Right to Organise and Collective Bargaining Convention, 1949 (No. 98) - New Zealand (RATIFICATION: 2003)

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Discussion by the Committee

Government representative – New Zealand has not appeared before this Committee for many years, but we welcome the opportunity to do so. We are fully supportive of the role of the Committee of Experts and this Committee in the administration of the supervisory system. We note the purpose of our appearance today is to provide further information to the Committee about the Fair Pay Agreements (FPAs) system, its objective and aims. We look forward to providing the Committee with the information it requires, and, in due course, learning of its conclusions.

I would like to start by setting out the broader context for FPAs, and how the FPA system interfaces with the Convention.

First, the FPA system is a result of a long, considered and inclusive policy process. It is also subject to further change and development as the legislative process continues over the course of this year.

The key building blocks of the FPA system are based on the recommendations of a tripartite working group, which fully considered the state of New Zealand’s labour market and employment systems in terms of collective bargaining outcomes. These systems have generally performed well in creating jobs, ensuring high rates of participation, and delivering some elements of job quality. However, there are masked and entrenched weaknesses, and the gains have not been equally distributed.

In the 1990s, New Zealand moved from a centralized bargaining system to a fully decentralized one, based on individual and enterprise-level bargaining. Collective bargaining coverage used to be around 70 per cent but has dramatically declined to around 17 per cent since then. Multi-employer bargaining, which used to cover over 90 per cent of the private sector workforce, fell to 16 per cent in two years.

Since then, and despite subsequent reforms, there has been increasing evidence of a “race to the bottom” in some sectors. A dramatic fall in unionization rates and a lack of sectoral bargaining both enable businesses to undercut their competitors through low wages, or by shifting risks onto employees without corresponding compensation. Because there is little multi-employer or national collective bargaining, wages come under pressure, and employers have fewer incentives to innovate or raise productivity. This is because they can increase profits by simply reducing wages, rather than adopting other strategies.

Consequently, we have seen a rise in low-paying jobs and poor working conditions. These jobs have not provided working people with sustainable full-time employment or the opportunities to advance. The impacts are evident in New Zealand’s stagnating productivity and wage growth, and the gap between them.

The drive for labour market flexibility has also seen increased casualization of work and the growth of labour hire practices, with reduced protections and rights for workers.

These outcomes also disproportionately affect specific population groups, such as Māori, Pacific peoples, young people and people with disabilities, who are over-represented in jobs where low pay, poor health and safety practices, low job security and limited upskilling are significant issues.

Paradoxically, New Zealand employers currently face skills shortages, and are under pressure to hire workers and retain staff. With such a tight labour market, workers should be well-positioned to bargain for better employment terms. Despite this, we see a persistent lack of bargaining power for workers in some sectors.

While all of these factors and weaknesses have drivers outside the labour market, the Government considers the regulation of employment relations to be a key factor. Employment terms in New Zealand are primarily negotiated at an individual level, where there is an inherent imbalance of power between employers and workers. Collective bargaining is primarily conducted at the enterprise level. This has led to under 20 per cent of workers being covered by collective agreements, with unionization around 17 per cent.

Our system does not promote effective multi-employer, or occupational or cross-industry bargaining at levels that might meaningfully reduce the negative effects of:

- low wages and wage growth;

- the decoupling of wages from productivity growth;

- poor labour practices;

- vulnerability; and

- an over-reliance on statutory minimum conditions as the norm, rather than bargained floors of minimum terms and conditions.

This has been our experience over the last 30 years.

To address these issues, a tripartite working group recommended an approach to developing a sectoral bargaining system in New Zealand. They noted it was not possible to simply “lift and shift” the sectoral bargaining models used in other countries because of our particular labour market circumstances and history. The FPA system is based on what the working group recommended, and the current Fair Pay Agreements Bill reflects our particular situation and the factors that have led to it.

A key aim of the FPA system is to drive enduring, transformational change benefiting workers – particularly those in low-paid jobs, or in sectors where collective bargaining does not presently exist or, if it does, is not effective.

FPAs are intended to create a step change following over 30 years of individualized and firm-level bargaining. They will do so by enabling new minimum terms at the industry or occupational level to be set through a process of collective bargaining which may then be improved upon by either further collective or individual bargaining.

The level playing field provided by FPAs should support firms to improve workers’ terms and conditions without fear of being undercut on labour costs by their competitors and create incentives to increase profitability or market share through increased investment in training, capital formation and innovation.

We think that FPAs should also improve outcomes for vulnerable workers, in particular those such as Māori, Pacific peoples, young people and people with disabilities, who disproportionately experience poor labour market outcomes.

