Saturday, December 4, 2010

Mine Disasters and Inquiries

During the recent Pike River tragedy I looked up Wikipedia for a reference to the Miners' Hymn written after the Gresford Disaster where 266 men died after explosions in the mine. The section of the entry on the subsequent inquiry makes interesting reading - some extracts below

Events after the accident

The wage packets of the dead miners were docked quarter of a shift's pay for failure to complete the shift.

An inquiry opened on October 25, 1934 and highlighted management failures, a lack of safety measures, bad working practices and poor ventilation in the pit. The miners were represented at the Inquiry by Sir Stafford Cripps; the mine owners, mindful of the fact they could face criminal charges, hired a formidable team of barristers including Hartley Shawcross.[4] Recovery teams entered the sealed pit in 1935 in connection with the Inquiry; however the Company allowed only its own officials to enter the Dennis districts, citing dangerous conditions, and the victims' bodies remained sealed in the pit. It was widely perceived that these actions were a deliberate attempt by the mine's owners to cover up any remaining evidence of their culpability, as it meant that any theories as to the explosion's cause could not be conclusively proven.[4] The colliery reopened six months after the disaster with coal production resuming from the South-East section in January 1936.

The inquiry, chaired by Sir Henry Walker, issued its findings early in 1937. The two Assessors chosen by the miners and by the pit's management, and the barristers representing them, gave widely different suggestions as to the explosion's cause. In the absence of any proof, due to the Dennis section remaining sealed, Walker drew very cautious conclusions

Later in 1937 court proceedings were started in Wrexham against the Pit Manager, the Under-Manager and the United & Westminster Collieries Limited, the owners of the mine. Aside from the evidence of poor working practices, it was discovered that Bonsall had after the accident instructed an assistant surveyor, William Cuffin, to falsify records of dust samples when none had actually been taken.[2] The court however dismissed most of the charges, finding the mine's management guilty only of inadequate record-keeping, and Bonsall was fined £150 plus costs; the mine's owners were never called to give evidence. Bonsall, despite being calculatedly portrayed as a ruthless and cynical manager by Cripps and others, is likely to have been more of a "weak man driven beyond his capabilities"[10] and who was reduced to a state of extreme exhaustion and stress by over 20 hours of examination at the inquiry. The Under-Manager, Williams, was singled out for praise in that unlike other officials he was found to have made a genuine attempt to improve working conditions for the miners since taking the job.

Cripps used the evidence given at the inquiry to call for nationalisation of the coal industry. This eventually occurred in 1947, when the pit, along with others in the country, was taken over the by the National Coal Board. As part of the takeover agreement, nearly all the operating records and correspondence relating to Gresford Colliery were deliberately destroyed.

Friday, October 29, 2010

Back to the Bad Old Days?

When discussing industrial relations much is made of the ”bad old days” in the 1970s and 1980s when industrial unrest was at a particularly high level and major projects could suffer long delays as a result. What is often forgotten is the other side of the bad old days – the Muldoon National government's use of legislation to deal with pretty much any dispute that gained political prominence or which could be used for a bit of pre-election union bashing. Labour was not entirely innocent of these tactics either, the Harbour Pilotage Emergency Act 1974 comes to mind. However compared to Muldoon Labour weren’t really in the game. Apart from virtually constant wage regulation there was the legislation on union membership ballots and especially those bits of it intended to make balloting virtually impossible-the excuse used to make the Clerical Workers’ Union compulsorily voluntary just before an election - and the Whangarei Refinery Expansion Projects Disputes Act 1984 to force a return to work in a long running dispute at a major oil refinery construction project. Threats to legislate and threats to declare a state of emergency under the Public Safety Conservation Act 1932 were used by the National Government on several occasions.

One positive thing that can be said for the ECA, and which was also true for the ERA during Labour’s period in government, was that once a legislative model was developed the government stood back and left the parties to sort things out for themselves. The epithet “Sideline Stan” might not have been intended to be complimentary when describing a former minister of labour but it pretty much summed up the approach of governments for two decades. It was an approach that removed special pleading and parties attempting to resort to one-sided political-legislative solutions to get their own way. One might not have liked the law but it operated as the law should operate. Legislative intervention during this period was confined to reforms based on genuine problems and aimed at a general solution – one technical amendment only to the ECA and amendments to the ERA focussed on matters such as clarifying the scope of good faith. Even the more focussed reforms such as transfer of undertakings and rest breaks were of application to broad groups of workers.

