Themes In Employment Law

June 2005

Facilitating Bargaining: An explanation of the new provisions under the Employment Relations Act 2000

NB: The comments included in this publication should not be read as representative of the view of the Court, Authority, or the Department of Labour.  Rather, any view expressed is in the nature of an opinion only.

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 I       INTRODUCTION

The concept of facilitation of bargaining by the Employment Relations Authority in certain circumstances was introduced by the Employment Relations Amendment Act (No 2) 2004 (“The Amendment Act”).  The Amendment Act came into force on 1 December 2004,¹ and included a series of provisions dealing with the facilitation of bargaining (ss50A-50J), with the aim “to overcome impasses in collective bargaining and facilitate settlement wherever possible.”²

The facilitation process is very generally speaking a two step process which involves:

• applying to the Authority for a “reference for facilitation,” where “…the initial role of the Authority as the gatekeeper of facilitation is to see whether [any grounds under s50C] exist”³ which would allow the Authority to accept the reference; and
• if the reference for facilitation is accepted, the Authority providing facilitation services for the parties and possibly providing a recommendation.

Since the introduction of the Amendment Act, there have been five cases where the Authority has a made a determination on a reference for facilitation.  Of those five cases, two were accepted for facilitation by the Authority. 

This editorial seeks to provide an overview of the new provisions relating to “facilitating bargaining” and to provide some examples by looking at the cases that have been before the Authority to date.⁴

II      APPLYING FOR A REFERENCE FOR FACILITATION

Any party who is involved in collective bargaining may apply to the Authority for a reference for facilitation to assist in resolving difficulties in concluding a collective agreement.⁵ Two or more of the parties to collective bargaining may jointly apply to the Authority.⁶ 

The application to the Authority may be about one or more matters relating to the bargaining the party or parties are currently involved in.⁷  The application must be made on one or more grounds as set out in section 50C of the ERA.

III     ACCEPTANCE OF A REFERENCE FOR FACILIATION: GROUNDS UNDER S50C OF THE ERA

Before the Authority can accept a reference for facilitation, one or more of the grounds set out in section 50C must be made out.⁸  It is clear that facilitation is not available merely by parties’ consent.⁹  The grounds under section 50C were usefully summarised in the Explanatory Note to the Employment Relations Law Reform Bill (first reading) as:¹⁰

1. a party has failed to comply with the duty of good faith, and the failure was serious and sustained and has undermined the bargaining:
2. the bargaining has been unduly protracted and extensive efforts have failed to resolve the difficulties:
3. the bargaining has been interrupted by 1 or more protracted or acrimonious strikes or lockouts:
4. during bargaining, a strike or lockout has been proposed which, if it were to occur, would be likely to affect the public interest substantially.

One or more grounds must be present separately before the Authority can accept the reference for facilitation.  The Authority in the Service & Food Workers Union Inc v Air New Zealand Ltd¹¹ case said that “[e]ach ground is clearly intended to be constituted by a set of separate stand-alone circumstances” (rather than combining grounds which may be partially present).

The purpose section relating to facilitating collective bargaining states that: “The purpose of sections 50B to 50I is to provide a process that enables 1 or more parties to collective bargaining who are having serious difficulties in concluding a collective agreement to seek the assistance of the Authority in resolving the difficulties.”¹²

The requirement for serious difficulties was discussed in the case of PMP Print Ltd and Anor v New Zealand Amalgamated Engineering Printing and Manufacturing Union Inc,¹³ where the Authority held (commenting on the words in the purpose section (s50A)) that:

The words support that the process is to be provided where there are serious difficulties in concluding a collective agreement, not simply ordinary difficulties that arise during collective bargaining.  It is not enough for the Authority to be of the view that facilitation may be of assistance to the parties in their collective bargaining because s50C(1) provides that the Authority must not accept a reference for facilitation unless satisfied that one or more of the grounds set out in that section exist.   

At this initial stage of deciding whether to accept the reference for facilitation, the Authority is not required to attribute blame for any ground being made out.  The Authority in the Service & Food Workers Union Inc v Air New Zealand Ltd case stated that: ¹⁴

The Authority must recognise what does exist rather than become too concerned with why that it so, and in doing that must accept the reference to facilitation as being the appropriate remedy for the situation.

A       First ground: Failure to comply with the duty of good faith, and the failure was serious and sustained and has undermined the bargaining

Pursuant to the first ground under s50C, three elements must be present before the ground is made out.  These are:

• there must be a breach of the duty of good faith as set out in section 4 of the ERA in the course of bargaining; and
• the breach of good faith must be serious and sustained; and
• the breach of good faith must have undermined the collective bargaining the party or parties were currently engaging in.

Parties in two of the cases which have been before the Authority to date argued that the first ground was present.  However, this ground was not established in either case.

