Employment Relations Reform Bill 2003

Draft submission on behalf of New Zealand Retailers Association Inc

Please provide comment on this submission
by email to Barry Hellberg (bhellberg@retail.org.nz)
before 20 February as the submission is required to be filed by 27 February. 

There will also be a members' meeting on this submission
on Friday 13 February at 9:30am to 11:00am
at the Retailers Association Auckland Office
61-63 St Lukes Road, Auckland.
Please advise Barry Hellberg on 04 472 3733 if you propose to attend.

INDUSTRY PROFILE AND DESCRIPTION OF THE ASSOCIATION

[To be inserted]

BACKGROUND

The Association notes that this is the second major industrial initiative on employment relations which has been developed since the Government first came to power in 2000.

Some four years ago we made extensive submissions on the Employment Relations Bill 2000 outlining our concern that:

• the legislation would bring about additional compliance costs to the retail sector in New Zealand, particularly to small businesses;
• that the legislation would result in reduced employment opportunities within the retail sector in New Zealand, and
• that the Bill would be more appropriately considered as part of a wider ' industrial package' that embraced other legislation such as the Holidays Act, and the Parental Leave and Employment Protection Act 1987.

We also made detailed submissions on a number of technical clauses or parts of the Bill that we identified as having negative impacts on good industrial relations within the retail sector in New Zealand.

In more recent years we have been actively involved with working parties established by the Government which has examined various aspects of industrial legislation within New Zealand, including holidays, shop trading, health and safety and the contentious issue of contracting-out/ sale of business operations.

The Association's contribution in these areas has been well recognised. We have demonstrated our ability to contribute positively to the debate on key employment issues and to represent the interests of the retail sector as a major contributor to the New Zealand economy.

SUMMARY AND FORMAT OF SUBMISSIONS

The Association has worked closely with Business New Zealand in the development of it's policy position on the issues arises from this legislation. The Association supports in principle the comprehensive submission made by Business New Zealand on the Bill and will not be making detailed submissions on all aspects.

We strongly endorse their submission that the Bill should not proceed unless it is substantially modified along the lines recommended in their submission.

Our main focus will be on the key policy issues that we consider will particularly affect retailers and the orderly operation of retail in New Zealand. In particular, we see four major issues that will have a detrimental effect on the retail sector and these will be the focus of our submission.

These four issues are:

• protection of employees where a business undertaking is sold, transferred or contracted out;
• the proposed extension of the ' good faith ' concept;
• promotion of collective bargaining; and
• personal grievances and standards for dismissal and discipline of staff

[Provide a summary of each of those issues and statement of how they impact on retail in particular.]

DRAFT SUBMISSIONS

A) CONTRACTING OUT AND SALE AND TRANSFER OF A BUSINESS

GENERAL COMMENT

The Association has major concerns about this proposal. If enacted as proposed it will have a serious impact on the value of all businesses in New Zealand, particularly the small and medium sized enterprises that are typical of a large part of the retail sector.

The requirement to provide a mechanism to manage the transfer of staff on the sale of a business will effectively destroy the accrued value in many retail businesses. It will be a substantial barrier to development and places owners in the position where the only viable way to exit a business will be to progressively run it down to avoid punitive exit costs. This will seriously affect the economy in several areas, including employment. 

We strongly opposed the original proposals in Clause 66 of the 2000 Bill and also made extensive submissions to the Ministerial Working Party that addressed this issue after the Act was introduced. We supported the conclusions reached in that exercise that while there is a particular problem in areas such as cleaning and service contracts in large areas of the private sector, this is not a widespread concern in other sectors of the economy and legislation of general application was not required.

We are concerned that the two-tier approach taken in this Bill takes the measures into areas where change is not required and that it opens the door to further changes at a later stage that will further impact the viability of the retail sector.

As a matter of principle, we simply do not believe it is reasonable for a new business to take on liabilities for past services and conditions for employees if a new business owner is not in a financial position to do so.

Issues for further comment:

• Specific instances where the proposed change will affect investment decisions for retailers.
   
• Attach submissions to the Working party. 
   
• How do we see them specifically affecting retailing given that the groups of employees referred to in the legislation seem to be primarily in other sectoral fields.
   

QUESTIONS FOR MEMBERS:

What do you estimate the cost of the proposed change will be for your business?

What is the extent of contracting out of services in your business?

B) THE PROPOSED EXTENSION OF THE ' GOOD FAITH ' CONCEPT

The major change here is to strengthen the 'good faith' provision by making it clear that 'good faith' means more than the common law obligations of mutual trust and confidence.

It particularly affects employer's obligations in regard to bargaining both for collective and individual agreements. Bargaining in 'good faith' will mean employers are required to be 'responsive, communicative and supportive' and must engage in genuine negotiation towards an agreement.

The effect of this is that in respect of any negotiation, the employer is required to allow a prospective employee to put forward alternatives to the proposed agreement and to consider and respond to those proposals in a genuine effort to reach agreement. The present approach of presenting a proposed agreement and advising the employee of their right to seek advice on the proposed terms will not satisfy this requirement. The employer will be expected to continue bargaining even if deadlocked on a particular term or condition.

Clearly this last point will make recruiting difficult in many cases.

