Submissions by YouthLaw Tino Rangatiratanga Taitamariki on the Employment Relations Law Reform Bill
Introduction 1. YouthLaw Tino Rangatiratanga Taitamariki (‘YouthLaw’) is a Community Law Centre, vested under the Legal Services Act 2000, providing free legal advice and advocacy for children and young people. We promote the interests of children and young people at local and national levels when decisions, laws or policies affecting them are being created. 2. YouthLaw is committed to the principles contained in the United Nations Convention on the Rights of the Child and seeks to apply them in our policy and practice.
3. Between 1 July 2002 and 30 June 2003, YouthLaw dealt with 304 employment advice queries and disputes, the third-largest general area of work behind criminal law and education matters. Employment law has constituted a significant proportion of our overall advice and casework for sometime now, with a large amount of our contacts in this area being direct referrals from the Employment Relations Service Info-Line. 4. We support the tenor of the Employment Relations Law Reform Bill (‘the Bill’) as we consider that in its present form it will have a positive impact on the status of young workers within the employment sector. Whilst the Employment Relations Act 2000 (‘ER Act’) signaled a shift to a more balanced and tightly regulated industrial environment to that procured by the Employment Contracts Act 1991, it is our experience that the problems experienced by young workers have remained largely the same. 5. These problems faced by young workers include the continuing proliferation of verbal, casual employment agreements (despite the provisions of the ER Act requiring otherwise). By their very nature, these types of agreements open up room for exploitation and unfair treatment. In addition, young workers have a general lack of awareness of unions or of their legal rights in employment. Most young workers we talk to have not even heard of unions, let alone understand what they do. 6. We consider that the Bill will improve this situation somewhat. However, we note that there is no consideration in the Bill of any of the issues relating to New Zealand’s international child labour obligations under the United Nations Convention on the Rights of the Child, concerning a minimum age of entry into employment and minimum wage protections for workers aged below 16. It is disappointing the Bill overlooks these issues, given both the breadth of its amendments and the context of the 2003 Report on New Zealand by the UN Committee on the Rights of the Child, which recommended that the Government address the deficiencies in this area forthwith.
7. These submissions focus on specific areas of the Bill that we feel are of most relevance to young workers, based on the feedback we receive from our advice service. Expansion of the duty of “good faith” 8. We support the expansion of the duty of good faith (clauses 4-6 of the Bill). We consider that the separation of the duty of good faith from the implied mutual obligations of trust and confidence between employer and employee, clarifies its practical purpose. The Bill imposes active duties (clause 5) on employer and employee in order to comply with the duty of good faith. These duties are largely focused around communication and it is in this respect that the duty is distinguishable from that of trust and confidence. We consider that the practical effect of clause 5 will be to require employers and employees to communicate in an open manner with each other about all matters that may impact on their employment relationship. Neither party can hide behind any implied terms of their agreement to justify their decisions. Whilst the duty is mutual, the inherent roles of each party will mean that the onus for compliance will ultimately rest more heavily with the employer, and this is indeed the case in clause 5(1)(c) which imposes active duties on the employer in the event of decisions which will likely have an adverse affect on the employee (such as redundancies). 9. We consider that the amendments will provide for more active involvement of young workers in workplace decision-making processes. Their bargaining position will certainly be enhanced, as the amendments require the employer to enter into an active, constructive dialogue with the employee. This should counter the ability of an employer to invoke unfair unilateral changes to an employment agreement, a situation that is commonly experienced by young employees. 10. In addition, the enforcement of a penalty for a breach of good faith under clause 6(7) of the Bill may encourage more compliance than currently exists. This may cause some initial contention, as employers and employees will undoubtedly have differing views about what constitutes a “responsive, communicative and supportive” relationship. However, the penalty has a high threshold for implementation, requiring “serious and sustained” failure of a party to act in good faith or intentional undermining by a party to an employment relationship process or agreement, in order to apply. We support this amendment in principle, as it could be a helpful deterrent from unconscionable employment practices if it is enforced effectively. Effective enforcement will be the key to the workability of this clause, as it concerns a more nebulous compliance issue than current compliance issues flowing out of ER Act, Wages Protection Act, Minimum Wage Act or Holidays Act requirements. Fixed-Term/Trial Employment Agreements 11. We support the additional protections accorded to employees subject to fixed-term, trial or probationary employment agreements under clauses 27-30 of the Bill. We believe the
amendments will go some way to providing some certainty for young workers in low-skilled jobs or probationary agreements that are represented as an apprenticeship opportunity. We hear many complaints from young people about employers imposing trial or probationary verbally into an employment agreement and then altering the duration of the period to effect an easy dismissal or avoid ongoing obligations (such as an agreement to enter into a formal apprenticeship arrangement at the expiry of the trial period). 12. We consider the requirement under clause 27, amending section 66 of the ER Act, that a fixedterm agreement must state in writing the way in which the employment will end and the reasons for this, is a sensible way of minimizing disputes that often arise from uncertainty regarding a fixed-term or trial period. We also support the proposal that non-compliance with this requirement, or imposition of an unreasonable reason for termination of the agreement, will render a fixed-term or trial clause ineffective. This should help deter the unconscionable or exploitative use of these types of employment agreements, and accordingly be of benefit to young workers. 13. Overall, the Bill issues more prescriptive requirements for the form of individual employment agreements and in doing so will hopefully increase the use of written employment agreements with clear, agreed terms. We have noticed since the enactment of the ER Act that despite its requirement, under section 65, that employment agreements be in writing, the use of verbal agreements for the employment of young workers is very common. In addition, we have received many accounts of employers refusing or neglecting to comply with this basic requirement when an employee has requested a written agreement. We hope that the compliance of this requirement is monitored and deterrent measures enforced, where appropriate, in order to prevent flagrant, unchecked breaches by employers. Part 6A – Restructuring Protections 14. We support the additional protections accorded to employees by the Bill’s insertion of Part 6A into the ER Act. Since the enactment of the Employment Contracts Act, employees have been largely powerless in the event of restructuring or sale of an employer’s business. We have dealt with many young workers whose employment has been summarily terminated without recourse as a result of such circumstances, which are usually completely out of their control. Whilst we aware that Part 6A will be viewed with some concern by employers and businesses and is accordingly a controversial aspect of the Bill, we consider these provisions will go a long way to providing some level of security and certainty for employees in such a position. It will be important for the provisions to take account of the position of all employees affected by a sale or merger, as most employees on either side of the deal are placed in an inherently vulnerable position. Part 8A – Codes of Employment Practice/Personal Grievance