It is important to emphasize that the FPA system will not replace our current system of collective bargaining under the Employment Relations Act (ERA), it will supplement it. The specific features of the FPA system will apply only to bargaining conducted under that system and not more generally.

I turn now to points raised by the Committee of Experts and others on FPAs.

In terms of initiation, some issues have been raised about how bargaining for an FPA can be started. FPAs can be initiated in two ways.

The first is a pathway through representation where support will be needed from at least 1,000 workers or employers, or 10 per cent of covered workers or employers. While this may be lower than in other countries’ systems, this reflects our relatively low levels of union density and collectivization. Setting higher representation thresholds would effectively mean this pathway could not be used.

However, a second pathway is through meeting a public interest test, with statutory criteria that are assessed by an independent regulator. These criteria will include that the workers concerned receive low or inadequate pay or have little bargaining power in their employment. The regulator will be able to hear evidence and submissions from interested parties. The administration of legislative frameworks for collective bargaining by a competent authority is a common and necessary feature of bargaining systems generally.

Given the purpose of FPAs, the Government considers that it is appropriate that workers, through unions, can initiate FPA bargaining and propose coverage for the first time. Bargaining for subsequent FPAs in the same occupation or industry however can be triggered by either employers or workers.

In terms of coverage, FPAs will apply to all employers and workers within the specified occupation or industry. The extension of bargained outcomes to employers and workers not directly involved in the original bargaining is again not a unique feature of FPAs and is also recognized in Article 5 of the Collective Agreements Recommendation, 1951 (No. 91). The Committee of Experts has found that the extension of collective agreements per se is not inconsistent with the Convention.

We know that if the minimum terms resulting from FPAs did not apply to all workers and employers within coverage, they would not achieve their objective of improving labour market outcomes by preventing undercutting and competition on the basis of reducing labour costs.

Again, we emphasize that the point here is to create and set minimum terms and conditions across a sector or industry.

Ultimately, the objective of FPAs is to set these minimum terms and conditions for work in occupations or industries where these cannot be effectively bargained for at present. A collective bargaining process best enables the key issues to be identified, negotiated and hopefully agreed, but this may not be possible. The fixing of FPA terms needs to be seen in this context.

The fixing of terms is not the first recourse when parties encounter difficulties during bargaining. When disputes arise, the parties will have access to independent mediation. If mediation does not resolve the issue, a party may apply to an independent tribunal – the Employment Relations Authority – for a non-binding recommendation. If parties decide not to accept the recommendation, either of them may apply to the Authority for a binding determination that fixes the terms of the FPA.

When fixing those terms, the Authority will be required to first consider what attempts have been made to resolve the dispute. The Authority may direct further mediation, or another process to try and resolve the dispute. Only if all other reasonable alternatives have been exhausted, or a reasonable time period has elapsed, will the Authority then be able to fix the terms.

This is intended to encourage the parties to work through their issues to achieve an agreed outcome if at all possible, reflecting the importance of the broader social outcomes sought by FPAs, and the fact that ultimately it may not be possible to lift minimum terms and conditions across entire occupations or industries without a mechanism to fix terms if bargaining has reached a stalemate.

The Government notes that the supervisory bodies have found fixing terms is permissible in specific circumstances, including “when, after protracted and fruitless negotiations, it becomes obvious that the deadlock will not be broken without some initiative by the authorities”. Given the FPA system will introduce a new form of collective bargaining to New Zealand, the Government also notes the Committee of Experts’ comments in its 2012 General Survey on arbitration in cases of a first collective agreement.

There has been one development since we provided our last report to the Committee of Experts in 2021, which is the introduction of a backstop component to the legislation.

Earlier this year, the Government proposed a change to what happens if the threshold to initiate FPA bargaining has been met, but only one side is available to bargain collectively. If this happens, the tripartite partners will first be given the opportunity to step into bargaining on behalf of either workers or employers, depending on where the gap is. If this is not possible, however, bargaining will not take place. Instead, the independent Employment Relations Authority will set the relevant minimum terms and conditions.

This reflects the Government’s view that, if the statutory conditions for setting sectoral minimum standards have been met, this should not be prevented by an inability for collective bargaining to take place.

To conclude, I would like to reiterate that the objective of the FPA system is to enhance workers’ terms and conditions, where the current collective bargaining system has failed to do so. This addresses 30 years of decentralized and fragmented bargaining, and consequently poor labour market outcomes for groups of workers. These proposals were designed to remedy those gaps, through a long process of tripartite consultation. Ultimately, this system is about setting minimum terms and conditions for work in certain sectors or industries through collective bargaining, insofar as is possible.

