National Reverts to Form

The nature of the reforms announced by the Minister of Labour yesterday are encapsulated in the proposal for "Removing the 30-day rule that forces non-union members to take union terms and conditions". This piece of dissimulation typifies these reforms-one's heart bleeds for those workers "forced" to accept inferior working conditions. But opps doesn't the Act actually allow such workers to also agree to any terms not inconsistent with the collective agreement - such as higher wages.  Silly me, it appears that workers are to be freed from the obligation to accept decent conditions to that they can immediately be put on to whatever inferior conditions the employer determines.

What is quite clear is that the National Government and its Parliamentary allies are launching an attack on the most vulnerable groups of workers, the young and the precariously employed. The reduction in the minimum wage for under 18 year olds signaled an opening shot of this new campaign and yesterday's announcement carries on the offensive.   I will look at the reforms in more detail later but some points might be highlighted:

(a) the 6A exemption for SMEs of course leaves the employees of such firms even more vulnerable to employment insecurity and cuts in working conditions.  No doubt also many larger firms will be restructuring to take advantage of the SME exception.  It also seems likely that the implied warranty against unreasonably increasing employee entitlements will have a chilling effect on improving employee terms and conditions as existing employers seek to avoid legal risk.

(b)The changes to collective bargaining laws are likely to further undermine collective bargaining and provide employers with options to walk away from bargaining.  How these changes will affect the bargaining facilitation and determination provisions of the Act is not explained but is unlikely to be in a positive way.  One suspects that these changes may have some impact in the state sector by enabling state sector employers to stonewall bargaining with the still large state sector unions and then to seek a declaration that bargaining has ended. It was after all a state sector case that prevented an employer's attempt to declare that bargaining had ended.

(c) The rest and meal break provisions, one might recall, were introduced into Parliament some years ago to prevent the countries airports grinding to a halt along with other overstated and over-hyped consequences of allowing workers proper rests.  The country has got along well  without these reforms so the motive for them is obscure.  Unless, possibly, it is the provisions in the Bill that effectively allow employers to effectively eliminate breaks or to require employees to remain at work during breaks that the Government wishes to advance.

Employment Law and the Election

Apparently today is the first day of the three month 'regulated period' during which political parties are required to spend their own money on electioneering. With a little imagination that makes today a good day to begin commenting on the implications of the election for the future of employment law.

Three years ago all seemed reasonably quiet on the employment front. National's minimal employment policy fitted onto a single, generously spaced, A4 page. Business New Zealand were making much of how change was not required and a period of legal stability was required. Labour had, on employment policy as much else, run out of steam. I was even rash enough to suggest that some broad degree of consensus might have emerged on the structure of employment law. This opinion was based on the fact that the ERA had changed little and that the ECA labour market reforms remained firmly in place. Indeed, from an industrial relations perspective, the ECA changes had been further entrenched.

Rash I might have been, but not stupid. As a good lawyer and an academic I was careful to qualify this view with a few "perhaps" and "it may be"s and so on. While my prediction did look justifiable for a while, it soon became apparent that I had allowed my natural optimism to override my cynical common sense. One likes to think law reform is based on evidence and reasoned opinion. I had of course temporarily overlooked that this is politics where evidence and common sense always take second place to ideology, the prejudice of a party's supporters and short term expediency. Hence of course the 90 day trial periods were quickly extended to all workplaces and s103A amended to favour employers in personal grievance cases to an even greater degree than was previously the case. In what can only have been a purely instinctual kneejerk response, union access to employees was limited.

In the case of all three reforms there was no evidence of any 'mischief' that needed reform. Indeed the law was working perfectly satisfactorily in all cases. That is if you believe that employees are citizens and that they should enjoy basic protections in their employment. Sort of like the owners of businesses, only considerably less! Of course, if you take the view that employees are commodities and disposable, the perspective is different. However in a democracy there should be a balance of rights and the ERA had achieved that, but in a manner that was both cautious and conservative. The New Zealand labour market, since 1991,has been, and remains, one of the least regulated among the OECD countries. In 2008 we had the 4th least restrictive level of employment protection, not that one would know it given the cries of woe from business lobbyists.

This election promises to be more interesting. National's far right and ACT clearly wish to return employment law to their rather strange vision of a 19th century utopia, the mainstream of National seem to base its policy on small town Chamber of Commerce anecdotes, and Labour shows signs of recovering the soul it sold in the 1980s!

All in all it should be interesting and further blogs will emerge when policies are announced.

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.

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 bas.cprc@gmail.com

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.

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 http://www.worklifelaw.org/pubs/ThreeFacesofWork-FamilyConflict.pdf.

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.

