United States Legal Documents


Employment agreements

This range of US employment agreements covers self employed persons, consultants, subcontractors and other professional service activities.

15

How to enter into an employment agreement as an employer

Introduction

The Employment Relations Act

Employment law is governed by the EMPLOYMENT RELATIONS ACT 2000, which came into force on 1 October 2000.

The previous Act, the Employment Contracts Act 1991, tended to treat employment contracts like any other contracts; by contrast, the EMPLOYMENT RELATIONS ACT 2000 recognises the inherent inequality in power between employers and employees and therefore promotes collective bargaining through unions to offset this. The Act also requires the parties to an employment relationship to deal with each other in "good faith" at all times.

The Act provides for the Minister to approve various "codes of employment practice" to provide guidance on how the Act should be interpreted, either generally or in relation to particular types of situations or particular areas of the employment environment. The Employment Relations Authority and the Employment Court can take these codes into account when making decisions.

Substantial amendments to the Act were made on 1 December 2004 by the EMPLOYMENT RELATIONS AMENDMENT ACT (NO 2) 2004. Those amendments are included in this information sheet.

What does "good faith" mean and when does it apply?

The Act requires the parties to an employment relationship to deal with each in good faith, which includes not doing anything (directly or indirectly) that would mislead or deceive the other. Good faith requires the parties to be active and constructive in achieving employment relationships in which the parties are, among other things, responsive and communicative.

This duty applies to employers and employees dealing with each other, to unions and employers dealing with each other, and various other employment relationships, such as unions and their members. So you will be bound by this duty whenever you negotiate an agreement with your existing employees, whether it is a collective or an individual agreement.

Good faith also requires you to consult with your employees if you are proposing to do something that would negatively affect the continuation of their employment, such as selling the business (for the rules that apply in those and other restructuring cases, including new laws introduced on 1 December 2004, see How to make an employee redundant).

It's a breach of good faith for you to advise an employee, or attempt to induce them, not to be involved in collective bargaining or not to be covered by a collective agreement. (For the requirements of good faith in the context of bargaining for collective agreements, see below, "Collective agreements and collective bargaining / Good faith and collective bargaining".)

While the general duty of good faith doesn't appear to apply to negotiations between an employer and a prospective employee, a different provision in the Act also protects against "unfair bargaining" for any individual employment agreement (see below, "Individual employment agreements / Protection against ‘unfair bargaining'"), and this protects prospective employees. Employers also have specific obligations towards prospective employees and new employees (see below, "Collective agreements and collective bargaining / New employees: Your obligations when a collective agreement exists" and "Individual employment agreements / Your obligations in bargaining for individual agreements, terms and conditions").

Penalties for breaches of good faith

A party to an employment relationship who breaches the general duty of good faith is subject to a penalty under the EMPLOYMENT RELATIONS ACT 2000 if the breach

  • was deliberate, serious and sustained, or
  • was intended to undermine an employment relationship or agreement, or undermine bargaining for an agreement, or
  • consisted of intentionally undermining a collective agreement or collective bargaining by passing on, to other employees, terms from that agreement or terms reached in that bargaining (see below, "Collective agreements and collective bargaining / Passing on terms from collective agreements")

"Collective" versus "individual" employment agreements

The EMPLOYMENT RELATIONS ACT 2000 allows employees and employers to negotiate either collective or individual agreements. However, the Act actively promotes collective bargaining and collective agreements. Only unions can negotiate collective agreements for employees and only union members can belong to a collective agreement (although a collective agreement can provide for non-members to get the terms and conditions in the agreement if they pay the union a "bargaining fee": see below, "Collective agreements and collective bargaining / Bargaining fee arrangements"). Unions must be registered with the Department of Labour, which means they have to meet particular requirements (see How to: Union rights).

Although employers can't give preferential treatment or conditions based on being or not being a union member, this doesn't prevent collective agreements including a term intended to recognise the benefits of collective agreements (such as an additional payment or other additional benefits).

Individual employees covered by a collective agreement can negotiate terms additional to the collective agreement.

There's nothing to stop employees who are not union members from negotiating collectively, but the end result can only be a number of individual agreements, not a collective agreement.

When you hire new employees who are already union members, they are automatically covered by any collective agreement that exists in your workplace. If there is no collective agreement, employees can negotiate individual agreements with you, whether or not they are union members.

If a collective agreement expires, the employees are covered by individual agreements based on the terms of the collective agreement. The same applies if a union member covered by a collective agreement resigns from the union.

Collective agreements and collective bargaining

Good faith and collective bargaining

The EMPLOYMENT RELATIONS ACT 2000 requires collective bargaining between unions and employers to be conducted in good faith. This means they must meet with each other, consider and respond to each other's proposals, and give reasons if they reject any offer or proposal. If they're deadlocked on an issue, they must continue to bargain about any other issues on which they've not reached agreement.

The duty of good faith requires unions and employers to reach an agreement unless there's a genuine reason, based on reasonable grounds, not to do so. It doesn't amount to a "genuine reason" that a party objects in principle to collective agreements or to bargaining for them, or that the party disagrees about including a "bargaining fee" clause (for bargaining fees, see below).

The parties must also provide each other, if requested, with information to substantiate claims or responses to claims made during bargaining. This can be provided to an agreed third party. If you're concerned about the confidentiality of the information, you can supply it to a mutually agreed third party - an "independent reviewer". If the independent reviewer thinks the information should be kept confidential he or she must decide whether or not the information does substantiate the claim or response in question, then inform the parties of this and answer any questions they have.

You cannot advise employees, or attempt to induce them, not to be involved in collective bargaining or not to be covered by a collective agreement.

A Code of Good Faith for collective bargaining was drawn up in 2000. The Employment Relations Authority and the Employment Court can consider the Code in deciding whether the parties have bargained in good faith It doesn't reflect the amendments made to the Act on 1 December 2004, and is currently being reviewed. There is also a specific Code of Good Faith for the Public Health Sector (contained in Schedule 1B of the Act).

Passing on terms from collective agreements

Employers are prevented from undermining collective agreements and collective bargaining by automatically passing on collectively bargained terms and conditions to employees who aren't covered by them.

Under these rules, the duty of good faith prohibits employers from intentionally undermining a collective agreement by passing on its terms to individuals who aren't party to that agreement, or intentionally undermining collective bargaining by passing on to an employee a term that the parties to the collective bargaining have agreed will be part of the collective agreement when it's concluded.

Similarly, good faith prohibits employers from intentionally undermining one collective agreement by passing on its terms to another collective agreement, or from intentionally undermining collective bargaining by passing on, to another collective agreement, a term that the parties to the bargaining have agreed will be part of the collective agreement when it's concluded.

Employers who breach these rules are liable to a penalty.

However, the rules above don't prevent unions and employers agreeing to pass on collective terms and conditions to other unions or employees – for example, through a "bargaining fee" arrangement (see below).