FPAs are intended to supplement, but not replace, the current collective bargaining system in New Zealand – which is retained and will continue to operate. FPAs are instead about addressing a particular problem. Beyond this, the existing collective bargaining framework will exist without change. The legislation for FPAs is currently being scrutinized by a parliamentary select committee and is subject to change before it passes.

We look forward to hearing the perspectives raised in this discussion. We will carefully consider any comments made by the Committee in its final report.

Worker members – This is the very first time the Committee has discussed the application of the Convention with respect to New Zealand. New Zealand ratified the Convention in 2003.

Before the Employment Contracts Act (ECA) came into force in 1991, New Zealand relied primarily on collective bargaining and awards to set minimum standards. Overnight, the country’s centralized industrial relations system was replaced with a system based on individual employment contracts. In the four years following the introduction of the ECA, collective bargaining coverage halved, falling from about 60 per cent to 30 per cent. Trade union density also declined from 46 per cent to 21 per cent in that period.

Today, collective bargaining coverage stands at 15 per cent, with union density at 18 per cent, making New Zealand one of only three countries in the OECD to have higher trade union density than collective bargaining coverage.

From 1989 to 2021, labour productivity across the New Zealand economy outpaced wages by 76 per cent. The enterprise-based ECA significantly constrained workers’ bargaining power and in doing so effectively delinked productivity growth from wage growth. It is therefore no coincidence that during this period New Zealand experienced one of the largest increases in income inequality across the Organisation for Economic Co-operation and Development (OECD). It is against this backdrop that we welcome the Government’s legislative initiatives to encourage and promote collective bargaining in line with Article 4 of the Convention.

We note with satisfaction the proposed measures under the Screen Industry Workers Bill which will ensure that all film and television workers, irrespective of employment status, can fully enjoy their rights under the Convention.

Regarding the amendments to the Employment Relations Act (ERA) made in 2018, we welcome the revisions to sections 31 and 33, which strengthen the duty to bargain in good faith, and these amendments require the bargaining partners to conclude a collective agreement, unless there is a genuine reason based on reasonable grounds.

We note too, among other things, that these amendments are aimed particularly at deterring situations where a party is simply in principle ideologically opposed to bargaining, or only engages in surface bargaining.

These provisions do not make settlement mandatory, as good faith bargaining may not always result in a collective agreement. However, it is evident that if the parties are negotiating in good faith, they should be able to provide genuine reasons for not being able to conclude an agreement. As the Committee of Experts has previously noted, the duty to bargain in good faith does not imply an obligation to reach an agreement, but it does contemplate various obligations on the parties, including endeavouring to reach agreement and avoiding unjustified delays in negotiation. Therefore, we believe that the new genuine reason test sufficiently codifies in law the good faith duty under the Convention.

Turning to article 50J of the ERA, we understand that this provision permits the courts to fix the terms of a collective agreement where the bargaining parties have not been able to conclude.

The Government states that this section provides a specific remedy of last resort for a grave breach of the duty of good faith. In such cases, the Employment Relations Authority may make a determination fixing the provisions of the collective agreement if five prescribed conditions are met, including whether the breach was sufficiently serious and sustained as to significantly undermine bargaining.

The provision has only been relied on once in 15 years. In that particular case, the union initiated bargaining in October 2013 and the Authority fixed the agreement in June 2018. The Authority and the court accepted that the employer had met the test of section 50J for a serious and sustained breach. The union tried direct bargaining, mediation, facilitation and even litigation to settle this agreement. The employer obstructed continuously for five years. This case perfectly demonstrates why the intervention of the court as a last resort is needed to address improper practices in collective bargaining. Indeed, as previously held by the Committee of Experts, compulsory arbitration is permissible under the Convention where, after protracted and fruitless negotiation, it becomes obvious that the deadlock will not be broken without some initiative by the authorities.

Let me now consider FPAs. The Fair Pay Agreements Bill was introduced into Parliament on 29 March 2022 and is now going through the parliamentary process. The system proposed under the Bill will bring together employers and unions within a sector to bargain for minimum terms and conditions for all employees in that industry or occupation.

It is aimed at promoting collective bargaining, especially for low-paid and vulnerable workers where union representation has been particularly low. The design of the FPA system was informed by the recommendations of the FPA working group, a tripartite body. The working group was particularly concerned with the race to the bottom within the economy in the absence of adequate minimum standards. Having considered various models, the tripartite working group recommended a system that suits New Zealand’s unique social and economic context.