The Key National government has abandoned this approach and the law is again prey to special bidding and the interests of National’s mates. Generally this legislation is being passed not because of need but either to solve, largely imaginary, short term issues or for pure political benefit. To wit:

  • The Jackson-Warner Brothers appeasement Act: neither needed or desirable. The objectives wanted by these actors (term used deliberately) were easily achievable under existing law.
  • The abandoned Bill (although now in the ER Amendment Bill) to remove rest breaks for workers because civil aviation would apparently come to a standstill last year if it wasn’t passed. I have been away so I might have missed the chaos!
  • Proposed amendments to the PG provisions: not needed as the law is perfectly satisfactory. Seems to have been placed in the ER Bill, following a very dodgy piece of DoL “research”, for no other reason than to pander to the misunderstandings of small employers who can’t be bothered to understand basic employment law.
  • Union access provisions: promised by National but drafted to allow delay to access to undermine both union membership and bargaining.

Labour law now seems to be open to the highest bidder and the loudest right-wing voice – and bugger the workers who are now locked out of the process. John Key’s collaborative approach was pretty short-lived.

Wednesday, October 27, 2010

"I want it all" (with apologies to Queen)

I haven't blogged for a while being in Glasgow but some issues cry out for comment.

"I want it all" pretty much sums up the attitude of New Zealand "icon" Peter Jackson. Happy to make films here if he get massive tax breaks unavailable to other businesses and labour law is changed to allow US-style employment at will. Paul Roth's comments about banana republics will have considerable truth if the government caves into these demands. Even for a National government one might have thought it would be a step to far to deny workers the rights in core ILO conventions to which New Zealand is a party-apparently not!

It is perhaps to be expected that many people are not fully conversant with New Zealand's labour law but to see a statement such as the following in a major newspaper beggars belief (well not really given the Herald's usual anti-worker stance)

"Some film workers work as contractors, meaning they can have significant tax breaks and can set their own terms and conditions".

Tax breaks maybe - although how significant is debatable- but "can set their own conditions": Joe or Jane Blogs who hold the microphone normally walk into Warner Bros and tell them what conditions they will work under - YEH RIGHT. Joe and Jane do not set their own conditions, they take what they are given and like it or lump it. Employees may have limited bargaining power but statutory protections such as good faith requirements do place some requirements on employers to negotiate. And if later Joe and Jane don't like it, or the movie moguls don't like them they are down the road. No personal grievance rights, no good faith, no explanation required, nothing. You're a commodity in this world mate and we don't need you/found a cheaper one.

The difference between contractors who work for predominately one employer and employees is pure legal form and has nothing to do with economic reality. It is a device to avoid the obligations of being an employer. That is why the Authority and courts are told to look at the real relationship.

And lets try and be a bit realistic-apart from avoiding personal grievance obligations, minimum holidays and the minimum wage and the dangers of collective bargaining (ie by workers-no problem with capital being collectivised in a company) anything you can do with a contractor can be done with employees - flexible hours, part-time, fixed term or whatever, on call employment and so on.

And perhaps more to the point as Paul Roth pointed out yesterday, if the contract makes it clear that you have agreed to be contractor it is unlikely that the Authority or Court will find that you are not- the law doesn't need changing. Peter Jackson and Warner Bros need to hire a lawyer and get them to write a clear contract - just like other businesses do.

John Key should try acting as Prime Minister and restore some national (small 'n') pride. With a big 'N' it is going down the drain - "Mexicans with cellphones" is insulting to both Mexicans and New Zealanders.

The sad thing is that a significant number of workers' jobs depend on the outcome of this dispute-yep workers, be they employees or contractors. These workers have been sitting around in limbo for many months as the moguls decide whether or not to film, whether or not to come to New Zealand etc. They deserve better and it is understandable they look to blame the union who seems to have upset an apple cart. However nothing of any significance has changed in labour law since the days of Lord of the Rings except to worker's detriment, 90 day trial periods and all that. They would do better and look at where the real problem lies-and it is not Australia or at the CTU.

