Questions about Fair Pay Agreements

hours of work, redundancy, leave, flexible work, leave and overtime as minimum conditions also. There really is not a lot left after this.

In an opinion piece published on November 2, Council of Trade Unions president Richard Wagstaff said: ‘‘Let’s be very clear here, done right this legislation will be critical to the Government guiding New Zealand’s society and economy towards a high road of greater equality, and greater national wealth.’’

These are worthy aspirations but the big question is how is this to be achieved?

The recently issued discussion paper contains 98 questions to be answered, such as ‘‘what problems do you think an FPA is best suited to address?’’ and ‘‘do you think that FPAS should need to be ratified by a majority of employers and workers who will be affected?’’.

These are pretty fundamental questions which, if anything, demonstrate how underdeveloped the current concept is.

Other questions in the discussion paper appear to be loaded, for example ‘‘Do you think that unions and employer organisations should be the major bargaining representatives as normal?’’.

There is nothing ‘‘normal’’ about the proposed new system in that it does not resemble anything that we currently have in New Zealand.

It is appropriate that the Government is seeking further feedback, but it is difficult to provide meaningful comment given the vacuum that exists as to how this system might actually work. In this regard, both the Working Group report and the discussion document appear to gloss over some major issues, in particular around representation.

For a start, the suggestion that existing union and employer groups will lead the negotiations on behalf of employees and employers, respectively, overlooks the lack of existing resource and capability. Employer groups, in particular, do not currently provide advocacy in collective bargaining, or if they do, certainly not on this scale and at this level. Unions are also currently stretched to capacity without the additional demand that FPA negotiations would impose.

Bear in mind that negotiations of this nature can extend over many months and are resource intensive. Further, the thresholds for initiating FPA bargaining are so low (10 per cent of employees in a sector or a minimum of 1000 employees), that there could be multiple sets of negotiations occurring nationally at the same time. Who is going to do all of this?

More importantly, how are non-union members and all of the employers within a sector going to be represented? Nonunion members may have made a deliberate decision not to be represented by the union, and so imposing union representation on them cuts across their freedom of association.

Further, how do small employers ensure their voice is heard at the bargaining table?

In his article, Wagstaff talks about good employers who want to pay their staff above market rates being priced out by exploitative employers who pay employees minimum wages. Equally, however, employers who cannot afford to pay more will be at the mercy of bigger employers who may see this as an opportunity to rid themselves of competition. This should be of particular concern because the proposal is that if 50 per cent of employers vote in favour of a FPA, it will be ratified and be enforceable on all employers in that sector or industry, whether they participated in the process or not.

The discussion paper raises the question whether 50 per cent of employers should be assessed on the basis of one vote per employer, or take into account the number of employees that the employer employs.

This is an extremely important question, because if it is based on the number of employees of each employer, big business will effectively determine the terms and conditions to apply across the sector.

There is no provision for variations in terms and conditions based on the size of a business, or ability to pay. This could have a big impact on smaller employers.

Another significant aspect of the proposed system is that the Employment Relations Authority would be able to set terms and conditions in the event that bargaining between the parties breaks down. This is potentially concerning. Enabling the authority to set the terms and conditions of an agreement if the parties themselves cannot agree is a massive abrogation of freedom of contract.

This is the biggest change to employment law in New Zealand since the introduction of the Employment Contracts Act in 1991.

The public therefore need to get involved and provide comment on the discussion paper before submissions close on November 27. I would suggest that small employers, in particular, pay attention.

Susan Hornsby-geluk is a partner at Dundas Street Employment Lawyers.