We see the eventual introduction of FPAs as a welcome affirmative measure allowing for the possibility to bargain at upper levels. In doing so, the Government is fulfilling its obligation to proactively promote free and voluntary collective bargaining under the Convention. FPAs will complement the current system of enterprise-level bargaining.

With regard to the initiation of an FPA, either party can and will initiate FPAs, except only in the first instance, when only trade unions can do so. This provision reflects long-standing national practice. Unions can initiate the FPA process by meeting a representation threshold of support of 10 per cent or 1,000 workers in coverage or a public interest test conducted by the Authority, an independent body.

In view of the low union density in the country, these thresholds would meet any test for sufficient representation status. Noting the Committee of Experts’ comments on this issue, we trust that the Government will engage in meaningful dialogue with the social partners to consider any open questions relating to the initiation of FPA negotiations.

Indeed, the FPA bargaining machinery is set up precisely to facilitate good faith negotiations with a view to concluding an agreement. Strikes are not permitted under the FPA system and the Fair Pay Agreements Bill requires the Authority to provide comprehensive bargaining support services to support fair pay relationships. On that basis, it is evident that the determination of an FPA by the Authorities is only possible as a last resort and only where a deadlock cannot be broken without some initiative by the Authorities. Indeed, without the possibility to call industrial action, an external intervention may be the only option to break a deadlock, similar to situations where compulsory arbitration is deployed to resolve disputes in essential services where strikes are prohibited.

Once an FPA is adopted, it applies to the entire agreed sector or occupational group. Given the overall aim of the FPA system, it is clear that the absence of any procedure for extension could result in two categories of employees: some of them covered by the agreement and others not, leading to unfair wage competition.

Recommendation No. 91 clearly establishes several principles for the extension of collective agreements, a common practice in multiple jurisdictions, including my own. Therefore, we welcome the fact that FPAs will essentially be declared erga omnes for both organized and non-organized employers and employees within the Agreements’ reach. We trust that the Government will accept observations by employers and workers to whom the agreements will be made applicable.

To conclude, if signed into law and implemented effectively, FPAs will finally raise standards for thousands of workers in sectors plagued by low pay, poor working conditions and other vulnerabilities. Companies will also benefit from stronger sector-wide coordination. FPAs can lead to an upward trend in wages and conditions with no employer being able to undercut their competitors on labour costs.

Employer members – New Zealand ratified the Convention back in 2002 and the Committee of Experts has issued only two observations on the Government of New Zealand’s application of the Convention in law and practice, in 2006 and most recently in 2021. Turning to the Committee of Experts’ observations, the Employer members take note that the Committee made comments on four issues in this case. We will not comment on the first issue regarding the scope of the Convention or the last issue regarding COVID. In our view, these issues are not relevant to the proper discussion of the heart of the matter in this case.

The Employer members consider the importance of this case focuses on the issue of collective bargaining and FPAs. By way of context, as has been referenced by other speakers, New Zealand introduced the Fair Pay Agreements Bill 2022 to override the Employment Relations Act. The new Bill proposes the establishment of Fair Pay Agreements, FPAs, as we have heard them referred to, which will cover an entire industry or occupation. More importantly, the Bill introduces a system of collective bargaining in which individual employers have no control over the scope, coverage or conditions of employment of workers who are their own employees.

On the first issue regarding the promotion of collective bargaining and the voluntary nature of collective bargaining, the Employer members recall that Article 4 provides that measures appropriate to national conditions shall be taken to encourage and promote the full development and utilization of machinery for voluntary negotiation between employers or employers’ and workers’ organizations with a view to the regulation of terms and conditions of employment by means of collective agreements.

The Committee of Experts noted the detailed observations made by Business New Zealand and the International Organisation of Employers (IOE) indicating that sections 31, 33 and 50J of the Act force the parties to conclude a collective agreement and that the introduction of FPAs will effectively remove the right of freedom of association and to bargain collectively for employers, who will be compulsorily covered by employment agreements for employees, negotiated by organizations of which they are not a member. In particular, sections 31 and 33 require a union and employer bargaining for a collective agreement to conclude a collective agreement unless there is a genuine reason based on reasonable grounds not to. Furthermore, section 50J permits the courts to compulsorily fix the terms of a collective agreement where the bargaining parties cannot reach an agreement.

The Employer members consider that it is clear that both of these provisions impose the duty to conclude and constitute compulsory arbitration upon the parties, contrary to the free and voluntary principle under Article 4 of the Convention. We note that the Government has argued that the amendment to sections 31 and 33 was to ensure that parties genuinely attempt to reach an agreement but will not have to settle if the reason not to do so is based on reasonable grounds. The Government also noted that section 50J does not apply simply when the parties cannot reach agreement over a particular matter or more generally. The Government indicated that section 50J provides a specific remedy of last resort for a serious and sustained breach of the good faith requirement.