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.

personal grievances and the mythical grievant

I suspect that the proposals to reform personal grievance law will help fill out this blog over the next few weeks. One of the most common criticisms of the personal grievance process is that it favours form over substance and that totally undeserving employees gain large payouts when clearly guilty of serious misconduct or even criminal conduct. One such example is the employee who was held to be unjustifiably dismissed for theft because the employer never told him that theft was misconduct. John Hughes wrote an illuminating article on this mythical case over a decade ago (The Grievant Who Never Was [1998] ELB 136). Apart from showing the mythical employee left no forensic record, Hughes gives examples that suggest, if anything, that the courts tended to lean in the opposite direction when theft or unauthorised taking of property is suspected. As Hughes points out the courts have upheld dismissals or reduced remedies to nil even where there have been serious procedural failings. Generally all that is asked of employers is that there is a proper factual foundation for their action. Hughes also makes the point that "demonstrably inaccurate political statements" and a misunderstanding of case law are a poor basis for legal reform.

Fast forward to early January this year and the sensationalist headline that appeared in a number of news headlines: "Worker fired for supplying drugs gets payout". A spokesperson for the employer concerned was apparently quoted saying that "employers are being shafted" and "its so unbalanced its not funny." The most issue of NZLawyer has an interesting article on this case "Don't believe everything you hear.." written by Aaron Lloyd and Bridget Smith of Minter Ellison (not previously suspected of being a hive of left-wing activism) who clearly went to the trouble of reading the case before commenting. What their analysis shows is clear procedural failures and a failure to properly define why the employee was being dismissed. Briefly, the employee had admitted supplying marijuana to a co-employer at some stage in the past and the employer then suspended and later dismissed him. The authors sum up the problem as follows: "the company failed to properly establish exactly what is was that Wilkinson had done. In particular it was not clear whether there was a recent alleged sale, when any previous exchange of drugs had occurred, or where any alleged sale or exchange may have taken place. In particular the company took no steps to ascertain if the activity...was inside or outside work hours, or whether or not it was on company premises." It seemed all that was established was that sometime in the past the employee had given a colleague drugs outside of work. There was no proper investigation, no opportunity to respond and no proper connection established between the non-work conduct and the work. As the authors note the fact that (non-work) actions amount to a criminal offence does not by itself justify dismissal.

This was a clear example not of employers being shafted but of an employer failing to follow even the most basic procedural steps - in spite apparently of having the benefit of HR advice.

In my next post I will provide an idiots' guide to procedure. For the moment I will close with a statement on its importance:

Megarry J explained this in John v Rees [1969] 2 All ER 274 at 402:
"It may be that there are some who would decry the importance which the Courts attach to the observance of the rules of natural justice. ‘When something is obvious,’ they may say, ‘why force everybody to go through the tiresome waste of time involved in framing charges and giving an opportunity to be heard? The result is obvious from the start.’ Those who take this view do not, I think, do themselves justice. As everybody who has had anything to do with the law well knows, the path of the law is strewn with examples of open and shut cases which, somehow, were not; of unanswerable charges which in the event, were completely answered; of inexplicable conduct which was fully explained; of fixed and unalterable determinations that, by discussion, suffered a change. Nor are those with any knowledge of human nature who pause to think for a moment likely to underestimate the feelings of resentment of those who find that a decision against them has been made without their being afforded any opportunity to influence the course of events."

Ending the union "monopoly" on bargaining-what monopoly?

In 2008 National's workplace relations policy featured only five substantive items one of which was its policy of ending the "union monopoly" on collective bargaining, newly rephrased as "restoring" rights to bargain without belonging to a union. Non-union bargaining was of course a feature of the ECA - or more accurately non-union non-bargaining. Negotiating a non-union "collective" employment contract was primarily a tactic used by employers as a method of accessing the power to lockout small groups of unorganised employees to force a reduction in wages and conditions. However at,rather than speculate on what National might have in mind for the future, I want to address a slightly different question - is there anything in the current law that prevents non-union employees bargaining?

Let us assume that a group of employees wish to bargain and for the moment that the employer is willing to talk to them. To start with most employers already use "collective" terms of employment (or more accurately standard terms of employment/contract) which form the basis of their employment agreements. Employment documentation typically consists of such terms supplemented by a letter of appointment tailoring the employment to the individual employee. Functionally this starts to look pretty much like the arrangement that exists with a collective agreement - a basic agreement plus some individual terms.

There is of course no reason whatsoever that an employer cannot agree to negotiate the contents of its standard terms with its employees, and even agree that those terms be available and offered to all existing and new employees. Behold - the employees have now bargained without belonging to a union. Moreover as they are negotiating individual employment agreements for themselves the general duty of good faith would seem to apply to the negotiations.

So what's the downside?
(a) the specific bargaining in good faith provisions in Part V won't apply,
(b) they can't strike (or be locked out)- but were such a group even going to have the capacity to strike anyway?

Of course the employer may refuse to negotiate/bargain (unless the good faith provisions can be invoked to require this)and the employer may not agree to what is requested but that is not unusual in normal collective bargaining.

The point is that if employees want to negotiate/bargain their standard terms of employment there is no legal impediment to doing so and it is difficult to see what any "right" to bargain might achieve - except of course for the employer who would again be free to lockout small groups of employees - but I'm sure National don't intend that.

