Media release
4 December 2003

Individual employees under the gun

Business NZ says the Employment Relations Law Reform Bill is not a "fine tuning" of the ERA, but an undisguised shifting of the goal posts by attacking individual agreements and freedom of choice in the workplace. It will also bring in a kind of 'Claytons' compulsory arbitration and hold back businesses' ability to change and rejuvenate, especially in the knowledge economy, Chief Executive Simon Carlaw said.

"'Promotion of collective bargaining' has come out as an attack on the individual. "We have serious concerns about the rights of the great majority of employees who have chosen individual agreements. When a number of different provisions are taken together, the result is that employees on individual employment agreements will be disadvantaged. For example, people on individual employment agreements would not be allowed to get better pay than those in a collective agreement if the intention and effect of this is to undermine collective bargaining. It will be hard for an employer to prove that he or she did not have this intention and to prove that the decision has not undermined collective bargaining. The likely result - an erosion of the pay levels of those on individual agreements, to the comparative benefit of those in collectives.

"Small business owners - the great majority of employers - are also under attack. Provisions on contracting out, in combination with the requirement to settle a collective agreement, make it likely that unions will be able to force redundancy payment provisions into collective agreements. This will place a huge contingent liability on businesses that could destroy owners' equity. Small business owners who planned to retire by capitalising on the equity they had built up over the years may find that equity has simply disappeared. This provision will also work against the rejuvenation and growth of businesses - it will be much harder to buy an ailing company and turn it around through changed staffing and management practices. This will hamper growth and innovation, especially in 'knowledge economy' businesses that are prone to change and reinvention. This provision is presently aimed at the service industry but the Minister will have the ability to add to the target list over time.

"'Good faith' will be more problematic, even a mystery. The new requirement for constructive, active engagement has no definition - that will lead to much litigation and a significant increase in compliance complexity and costs. If there's a "serious" breach of good faith, the Employment Relations Authority will have the power to impose the terms of an employment agreement - a 'Claytons' form of compulsory arbitration. It means contractual agreements between employer and employee can be determined by a third party. But the sanctity of contract is paramount for business - if you can't rely on a contractual arrangement, it undermines the whole ability to do business.

"This Bill is a novel prescription for growing new and better-paid jobs on a sustainable basis. Business NZ will be firmly opposing many of the Bill's provisions."

ENDS

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