Wednesday, August 25, 2010

Trial Periods: Guest Post by John Hughes

There’s no doubt that managing people can be a tricky business. In just one workplace, recently, manager A had to deal with a team member who had been found to have misrepresented the nature of some personal spending on a credit card dedicated for business use, while manager B discovered that a member of his team had directed inappropriate sexual comments at women who also worked there. Disciplinary action would obviously have been on the cards under conventional employment law principles.
But each of these managers showed themselves to be acutely responsive to the needs of the team members in question. Manager A described the credit card offence as a technical matter and argued strongly that no action should be taken until a high level investigation had taken place and natural justice observed. Although the offender took it on himself to resign, he was soon reinstated. Manager B, meanwhile, explained his team member’s lewd behaviour by saying that he was unused to the work environment he now found himself in and as demonstrating that he needed to grow into a job that was new to him. He was given a “talking to”.
Manager A, we might remind ourselves, was Prime Minister John Key faced with the issues arising from Housing Minister Phil Heatley’s misuse of his ministerial credit card. Manager B, again, was ACT leader Rodney Hide, dealing with the fallout from the misbehaviour of ACT MP David Garrett.
So why are both men now so keen to introduce trial periods which will potentially deprive all employees in New Zealand of the consideration that they extended to their own colleagues? Since it might seem churlish to suggest anything as simple as a double standard at work, let us consider the arguments that have surfaced since the decision to extend the current trial period scheme was announced.
First, there is the freedom of choice argument. In the view of the Prime Minister, no-one needs to sign up to a trial period. They can “opt out”. Despite attempts to distance the current government from the thinking underpinning the Employment Contracts Act 1991, this is neo-liberal ideology at its purest. Employers and employees, in this theoretical world, are seen to possess equal bargaining power. Whilst some job applicants (a successful foreign exchange trader, for example) may indeed possess a degree of bargaining power, in the real world others plainly will not (for instance a pizza deliverer, even if the government had not already voted down legislation to improve his or her existing working conditions as a contractor).
The Government has pinned much of its propaganda on findings in a Department of Labour report that surveyed 771 employers in detail but interviewed only 13 workers (this purportedly due to “resource constraints”). Ironically, perhaps, that research makes this very point about bargaining power. The report showed that the employers surveyed generally made a take it or leave it offer which included non-negotiable trial periods and that the employees surveyed generally were unaware of their ability even to attempt to negotiate on the issue.
Even if such awareness existed, how realistic is it to expect job applicants to expect to bargain over such issues when hundreds of people queue for a few vacant positions at a fast food outlet and there remains the very real prospect of a social security stand-down if a job offer including a trial period is refused?
Second, the Prime Minister and the Minister of Labour have argued that the current limited trial period law has increased job opportunities. Once again, however, the Department of Labour research on which this claim is based shows nothing of the sort. Rather, in the words of that report “it cannot be stated categorically that trial periods had created extra job opportunities”. The much-trumpeted 40% of employers surveyed who claimed that they were unlikely to have hired a particular recruit without a trial period tells us nothing about how that conclusion was reached and certainly does not tell us that the job would not have been there in the absence of trial periods.
Third, the Prime Minister and Minister of Labour have both asserted that the extension of trial periods will assist marginalised groups such as lone parents and migrants who would otherwise not get job offers. It’s remarkable, isn’t it, how the purported concern of the Government for the poorest in society always manifests itself in practical measures that further worsen their lives, working or otherwise? That concern was not apparent when officials repeatedly warned the Government that axing ACC entitlements would hit the most vulnerable groups the hardest; it wasn’t there when the decision to raise GST was taken, again disadvantaging the poor infinitely more than the rest of society; and it certainly wasn’t there when the Government passed legislation allowing the Work and Income Service to halve the benefits of parents who fail new work tests, at a time when the Public Health Advisory Committee reported that there is already massive, and we would say utterly shameful, inequality in the health status of New Zealand children (beneficiaries’ children were identified as the most likely group to face continuing serious hardship in this respect).
Then, of course, if employers were indeed behaving as the Government claims, they had ample opportunity to demonstrate this in the skewed Labour Department Report on which the Government has relied so heavily. Unsurprisingly, that Report found instead that “very few” employers had used trial periods to employ marginalised workers. By telling these same employers that marginalised groups are a risky prospect without trial periods, moreover, the Government has effectively legitimised prejudices which would amount to unlawful discrimination if acted upon.
Fourth, if this new-found compassion for the poor seems a remarkably convenient camouflage for a right-wing policy that suits the Government’s natural constituency, it isn’t alone in this respect. So also is the much-vaunted comparison with other countries that use trial periods, especially the UK. Three years ago, when the parties forming the Government were in opposition and UK standards were used to promote legislation for flexible working arrangements, the present Minister of Labour Kate Wilkinson decried the comparison. “The current set of labour market and economic and social conditions in New Zealand”, she said, “does not present a close enough match to any [other] countries for that country’s solutions to be the obvious choice”. Indeed, she stated then that “it is dangerous simply to compare our situation with the United Kingdom situation and say this is the law for us”. Three years on, it appears that this danger only arises when the comparison with the UK favours employees rather than employers.
Then, finally, there are the simple misrepresentations. The Prime Minister has claimed that unions are “hyping up” the 90 day trial period and that workers currently on trial periods cannot be dismissed without reasons being given: “you can say it didn’t work out, but you have to say why it didn’t work out”. This is completely false. The trial period provisions introduced by the Government expressly remove the usual obligation to provide reasons for dismissal and the relevant official background papers state that the trial period proposals were “explicitly developed on the basis that there would be no requirement for employers to give reasons”. As misrepresentation goes, the Prime Minister’s claim ranks with Labour Minister Wilkinson’s original assurance that trial periods were covered by good faith provisions requiring notification of proposed dismissal. Once again, to the contrary, this aspect of good faith is expressly excluded from trial periods.
BAS, of course, is primarily concerned with the interaction of trial periods and the social security system. Here, the Work and Income Service requires that clients who are receiving the unemployment benefit and are referred to trial period of employment either take up the trial or face loss of benefit. Further, if a worker’s trial period is terminated after moving to trial employment from other work, he or she faces a social security stand-down. Despite original promises by the National Party in opposition, when trial periods were introduced under urgency in December 2008 no change was made to the provisions for waiver of the one or two-week stand-down before receiving a benefit. (This stand-down can be waived only if the applicant has been in full-time employment for less than 26 weeks; was receiving a benefit immediately before they were employed; and if their benefit was stopped because they moved into work.) Even worse, if a Work and Income case manager believes that a trial period employee has been dismissed for misconduct, or left work voluntarily, that employee ultimately faces a 13 week disqualification period without the option of first testing the validity of the dismissal (and the consequent stand down) through an unjustifiable dismissal claim, a right which exists for all other dismissed employees.
So, once again, we are back to the brutal politics of the 1990s in which the marginalised are squeezed between precarious working conditions and an increasingly mean-spirited and punitive social security system. Freedom of choice, anyone?

