Norman LaRocque: Scrap labour bill and start again

COMMENT

Labour Minister Margaret Wilson recently claimed that neither business organisations nor unions would be satisfied with changes to the Employment Relations Act. She was being disingenuous.

One group that has reason to be particularly proud of the Employment Relations Law Reform Bill is the Council of Trade Unions (CTU), which seems to have basically dictated the legislation's contents.

The bill was presented to Parliament last December. Business organisations were given less than three months to respond - a period that included the run-up to Christmas and the holiday break. When employers protested that this timeframe was too short, Prime Minister Helen Clark curtly told them to cut the "silly rhetoric".

In contrast, the CTU presented its labour-law shopping list in December 2002. That submission is ostensibly a public document, yet Wilson took four months to comply with a Business Roundtable request for it.

The delay may have been caused by embarrassment. Put simply, the CTU got almost exactly what it wanted. Not only are the broad objectives and policy directions of the union submission and the new bill remarkably similar, in key cases the drafting is actually identical.

The ERA introduced the concept of "good faith" into employment law. Courts were forced to define that term, and mostly based their judgments on the common law test of "mutual trust and confidence". This was not strong enough for unions - the CTU submission asked that the words "mutual trust and confidence" be replaced by "good faith" in the bill's objectives. The request was carried out to the letter, creating more work for courts.

Only one worker in five belongs to a union. Unions can attempt to expand membership by preventing non-members from improving their individual contracts. The CTU asked for the legislation to state clearly that employers were not obliged to pass on superior terms and conditions from collective contracts to employees on individual contracts. This exact change was made.

The CTU also requested that the legislation force employers to seek the approval of a union before giving employees on individual contracts similar terms and conditions to those negotiated under a collective agreement. In this case, the CTU was given what it asked for, though through a less direct route than requiring union "sign-off".

Employers breach the duty of "good faith" if they extend a collective agreement's provision to other employees with an aim to "undermine the collective agreement". Such slippery wording means huge scope for interpretation in individual cases and great uncertainty. Employers are offered one sure way to avoid lengthy legal hassles: get union approval of non-union contracts.

The CTU wanted more "face-time" with union members, at company expense. It asked that employers be instructed that they could not dock union members' wages for holding meetings during work time, and that the law state that only union members were eligible for education leave. Policymakers rubber-stamped these changes.

There are other disquieting coincidences between the bill's provisions and the union's requests. A more complete list and the CTU's submission are at www.nzbr.org.nz.

The CTU document makes it clear its proposals are but a stepping stone on the path back to national awards, compulsory unionism and compulsory arbitration. The CTU baldly states it has "an interest in more fundamental measures such as a return of the [national] award system" and it "believes that various forms of arbitration should be promoted to assist in the resolution of collective bargaining". The CTU will be back for more - provisions relating to the sale of a business were dropped from the ERA in 2000, yet are back in modified form in this bill.

Business apprehension is not just "silly rhetoric", and this bill is more than the "fine-tuning" that the Government claims. Bad labour law would affect productivity, growth and employment.

Employment legislation should be consistent with the Prime Minister's main economic goals of returning average incomes to the top half of the OECD range and getting the unemployment rate down to 3 per cent.

This legislation will benefit only lawyers and union organisations.

Businesses large and small are speaking out with one voice against the bill: it must be scrapped, and labour legislation changes returned to the drawing board.

* Norman LaRocque is a Business Roundtable policy adviser.