"Facilitation": Assistance from Employment Relations Authority to resolve disputes

In some cases, collective bargaining that breaks down can be referred to the Employment Relations Authority for it to "facilitate" the bargaining. The Authority will play this role only if

  • there has been a serious and sustained breach of good faith, or
  • the bargaining has been unnecessarily drawn-out and extensive efforts to resolve the differences have failed, or
  • there has been protracted or acrimonious strike or lock-out action, or
  • a strike or lock-out has been proposed that would substantially affect the public interest (because it would endanger someone's life, safety or health, or significantly disrupt social, environmental or economic interests)

The facilitation process must be carried out in private. But otherwise the Authority is free to decide what process will be used. Statements made during the process cannot later be used in any proceedings in the Authority or the courts.

The Authority can make recommendations at the end of the process. The parties don't have to follow these recommendations, but they do have to consider them in good faith.

Authority can determine collective agreement in case of serious breach

The Employment Relations Authority can fix the terms and conditions of a collective agreement if:

  • a breach of good faith has been so serious and sustained that it has significantly undermined the collective bargaining, and
  • all other reasonable alternatives have been exhausted, and
  • this is the only effective remedy for the innocent party

What must be included in a collective agreement?

A collective agreement must be in writing and must be signed by each union and employer that is a party to it, otherwise the agreement has no effect.

The agreement must contain:

  • a "coverage clause" (this is a clause specifying the work that the agreement covers, whether by reference to the work or type of work, or to employees or types of employees, including referring to named employees, or to the work or type of work done by named employees, to whom the collective agreement applies)
  • a plain language explanation of the services available for resolving employment relationship problems, including the 90-day time limit for raising a personal grievance with the employer (see How to defend a personal grievance claim brought by an employee)
  • for new agreements made after 1 April 2004, a clause confirming the right of an employee who works on a public holiday to be paid either time and a half or penal rates contained in the agreement, whichever is more (Agreements already existing on 1 April 2004 must be amended to include this the next time they're amended, but not later than 1 April 2005.) (For more details, see How to ensure you receive your full holiday and leave entitlement as an employee.)
  • for new agreements made after 1 December 2004 (unless the agreement covers one of the industries specified in the Act), a provision negotiated between the parties that protects employees affected by restructuring (Agreements already existing on 1 December 2004 must be amended to include this by 1 December 2005, or the next time they're amended, or before the restructuring takes effect, whichever is earliest.) (These "employee protection provisions" for employees affected by restructuring are explained in detail in How to make an employee redundant.)
  • a clause providing how the agreement can be varied
  • the expiry date

Apart from these requirements, the agreement can contain any provisions that the parties agree on, provided they're not unlawful or inconsistent with the rights and obligations contained in the Act (see below, "Other issues / What other matters should be included in an employment agreement?").

Bargaining fee arrangements

This is an arrangement whereby employees who are not members of a union can be employed on the same terms and conditions as those contained in a collective agreement if they pay a bargaining fee to the union that negotiated the collective agreement.

The arrangement must be agreed to by the employer and the union in a collective agreement and then agreed to in a secret ballot by majority vote of all employees (union members and non-members) whose work is covered by the coverage clause in the collective agreement. The ballot must be held before the collective agreement comes into force, and must be run jointly by the union and employer.

Non-union employees who don't want to pay the bargaining fee must notify the employer of this in writing, within the period specified for this purpose in the collective agreement. Those employees will not be required to pay the fee, and their terms and conditions will remain the same, rather than being based on the collective agreement.

Bargaining fees are deducted from the employee's wages by the employer and paid to the union. The fee cannot be more than the employee would pay as a union fee if a union member.

New employees: Your obligations when a collective agreement exists

If there is an existing collective agreement in your workplace, new employees who already belong to a union that is a party to the agreement will automatically be covered by the collective agreement.

If a new employee doesn't belong to the union, you must tell him or her that the collective agreement exists. The employee then has 30 days to decide whether or not to join the union and be covered by the agreement. During the 30 days the employee is covered by an individual agreement on the same terms as the collective one.

If after 30 days the employee decides not to join the union, you can then negotiate a new individual agreement. If you don't negotiate a new agreement, the employee continues to be covered by an individual agreement on the same terms as the collective agreement.

Individual employment agreements

Good faith in bargaining for individual agreements

In determining whether an employer and employee bargaining for an individual agreement are dealing with each other in good faith, a relevant factor is the circumstances of each of them, including the "operational environment" of the employer and employee and the resources available to them.

Your obligations in bargaining for individual agreements, terms and conditions

You have the following obligations towards employees whenever you're bargaining for an individual employment agreement, or bargaining for individual terms and conditions that are additional to a collective agreement:

  • You must give the employee a copy of the intended agreement, or the part of it, that's under discussion.
  • You must inform the employee that they're entitled to seek independent advice about it.
  • You must give the employee a reasonable opportunity to seek this advice.
  • You must consider any issues the employee raises, and respond to them.

Those obligations apply in all of the following situations:

  • when the employee is bargaining for individual terms and conditions additional to a collective agreement that covers the employee
  • when the employee is bargaining for individual terms and conditions additional to a collective agreement on which their current individual agreement is based, or bargaining for variations to those individual terms and conditions (This applies where the collective agreement has expired or the employee has resigned from the union, in which case the employee is covered by an individual agreement based on the collective one.)
  • in the case of a new employee who's not a union member, when they're bargaining for individual terms and conditions additional to the terms, based on the collective agreement, that cover them for the first 30 days
  • when the 30 days have expired and the employee has decided not to join the union, and they're bargaining for any variations to the individual agreement that applied during the 30 days
  • when no collective agreement covers the employee and they're bargaining for an individual agreement
  • when a fixed-term agreement, or a probationary or trial period, is proposed
  • when the employee is bargaining over an "employee protection provision" to cover restructuring situations (This situation, which applies only to workers outside certain industries specified in the Act, is explained in detail in How to make an employee redundant.)
  • when the employee is bargaining with you, as a new employer to whom they've transferred as part of their previous employer's restructuring, over redundancy entitlements (This situation, which applies only to employees in the industries specified in the Act, is explained in detail in How to make an employee redundant.)

Protection against "unfair bargaining"

The EMPLOYMENT RELATIONS ACT 2000 places some restrictions on unfair bargaining for any individual employment agreement. This applies to negotiations with prospective employees and negotiations for new individual agreements with existing employees.

If it finds that you as an employer have bargained unfairly, the Employment Relations Authority can order you to pay compensation to the employee, or it can cancel or alter the employment agreement or make some other order.

