The Bargaining Process

The duty to act in good faith

The duty to act in good faith in the context of collective bargaining is in section 32 of the Employment Relations Act:

• The employer and union must try their best to agree to a process by which the bargaining will take place.
• They must meet with one another for the purposes of bargaining.
• They must each seriously consider and respond to one another’s proposals. Dismissing a proposal out of hand or making quite unreasonable proposals might amount to acting in bad faith.
• Both parties must recognise the role and authority of one another’s chosen representatives and must not act to undermine them. This has implications for the communications an employer may have with staff during negotiations.
• Both parties must, on request, provide one another with information that is necessary to substantiate the claims upon which their bargaining position is based.

• The parties are not obliged to come to an agreement. They are not even obliged to make concessions to one another, as long as their failure to do so is for genuine reasons and not just because they want to stonewall the bargaining process (section 33).

Recognising the role and authority of representatives

The Act requires each bargaining party to recognise the role and authority of the other’s representatives. The parties must not:

• directly or indirectly bargain about matters relating to terms and conditions of employment with persons for whom the representative or advocate are acting, unless the union and employee agree otherwise
• undermine, or do anything that is likely to undermine, the bargaining or the authority of the other in the bargaining (section 32 (1)(d)).

Employers may not discuss the bargaining, or anything arising out of it, directly with their employees, unless both the union and the employees have agreed. If employers give coercive or threatening messages to their employees during the bargaining process, this will influence the choices those employees make and effectively limit their freedom of association. It will also breach the employer’s duty to act in good faith.

Section 32(1)(d)(iii) sets out the duty not to undermine the bargaining of the other party. Both parties are under an obligation not to misrepresent the other party’s position to their own members. Employers may not communicate directly with their employees about the bargaining process, but union representatives who misrepresent an employer’s stance or position to their members will be in breach of their obligation to act in good faith.

Providing necessary information

Under the Employment Relations Act both unions and employers are obliged to provide information to one another to substantiate their claims, or a position they are taking, during the bargaining. This provision means that neither employers nor unions can rely on claims that they are not prepared to substantiate. For example, an employer cannot claim that they are unable to afford a pay increase unless they are willing to provide financial information that verifies their claim. Equally, a union cannot claim a pay increase in excess of inflation or the rise in the cost of living without being able to provide the employer with information explaining why the increase is considered necessary.

Failure to provide information of this kind is likely to be taken as evidence of bad faith.

The information required will usually be financial, business planning and forecasting information such as wages and salaries data, information about hours worked, insurance and pension plan information, seniority lists, and personal information about employees.

The Act provides some additional protection for the parties if they are afraid that confidential information about their business might be disclosed. The information can be given to an independent reviewer, who will decide whether or not the information should be treated as confidential and if so, whether or not it substantiates the claim at issue. The independent reviewer will then advise the parties of their decision.

Information that is disclosed for the purposes of bargaining must:

• only be used for the purposes of bargaining
• be treated as confidential to the bargaining representatives – unions are limited in how much they can disclose specific information about an employer’s business to their members (section 34.)

A request for information must:

• be made in writing
• specify in reasonable detail the nature of the information required
• specify for which claim the information is requested
• specify a reasonable period of time within which the information is required.

The legal requirements of bargaining for collective employment agreements

Bargaining for a collective employment agreement (CEA) is initiated by providing written notice that:

• is signed by an authorised representative
• identifies each of the intended parties to the agreement
• identifies what the agreement is intended to cover (sections 42–43).

Either party may initiate bargaining where no CEA exists. Either party can initiate bargaining where a CEA exists, but there are limitations on the timing within which this can be done (see section 41).

There are a number of provisions that govern bargaining where more than one union, or more than one employer, is involved. This is known as multi-party bargaining. The Act has a number of requirements governing the use of secret ballots in these situations (see sections 45–48). Additional parties may join the bargaining process but must comply with the requirements already set down by the Act (section 49).

Unions cannot sign a CEA until it has been ratified by all of the employees it covers. If the agreement does not specify a commencement date, it will come into effect on the date that the last party signs it.

A collective employment agreement must:

• be in writing
• be signed by every union and every employer it covers
• specify who and what it covers
• specify what will happen if an employee’s work is contracted out, or if an employer’s business is sold or transferred, to protect employees from being disadvantaged in these circumstances
• explain, in plain language, the dispute resolution processes available, and refer specifically to the statutory period of 90 days within which a personal grievance must be lodged
• provide for, and explain how, the agreement is to be varied
• specify when and how the agreement will expire (sections 51, 52 and 54).

Employees can be bound by additional terms and conditions to those contained in the CEA if they do not contradict the CEA and have been mutually agreed to. An employee who resigns from a union bound by a CEA is deemed to be employed on an individual employment agreement (IEA), based on the same terms and conditions as the applicable CEA or on any other terms and conditions that might be mutually agreed to between the employee and employer (section 61).

What happens if things go wrong?

Obviously, there will be times when the parties are unable to agree, and the bargaining process hits a stalemate. So, what are the legal options when that happens?

The Employment Relations Authority

The Act sets up a dispute resolution process to cater for employment disputes and grievances, including those arising during the bargaining process.

The Employment Relations Authority may investigate and determine whether or not one of the parties is in breach of the obligation to bargain in good faith. The Authority decides whether the matter is appropriate for mediation, and may direct the parties to mediation if it thinks this will be useful. If the Authority considers that one of the parties is not acting in good faith, it can require the parties to recommence bargaining and, essentially, behave better. Either party can refer the matter to the Employment Relations Authority if they wish.

If either one of the parties is not satisfied with the outcome of the Authority’s investigation, they may take their case to the Employment Court which will adjudicate in a formal legal manner.

Strikes and lockouts

The duty to act in good faith does not exclude the right to strike or lockout. However, these actions are only lawful in the bargaining context if:

• the strike or lockout relates to a CEA that will bind each of the employees concerned
• the Employment Court has made an order giving one of the parties the right to strike or lockout while the bargaining process continues.

Strikes and lockouts are illegal if:

• there is a CEA that is binding on the employees concerned which is still in force at the time
• the strike or lockout occurs during the bargaining process, unless:
• at least 40 days have passed since the bargaining was initiated
• the employees concerned were all bound by the same CEA when the bargaining was initiated, and that CEA has since expired
• the employees concerned were all bound by different CEAs on the date that the bargaining was initiated, and at least one of those CEAs has since expired.

A strike or lockout is legal at any time if the party taking the action has reasonable grounds to believe that it is necessary in the interests of health and safety. Special provisions apply to giving notice of strike or lockout action in essential services such as health or transport services.

The Act limits employers’ ability to hire outside labour during a strike or lockout.