Editorial: Labour day still awaits settled law

Labour relations, the cause the country has taken today off work to observe, has been the basic definitive divide in politics since the advent of full democracy. There is a natural conflict of interest between those who sell their labour and those who buy it, and a natural advantage on the side of the buyers as there is in any market where sellers must compete for the preferences of consumers. The response of the sellers of labour has been to form cartels, called trade unions, as the sellers of any goods or service would do to the extent they are allowed.

Competition law forbids business cartels that are deemed to be to the consumers' disadvantage. But labour cartels are permitted to a greater extent because society recognises that labour is not like any other commodity. Employment is the labourer's lifeblood and it cannot be stopped and started like other commodities at a purchaser's whim. People whose knowledge and skills are in high demand have not much difficulty negotiating secure contracts, if they want them. But the less skilled the labour the more likely it is to have to accept a lower price and less security in a competitive market. So labour cartels are permitted to engage in collective bargaining for the purposes of price fixing.

The extent to which the law permits, even encourages, collective bargaining is a matter of constant political argument. The National Party, when last in power, passed the Employment Contracts Act which permitted collective bargaining but did not encourage it. Indeed, unions complained that it made it as difficult as possible. The Labour Government has replaced the Act with a regime that makes it much easier for unions to organise and enforce collective bargaining and employers complain that the law now unduly favours the unions.

Employers have been particularly concerned at the latest revision of the law which looks capable of undermining the right of employees to negotiate independently of trade unions if they wish. An amendment to the Government's Labour Relations Act will hold an employer to be in breach of good faith if the terms and conditions agreed with an individual employee have the effect of undermining collective bargaining. Almost any terms and conditions superior to those agreed with the union could have that effect. It is not necessary for the effect to be deliberate on the employer's part.

Those who bargain individually are likely to agree to terms more flexible and advantageous from an employer's point of view, which would make the deals less attractive to union members and therefore could not be said to undermine the collective. But there may be instances in which an individual gains a better deal than the collective for reasons appreciated only by the employer. In those cases the mere suspicion among workmates that the individual has been rewarded solely for independence would have the effect punishable at law.

Employers will also be required to enter a union-organised "multi-employer agreement" unless they have a "genuine reason" not to go along with it. That adds another phrase to a growing list of legislatively vague concepts that this Government has handed to the courts to try to define and enforce. The select committee on the amendment bill said a genuine reason would be characterised by "reasonable grounds", which does not clarify things much. When it comes to multi-employer agreements it remains to be seen whether companies are allowed to hold the genuine belief that anti-competitive deals across industries are against not just their own interests but the overall competitiveness of the economy.

Employment law will never be settled as long as governments of the left and right set out to award an advantage to their respective constituents. The latest revision brings us not much closer to the day the country can celebrate a settled code of fair dealing.