"Unfair bargaining" exists if, when bargaining is taking place or when the agreement is entered into, one of the following circumstances existed, and you (or your representative) were or should have been aware of those circumstances:

  • The employee was unable to understand the agreement adequately because of, for example, age, sickness, mental or educational disability, a disability relating to communication, or emotional distress.
  • The employee reasonably relied on your skill, care, or advice or on that of someone acting for you.
  • The employee was induced to enter into the agreement by oppressive means, undue influence, or duress.
  • You did not give the employee the proper information and opportunity to obtain advice as you are required to under the Act (see above, "Your obligations in bargaining for individual agreements, terms and conditions").

Employers are also protected against unfair bargaining by employees.

What must be included in an individual employment agreement?

An individual employment agreement must be in writing and must include:

  • the names of the employee and employer concerned
  • a description of the work to be performed
  • an indication of where the employee is to perform the work
  • an indication of the arrangements for hours of work
  • the wages or salary
  • a plain language explanation of the services available for resolving employment relationship problems, including the 90-day time limit for raising a personal grievance with the employer (see How to defend a personal grievance claim brought by an employee)
  • for new agreements made after 1 April 2004, a clause confirming the right of an employee who works on a public holiday to be paid either time and a half or penal rates contained in the agreement, whichever is more (Agreements already existing on 1 April 2004 must be amended to include this the next time they're amended, but not later than 1 April 2005.) (For more details, see How to ensure you receive your full holiday and leave entitlement as an employee.)
  • for new agreements made after 1 December 2004 (unless the agreement covers one of the industries specified in the Act), a provision negotiated between the parties that protects employees affected by restructuring (Agreements already existing on 1 December 2004 must be amended to include this by 1 December 2005, or the next time they're amended, or before the restructuring takes effect, whichever is earliest.) (These "employee protection provisions" for employees affected by restructuring are explained in detail in How to make an employee redundant.)

Apart from these requirements, the agreement can contain any provisions that the parties agree on, provided they're not unlawful or inconsistent with the rights and obligations contained in the Act (see below, "Other issues / What other matters should be included in an employment agreement?").

Requirement to inform new employees about holiday and leave entitlements

When you enter into an employment agreement with an employee, you must tell them about their minimum rights under the HOLIDAYS ACT 2003. You must also tell them that they can get more information from their union (if they're a member) or from the Department of Labour. See How to ensure you receive your full holiday and leave entitlement as an employee.

Can an agreement be for a fixed term?

Yes, an employer and employee can agree that the agreement will end after a certain period, or when a particular event happens, or when a particular project is completed.

However, you as employer must have genuine reasons based on reasonable grounds for this. You cannot negotiate a fixed-term agreement merely as a means of denying the employee his or her rights under the Act, nor to set up a period of probation, nor to exclude or limit the employee's rights under the HOLIDAYS ACT 2003.

Before a fixed-term agreement is entered into, you must advise the employee of when or how the agreement will end and the reasons why it is for a fixed term. This must also be stated in the agreement in writing.

If this information isn't included in writing in the agreement, or if the reasons aren't genuine ones based on reasonable grounds, the employee can choose to treat the fixed-term aspect of the agreement as ineffective, in which case you won't be able to end the employee's employment in reliance on it. However, the validity of the rest of the employment agreement won't be affected.

Can an agreement include a period of probation?

It can be part of an employment agreement that the employee will serve a period of probation or trial, in which case the agreement must state this is writing. If it's not stated in writing in the agreement, the employee can choose to treat this aspect of the agreement as ineffective, in which case you won't be able to rely on it; however, the validity of the rest of the agreement won't be affected.

Even if the agreement does include a probation period, the employer must still follow the requirements of procedural fairness in dismissing the employee: the employer must provide the proper warnings and provide the employee with assistance, training and opportunities to improve his or her performance, the same as with any other employee.

However, it may be that an employer will be permitted a wider discretion in the area of substantive reasons for the dismissal than is the case with permanent employees.

Other issues

What other matters should be included in an employment agreement?

Other matters commonly included in employment agreements are:

  • your company policies (see below)
  • procedures for taking disciplinary action (see below)
  • a confidentiality clause (see below)
  • remuneration and fringe benefits – for example, long-service leave and staff options to buy company products or services
  • arrangements for parental leave (see How to: Entitlements to parental leave)
  • indexing of wages to the Consumers Price Index
  • health and safety issues (see How to complain about health and safety standards in your workplace)
  • provision for employees on jury service

Incorporating company policies into the contract

The employment contract is the appropriate way for the employer to state and enforce company policy on issues that the employer considers important. By making these policies part of the contract, they become binding on the parties and their importance to the company is stressed. This may include policies on, for example, discrimination, illegal substances, smoking, equal employment opportunities and retirement.

Disciplinary procedures

It is best if a formal disciplinary procedure is included in the contract (whether an individual or a collective agreement). The parties therefore have a written document to refer to should it become necessary. This also allows for easier action if the claim goes before the Employment Relations Authority or Employment Court.

Confidentiality agreements

You should consider the nature of your business and whether there is any need to make a confidentiality arrangement with your staff.

Negotiating the contract: do I need a representative?

Employees and employers can choose some other person or organisation to represent them in negotiating the contract and in dealing with employment issues generally. In the case of an employer, the representative might be a lawyer or an industrial-relations consultant.

"Employee" versus "independent contractor": Is an employment agreement required in my case?

It may be that the person you are hiring would in fact be an independent contractor, and not an employee, in which case an employment agreement is not applicable.

The courts have applied a number of tests to determine whether a particular business relationship is one of employment. A helpful test that is often applied is the "control" test – this asks whether the person performing the services is performing them as a person in business on his or her own account. If this is so, the person will be considered to be an independent contractor, not an employee.

Problematic situations have included deciding whether an agent or salesperson paid by commission is an employee. Courier operators, owner-driver operators and contract tradespeople are generally regarded as independent contractors, not employees. The EMPLOYMENT RELATIONS ACT 2000 also makes clear that real estate agents and sharemilkers are not employees.

In determining whether a particular person is an employee or a contractor, the Employment Relations Authority and the Employment Court must decide on the basis of the real nature of the agreement and not the particular words the agreement uses.

Cautionary notes
  • As well as assisting you in negotiating the terms of the employment agreement, your lawyer or industrial-relations consultant will be able to advise you of your rights and obligations under employment law. He or she will also be able to advise and represent you should you need to defend a personal grievance claim (see How to defend a personal grievance claim brought by an employee).

How to enter into an employment agreement as an employee

Introduction

The Employment Relations Act

Employment law is governed by the EMPLOYMENT RELATIONS ACT 2000, which came into force on 1 October 2000.

The previous Act, the Employment Contracts Act 1991, tended to treat employment contracts like any other contracts; by contrast, the EMPLOYMENT RELATIONS ACT 2000 recognises the inherent inequality in power between employers and employees and therefore promotes collective bargaining through unions to offset this. The Act also requires the parties to an employment relationship to deal with each other in "good faith" at all times.

