The Employment Court’s recent decision, Kaikorai Service Centre v First Union, [1]  scrutinised the duty of good faith and made headlines for making it “legal to insult an employer in wage negotiations”.[2] In the course of collective bargaining First Union sought public support by staging a protest outside Kaikorai’s Pak’n’Save supermarket. This involved a giant inflatable rat with a sign around its neck saying “Don’t be a rat Mr Dobson” and a banner reading “Pak’n’Slave”. The company, and its director Mr Dobson, took exception to the Union’s methods, claiming a breach of good faith. However, the Court held that while there is likely to be a point where what has been said or done is so offensive or undermining that the duty of good faith is breached, the good faith duty does not require bargaining to be undertaken in a courteous way, nor does it require using polite language or avoiding a combative style. The Court disagreed with the employer’s view that the Union’s methods were offensive, preferring to characterise them instead as creative bargaining tools used to exert legitimate pressure on the employer.  A key question for employers now is whether they too will be found to have acted in good faith, if they take a similarly discourteous approach to collective bargaining and use language which is impolite towards the union(s).

The Government’s plan to implement a Fair Pay Agreement (FPA) system represents another pro-union and collective agreement development, and pressure-point for employers. FPAs would set minimum terms and conditions (not just pay) for all workers (which could be extended to include contractors as well as employees) in an entire industry or occupation. While the Working Group’s full list of recommendations have not been officially released, the Working Group has reported back to the Workplace Relations Minister on its proposal to have a trigger, of either 10 per cent or 1000 workers in an occupation or sector to kick off a FPA process. This means that 10% of a group can effectively compel the remaining 90% into an FPA process, whether they are union members or not.  It will be interesting to see whether this will affect the Prime Minister’s earlier indication that there would be “no more than one or two” FPAs reached during this electoral term.

For employers, the proposed FPA system would represent a significant loss of autonomy and flexibility around business decision-making. This is because unlike traditional collective bargaining, the proposed system does not require any form of consent from employers. In light of the Treasury’s warnings against FPAs, we await the Minister’s response to the Working Group’s recommendations with interest.

These developments flow off the back of the Employment Relations Amendment Bill passing in December, which brought in changes that further strengthen collective bargaining and union rights. These changes have either already come into effect or will come into effect from 6 May 2019.

The nature and extent of strikes and other industrial action which we have seen in 2018 seem set to continue during 2019. Our team of experts would be happy to advise on any questions you may have.

Footnotes

[1] Kaikorai Service Centre and First Union [2018] NZEmpC 160.
[2] https://www.stuff.co.nz/business/110078393/its-legal-to-insult-an-employer-in-wage-negotiations