections in the bill are targeted at the most at-risk employees. Amendments to these provisions also tighten the process for changing the schedule. A report commissioned by the Minister of Labour about whether the grounds for changing the schedule have been met would form the basis for consultation with employers employees and other parties as appropriate. 
I turn now to the question of equal pay. After careful consideration of the views on updating the equal pay legislation the select committee has recommended that the equal pay provisions of the bill be removed. Amendments to update equal pay legislation will be considered in the context of the Government’s pay and employment equity initiatives. 
What about personal grievances? The select committee has recommended amending the test of justification in personal grievance cases to reinforce that it is based on what a fair and reasonable employer would have done. The requirement of an employer to consider and balance the legitimate interests of the employee and the employer has also been removed. I am aware that many employers particularly small-business owners have concerns about the procedures for dismissals and personal grievances and their capability to deal with these issues. I have spoken to a number of these employers including those that are represented on the Small Business Advisory Group and they argue that the issue of personal grievance is the single biggest issue that they face. In fact 80 percent of small-business people employed in New Zealand are not covered by any collective agreement or union and this is the issue that they are most concerned about. As a result I have indicated to them that once the bill is passed I will be looking at ways to give better guidance around these issues and I have already indicated a number of— 
Hon Dr Nick Smith 
: That’s what you said with the holidays stuff. 
Hon PAUL SWAIN 
: And we did that. Does the member remember that? It is coming up a bit later in the week. If the member did some reading it would be helpful. 
So all in all the select committee has done thoroughly good work on this legislation. [ 
Interruption 
] I heard that there were quite good discussions on the select committee actually. Of course one of the issues about employment relations legislation is balance. Everybody recognises that perhaps the balance went too far in the 1980s and in the time leading up the 1980s. Then in the 1990s of course the Employment Contracts Act stripped away all the rights and we replaced it with the Employment Relations Act. National of course said it would scrap the Employment Relations Act. Only last year it said that and now the Leader of the Opposition Don Brash says that basically business thinks it is all right. So once again there is a problem and I would be very interested to know what the National Party position is on the Employment Relations Act generally. I would like to hear about that but as far as this bill is concerned it is about getting the balance between the rights of the employer and the rights of the employee. 
The select committee under the good guidance and leadership of my friend and colleague Mark Gosche has provided excellent leadership on this legislation. He has brought back a piece of legislation a reform bill that has been much improved since it went before the committee. It is great legislation and I recommend it most strongly to the House.