This piece was first published in the Spring Newsletter of the Beneficiary Advisory Service, (“BAS”). The BAS specialises in information and advice on low-income issues and social security advocacy and can be contacted at Suite 18, 107 Armagh Street, Christchurch, PO Box 130090, Christchurch. Phone, 379 8787, Fax, 377 3561. Email

Thursday, August 19, 2010

Personal Grievances: the proposed new s103A

The Minister’s Explanatory Note to the ER Bill states that it will “help restore the confidence of all parties in the personal grievance system”. This seems unlikely as the reforms do little to improve things that need reform, such as issues arising from triangular employment, and a lot to change things that don’t. However it has been clear since the Department of Labour issued its execrable Discussion Paper that these reforms have little to do with improving the personal grievance process and more to do with providing a response to the campaign of disinformation and misinformation run by various employer lobby groups who claim that the system is unfairly weighted against them and that wholly justifiable dismissals are overturned on the basis of some minor procedural mistake – examples of which are rarely if ever produced or substantiated (see my post of 24 February).

So what are the reforms?

The most important is of course the exclusion of new employees from personal grievance protection if they “agree” to a trial period. I will not comment on this as the inevitable iniquities that will result have been well covered in the CTU’s campaign on this issue. However one point that might be noted is that these employees have not only been stripped of their statutory protections but also of the limited common law protection from wrongful dismissal as section 113 bars such actions. The government has therefore enacted employment-at-will for up to 400,000 employees who change jobs each year – a period that might easily be extended in a third round of reforms.

The most important change to the personal grievance procedure itself is to be found in the proposed new s103A. The first is the change in the test of justification from “what a fair and reasonable employer would have done in all the circumstances” to what that that employer “could” have done. This change may look linguistically insignificant but its import is clear from the Explanatory Note. This states that “the current test of justification, which inappropriately obliges the Judge to substitute himself or herself for the employer and determine what the fair and reasonable employer would have done” should be amended. The Note goes on to state that “By substituting the word “could” for the word “would” in the test of justification, the Bill recognises that there is a range of fair and reasonable responses (actions and courses of action) that could be made by an employer in any situation.”