In PMP Print Ltd and Anor v New Zealand Amalgamated Engineering Printing and Manufacturing Union Inc the alleged breaches of good faith were:

• misrepresentation by the respondent to its members of the applicant’s position as to whether there was an ability for the applicant to move on its existing offer which it says induced a vote to take industrial action; and
• that the union failed and refused to be active and constructive in establishing and maintaining a productive employment relationship by dismissing an option of mediation for no good reason.

The Authority held that there was no misrepresentation by the union and no breach of the duty of good faith by refusing mediation.  Therefore ground A was not made out.

In Finegand SubBranch of the New Zealand Meat Workers Union v Primary Producers Co-operative Society¹⁵ the alleged breaches of good faith were that:

• the respondent showed no genuine interest in settling their agreement;
• the respondent made token and derisory offers;
• there was a point blank refusal to consider third party arbitration; and
• the respondent refused to supply financial information requested (instead of directly responding to the information request, the respondent offered a copy of its annual report).

The Authority found that there was no breach of good faith by the respondent not wanting to settle on the applicant’s terms, and that the offers made by the respondent did not demonstrate a breach of good faith.  It further found that there was nothing illegal or improper in refusing third party arbitration.  While the Authority found that the respondent’s response to the information request fell short of the obligation not to do anything likely to mislead, it also found that the information request was incidental to the bargaining. The Authority held that the breach of good faith was not regarded as serious and sustained and did not undermine bargaining.

B       Second ground: Unduly protracted bargaining and extensive efforts have failed to resolve the difficulties

For the second ground under section 50C to be established, the bargaining must have been unduly protracted as well as there having been extensive efforts (including mediation) which failed to resolve the difficulties that precluded the parties from entering into a collective agreement.

Parties in all five cases that have been before the Authority so far have argued the presence of ground B.  In one of the five cases, this ground was established.

In PMP Print Ltd and Anor v New Zealand Amalgamated Engineering Printing and Manufacturing Union Inc the union had initiated bargaining seven months earlier.  However, there was a delay of four months before the first meeting.  During the bargaining process there were seven meetings and a one day mediation session.  The Authority held that the bargaining had not been unduly protracted and that it was not satisfied that the efforts made satisfied the requirement of “extensive efforts.”

In the Service & Food Workers Union Inc v Air New Zealand Ltd case, the parties had been bargaining for eight months.  Initially the respondent was bargaining with the applicant and another union (“EPMU”), but then began bargaining separately with each union.  There had been bargaining meetings on 22 days, with mediation assistance on seven of those days.  There had also been various other facilitatory meetings and considerable correspondence and other communication.  Four separate proceedings had been lodged in the Authority (three relating to disciplinary investigations related to strike action, and one to an information request).  Several issues arose during the bargaining process:

1. The applicant was concerned to avoid disparity with staff who were not members of their union.
2. The applicant sought access to information about pay settlements with staff who were not members of their union.
3. Strike action occurred (discussed in more detail below).

The Authority found that the bargaining had been protracted in comparison to the respondent’s bargaining with EPMU.  However, it noted that the information requests and strike action were part of the cause of the prolonging of the bargaining:¹⁶

It must be expected that a strike in the course of bargaining may not speed up the negotiations but have quite the opposite effect, which as a matter of degree is not an undue consequence.

The Authority accepted that there had been considerable efforts to resolve difficulties.  However, it held that this ground was not established.

In Finegand SubBranch of the New Zealand Meat Workers Union v Primary Producers Co-operative Society, bargaining had commenced two years two months before the investigation meeting.  However, most of the efforts between the parties to resolve differences occurred within a 12 month period, and in the context of seasonal work.  During bargaining there were approximately seven meetings plus two mediations.  There were also a number of further exchanges between the parties.  In addition there were three incidences of strike action.

The Authority found that the bargaining was not unduly protracted.  The Authority compared this case to the Service & Food Workers Union Inc v Air New Zealand Ltd case and said that the effort in the present case was “far less” than in the Air New Zealand Ltd case.  The Authority also found that there had not been extensive efforts to resolve the difficulties between the parties.  Therefore, this ground was not established.

In Service & Food Workers Union Inc v Spotless Services¹⁷ the bargaining between the parties had been occurring over 10 months.  During that time the parties met on a number of occasions as well as attending mediation.  There were also five days of strike action plus threatened lockouts.  The Authority was not satisfied that the bargaining was unduly protracted: “When compared to other instances of collective agreement negotiations, the bargaining period cannot be said to be uncommonly long.”¹⁸  This ground was not established.

