In 1894, William Pember Reeves introduced the Industrial Conciliation and Arbitration Bill to Parliament. The Liberals were rewarding the New Zealand working classes’ support by introducing a progressive and comprehensive system of labour market reform.
Reeves’s legislation legitimised and strengthened unions and required compulsory arbitration to settle disputes. It provided a legal framework for enforcing the provisions of agreed settlements and effectively prohibited the use of direct action such as strikes and lockouts. Direct action as a legitimate means of bargaining was almost unheard of in New Zealand from 1894 until 1906.
Under the Act, registered unions could call employers to conciliation, and employers had to participate. These conciliations were heard by district conciliation boards made up of two or three elected worker representatives, the same number of employer representatives, and an impartial chairman elected from amongst their number.
If the board was unable to come to a decision, or if either party disputed the decision, the matter would go to the Arbitration Court. The court consisted of a Supreme Court Judge, assisted by one employer representative and one trade union representative. The Supreme Court was the predecessor of the High Court, so the Judge was a senior member of the judiciary. The court could refer matters back to conciliation and make directions or compulsory orders. Notably, the Court could make binding awards setting out the applicable wages and conditions that would pertain to any given industry. This was unique to New Zealand.
The Act gave workers legitimacy through the registration of their union, and the power to call employers to conciliation. It gave employers confidence that business would not be disrupted by industrial action. It also limited the number of unions with whom employers would need to negotiate.
In smaller businesses, employers could negotiate with unions rather than negotiate directly with staff – a process many found uncomfortable. In fact, it became regular practice that once some key industries or trades had negotiated their awards, they would be copied by others. There might not have been much room for individual flexibility with this system, but it did save time!
Like any system, the Act was effective only for as long as the parties remained willing to be bound by it – and the parties remained willing only so long as they saw it working to their advantage. This depended on the court’s ability to produce decisions that both parties regarded as fair. In particular, it depended on unions remaining confident that the outcomes they achieved through conciliation and arbitration were at least comparable to the outcomes they could get by de-registering from the Act and taking direct action against their employers.