Substantial penalties are provided for breaches of 'good faith' provisions.

Comment to be added:

• Effect of the 2000 changes on retailers.
   
• Practical impact of the change on employers and likely costs in seeking professional help?
   
• These are not areas where penalties are necessary or effective.
   

QUESTIONS FOR MEMBERS:

What problems have been encountered with current bargaining arrangements?

Can you estimate costs for the additional time required to meet the proposed standard?

C) PROMOTION OF COLLECTIVE BARGAINING

The changes proposed will significantly increase union negotiating power and will increase the level and complexity of collective bargaining.

The overall experience in the retail sector is that there is relatively little interest in collective bargaining, except in a small number of major operators that traditionally had collective instruments under the previous law. There have been relatively few new CEA's proposed and even fewer settled in retail.

• Under the proposed change, parties will be required to agree to a CEA unless there is 'good reason' not to. 'Good reason' is not defined.
   
• It will be a breach of good faith for an employer to advise employees against collective bargaining or joining an existing CEA.
   
• There are complex rules aimed at preventing employers from undermining a CEA by passing in terms and conditions of a collective agreement to employees on individual agreements. The effect of this may be to require employers party to a CEA to check with the union before offering terms of employment to a non-union member. It has been seen as a union veto over bargaining with non-union members.
   
• If a union seeks a multi-employer collective agreement (MECA) the cited employers have to attend at least one meeting to talk about it.  That is likely to mean that the employer is a party to the bargaining and will need to continue to be involved.
   
• Provision is made for the Employment Relations Authority to 'facilitate' bargaining and impose a collective agreement where there has been a breakdown in negotiations and the Authority finds that one party has failed to act in line with the good faith guidelines. This has been interpreted as de facto compulsory arbitration.
   
• New provisions are included to update the old 'equal pay' legislation.  Some change in this area is justified as the old legislation has been overtaken by changes in the legal framework, but there are issues here for employers arising from the interaction between CEA's and individual agreements and situations where employers have more than one CEA affecting a particular group of employees.
   
• It is proposed to allow union representatives unfettered access to employees to discuss union business.  This is likely to result in major disruption in some workplaces.  Failure to facilitate this access is a breach of 'good faith'.
   
• Every union member can require the employer to deduct union fees and remit them to the union. At present this applies only where there is a CEA in place.
   

Further comment will be added to reflect:

• How the 2000 proposals have worked in the retail marketplace
   
• The cost implications of deducting union fees for all union members.
   
• The need for employees to be paid for workplace discussion between a union rep and employees outside of formal paid union meetings.
   
• Question the perceived right to compulsory arbitration in the event of some breach of good faith and also the right to take industrial action during the arbitration process.
   
• The viability of granting the Employment Relations Authority the enhanced powers to get involved in collective bargaining.

d) PERSONAL GRIEVANCES AND STANDARDS FOR DISMISSAL AND DISCIPLINE OF STAFF

The Bill proposes tougher standards and procedures for the disciplining and dismissal of staff. It imposes a legal test that will require the employer to consider and balance the legitimate interests of both the employer and the employee when deciding if action is to be taken. Effectively this means that discipline can only follow if that is the most fair and reasonable choice of action available.

The current standard allows employers to act if they believe such action is justified in the circumstances. This change, if enacted, will have a major impact on this sector as standards applied by many employers in making disciplinary decisions are relatively low.

There will be enhanced roles for the Mediation Service in these areas.

Further comment will be added on the need for a" test for justification".
 

QUESTIONS FOR MEMBERS:

What impact do you see this proposal having on your business?

Do you currently follow a 'fair process' approach to disciplinary procedures and has this been challenged or found wanting in any proceedings?

OTHER MATTERS

Provision is made to further restrict the ability to enter into fixed term or temporary employment agreements. The terms imposed go back to the approach recommended in the 2000 Bill and make it more restrictive to take on temporary staff.

Considering the relatively high number of temporary staff employed to meet seasonal needs in retail, this will have a significant impact on our sector.

Comment will question the need for this change.
 

QUESTIONS FOR MEMBERS:

What impact will this have on your business?

Can you estimate the costs arising including any potential loss from being restricted in hiring staff required?

COMPLIANCE COSTS

We note that there is no compliance cost assessment or regulatory statement associated with this Bill. This is contrary to the Governments declared policy that such statements should be part of any new legislative initiatives.

We believe that the Employment Relations Bill 2000 has added significant additional compliance costs on to employers in the retail sector and noted in our submission at that time that there were 12 particular clauses that imposed new costs.

Our assessment is that the new Bill presents again additional cost impediments to the industry not only in the four areas outlined above but also in:

[List other clauses that contain cost impediments.]

Our estimate of the additional cost to be the retail industry are:

[Try to assess the direct costs of the proposed changes and provide a similar statement to that prepared for the Holidays Act review.]

 

SUMMARY AND RECOMMENDATIONS

[To be written based on the full text.]

"That this Bill not proceed and that Government initiate a full consultation process with all interested parties to assess the need for further change in the Employment Relations Act at this time."

REQUEST TO BE HEARD

The Association wishes to appear before the Select Committee in support of this submission.

John Albertson
Chief Executive