The Employer members consider that a requirement to conclude a collective agreement clearly constrains voluntariness and removes it entirely if it is not demonstrated that the genuine reason criterion can be met. Furthermore, these provisions do not provide an employer with the necessary flexibility to bargain collectively. Once bargaining is initiated, the process mandated by the good faith obligations must be followed to its logical conclusion, no matter how many or few employees may be affected by the outcome.

Ensuring the voluntary nature of collective negotiation is inseparable from the principle of negotiation in good faith if the machinery to be promoted under Article 4 of the Convention is to have any meaning.

In this regard, the Employer members call on the Government to review and amend without delay these provisions in consultation with the most representative employers’ and workers’ organizations with a view of ensuring that these provisions fully respect the right to bargain collectively in a free and voluntary manner, as enshrined and protected in Article 4 of the Convention.

Regarding the second issue, referencing FPAs, the Committee of Experts notes that the introduction of FPAs covers all employees in an industry or occupation and only allows a union to initiate bargaining processes. In essence, it does not provide employers with any ability to opt out of these agreements and any disputes will go to compulsory arbitration with no right of appeal against the terms that are fixed.

The Employers’ group notes that the Government has argued that the aim of the FPAs is to create a new bargaining mechanism to set binding minimum terms at the industry or occupation level. The Government has argued that these will help build on national minimum standards and provide a new floor for enterprise-level collective agreements where an FPA has been concluded, thus improving outcomes for employees with low bargaining power.

The Employers’ group notes that compulsory arbitration in cases where the parties have not reached agreement is generally contrary to the principles of collective bargaining. Compulsory arbitration is only acceptable in certain specific circumstances, namely essential services in the strict sense of the term; in the case of disputes in the public service; and/or after protracted and fruitless negotiations; or in the event of an acute crisis.

The Employer members consider the Fair Pay Agreements Bill deeply concerning in that it allows the Government to oversee an entire process of collective bargaining. In effect, this Bill will arbitrarily impose collective bargaining outcomes on hundreds, if not thousands of employers and their employees, whether or not they seek such coverage or are represented by a union or employer organization. In particular, the requirement for compulsory arbitration when no agreement can be reached by the parties is unduly broad and undermines the principle of free and voluntary collective bargaining protected by the Convention.

Therefore, the Employer members urge the Government to provide the Fair Pay Agreements Bill to the Committee of Experts so that it may be reviewed. The Employers also urge the Government to review and amend, without delay, the Fair Pay Agreements Bill, in consultation with the most representative employers’ and workers’ organizations, to ensure that it is in fact in full compliance with the provisions of the Convention.

I will conclude by noting that the breaches of the Convention – in our view – are serious and significant and, in fact, the Government in its own documents openly acknowledges that it intends to breach this fundamental ILO Convention in the introduction to this legislation and has delayed its responses to the ILO. Furthermore, the proposed FPAs process tramples on workers’ and employers’ rights of freedom of association and undermines the principle of free and voluntary bargaining enshrined in the Convention.

Worker member, New Zealand – I want to start by emphasizing that FPAs will not be a replacement for, and do not interfere with, regular collective bargaining or individual bargaining in New Zealand. These are not overwritten as the previous speaker suggested. They are quite separate, and every worker legally employed in New Zealand will continue to need to negotiate an employment agreement, as they always have, whether or not an FPA comes into existence. Nobody can be employed on an FPA because FPAs are not employment agreements; they are simply a set of minimum standards over and above which normal employment agreements are made. To be clear, the existing and undisturbed system of bargaining for employment agreements, under the Employment Relations Act, constitutes the voluntary form of negotiation anticipated by Article 4 of the Convention.

FPAs were informed by a tripartite working group chaired by former Prime Minister and President of the International Labour Conference Mr Jim Bolger. I was a member of the working group and we quickly identified the problems inherent in our current system that is characterized by a complete absence of any industry standards, less than 20 per cent union density and no extension mechanisms. We could see that the logic of our system drives an inevitable race to the bottom for wages and conditions, as firms in an open and competitive economy compete on price first instead of innovation and quality. It became clear that employers that bargain decent collective agreements cannot compete fairly for business in an environment where there are no industry standards and no level playing field and, in this way, we could see that unions and collective agreements have become targets themselves for attack and/or are strenuously avoided by employers who seek to compete against other low-wage non-union firms. Put simply, without industry standards like FPAs, workers, collective bargaining and good employers are all vulnerable and at risk.