In Stagecoach New Zealand Limited v The New Zealand Tramways Union and ors¹⁹ the parties had been negotiating for seven months.  Over that time, the parties had been in formal negotiations on 27 days, two of those days with mediation assistance.  The parties had exchanged offers and counter offers and had reduced the number of outstanding matters between the parties.  There were also informal discussions between the parties.  During this time there were also a number of strikes.

The Authority found that the parties had “actively engaged in substantial negotiations with every intention of reaching a settlement.”²⁰ It was held that the bargaining had been unduly protracted and that despite the extensive efforts of the parties, they had failed to resolve the difficulties precluding them from entering into a collective agreement.  This ground was established.  Accordingly, the Authority accepted the reference for facilitation.

C       Third ground: Bargaining has been interrupted by one or more protracted or acrimonious strikes or lockouts

The third ground involves a situation where there has been a strike or a lockout (or multiple strikes or lockouts) during the bargaining between the parties, and the strikes/lockouts have been protracted or acrimonious.

What should be considered in determining whether a strike is protracted was usefully discussed in the PMP Print Ltd and Anor v New Zealand Amalgamated Engineering Printing and Manufacturing Union Inc case.  In that case the Authority stated that the following factors should be looked at:

• The nature of the strike action (eg whether the strike was of a limited nature or a full withdrawal of labour).
• The period over which the action has been occurring.
• What had happened between the parties over the period of strike action (eg communications or other interactions between the parties). 

What is meant by “acrimonious” was discussed by the Authority in the Service & Food Workers Union Inc v Air New Zealand Ltd case.  The Authority held that:²¹

The Act uses the word “acrimonious,” the meaning of which is defined in the Concise Oxford Dictionary as “bitter in manner or temper.”  It may be thought that few employers and employees who become directly involved in a strike (or lockout) will not be bitter or resentful about that situation.  Consistent with the meaning of acrimonious however, what the Act requires is a display of bitterness by words or conduct and not merely experiencing feelings of that kind.”

The Authority in that case also commented that “it is not a necessary feature of acrimony that anything unlawful must also have occurred.”²²

Parties in all five cases argued that this ground existed.  In one of the five cases this ground was established.

In PMP Print Ltd and Anor v New Zealand Amalgamated Engineering Printing and Manufacturing Union Inc there had been limited strike action over approximately 17 days, including not operating certain parts of a process.  There was also one 24-hour stoppage.  The Authority found that this ground was not made out: the strike action was of a limited nature and had been continuing for less than a month.  The Authority also took into account what had happened between the parties over the period of strike action.  This involved some correspondence, and agreement to go to mediation, plus an issue where union organisers wished to enter the applicant’s premises (though the matters did not escalate).

In Finegand SubBranch of the New Zealand Meat Workers Union v Primary Producers Co-operative Society there were six strike days over three periods of strike action.  The Authority found that there was no evidence of acrimony.  The Authority held: “In some situations, 6 strike days over three separate strikes might be considered protracted but in my judgment, it falls well short of that description in this case.”²³  The ground was not made out.

In Stagecoach New Zealand Limited v The New Zealand Tramways Union this ground was also not made out.  In this situation the strikes were mostly part withdrawal of labour only.  Staff had “worked to rule” and imposed overtime bans.  There had also been a series of four hour stop work meetings and a 24-hour full strike.  The Authority held “while this industrial action may have been disruptive and costly it does not … amount to protracted strikes as envisaged by s50C(1)(c).”

In Service & Food Workers Union Inc v Spotless Services there were five days of strike action, as well as threatened lockouts.  The lockout was restrained by an interim injunction from the Employment Court.²⁴  The Authority held that “when compared to other instances of strike action, the period and nature of strike action taken to date cannot be said to be uncommonly protracted or acrimonious, the injunction notwithstanding.”  This ground was not established.

In the Service & Food Workers Union Inc v Air New Zealand Ltd case there was a 22 hour strike, constituting full and continuous withdrawal of labour at the Christchurch and Auckland airports.  It was held that this strike was accompanied by acrimony.  This was evidenced by a number of events which happened in relation to the strike:

• The respondent notifying the applicant that striking members would have travel privileges withdrawn for the duration of the strike.
• The respondent publishing a notice to its staff saying “Air New Zealand was not prepared to enter into negotiations with a gun held to its head in the form of a strike notice.” 
• That statement was repeated on a radio programme.  On the programme a further comment was made that the applicant was holding Air New Zealand and its customers to ransom.

It was found that those statements showed a degree of bitterness by the respondent.  In addition, as a result of complaints about alleged conduct of some applicant members during the strike, the respondent commenced disciplinary proceedings and the employees concerned brought claims in the authority.  The Authority found this also indicated the presence of acrimony.

