Backing of 10 per cent of an industry should trigger nationwide process, working group recommends

Wednesday, 23 January 2019

Former prime minister Jim Bolger and Workplace Relations Minister Iain Lees-Galloway announce the fair pay agreement working group in June. The Government says the agreements would set minimum standards in certain industries, but opponents say they mark a return to national awards, last seen in the 1980s.

Nationwide employment negotiations could be triggered if one in ten workers in a sector sign up to a fair pay agreement process, a working group on controversial labour law reform is recommending.

The working group on fair pay agreements, headed by Jim Bolger, a former National Party prime minister, has delivered its report to Workplace Relations Minister Iain Lees-Galloway.

A summary of the recommendations, obtained by the National Party, says that either 10 per cent or 1000 workers in an occupation or sector - whichever is lower - would be enough to pass a representativeness trigger, kicking off a fair pay agreement process.

With limited exemptions, employees and employers covered would be bound by the process, negotiated by unions and employee groups or industry organisations. If the two sides fail to reach a deal, a deciding body - possibly the Employment Relations Authority - would have the final say.

Scott Simpson, National's workplace relations spokesman, said the agreements were a product of the 1970s 'when we had a command and control economy, where it was big unions and big business who made decisions on behalf of all workers and all businesses'.

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Employment lawyer Susan Hornsby-Geluk said fair pay agreements, if they covered all businesses in a given sector, it would remove an important part of their right to decide how to run their businesses. 'It is a significant departure from the current situation where, even in multi-employer bargaining, each employer party has to individually agree to the terms.'

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Although strikes and lockouts related to the fair pay agreement negotiations would be prohibited during negotiations, the working group recommends that strikes about matters unrelated to the agreements would not be.

Labour has said fair pay agreements aim to set minimum standards across sectors which are above the basic legal requirements.

However the National Party and some employment lawyers say the agreements would mark a return to national awards, where industry-wide agreements were struck between unions and business representatives.

The agreements have proved so controversial that Prime Minister Jacinda Ardern promised that there would be 'no more than one or two' agreements reached in the current electoral term, as part of a major speech to try to reassure business leaders in August.

A spokeswoman for Lees-Galloway refused to comment on the recommendations, beyond saying the report was under consideration by the minister.

Bolger refused to say whether the group, which included employee representatives, was unanimous in its recommendations. Other working group members also declined to comment.

National's workplace relations spokesman Scott Simpson said the agreements effectively 'farmed out' negotiations, even if a majority of workers or employers did not want to be part of them.

'It's a one-size fits all formulation for negotiating wages, terms and conditions that assumes that every business within a nominated sector actually operates in the same way,' Simpson said.

'This is an old-fashioned view of the world that takes us back to at least the 1970s, but probably the 1960s, when we had a command and control economy, where it was big unions and big business who made decisions on behalf of all workers and all businesses.'

Simpson said he had been told the working group process was 'fraught' and the recommendations were not unanimously supported by the working group.

Prior to the 2017 election, BusinessNZ attacked Labour for a lack of clarity on its policy on fair pay agreements. Treasury later warned that the working group was being asked fundamental policy design questions, as it urged the Government to delay its formation.

Susan Hornsby-Geluk, managing partner at employment law firm Dundas Street Employment Lawyers said fair pay agreements could mark a significant change in industrial relations.

'If FPAs are to cover all employers in a sector or industry, regardless of whether they have individually voted to accept the terms, this will remove an important part of their right to decide how to run their businesses,' Hornsby-Geluk said.

'It is a significant departure from the current situation where, even in multi-employer bargaining, each employer party has to individually agree to the terms.'