The Act provides for the Minister to approve various "codes of employment practice" to provide guidance on how the Act should be interpreted, either generally or in relation to particular types of situations or particular areas of the employment environment. The Employment Relations Authority and the Employment Court can take these codes into account when making decisions.

Substantial amendments to the Act were made on 1 December 2004 by the EMPLOYMENT RELATIONS AMENDMENT ACT (NO 2) 2004. Those amendments are included in this information sheet.

What does "good faith" mean and when does it apply?

The Act requires the parties to an employment relationship to deal with each in good faith, which includes not doing anything (directly or indirectly) that would mislead or deceive the other. Good faith requires the parties to be active and constructive in achieving employment relationships in which the parties are, among other things, responsive and communicative.

This duty applies to employers and employees dealing with each other, to unions and employers dealing with each other, and various other employment relationships, such as unions and their members.

Good faith also requires your employer to consult with you if they are proposing to do something that would negatively affect the continuation of your employment, such as selling the business (for the rules that apply in those and other restructuring cases, including new laws introduced on 1 December 2004, see How to challenge a redundancy).

It's a breach of good faith for an employer to advise you, or attempt to induce you, not to be involved in collective bargaining or not to be covered by a collective agreement. (For the requirements of good faith in the context of bargaining for collective agreements, see below, "Collective agreements and collective bargaining / Good faith and collective bargaining".)

While the general duty of good faith doesn't appear to apply to negotiations between an employer and a prospective employee, a different provision in the Act also protects against "unfair bargaining" for any individual employment agreement (see below, "Individual employment agreements / Protection against ‘unfair bargaining'"), and this protects prospective employees. Employers also have specific obligations towards prospective employees and new employees (see below, "Collective agreements and collective bargaining / New employees: The employer's obligations when a collective agreement exists" and "Individual employment agreements / Employer's obligations in bargaining for individual agreements, terms and conditions").

Penalties for breaches of good faith

A party to an employment relationship who breaches the general duty of good faith is subject to a penalty under the EMPLOYMENT RELATIONS ACT 2000 if the breach

  • was deliberate, serious and sustained, or
  • was intended to undermine an employment relationship or agreement, or undermine bargaining for an agreement, or
  • consisted of intentionally undermining a collective agreement or collective bargaining by passing on, to other employees, terms from that agreement or terms reached in that bargaining (see below, "Collective agreements and collective bargaining / Passing on terms from collective agreements")

"Collective" versus "individual" employment agreements

The EMPLOYMENT RELATIONS ACT 2000 allows employees and employers to negotiate either collective or individual agreements. However, the Act actively promotes collective bargaining and collective agreements. Only unions can negotiate collective agreements for employees and only union members can belong to a collective agreement (although a collective agreement can provide for non-members to get the terms and conditions in the agreement if they pay the union a "bargaining fee": see below, "Collective agreements and collective bargaining / Bargaining fee arrangements"). Unions must be registered with the Department of Labour, which means they have to meet particular requirements (see How to: Union rights).

Although employers can't give preferential treatment or conditions based on being or not being a union member, this doesn't prevent collective agreements including a term intended to recognise the benefits of collective agreements (such as an additional payment or other additional benefits).

Individual employees covered by a collective agreement can negotiate terms additional to the collective agreement.

There's nothing to stop employees who are not union members from negotiating collectively, but the end result can only be a number of individual agreements, not a collective agreement.

If you start work in a workplace where there is a collective agreement and you're already a union member, you'll automatically be covered by the collective agreement. If there's no collective agreement, you can negotiate an individual agreements with the employer, whether or not you are a union member.

If your collective agreement expires, you're covered by an individual agreement based on the terms of the collective agreement. The same applies if you resign from your union.

Collective agreements and collective bargaining

Good faith and collective bargaining

The EMPLOYMENT RELATIONS ACT 2000 requires collective bargaining between unions and employers to be conducted in good faith. This means they must meet with each other, consider and respond to each other's proposals, and give reasons if they reject any offer or proposal. If they're deadlocked on an issue, they must continue to bargain about any other issues on which they've not reached agreement. The parties must also provide each other, if requested, with information to substantiate claims or responses to claims made during bargaining. This information can be provided to an agreed third party.

The duty of good faith requires unions and employers to reach an agreement unless there's a genuine reason, based on reasonable grounds, not to do so. It doesn't amount to a "genuine reason" that a party objects in principle to collective agreements or to bargaining for them, or that the party disagrees about including a "bargaining fee" clause (for bargaining fees, see below).

Employers cannot advise employees, or attempt to induce them, not to be involved in collective bargaining or not to be covered by a collective agreement.

A Code of Good Faith for collective bargaining was drawn up in 2000. The Employment Relations Authority and the Employment Court can consider the Code in deciding whether the parties have bargained in good faith.

Passing on terms from collective agreements

Employers are prevented from undermining collective agreements and collective bargaining by automatically passing on collectively bargained terms and conditions to employees who aren't covered by them.

Under these rules, the duty of good faith prohibits employers from intentionally undermining a collective agreement by passing on its terms to individuals who aren't party to that agreement, or intentionally undermining collective bargaining by passing on to an employee a term that the parties to the collective bargaining have agreed will be part of the collective agreement when it's concluded.

Similarly, good faith prohibits employers from intentionally undermining one collective agreement by passing on its terms to another collective agreement, or from intentionally undermining collective bargaining by passing on, to another collective agreement, a term that the parties to the bargaining have agreed will be part of the collective agreement when it's concluded.

Employers who breach these rules are liable to a penalty.

However, the rules above don't prevent unions and employers agreeing to pass on collective terms and conditions to other unions or employees – for example, through a "bargaining fee" arrangement (see below).

"Facilitation": Assistance from Employment Relations Authority to resolve disputes

In some cases, collective bargaining that breaks down can be referred to the Employment Relations Authority for it to "facilitate" the bargaining. The Authority will play this role only if

  • there has been a serious and sustained breach of good faith, or
  • the bargaining has been unnecessarily drawn-out and extensive efforts to resolve the differences have failed, or
  • there has been protracted or acrimonious strike or lock-out action, or
  • a strike or lock-out has been proposed that would substantially affect the public interest (because it would endanger someone's life, safety or health, or significantly disrupt social, environmental or economic interests)

The facilitation process must be carried out in private. But otherwise the Authority is free to decide what process will be used. Statements made during the process cannot later be used in any proceedings in the Authority or the courts.

The Authority can make recommendations at the end of the process. The parties don't have to follow these recommendations, but they do have to consider them in good faith.

Authority can determine collective agreement in case of serious breach

The Employment Relations Authority can fix the terms and conditions of a collective agreement if

  • a breach of good faith has been so serious and sustained that it has significantly undermined the collective bargaining, and
  • all other reasonable alternatives have been exhausted, and
  • this is the only effective remedy for the innocent party

What must be included in a collective agreement?