Our tripartite working group took on board the OECD’s recommendations in its 2018 Employment Outlook on “The role of collective bargaining systems for good labour market performance”. The OECD recommends a model which combines firm-level bargaining over and above industry standards because this model delivers good employment performance, better productivity outcomes and higher wages compared to decentralized systems, like New Zealand currently has. So, the working group designed FPAs accordingly, recognizing New Zealand’s unique characteristics and proposed a system that would “complement, not replace, the existing employment relations standard system”.

While Business New Zealand leaders, in an unguarded moment, publicly acknowledged that FPAs will lead to higher wages, their narrative has largely been to misconstrue the nature of FPAs and confuse and conflate them with our existing collective bargaining system – and we have just heard it again from the Employer spokesperson. Employers keep insisting that they will lead to more strikes, even though strikes are not permitted in relation to FPAs. Business New Zealand has said that FPAs are too complicated and insist that the parties will be unable to effectively form bargaining sides. Yet there is clear experience in New Zealand that shows the opposite is true. For example, when the Employment Court recently invited the employers and unions in the care and support industry to negotiate an industry standard for pay equality rates, we quickly, efficiently and effectively organized ourselves into bargaining sides representing over 65,000 workers, not just union members, but 65,000 workers and over 1,000 private and non-governmental organization employers, ranging from multinational companies to small family-owned not-for-profit organizations, and we prepared for negotiations and ratification in exactly the same way that is envisaged in FPAs, and the net result was a milestone settlement that set a new floor for vulnerable woman workers in terms of pay, training and enhanced dialogue between the social partners. Mind you, Business New Zealand was not involved.

Business New Zealand’s position is not just confused, it is inconsistent. They have already agreed to two legal mechanisms in New Zealand that the proposal for FPAs emulates very closely, in the screen industry and the now amended Equal Pay Act. Both of these mechanisms involve a process that is very much like FPAs. They establish minimum standards through employer and union negotiation in the shadow of compulsory fixing and in the absence of a right to strike. Business New Zealand has even misconstrued the process we are engaged in, including here in this room in the Committee. They publicly stated a couple of weeks ago in our biggest daily newspaper that New Zealand was on the ILO list of “worst case breaches”. This was even before the shortlist came out warning the public of New Zealand that the ILO may even prosecute New Zealand.

These employer objections to FPAs do not make sense. There is nothing wrong or unusual about minimum industry standards being set that apply to everyone. That is how standards always work. To suggest minimum standards should be voluntary, and employers should be able to opt out, defeats the whole concept of standards and is a nonsense. There is nothing about the Convention which prevents ILO Member States from having laws that allow for the fixing of compulsory minimum standards across industries, provided that voluntary collective bargaining provisions are maintained, as they are in New Zealand, nor is there a problem with the Employment Authority fixing the terms of these standards in the event of a bargaining stalemate when all other options have been exhausted. Member States have industry standards and it is time that New Zealand did the same.

Employer member, New Zealand – As the Employer spokesperson has said, this is a serious case. All the more so, since New Zealand is a founding Member of the ILO and has long been active in upholding ILO standards.

In 2017, the Government announced its intention to introduce FPAs and, in March 2022, the Government introduced the Fair Pay Agreements Bill to give effect to its intention. A tripartite working party developed the framework of the Bill. However, it needs to be said here that the employer members of that group dissented from the views of the majority and do not agree with the overall outcome of that report.

The Bill clearly denies freedom of association and the right to bargain freely and voluntarily to employers and workers because only unions can initiate an FPA. Employers have no say on the first agreement, having met the initiation criteria of either the representative test or a public interest test.

The representative test criteria of 1,000 union members or 10 per cent of the affected workforce are so low as to be farcical and if even these low criteria cannot be met, the union can ask for an FPA on the grounds it will be in the public interest. Following an assessment, the Ministry of Business Innovation and Employment will decide if the public interest test is met, but astoundingly is not required to consult the public. By way of example, there are several hundred thousand clerical workers in New Zealand. Only one union in New Zealand has over 1,000 clerical members, and they will have unilateral rights to establish the conditions of work for potentially hundreds of thousands of clerical workers who are not their members and who will have no effective say in the matter. They cannot opt out and they cannot say they do not want to be involved, and the 29 other unions that cover clerical workers may be cut out of representing their own members.

The initiating unions decide whether the FPA will be an industry or occupation document, and the scope of it.

In the absence of a suitably representative employer bargaining party, unions will be able to take their claim for an FPA straight to the judicial authority, which will fix the terms of an FPA. In this instance, employers will not be represented at all, and there is no right of appeal against a determination.