Two points need to be made here. The first is that the Note suggests that the Authority and the Court take a rigid approach to what is reasonable and insist there is only one answer to the question: it refers to “the “false assumption that there is only 1 fair and reasonable course of action.” – this is garbage. Both the Authority and the Court are careful to look at the full range of circumstances in deciding whether a particular approach was reasonable and in fact recognise that there may be a proper range of responses. As Judge Shaw said in Air New Zealand v Hudson [2006] 1 ERNZ 415 “While the range of responses open to an employer is obviously one of the matters to be considered, it is not the only matter”, a statement that clearly gives the lie to the statement on p 4 of the Note (my emphasis).

What this amendment is intended to do was made clear by employer submissions Air New Zealand v V (2009) 6 NZELR 582. It was argued that
once the Authority or the Court has determined that there was serious misconduct, and that this was a decision that a fair and reasonable employer would have made in all the circumstances at the time the dismissal occurred, the Authority and the Court should have no further role."
In other words it is nothing to do with the Authority of Court that the employer may have made a decision that was totally disproportionate in the circumstances or even totally irrational. Any person familiar with employment law could identify situations that might constitute “serious” misconduct but where dismissal would be totally unjust. Indeed the term “serious” should be regarded with considerable suspicion as it contains very strong pro-employer values, has become increasingly subjective and encompasses a range of conduct that many might regard as falling well short of conduct that justifies dismissal.

The second point that deserves comment is the idea that it is “inappropriate” for a neutral third party to decide if an employer’s substantive decision was reasonable in the circumstances. The point of independent evaluation is just that. Natural justice does not consist only of a right to be heard and it is not achieved when the decision maker is the judge of their own actions. Given the seriousness of the consequences of dismissal for an employee that employee is entitled to an unbiased and independent evaluation of a decision they challenge. It is also important to recognise what role the courts perform in such cases. The simplistic language in the Note suggests that judges act in an arbitrary and capricious fashion in imposing their own values. Perhaps the Minister might gain some value by a careful reading of the thorough and thoughtful analysis of Judge Shaw in Air New Zealand v Hudson in which she said:
the s103A requirement for the Authority and the Court to stand back and determine the matter on an objective basis by evaluating the employer’s actions does not give an unbridled licence to substitute their views for that of an employer. Their role is instead to ask if the action of the employer amounted to what a fair and reasonable employer would have done and evaluate the employer’s actions by that objective standard. It may mean that the Court reaches a different conclusion from that of the employer but, provided this is done appropriately, that is objectively and with regard to all the circumstances at the time the dismissal occurred, a conclusion different from that of the employer may be a proper outcome.
It is of course not yet clear how the courts will interpret this change of wording, and one should remember that the need for an objective standard of evaluation remains as does the general good faith requirement, but the objective of its advocates is clearly to reinforce the subordination of the employee and the vulnerability of their employment – on which see my blog of July 26.

The Bill, in sub clause (3), proposes to add a number of new considerations to be taken into account by the Authority or Court. These would seem to largely restate the existing law but do have the advantage of making explicit at least the basics of procedural fairness. Similarly sub clause (5) appears to add little. Perhaps the one concern relates to the need to consider the “resources available to the employer”, although this may be prove to be a cleft stick. All employers have access to professional advice and might be expected to seek it. It might also be recalled that in In Association of University Staff Inc. v The Vice-Chancellor of the University of Auckland [2005] 1 ERNZ 224 at [41] the Court suggests that professional HRM managers might be expected to be aware of appropriate standards and practice in their field.

Friday, August 13, 2010

Death of Jimmy Reid

All the national papers in Britain this week have carried extensive obituaries following the death of Jimmy Reid, one of the foremost Scottish trade unionists in the post-war era. Among other things he apparently said that if kamikaze pilots formed a union Arthur Scargill would have been its natural leader. A speech he delivered on his inauguration as rector of Glasgow University in 1972, compared at the time to the Gettysburg Address, is reproduced in full in The Independent and is still well worth reading.