A collective agreement must be in writing and must be signed by each union and employer that is a party to it, otherwise the agreement has no effect.

The agreement must contain

  • a "coverage clause" (this is a clause specifying the work that the agreement covers, whether by reference to the work or type of work, or to employees or types of employees, including referring to named employees, or to the work or type of work done by named employees, to whom the collective agreement applies)
  • a plain language explanation of the services available for resolving employment relationship problems, including the 90-day time limit for raising a personal grievance with the employer (see How to bring a personal grievance against your employer)
  • for new agreements made after 1 April 2004, a clause confirming the right of an employee who works on a public holiday to be paid either time and a half or penal rates contained in the agreement, whichever is more (Agreements already existing on 1 April 2004 must be amended to include this the next time they're amended, but not later than 1 April 2005.) (For more details, see How to ensure you receive your full holiday and leave entitlement as an employee.)
  • for new agreements made after 1 December 2004 (unless the agreement covers one of the industries specified in the Act), a provision negotiated between the parties that protects employees affected by restructuring (Agreements already existing on 1 December 2004 must be amended to include this by 1 December 2005, or the next time they're amended, or before the restructuring takes effect, whichever is earliest.) (These "employee protection provisions" for employees affected by restructuring are explained in detail in How to challenge a redundancy.)
  • a clause providing how the agreement can be varied
  • the expiry date

Apart from these requirements, the agreement can contain any provisions that the parties agree on, provided they're not unlawful or inconsistent with the rights and obligations contained in the Act (see below, "Other issues / What other matters should be included in an employment agreement?").

Bargaining fee arrangements

This is an arrangement whereby employees who are not members of a union can be employed on the same terms and conditions as those contained in a collective agreement if they pay a bargaining fee to the union that negotiated the collective agreement.

The arrangement must be agreed to by the employer and the union in a collective agreement and then agreed to in a secret ballot by majority vote of all employees (union members and non-members) whose work is covered by the coverage clause in the collective agreement. The ballot must be held before the collective agreement comes into force, and must be run jointly by the union and employer.

Non-union employees who don't want to pay the bargaining fee must notify the employer of this in writing, within the period specified for this purpose in the collective agreement. Those employees will not be required to pay the fee, and their terms and conditions will remain the same, rather than being based on the collective agreement.

Bargaining fees are deducted from the employee's wages by the employer and paid to the union. The fee cannot be more than the employee would pay as a union fee if a union member.

New employees: The employer's obligations when a collective agreement exists

If there's an existing collective agreement in the workplace, new employees who already belong to a union that is a party to the agreement will automatically be covered by the agreement.

If when you start work you don't belong to a union that's party to the collective agreement, the employer must tell you that the agreement exists. You then have 30 days to decide whether or not to join the union and be covered by the agreement. During the 30 days you are covered by an individual agreement on the same terms as the collective one.

If after 30 days you decide not to join the union, you can then negotiate a new individual agreement. If you don't negotiate a new agreement, you continue to be covered by an individual agreement on the same terms as the collective agreement.

Individual employment agreements

Good faith in bargaining for individual agreements

In determining whether an employer and employee bargaining for an individual agreement are dealing with each other in good faith, a relevant factor is the circumstances of each of them, including the "operational environment" of the employer and employee and the resources available to them.

Employer's obligations in bargaining for individual agreements, terms and conditions

Employers have the following obligations towards you whenever you're bargaining for an individual agreement, or bargaining for individual terms and conditions that are additional to a collective agreement:

  • You must be given a copy of the intended agreement, or the part of it, that's under discussion.
  • You must be informed that you're entitled to seek independent advice about it.
  • You must be given a reasonable opportunity to seek this advice.
  • The employer must consider any issues you raise, and respond to them.

Those obligations apply in all of the following situations:

  • when you're bargaining for individual terms and conditions additional to a collective agreement that covers you
  • when you're bargaining for individual terms and conditions additional to a collective agreement on which your current individual agreement is based, or bargaining for variations to those individual terms and conditions (This applies where the collective agreement has expired or you've resigned from the union, in which case you're covered by an individual agreement based on the collective one.)
  • when you're a new employee who's not a union member, and you're bargaining for individual terms and conditions additional to the terms, based on the collective agreement, that cover you for the first 30 days
  • when the 30 days have expired and you've decided not to join the union, and you're bargaining for any variations to the individual agreement that applied during the 30 days
  • when no collective agreement covers you and you're bargaining for an individual agreement
  • when a fixed-term agreement, or a probationary or trial period, is proposed
  • when you're bargaining over an "employee protection provision" to cover restructuring situations (This situation, which applies only to workers outside certain industries specified in the Act, is explained in detail in How to challenge a redundancy.)
  • when you're bargaining with a new employer, to whom you've transferred as part of your previous employer's restructuring, over redundancy entitlements (This situation, which applies only to employees in the industries specified in the Act, is explained in detail in How to challenge a redundancy.)

Protection against "unfair bargaining"

The EMPLOYMENT RELATIONS ACT 2000 places some restrictions on unfair bargaining for individual employment agreements. This applies to negotiations with prospective employees and negotiations for new individual agreements with existing employees.

If it finds that an employer has bargained unfairly with you, the Employment Relations Authority can order the employer to pay you compensation, or it can cancel or alter the employment agreement or make some other order.

"Unfair bargaining" exists if, when bargaining is taking place or when the agreement is entered into, one of the following circumstances applied to you, and the employer (or his or her representative) was or should have been aware of those circumstances:

  • You were unable to understand the agreement adequately because of, for example, age, sickness, mental or educational disability, a disability relating to communication, or emotional distress.
  • You relied on the skill, care, or advice of the employer or someone acting for the employer, and it was reasonable for you to do this.
  • You were induced to enter into the agreement by oppressive means, undue influence, or duress.
  • You weren't given the proper information and opportunity to obtain advice as required under the Act (see above, "Employer's obligations in bargaining for individual agreements, terms and conditions").

Employers are also protected against unfair bargaining by employees.

What must be included in an individual agreement?

An individual employment agreement must be in writing and must include:

  • the names of the employee and employer concerned
  • a description of the work to be performed
  • an indication of where the employee is to perform the work
  • an indication of the arrangements for hours of work
  • the wages or salary
  • a plain language explanation of the services available for resolving employment relationship problems, including the 90-day time limit for raising a personal grievance with the employer (see How to bring a personal grievance against your employer)
  • for new agreements made after 1 April 2004, a clause confirming the right of an employee who works on a public holiday to be paid either time and a half or penal rates contained in the agreement, whichever is more (Agreements already existing on 1 April 2004 must be amended to include this the next time they're amended, but not later than 1 April 2005.) (For more details, see How to ensure you receive your full holiday and leave entitlement as an employee.)
  • for new agreements made after 1 December 2004 (unless the agreement covers one of the industries specified in the Act), a provision negotiated between the parties that protects employees affected by restructuring (Agreements already existing on 1 December 2004 must be amended to include this by 1 December 2005, or the next time they're amended, or before the restructuring takes effect, whichever is earliest.) (These "employee protection provisions" for employees affected by restructuring are explained in detail in How to challenge a redundancy.)