The Bill also provides that a second failed or no ratification vote will refer a settlement to the judicial authority, again for determination. This makes an employer vote against an FPA completely meaningless.

In further contravention of the principle of free and voluntary bargaining, the Government will control the process, making it even less free and voluntary. For instance, the Ministry of Business Innovation and Employment will approve the initiation of bargaining for an FPA, assist in managing the process, vet any settlements and translate settlements into legislation.

Since 31 July 2019, the Government has failed to respond to any of the ILO’s repeated requests for an explanation of its actions and proposals with regard to FPAs. Indeed, a response that the Government would wait for Business New Zealand to lodge a complaint before responding to any of the concerns raised over the preceding two years suggests a deliberate strategy of avoidance.

The Government has openly acknowledged that it intends to breach the principles of the Convention. The Government actually acknowledged, in a publicly available Cabinet paper, that it will breach principles related to freedom of association, voluntary bargaining and arbitration because it considers this to be necessary to achieve its goals.

It is our view that the Government is effectively thumbing its nose at the ILO supervisory system, because staying true to the system would thwart its aims. Aims that trample on the rights of freedom of association and the right to free and voluntary collective bargaining for individual workers and employers throughout the country. This is of very serious concern.

Any country that is not challenged when it proclaims its intent to breach a fundamental Convention constitutes a serious challenge to the integrity of the ILO supervisory machinery. New Zealand is not just any country. It is a developed, democratic economy and a founding Member of the ILO. We, in this Committee, are the body that upholds the system and ensures its integrity. We must not let such a serious challenge to the system go unanswered. If we do not challenge something so deliberate what is the point of being here?

For the sake of workers and employers throughout New Zealand, and for the sake of the continued integrity of the ILO supervisory system, we urge this house to condemn the actions of the New Zealand Government in the strongest possible terms.

Worker member, Australia – Australia and New Zealand are neighbours, our bonds run deep, and we have long-standing shared histories and approaches in many areas, including workers’ rights and our systems of minimum standards and protections.

Australia’s industrial relations framework is built on three levels. The first includes basic minimum rights in legislation and a minimum wage. The second, over 100 industry and occupational “Awards” that create minimum standards for specific industries and occupations. These Awards provide a minimum floor on matters from rates of pay, hours of work, shift work and overtime, to things like breaks, leave arrangements and rostering.

On top of this sits a third level, which involves collective bargaining at the enterprise level.

In the past, Australia and New Zealand had in common a comprehensive award system providing an essential minimum floor for the vast majority of workers in both countries. Our paths diverged in 1990, when New Zealand completely abolished their award system.

When New Zealand tore up their industry-specific safety net inequality rose and wages fell. Lacking a set of industry-based minimum standards, New Zealand workers saw their ability to negotiate employment agreements severely weakened, and consequently their standard of living worsened significantly.

Average wages in New Zealand are now significantly lower than in Australia, and this is in part attributable to the lack of a solid safety net. By comparison, Australia has an industry-specific safety net that employers cannot opt out of, as much as they might like to. Australian workers depend on it.

FPAs will fill a gap in the New Zealand system, and we fully agree with the New Zealand Government’s view that the FPA scheme creates a much-needed safety net much like our modern award system.

FPAs and Awards have a lot in common. They both provide an important middle layer of protection between statutory minimum-wage fixing and enterprise-level bargaining. They both cover all workers, whether they are union members or not, and they both include provisions for a comprehensive set of terms and conditions.

There is an important difference. FPAs place a greater emphasis on the parties doing everything they can to reach their own agreement long before any invitation is made to an independent third party to fix rates and conditions, whereas the award system is built around a process of compulsory fixing.

In New Zealand’s case, employers will only have to bargain in good faith and agreements will be struck. Arbitration only kicks in to ensure vulnerable workers are protected. Which makes it all the more shocking that what appears to be a blatantly political case without merit has been presented to this Committee, when the Committee has such a competing list of extreme cases of standards being breached, in many cases with life and death consequences for workers.

FPAs will serve a comparable function to Awards in Australia, and with them New Zealand’s industrial relations system will once again have far more in common with Australia’s. Our assessment of FPAs is that they will in fact promote and support collective bargaining and the right for workers to organize.

Minimum standards should never be voluntary. FPAs provide an effective mechanism and are essential in protecting the most vulnerable and lowest paid workers. They should be properly assessed as part of the machinery for fixing minimum wages and conditions and consistent with core Conventions.

Worker member, Samoa – I am proud to speak in support of the New Zealand Government’s work on FPAs. FPAs will be important instruments to lead standards of decent work and will be of particular benefit to our specific migrant workers in New Zealand.