D       Fourth ground: Strike or lockout has been proposed during bargaining which, if it occurred, would be likely to affect the public interest

The fourth ground concerns a proposed strike or lockout, which, if it were to occur would be likely to affect the public interest substantially.  Types of strikes and lockouts which would be held to be likely to affect the public interest substantially are explained further in subsection (2):

(2) For the purposes of subsection (1)(d)(ii), a strike or lockout is likely to affect the public interest substantially if –

1. the strike or lockout is likely to endanger the life, safety, or health of persons; or
2. the strike or lockout is likely to disrupt social, environmental, or economic interests and the effects of the disruption are likely to be widespread long-term, or irreversible.

The threshold necessary to establish this ground was discussed in the case of Stagecoach New Zealand Limited v The New Zealand Tramways Union.  In that case the Authority stated that: “The Act clearly envisages a high level of disruption.” 

Parties in two cases argued that this ground was established.

In Air New Zealand v Service & Food Workers a “higher impact strike” was contemplated for the next round of direct action proposed by the applicant.  The Authority found that the strike which had already occurred (discussed above) was not “to any significant extent disruptive to social, environmental, or economic interests… and in any event was not widespread, long-term or irreversible.  The Authority held that the proposed action was similarly unlikely to meet the substantially affecting the public interest test.  This ground was therefore not established.

In Stagecoach New Zealand Limited v The New Zealand Tramways Union this ground was also not made out.  It was noted that disruption caused by strikes would be increased if the matter was not settled and further strikes were to occur.  The Authority held that “[i]t is clearly in the public interest that such strikes do not take place.  However the Act requires that, to fulfil this ground for referral to facilitation the public interest must be affected substantially.”  It was held that “while the proposed strikes will no doubt cause some inconvenience and disruption it cannot be said that this disruption is likely to be widespread, long-term or irreversible.”²⁵

IV      FACILITATION PROCESS

If one of the grounds in s50C is made out and the Authority accepts the reference for facilitation, a facilitation process between the parties, with the Authority involved as facilitator, will follow.

The amendments to the ERA include a number of provisions stating various requirements of the facilitation process. The sorts of things covered include, what happens to the collective bargaining during facilitation, restrictions on statements made during facilitation, the nature of facilitations, who can act as a facilitator, and challenges to the facilitation process.  An overview of these provisions is provided below.

A       Collective bargaining during facilitation

During the facilitation, the collective bargaining to which the facilitation relates will continue, subject to the process determined by the Authority.²⁶

Unless parties agree otherwise, a proposal made by a party or a position reached by parties to collective bargaining during the facilitation process is not binding on a party after facilitation has come to an end.²⁷

B       Statements made during facilitation

Any statement made by a party for the purposes of facilitation is not admissible against the party in proceedings under the ERA.²⁸

However, a party is allowed to make a public statement about the facilitation, but only if the statement is made in good faith and is limited to the process of the facilitation or to the progress being made.²⁹

C       Nature of facilitation

The facilitation process must be conducted in private.³⁰ (However, as stated above a party may make public statements in certain circumstances). 

The Authority will determine the process to be followed.  However, the Authority is not acting as an investigative body when undertaking facilitations, nor may it exercise the powers it has for investigating matters.³¹ 

During facilitation, a party to bargaining for a collective agreement must deal with the Authority in good faith.³²

D       Who can act as facilitator?

The Authority member who accepted the reference for facilitation cannot facilitate the collective bargaining.³³ This section was added on advice from the Select Committee to avoid any perception of bias.³⁴

E       Challenges

The provision of facilitation may not be challenged or called into question in any proceedings on the ground that the nature and content of the facilitation was inappropriate or the manner in which the facilitation was provided was inappropriate.³⁵

However, it seems that a determination about a reference for facilitation remains open to challenge: “Whether deliberately or by oversight, the amendments to the Act have not altered the rights of a party to challenge de novo a decision of the Authority to accept a reference to facilitation.”³⁶

V       RECOMMENDATIONS

While assisting parties to bargaining for a collective agreement, the Authority member may make one or more recommendations.  The recommendation(s) may be about either the process the parties should follow to reach agreement, or the provisions of the collective agreement the parties should conclude (or both).³⁷  

The Authority may give public notice of a recommendation in such manner as the Authority determines.³⁸ 

A recommendation is not binding on a party, though a party must consider the recommendation before deciding whether or not to accept it.³⁹

VI      CONCLUSION

The “facilitating bargaining” provisions introduced by the Amendment Act provide a useful service for parties experiencing serious difficulties in reaching a collective agreement, and who meet one of the grounds under s50C(1).  The cases which have been before the Authority so far in which a party applied for a reference for facilitation illustrate the high threshold which is required before the Authority will accept a reference for facilitation.  In the cases where reference for facilitation is accepted it is hoped that the facilitation process will overcome the difficulties between the parties and assist them in concluding their collective agreement.

Endnotes

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