Apart from these requirements, the agreement can contain any provisions that the parties agree on, provided they're not unlawful or inconsistent with the rights and obligations contained in the Act (see below, "Other issues / What other matters should be included in an employment agreement?").

Information your employer must give you about holidays and leave

When you enter into an employment agreement, your employer must tell you about your minimum rights under the HOLIDAYS ACT 2003: see How to ensure you receive your full holiday and leave entitlement as an employee. They must also tell you that you can get more information from your union (if you're a member) or from the Department of Labour. The Department's Employment Relations Service has much useful information on its website at www.ers.dol.govt.nz. You can also phone their free Employment Relations Infoline on 0800 800 863.

Can an agreement be for a fixed term?

Yes, an employer and employee can agree that the agreement will end after a certain period, or when a particular event happens, or when a particular project is completed.

However, the employer must have genuine reasons based on reasonable grounds for this. The employer cannot negotiate a fixed-term agreement merely as a means of denying you your rights under the Act, nor to set up a period of probation, nor to exclude or limit your rights under the HOLIDAYS ACT 2003.

Before a fixed-term agreement is entered into, the employer must advise you of when or how the agreement will end and the reasons why it is for a fixed term. This must also be stated in your agreement in writing.

If this information isn't included in writing in your agreement, or if the reasons aren't genuine ones based on reasonable grounds, you can choose to treat the fixed-term aspect of your agreement as ineffective, in which case your employer won't be able to end your employment in reliance on it. However, the validity of the rest of your employment agreement won't be affected.

Can an agreement include a period of probation?

It can be part of an employment agreement that you will serve a period of probation or trial, in which case the agreement must state this is writing. If it's not stated in writing in the agreement, you can choose to treat this aspect of your agreement as ineffective, in which case your employer won't be able to rely on it; however, the validity of the rest of your agreement won't be affected.

Even if your agreement does include a probation period, the employer must still follow the requirements of procedural fairness in dismissing you: the employer must provide the proper warnings and provide you with assistance, training and opportunities to improve your performance, the same as with any other employee. (See How to bring a wrongful dismissal claim against your employer and How to dismiss an employee for the procedure the employer must follow.)

However, it may be that an employer will be permitted a wider discretion in the area of substantive reasons for the dismissal than is the case with permanent employees.

Other issues

What other matters should be included in an employment agreement?

Other matters commonly included in employment agreements are:

  • company policies on matters such as discrimination and equal employment opportunities
  • the procedure for disciplinary action by the employer
  • any restraint of trade or confidentiality clauses
  • remuneration and fringe benefits – for example, long-service leave and staff options to buy company products or services
  • arrangements for parental leave (see How to: Entitlements to parental leave)
  • indexing of wages to the Consumers Price Index
  • health and safety issues (see How to complain about health and safety standards in your workplace)
Cautionary notes
  • It is advisable that you seek legal advice before entering into any individual employment agreement.
  • For more information on the EMPLOYMENT RELATIONS ACT 2000 and your rights and obligations under it as an employee, you may wish to consult a lawyer. Information and assistance is also available from the Department of Labour's Employment Relations Service, which can be contacted on 0800 800 863.

How to ensure you receive your full holiday and leave entitlement as an employee

Introduction

Minimum rights to public holidays and leave

It's important that you as an employee are aware of your rights to public holidays, annual leave and other types of leave. Your minimum entitlements are contained in the HOLIDAYS ACT 2003.

You may be entitled to additional leave under the terms of your particular employment agreement. Your agreement cannot take away any of your rights and entitlements under the Act.

The HOLIDAYS ACT 2003 came into force on 1 April 2004, replacing the HOLIDAYS ACT 1981. The 2003 Act was amended on 22 October 2004; the amendments are included in this information sheet.

Information your employer must give you

When you start work, your employer must tell you about your minimum rights under the HOLIDAYS ACT 2003. They must also tell you that you can get more information from your union (if you're a member) or from the Department of Labour.

The Department's Employment Relations Service has much useful information on its website at www.ers.dol.govt.nz. You can also phone their free Employment Relations Infoline on 0800 800 863.

Public (or "statutory") holidays

The 11 public holidays

  • Christmas Day
  • Boxing Day
  • New Year's Day
  • 2 January
  • Waitangi Day
  • Good Friday
  • Easter Monday
  • ANZAC Day
  • Labour Day
  • Queen's Birthday
  • your province's Anniversary Day

When am I entitled to be paid for a public holiday?

You will receive a paid holiday for each of the 11 public holidays if it would normally be a working day for you. If you would normally work any amount of time on a public holiday, that day must be treated as normally being a working day for you.

If you and your employer can't agree on whether a particular day would normally be a working day, you can approach the Labour Department and a Labour Inspector will decide the issue.

What if I work the public holiday?

You can agree with your employer that you will work on the public holiday, in which case you must:

  • be paid at least time and a half for that day (see below), and
  • be given an alternative paid holiday

The alternative holiday is to be taken on a day agreed between you, and on a day that would normally be a working day for you. The alternative holiday must be a whole day off, even if you worked only part of the public holiday.

If you work a public holiday that would not normally be a working day for you, your employer must pay you at time and a half, but you're not entitled to an alternative paid holiday.

Calculating your pay if you work a public holiday

The amount you must be paid for working a public holiday is whichever is the greater of the following two amounts:

  • what you would get under your employment agreement for your hours worked that day, not including penal rates, plus half that amount again, or
  • what you would get under your agreement for your hours worked that day, including penal rates

"Penal rates" is limited here to any additional amount paid to compensate you for working a particular day of the week or a public holiday. It doesn't include, for example, additional amounts for working more than five days a week, or for working at particular times (such as overtime or shift allowances).

So in other words, you're entitled to either the "penal rates" in your agreement or to the minimum time and a half required under the Holidays Act, whichever is more, but not both. If, for example, you work a public holiday that falls on a Saturday, and your agreement gives you time and a quarter for working Saturdays, you must be paid the time and a half minimum under the Act. If on the other hand you work a public holiday that falls on a Sunday, and your agreement provides for double-time on Sundays, you must be paid the double-time under the agreement.

There's a temporary exemption for employers who already pay employees for working on public holidays as part of their regular pay. The employer can continue doing this temporarily, if this had previously been genuinely negotiated into the regular pay in order to achieve the same ends as the minimum requirements in the Act. In the case of individual agreements, the exemption lasts until 1 April 2007. In the case of collective agreements, it lasts until 1 April 2007 or until a new collective agreements comes into force, whichever is earlier.