For an obituary see

Wednesday, August 11, 2010

Guest Post from Amanda Reilly

One More Straw

Most parents would agree that simultaneously managing family responsibilities and paid work can be hard. Research in this area frequently focuses on the difficulties faced by middle class professional women (which is unsurprising since much of this research is carried out by middle class women who have a very personal stake in the issue). However, a recent joint report by the UC Hastings College of Law Work Life Law Center and the Center for American progress shines a light on how work family conflict affects poor and working class families. It makes for harrowing and heartbreaking reading. Click here to read the whole report

Here is one extract I found particularly upsetting: Kim Braithwaite was making progress. She was working two jobs to support her two children, 9-year old Justina and 1-year-old Justin. But on October 12, 2003, she faced a dilemma: her babysitter was late. Kim would be tardy for her shift at McDonald’s if she delayed and she worried that she would be fired. The sitter would arrive in a few minutes, Kim reasoned, and she left for work. The next she heard was from the police. Her children were found dead in her front room; her apartment had caught fire before the babysitter arrived. Kim was arrested for child neglect. Said a neighbor, “It’s hard when a single mother has two or three kids and has to work a lot. But I never hear her kids crying, never see her yelling at them. She is a good mom. ”'

Could such a tragedy occur in New Zealand? One would hope not but I suspect we would not have to look too hard to find families in New Zealand who, like those identified in the report ‘get few benefits from their employers to help manage work-life conflict and often hold jobs with inconsistent or unpredictable schedules that exacerbate these conflicts. Government policies to help these families are too often inadequate and underfunded, yet conservatives point to the problems these families have in balancing work and family as proof of their “irresponsibility.”’

There are no quick fixes or easy answers to the problem of helping families to manage work and family. However, the consequences of the recent proposal to amend the Holidays Act, to give employers the right to request a medical certificate if an employee is absent from work for a single day, strike me as likely to be particularly harsh on poor working families. For a well paid single person with reliable transportation having to go to a doctor for a medical certificate because your employer suspects you took the day off to go shopping is a minor inconvenience. But the same requirement to obtain a medical certificate could be a significant imposition on a struggling solo parent on a low wage with no car and a complex web of childcare arrangements to juggle. Keep in mind also that under s65 of the Holidays Act an employee may take sick leave if a person who depends on the employee for care is sick or injured. Anecdotally, many working parents of young children use up their statutory sick leave entitlements on caring for their children and soldier on at work if they themselves are ill. Any parent who has experienced what it is like to be up all night with a vomiting child and then had to drag themselves to work the next day ought to be able to empathize with the burdens that illness must impose on poor working families. These families deserve our respect and support. I have no doubt that many good employers are supportive and understanding of their employees with family responsibilities and that the proposed law change will make no difference to their treatment of their workforce. However, not all employers are good or sensitive and I fear that conferring the ability to compel employees to obtain medical certificates after one day of sick leave on employers could be one more straw for the backs of already struggling workers and families.

Saturday, July 31, 2010

Consultation or Dicat: Different Approaches to Labour Law Reform

While mulling over a more detailed response to National's reforms, on which I will blog over the next few weeks, it has been interesting to contrast the very different approach to labour law reform taken by National and Labour. Older readers will recall the detailed and lengthy consultation process that preceded Labour's Labour Relations Act 1987 (as I recall a Green paper and submissions and then a white paper and more submissions before an Act was introduced and then the ususal Select Committee process).

In a paper that forms part of Erling Rasmussen's (ed) Employment Relationships: New Zealand's Employment Relations Act Margaret Wilson has detailed the comprehensive consultation process with all relevant groups that took place before the introduction of the Employment Relations Act 2000. This Act was notable for the limited nature of its reforms and its caution in introducing measures that might be damaging to business. In both cases Labour was open about its intentions, took care to ensure that both workers and business were consulted, that their respective interests were considered, and that the resulting legislation was genuinely pluralist in character.

By contrast National has been and remains completely unitarist. In its view of labour law there is only one side whose interests deserve consideration even if political realism may constrain that interest being pursued to too much of an extreme. National prefers to work behind closed doors and to consult only its own supporters and their lobby groups. In 1990 National had signalled the direction of its changes but the magnitude of those changes was unexpected. The policy and the legislative scheme was largely drafted in secret behind closed doors and workers and their representatives were excluded from this process. The process at the second and subsequent reading stages was particularly appalling. A significantly amended Bill was pushed through under urgency with few if any copies of the changes available either to the opposition or the public until the Bill was well through the parliamentary process. One result was that probably a third of New Zealand employees woke to find that they were covered by legislation on which they had not been consulted and had no opportunity to comment. It will be recalled that workers outside the award system only found they were to be covered by the ECA during the second reading.

