Dispute resolution under Sharemilking Agreements

By Sean O’Sullivan

Having a chat about a problem when it arises can help avoid conflicts over difficult issues, especially if tackled early on.

Calling in a knowledgeable farmer can help both sides understand difficulties better and Federated Farmers can also offer practical expertise.

It is always best to deal with problems as they arise rather than waiting for the sharemilking relationship to deteriorate to the stage where it affects farm outputs.

Some problems are not so easily avoided or resolved, so it is important both parties have an understanding of the conciliation and arbitration processes available under Federated Farmers Sharemilking Agreements if they cannot find an agreed position themselves.

The parties can opt to use other processes, such as the court system, but this needs to be settled and set in writing before agreements are signed.

Conciliation and arbitration processes are cost-effective, mediated and procedurally fair. These encourage parties to negotiate agreements of the disputed matters with the assistance of a neutral conciliator.

Where the sharemilker and owner still cannot agree, the conciliator decides what is fair.

All discussions within the conciliation process are without prejudice, so cannot be used in later proceedings.

Conciliation begins with the party claiming a dispute or breach of agreement, giving written notice to the other party. This notice must make the other party aware of a real issue.

It must be clear and detailed and include the relevant clauses of the sharemilking agreement the complainant claims have been breached and state the steps needed to rectify the situation.

A reasonable time limit to fix the problem should be given. While it is best to give notice of a dispute as soon as possible, it must be given no later than 28 calendar days from the close of the season in which the dispute or claim arose.

The other party must respond to this within the number of days set out in their agreement either by undertaking to rectify the breach or by making a counterclaim.

An attempt to resolve the issue must be made within 10 working days before entering the conciliatory process. Both parties are required to co-operate and negotiate in good faith in an endeavour to resolve the dispute quickly.

An independent party such as an external farm adviser or consultant can be called in. Resolution at this stage is the most cost-effective outcome.

If negotiation is successful, any resulting agreement should be recorded in writing and signed by both parties. However, if the parties fail to resolve the dispute, they will be automatically referred to conciliation, unless both agree in writing to opt out of the process and hand over to the courts.

The parties must choose a mutually accepted conciliator. If they fail to agree, either party, at a shared cost, may ask the President of Arbitrators' and Mediators' Institute of New Zealand to appoint one.

The conciliator will independently and impartially assist the parties to come to an agreement, which is then recorded and signed by the parties.

This agreement is binding and can be used by either party to enforce the outcome. However, where agreement is not reached the conciliator may propose a settlement or solution. If neither party rejects the proposal by written notice within a week it becomes the decision, binding on both parties.

Both parties pay their own costs and pay half each of the conciliator's costs which, depending on the investigation, can be substantial. Arbitration is the backup process when conciliation is unsuccessful. There will be more information on arbitration in the March edition of the National Farming Review.


If you need any help with an employment dispute, or have any other questions relating to employment, Federated Farmers members can call 0800 FARMING for free, independent employment law advice.

- Hamilton News

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