From 1 April 2004 all new employment agreements must include a provision confirming your right to be paid either time and a half or penal rates contained in the agreement, whichever is more, if you work a public holiday. Agreements already existing on 1 April 2004 must be amended to include this the next time they're amended, but not later than 1 April 2005 (except that in the case of the temporary exemption explained in the last paragraph, the agreements don't have to be amended until that exemption ends).

When will I get paid for the public holiday?

You must be paid for it in the pay that covers the pay period in which the holiday falls.

Special rules for Christmas and New Year

In addition to these general rules, the HOLIDAYS ACT 2003 has special provisions that apply when Christmas or New Year's Day falls on a Friday, Saturday or Sunday.

What if I'm sick or have a bereavement on a public holiday?

If you're required or have agreed to work a public holiday, but you don't in fact work that day because you're sick or injured or have a bereavement, the day will still be treated as a public holiday, rather than as sick leave or bereavement leave. However, you're entitled only to your normal pay, not time-and-a-half, and you're not entitled to an alternative day's holiday.

Annual leave

How much annual leave am I entitled to?

As of April 1 2007, you are entitled to at least four weeks' paid holiday leave each year. This becomes due at the end of each year of continuous employment with your employer. A 12-month period of employment is still "continuous" even if it includes periods of parental leave, time on ACC, or unpaid leave of any kind.

If you work part-time you'll be entitled to three of your normal working weeks – for example, if you work 20 hours a week you'll be entitled to three 20-hour weeks off work and on pay. If you and your employer can't agree on what is a genuine working week for you, a Labour Inspector can decide the issue.

Public holidays that fall during your annual leave are treated as public holidays, not annual leave.

The minimum of three weeks' annual leave will increase to four weeks on 1 April 2007.

How is my annual holiday pay calculated?

Your holiday pay must be at the rate of:

  • your ordinary weekly pay as at the start of the holiday, or
  • your average weekly earnings for the 12 months immediately before the last pay period before the holiday,

whichever is more.

When must my annual holiday pay be paid?

Your employer must pay you your holiday pay before you take your holiday, unless you agree that you will be paid in the pay that covers the period in which your holiday falls.

Who decides when I can take my annual leave?

Your employer must allow you to take your three weeks of leave within 12 months after you became entitled to them. The employer must also allow you to take at least two uninterrupted weeks of leave if you choose this.

Aside from those requirements, the issue of when annual leave is taken is a matter to be negotiated between you. But your employer cannot unreasonably refuse to allow you to take annual leave.

Your employer can require you to take your annual leave at a particular time if you cannot agree on when to take them. But the employer must give you at least 14 days' notice of this.

You and your employer can agree to you taking annual leave in advance – that is, before they become due at the end of a year of employment.

What happens when I leave my job?

If you leave your job during the first year, as of April 1 2007 you're entitled to be paid 8 percent of your gross earnings since you started the job. (This increases to 8 percent on 1 April 2007.)

If you leave your job after the first year, you're entitled:

  • to have any unused annual leave paid out in holiday pay, and
  • to be paid 8 percent of your gross earnings since you last became entitled to annual leave (increasing to 8 percent in 2007)

Closedown periods

Your employer may require you to take annual holidays during a closedown period, but must give you at least 14 days' notice. If you don't have enough leave owing to cover the whole closedown, you and the employer can agree that you will take some of the closedown as leave in advance.

If you haven't accrued any annual leave by the closedown, the employer can require you not to work during the closedown. You will be paid 6 percent of your gross earnings since you started the job (if you've worked there less than a year) or since you last became entitled to annual leave (if more than a year).

Employers can have only one closedown period a year. They can have different closedown periods for different parts of the business.

Sick leave

When do I become entitled to sick leave?

After you've worked for your employer for six months, you become entitled to five days' paid sick leave for each year you work after that. Over those six months you must have either:

  • worked continuously for the employer, or
  • worked an average of 10 hours a week, and not less than one hour a week or 40 hours a month

You and your employer can agree that you can take sick leave in advance, with the amount taken in advance being deducted from your entitlement when it becomes due.

In what situations can I take sick leave?

You can take sick leave if:

  • you're sick or injured
  • your spouse or partner is sick or injured, or
  • someone who depends on you to care for them (such as a child or elderly parent) is sick or injured

Can I carry over sick leave?

Yes, you can carry over unused sick leave to the following year. You can carry over up to 15 days, so that in any year you can have a maximum of 20 days current entitlement to sick leave. Your employer can also allow you to carry over more than this.

When you leave your job you are not entitled to be paid out for unused sick leave.

Do I have to provide a doctor's certificate?

Your employer can require you to produce a doctor's certificate or other proof that you are sick or injured if the sickness or injury is for more than three consecutive days. This applies whether or not any of those consecutive days would normally be working days for you. So if, for example, an illness lasts from Friday to Monday inclusive, the employer is entitled to require a doctor's certificate.

Your employer can also require you to provide proof within the three consecutive days if they have reasonable grounds to suspect that your sick leave isn't genuine. The employer must tell you, as soon as possible after forming this suspicion, that they require proof. They must agree to meet your reasonable costs for getting the proof (for example, pay for your visit to your GP).

Your employer doesn't have the right to tell you which doctor or other health professional you must go to to obtain proof.

Payment of sick leave

You must be paid sick leave in the pay that covers the pay period in which you took the leave.

But if you fail, without a reasonable excuse, to provide proof of sickness or injury when required (see above), your employer doesn't have to pay you until you provide that proof.

Bereavement leave

When do I become entitled to bereavement leave?

You become entitled to bereavement leave after you've worked for your employer for six months. Over those six months you must have either:

  • worked continuously for the employer, or
  • worked an average of 10 hours a week and not less than one hour a week or 40 hours a month

You and your employer can agree to you taking bereavement leave in advance – that is, before you have worked for the employer for six months.

In what situations can I take bereavement leave?

You are allowed to take three days bereavement leave if any of the following people die:

  • your spouse or partner (including a same-sex partner)
  • your parent
  • your child
  • your brother or sister
  • your grandparent
  • your grandchild
  • your spouse's or partner's parent

If someone other than one of those people dies, you are allowed to take one day's bereavement leave if the employer accepts that you've suffered a bereavement, taking into account relevant factors such as:

  • how close you were
  • whether you have significant responsibilities for organising the ceremonies relating to the death
  • any cultural responsibilities that you have in relation to the death

There is no maximum total number of days of bereavement leave that you can take in any one year.

Payment of bereavement leave

You must be paid bereavement leave in the pay that covers the pay period in which you took the leave.

Enforcing your rights under the Holidays Act

What can I do to recover unpaid holiday pay?