National's record in 2010 is even worse. At least in 1991 National were reasonably honest about their intentions. By contrast, in 2008 its election manifesto proposed only minimal changes to employment law. This position has been repeated on several occasions. As we now know, this disinformation campaign was concealing a different game. In the dark corridors of power and in rooms that would have been previously smoke filled National was developing reforms intended to allow it to come as close as possible to pushing an agenda that appears to have changed little from the days of the ECA. It is an agenda that treats over 2 million New Zealanders as commodities and it is an agenda that makes it increasingly clear that those New Zealanders, whatever the HRM propaganda of their employers or however many statements that "our employees are our most important assets", will find that the cold legal reality is that security in their employment will diminish and that their economic well being will be increasingly subject to the arbitrary and unchallengeable decisions of their employer.

Monday, July 26, 2010

Behind National's Reforms

In the nineteenth century Sir Walter summed up the fears of British Tories and the propertied classes when he feared the day that “unwashed artificers” might get the vote, a sentiment that caused Borderers to jeer at him and stone his carriage. Universal suffrage, in Britain as in New Zealand, posed a major threat to the ability of the propertied class and expanding corporate capitalism to treat the great bulk of the population as exploitable commodities. In their view capital was endowed by god, or the “laws” of economics to exploit whatever resources were available, including human resources, and to accumulate the benefits of that exploitation for its private benefit.

Before universal suffrage the subordination of workers could be guaranteed through penal sanctions and imprisonment as well as the threat of unemployment, destitution and the workhouse for the worker and their family. Universal suffrage, the growth of effective trade unions, collective agreements, legislated minimum employment standards and welfare systems undermined these controls but the employment relationship, however, remained one of subordination. The courts invented new torts to crush worker organisation and developed a new form of contract embodying mechanisms to ensure effective control of employees. Employees were held to owe onerous duties of fidelity to their employer but such obligations were strictly one way – employers were obliged to pay wages but owed nothing more to their employees. The ASLEF case in the UK and decisions of the New Zealand Court of Appeal in the 1990s made it clear that in the view of the law an employment contract is a contract intended to benefit the employer – its function is to allow the owners of property to maximise the gain from their property. Employees are there to promote that function.

Employees however have no interest worthy of legal recognition in their employment. While the common law courts have long shown incredible flexibility in creating abstruse property and proprietary rights to protect employers, increasingly including quasi-property rights in their workforce in part or as a whole, they have never recognised any such rights for employees.

Subordination depends on fear. Historically fear was generated by the threat of flogging, transportation and the workhouse. Universal suffrage and effective political power ended the more draconian of these threats but the common law courts, always one of the strongest supporters of the interest of property, ensured that one threat remained clear and untrammelled – the right to dismiss without reason and without consequences. The common law has always taken, and continues to take the position, that any employee, be they employed part-time for a day or have worked productively and faithfully for 30 years, can be dismissed on a whim and without reason or even for reasons which any reasonable person would regard as totally unacceptable. An employee who has spent half a decade or more accumulating professional or technical expertise, increasing at their own expense, may have their reputation and their investment compromised or destroyed in a second by an arbitrary or vindictive employer and the common law gives not a jot.

Since the Second World War, however, most democratic developed countries, with the notable exception of the United States, have moved to limit such arbitrary power by requiring employers to justify a dismissal on some rational grounds-economic or commercial or employee misconduct or incapacity. New Zealand introduced this protection in 1973 and while personal grievance protection was never perfect, and rarely provided adequate remedies against unjustified employer actions, it did act as a significant deterrent to at least the more obvious abuses of employer power. Protection from unjustified dismissal, as with union organisation, thus qualifies employee subordination and hence the power of an employer to unilaterally and arbitrarily control its labour force. An employee who can insist on their contractual rights, or on some control in how their labour is utilised, constrains the so-called right of capital to have an untrammelled ability to exploit that capital. On the other hand an employee who knows that they can be dismissed without reason, and see their own and their dependents future jeopardised, is an employee who for all practical purposes has few if any legal rights and will have no power or ability to control or protect their own economic security. Understand that and the logic behind National’s reforms becomes clear.

Political constrains may mean that John Key's government is not be able to introduce the United States employment-at-will rule which reduces employees to totally disposable assets, as many National supporters would have liked to do in 1991. Gutting the balanced test of justification and replacing it with one that comes close to equating lack of justification with employer irrationality is however a large step in that direction.