Editorial: Job growth at risk from law changes

The holiday season is not a time when thoughts turn easily to the subject of employment law but a February deadline for submissions on wide-ranging new legislation leaves little choice. Each day over the past week the Business Herald has taken a close look at a different element of the Employment Relations Law Reform Bill introduced to Parliament before Christmas and the series has produced some unexpected observations.

None more so than the sympathy extended to small employers by the secretary of one of our largest trade union conglomerates for the litigiousness of labour relations today. Andrew Little, secretary of the Engineering, Printing and Manufacturing Union, cites the opportunities for dismissed employees to threaten groundless personal grievance actions in the knowledge that it will be cheaper for the employer to pay them out than to engage lawyers for a defence.

Mr Little blames the previous industrial regime, the Employment Contracts Act, for transferring so many issues from the bargaining table to the courtroom. But its replacement, the Employment Relations Act, has made matters much worse. The previous regime treated employment much like other voluntary contracts between buyers and sellers of services. The ERA sought to boost the sellers' bargaining strength by requiring both sides to adhere to poorly defined principles of "good faith".

Inevitably, the courts have been called on to define that term and they have generally applied its ordinary meaning in common law. That has not been good enough for the framers of the act. Their amendment bill attempts to demand, in the name of good faith, that "parties are responsive, communicative and supportive". Furthermore, parties bargaining in good faith must come to an agreement "unless there is a genuine reason not to". If those phrases survive in the bill, the courts will have even more work to do.

In personal grievance cases, too, the role of the courts would be significantly extended. They need no longer confine their jurisdiction to the procedural requirements of dismissal but may rule whether the employer's decision was reasonable and fair in the circumstances. A case won by this newspaper in the Court of Appeal has evidently so disturbed the Government that it is intent upon overturning the principle that judges should not substitute their own judgment for that of the employer.

Surveys of business suggest employers are particularly opposed to the bill's provision that threatens to force firms into multi-employer agreements, an anti-competitive device to regularise wages and conditions in rival firms. Multi-employer agreements have not had much appeal since the act was passed. Now the legislators are reaching for a little compulsion. Under the bill an employer whom a union wants to bind to such an agreement will be obliged to attend at least one meeting to discuss it. Then the principle of good faith bargaining might force the employer to continue discussions in a suitably "responsive, communicative and supportive" fashion.

The proposed law also seeks to protect staff when a business is sold or their work is taken over by a new contractor, giving them the choice of continuing with a new employer on the same terms. But it will cause costing problems for firms bidding for contracts, especially if existing contractors are not obliged to disclose their employment arrangements, and it will be one more discouragement to competition.

The Business Herald series has highlighted other legislative moves that will complicate and add costs to employment, notably the more rigid holiday pay requirements, and the possibility of fixed relativities for the sake of the elusive "pay equity". Each of these proposals adds to the fear of companies when they contemplate hiring staff and expanding. Every job thus not created is one more debit to the nation's growth.