You can recover unpaid holiday pay by taking your employer to the Employment Relations Authority. Your union or a Labour Inspector can also take your employer to the Authority on your behalf.

A Labour Inspector can also take a penalty action to the Authority against your employer for breaches of your rights under the HOLIDAYS ACT 2003. A penalty can be up to $5,000 if the employer is an individual, and up to $10,000 if it's a company or other type of incorporated body.

Cautionary notes
  • Not all employers understand their obligations under the Holidays Act. Any employer or employee who is in doubt about their obligations and rights under the Act should consult a lawyer.

How to recover wages owing to you

In what situations can I take action to recover wages?

You have the right to recover any wages owed to you if:

  • you have been paid below the minimum wage
  • you have been paid below the wages required under your employment contract
  • your employer has attempted to pay you with company products instead of money
  • your employer has failed to pay you overtime rates or holiday pay required under your contract
  • your employer has docked your pay for an unfair reason

First discuss the matter with your employer

Before you consider taking legal action to recover your wages, it is recommended that you first discuss the problem with your employer. You may be able to resolve the problem at that point, and this will avoid the pressure that legal action would bring to your relationship with your employer.

You can also obtain information and assistance from the Department of Labour's Employment Relations Service, including mediation services. Contact them on 0800 800 863.

Taking a grievance to the Employment Relations Authority

If discussing the matter with your employer does not resolve the problem, you are entitled to take the dispute to the Employment Relations Authority to recover the money.

Once the matter has been brought to the Authority, you can pursue the unpaid wages on the basis that they are owed to you under contractual obligations that the employer has not fulfilled.

Your right to pursue the wages through the Authority is not affected by you accepting any payment at a lower rate or any express or implied agreement to the contrary.

The Authority can order the employer to pay the money owed to you by instalments, but only if the employer's financial position makes this necessary.

What if my employer has gone out of business?

If the company you worked for has gone out of business, you may need to bring liquidation (winding up) proceedings (see How to recover a debt from a company and How to liquidate a company).

When a company is liquidated, employees that are owed wages (this includes holiday pay) are very high on the list of creditors to be paid. The costs of liquidating the company will be paid first, followed probably by certain payments to the Inland Revenue Department; then those owed wages will be paid out of any money recovered from liquidating the company.

Employer must keep wages and time record

Employers must keep a record for each employee, called a "wages and time record", that shows, among other things:

  • the kind of work on which the employee is usually employed
  • the hours between which the employee is employed on each day, and the days of the employee's employment during each pay period
  • the wages paid to the employee each pay period and the method of calculation

The employer must provide you or your representative with access to this record or a copy of it if you request it.

If the employer fails to keep this record or fails to allow you access to it, the Employment Relations Authority can impose a penalty on the employer.

Cautionary notes
  • If the matter is likely to go to the Authority, it is advisable that you obtain legal assistance from someone who is skilled in advocacy and familiar with this area of law and the processes involved.

How to: Union rights

Introduction

The EMPLOYMENT RELATIONS ACT 2000 came into force on 1 October 2000, making substantial changes to the legal status and functions of unions. The Act promotes collective bargaining by unions as a means to offset the inherent inequality in power between employers and employees.

Under the Act only a union can negotiate a collective agreement with an employer, and only union members can be covered by a collective agreement (although a collective agreement can provide for non-members to get the terms and conditions in the agreement if they pay the union a "bargaining fee"). Unions must, however, be registered with the Department of Labour to have the benefit of these new advantages.

For more information on negotiating employment agreements (including bargaining fees), see How to enter into an employment agreement as an employee.

Registration of unions

In order to enjoy the monopoly of collective bargaining under the new Act, unions must be registered with the Registrar of Unions in the Department of Labour. If they are not registered they have no status under the Act.

A union is entitled to be registered if:

  • the union's object (or one of them) is to promote its members' collective employment interests; and
  • the union is incorporated under the Incorporated Societies Act 1908; and
  • its rules are democratic, not unreasonable, not unfairly discriminatory or prejudicial, and not contrary to law; and
  • the union is independent of and operates at arm's length from any employer

Is union membership voluntary?

Yes, employees cannot be required to join a union. No contract or arrangement may require an employee to be or not be a union member, and no person can put undue influence, directly or indirectly, on another person to be or not be a union member.

However, only union members will be covered by a collective agreement in force in their workplace. Non-members must negotiate their own individual agreements with their employer (although in certain cases they can pay the union a "bargaining fee" and get the benefit of the terms and conditions in the collective agreement: see How to enter into an employment agreement as an employee).

Discrimination on the basis of union membership

If an employer discriminates against employees on the basis of their union activities or subjects them to duress because of their union membership, the employees can take a personal grievance to the Employment Relations Authority: see How to bring a personal grievance against your employer.

Although employers can't give preferential treatment or conditions based on being or not being a union member, this doesn't prevent collective agreements including a term intended to recognise the benefits of collective agreements (such as an additional payment or other additional benefits).

What rights of access do unions have to the workplace?

Under the Act, unions have wider access to workplaces than previously. Under the previous Act unions could enter only for the purposes of contract negotiations; but now unions can enter for any purpose relating to their members' employment or relating to union business. This includes:

  • participating in bargaining for a collective agreement
  • dealing with health and safety matters
  • monitoring whether a collective agreement is being complied with and, if it is not, seeking compliance with it
  • monitoring whether the Act and other employment-related Acts are being complied with in relation to union members and, if they are not, seeking compliance
  • dealing with individual employment agreements or an individual's terms and conditions
  • discussing union business with members
  • recruiting new union members
  • providing information on the union to employees

Union representatives can enter the premises only at reasonable times, and must do so in a reasonable way, having regard to normal business operations in the workplace. They must also comply with any reasonable existing procedures relating to health and safety or security.

Discussions with employees must take no longer than is reasonable.

Employers can be penalised for denying or obstructing union access to the workplace. They cannot dock employees' wages for time spent in discussions with union representatives.

Union meetings

Employers must allow employees who are union members to attend two union meetings each year on ordinary pay. Each meeting may be up to two hours long. The union must tell the employer which union members attended and how long the meeting lasted.

This right to hold union meetings is quite separate from the right of union officials to enter the workplace as necessary to discuss union business with employees (see above).

Do employers have to collect union fees?

Whether or not there's a collective agreement in the workplace, employers are required to collect union fees from each union member (if he or she consents) and then pass them on to the union, as arranged with the union.

However, this requirement can be cancelled or modified by a collective agreement or, if there's no collective agreement, by the employee's individual agreement.

Cautionary notes
  • For more detailed information on the changes made to union rights and other areas by the EMPLOYMENT RELATIONS ACT 2000, you may wish to consult a lawyer. Information and assistance is also available from the Department of Labour's Employment Relations Service, which can be contacted on 0800 800 863.

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