Clayton's Law? Codes of Employment Practice

The Explanatory Note to the Rest and Meals Breaks Bill discussed in the last post indicates that the Minister intends to develop an approved code of practice to provide “non-prescriptive guidelines highlighting the recommended duration and frequency of rest breaks and meal breaks.” Section 100A of the ERA allows the Minister to approve codes of employment practice either generally or in relation to particular situations or particular parts or areas of the employment environment. Once a code is approved the Authority and the Court are required to have regard to the code in determining any matter within its jurisdiction.

To date codes of practice have not been widely used in New Zealand employment law other than in relation to safety and health. The two significant codes issued under the ERA, the Code of Good Faith in Collective Bargaining and the Code of Good Faith for the Public Health Sector have both been issued under specific provisions of the Act, sections 35 and 100D. In AUS v VC of Auckland University(2005) the full Employment Court stated that the Code of Good Faith “is, or ought to be, well known to unions and human resource managers engaged in bargaining”, a fairly clear hint that observance of its general principles might be expected. The use of codes is more widespread in the UK and codes have been issued in relating disciplinary and grievance procedures, picketing, disclosure of information to unions for bargaining purposes and a range of matters around union recognition that have no direct relevance here. A leading UK text, Deakin and Morris’s Labour Law, comment that there is evidence that codes are capable of having a significant impact in the workplace and refer specifically to the code on disciplinary and grievance procedures.

Codes of practice come within the category of “soft law” or possibly what older readers might describe as “Clayton’s law”, ie a form of law that either lacks binding force or which has only indirect force or "the law you're having when you're not having a law". Employment codes of practice both in New Zealand and the UK only have force to the extent that courts or tribunals can be persuaded to have regard to the code. Generally it might be expected that the more a code resembles traditional legislation the more it will be taken into account. A code that has clear and relatively unambiguous provisions is more likely to be seriously regarded by the courts than one with flexible aspirational provisions. Thus a code on rest and meal breaks that reflects the current law, providing for fixed breaks at regular intervals, is more likely to have a positive impact than one phrased in the vague and imprecise language of the Bill. If there is nothing to grasp onto it is difficult to have regard to.

Codes of practice can provide expectations for workplace behaviour and can provide useful guidelines for employers, employees and unions. They can provide greater flexibility than might be desirable in legislation and need not be written in an overly prescriptive form. However if they are to be other than meaningless window dressing they need to be fulfill at least two criteria. First they need to be carefully developed following full consultation. A code that has broad stakeholder acceptance and which reflects workplace realities as well as good practice is clearly more likely to be accepted by the courts. This is particularly so if they also meet the second criteria of stating clear and well defined standards or expectations. The Minister's proposed code on rest and meal breaks may provide a useful indicator for the future.

The Ghost of Blackball ?

Readers with an historical bent will recall that the catalyst for the Blackball Strike in 1908 was the insistence of the mine owners on 15 minutes crib time rather than the customary half hour. Miners were expected to eat where they worked and not even move to a ventilation shaft. At the subsequent prosecution it was reported that the judge, after remarking that 15 minutes was ample for crib, adjourned the Court for an hour and a half lunch break. The introduction of the Government’s Employment Relations (Rest Breaks and Meal Breaks) Amendment Bill yesterday provides a useful reminder of these events and of that mind-set.

The Bill is intended to repeal the current provisions in sections 69ZD and 69ZB of the Act which require regular meal and rest breaks to be provided throughout a work period. The current law provides for 10 minute paid rest breaks and a 30 minute meal break to be provided “so far as is reasonable and practical” at regular intervals throughout the work period. The proposed amendments remove these clear entitlements and substitute a very open-ended “flexible” regime that provides for breaks at times that may be agreed but in the absence of agreement are able to be determined by the employer. The amendment will give employers much greater control over what an employee may do during a break. It clearly envisages that breaks may be interrupted and that they can be required to be taken in a place specified by the employer. Indeed one provision allows the employer to deny breaks completely by substituting “compensatory measures” that might include earlier start or finish times or accumulated time off on an other occasion.

The rationale for this Bill is unclear given that the existing provisions provide adequate flexibility. According to the Bill’s statement of “Status quo and problem” the change is driven by a concern that the present law is inflexible although no evidence is produced to justify this statement other than some conjecture that some regional airport towers may be forced to close to enable breaks to be taken. Although some publicity was generated about this claim a few months ago it appeared to be more smoke than fire and the statement ignores the “reasonable and practical” requirements of the current law. It is notable that the Minister did not feel the need to consult either Business NZ or the CTU on this measure and that officials have indicated concern about “developing the proposed amendments…at speed and without adequate consultation.”

The current law on rest and meal breaks is flexible while providing a clear principle of regular and fixed breaks during the working day. The amendments are likely to have the effect allowing employers to avoid such breaks and substitute practices such as “working breaks” where smoko or a meal is continuously interrupted so that no clear break is ever provided. Workplace health and safety and a productive work environment are promoted by regular rest breaks that combat fatigue and boredom. This Bill promotes none of these. It seems to be driven less by need than a desire to make a narrow ideological point about employer "rights" and smacks of Muldoonist micro-legislation.

The Bill including the Explantory Note can be viewed at:
http://www.legislation.govt.nz/