15. We consider the Bill’s amendments to this Part of the ER Act to be significant, given that the grounds for grievances and workplace conduct issues have remained largely unchanged from the Employment Contracts Act era. 16. The provision for the Ministerial approval and implementation of Codes of Employment Practice (clause 35) illustrates the Bill’s underlying prescriptive intent. However, it is interesting that the Codes provide nothing more than guidance and the Employment Relations Authority is not compelled to have regard to the contents of the Code. They effectively become a legislative statement of best practice, and whilst they will possibly have some value for the Authority in determining the objective test of whether an employer’s actions was reasonable in a dispute, the lack of any compliance objective may render them relatively ineffective. 17. The expanded objective stated in clause 36 of the Bill is sensible in promoting quick resolution of personal grievances and other workplace disputes. There is no doubt that in practice, the longer a dispute takes to resolve, the more intractable, adversarial and litigious the respective parties become. However, this objective should also not be allowed to cloud the fact that some disputes are of such a nature that front-end negotiations are not always appropriate without invoking regulatory intervention. This can especially be the case where there are allegations of sexual harassment, workplace bullying or other forms of discrimination or harassment, where there is a need for a sensitive, neutral procedure. 18. Clause 37 of the Bill is significant for its clarification of the test for determining whether or not a dismissal is justified, in response to the Court of Appeal decision in W & H Newspaper Ltd. v Oram [2001] 3 NZLR 29. Like clauses 35 and 36, in doing so it clearly underlines the Bill’s intention to provide the employment jurisdiction with a more prescriptive statutory regime. 19. In defining what constitutes an unjustified dismissal, the Court of Appeal in Oram have emphasized that the test should be whether a reasonable employer could reach the decision that the actual employer did reach. This test incorporates the notion that the reasonable employer will look at all the circumstances, including those of the employee. 20. This approach is seen by many to be a controversial for several reasons. There are some arguments that the Oram test has resulted in a gradual undermining of employee protection, as it subtly shifted the test for justification from a neutral 3rd party perspective to adopting the standard of a “reasonable employer”. One may view this as a focus on the perspective of the particular employer acting fairly, which in turn can be interpreted as a subjective application of the actual employer’s beliefs and standards in evaluating the possible actions of a reasonable employer. 21. We therefore welcome the statutory confirmation of a neutral 3rd party objective test that would be brought about by clause 37. It is our experience that young workers are often subject to unreasonable, arbitrary decisions by employers and, accordingly, they require that a neutral
standard be applied to the determination of a disputed employer decision, rather one that could potentially favour considerations of employer expediency. 22. Clause 39 clarifies the position in the event an employee has a choice between pursuing a personal grievance under the ER Act or a complaint under the Human Rights Act 1993. Such an election becomes available in instances where an employee is alleging sexual harassment or discrimination, and as such as able to seek relief via procedures pursuant to each statute. We interpret section 112(3) to mean that the right of an election remains open until proceedings have been filed with the Authority. We understand that this would mean that procedures prior to filing, such as the raising of a personal grievance with the employer or attending Department of Labour mediation, would not prejudice the right of an employee to elect to proceed under the Human Rights Act. We support this clarification, as it allows mediation to occur under each jurisdiction without prejudice to the location of the proceedings that may follow. However, it may be necessary to clarify further the definition of “proceedings” under the Human Rights Act in section 112(2) to specifically refer to a claim filed in the Human Rights Review Tribunal. As it currently, mediation assistance provided by the Hunan Rights Commission could be interpreted as constituting a proceeding under the Human Rights Act, which would, by way of the amendment, nullify any claim under the ER Act. 23. In reference to the proposed amendment of section 123 (ca) under clause 40 of the Bill, we support in principle the establishment of a provision for the Authority or the Court to make recommendations to an employer concerning workplace conduct or practices. 24. However, we consider that this largely replicates the authority of the Minister to issue Codes of Employment Practice, per clause 35 of the Bill. We are also concerned that, by granting the Court or Authority recommendatory rather than directive powers, it may inadvertently undermine the purpose of each establishment, which is to make enforceable findings. In addition, the Court already possesses a similar function through its development of legal tests and through obiter dictim, factors that can have significant impact on employment practice. 25. We are also concerned that the amendment to section 123(2) of the ER Act, proposed by clause 40, whereby employers can pay damages in installments to an employee, may encourage employers to structure their business in a manner in which they can claim a detrimental financial position, and thus deny an employee what is usually a much-needed lump-sum payment. This clause could greatly impact on employee hardship following an unjustifiable dismissal. In our experience, many young employees struggle to find work immediately after a dismissal and often find themselves in debt as a result of the loss of income. Often a lump-sum payment is all that saves them for long-term financial hardship. We accordingly consider that the financial position of the employee should be added to the clause as a parallel consideration of the Court or Authority when determining the nature of a damages payment under section 123.
Thank you for your consideration of these submissions.
John Hancock Solicitor YouthLaw Tino Rangatiratanga Taitamariki