Every year, 60,000 people from the Pacific travel to New Zealand under the Recognized Seasonal Employers (RSE) Scheme to work in agriculture and horticulture industries. People from the Pacific value these opportunities and we also want to make sure that the work our people do in New Zealand is decent, safe and fair.

All Samoans and all other Pacific migrant workers in New Zealand are vulnerable. In reality, they cannot possibly engage in effective and fair individual bargaining or collective bargaining under the New Zealand Employment Relations Act and, because New Zealand does not have a set of minimum industrial standards, our people do not receive fair wages and enjoy decent terms and conditions of employment under the RSE Scheme. That is why it is so important that the New Zealand Government is looking at new ways to raise standards across whole industries.

During the COVID-19 pandemic, when employers were desperate for RSE workers and New Zealand granted limited border exemptions for Pacific seasonal workers, the Government unilaterally imposed conditions requiring employers to pay a living wage of NZ$22 an hour, NZ$2 above the minimum wage at the time. Without that interim measure, these workers would have remained on the minimum wage.

This was an example of the Government using its power as a regulator to raise pay for working people across an industry where the Employment Relations Act mechanisms for bargaining is inadequate. FPAs would use that same power to raise standards for decent work across industries, with mechanisms to give workers and employers a real voice in the process.

By doing this, FPAs will benefit our Pacific migrant workers and all workers in New Zealand. For that reason, I congratulate the New Zealand Government on taking this initiative, which is central to achieving decent work for RSE workers.

Government member, Australia – As a cornerstone of Convention No. 98, Australia respects the rights of countries to implement measures, appropriate to national conditions, to encourage and facilitate collective bargaining between employers and workers. We are therefore pleased to note that New Zealand’s Fair Pay Agreements Bill, the subject of our discussions today, has been developed as a recommended outcome of a tripartite working group formed to address labour market challenges unique to New Zealand.

Australia fully supports the objectives of the proposed FPA system, a system that is intended to deliver better living standards for workers and their families and provide an environment that enhances productivity, growth and the sustainability of enterprises.

The Australian Government believes sectoral minimum standards, supplemented by collective bargaining, provides the right balance between a safety net on the one hand, and driving wage growth and productivity on the other. This can only deliver outcomes that are in the best interests of both workers and employers.

We further support the intention of the proposed FPA system to drive enduring, transformational system-wide change for the benefit of workers, particularly those in low-paid jobs, or in sectors where there is low or no effective representation or bargaining.

Australia notes the cooperative spirit in which the New Zealand Government has engaged with the Committee. We encourage all parties to continue to engage constructively through tripartite dialogue to work towards achieving the important objectives of the Fair Pay Agreements Bill.

Worker member, Chile – Collective bargaining has various relevant functions in the world of work, as a social dialogue practice at the enterprise or activity level, a means of improving the living and working conditions of workers and their families and, consequently, achieving labour peace. The bargaining process therefore has to be carried out with good faith by the parties, so that it is not distorted into becoming a mere ritual or formality with which enterprises and their organizations comply in disregard of their obligations towards workers and compliance with standards on fundamental rights.

Accordingly, good faith bargaining requires that, if employers conclude that it is not possible to achieve agreement, there must be objective reasons to ascertain whether they are acting correctly or merely pretending in order to evade their ethical and legal obligations.

There therefore need to be grounds based on genuine reasons and reasonable criteria, which justify and explain the fact that it was impossible to conclude a collective agreement, or a genuine reason that prevents agreement. As such, it is very clear that it is not a requirement to reach agreement or the arbitrary imposition of collective bargaining conditions by the State, but a genuine obligation to make every effort to conclude a collective agreement.

As with any legal requirement, in the event of serious or sustained failure to act in good faith, the labour legislation has to offer a means of ensuring the effective application of the requirement to negotiate in good faith.

For this reason, we also support the supplementary provision in the Employment Relations Act which provides for the Authority to determine the terms of a collective agreement in exceptional cases, and only where there has been a serious and sustained violation of good faith during negotiations. Without this ultimate guarantee, collective bargaining could be impeded by one of the parties, even when it does not have genuine reasons for not reaching agreement, that is, without this guarantee in the legislation, if one of the parties decides to prevent the possibility of reaching agreement it could do so without further consequences.

We therefore share the view of the Committee of Experts when it points out that, within the context of the Convention, the guarantee of the voluntary nature of collective bargaining is inseparable from the principle of good faith bargaining, as the general objective of the standard is the promotion of good faith bargaining with a view to achieving agreement on terms and conditions of employment.

For these reasons, we consider that the legislation in New Zealand is in full conformity with Article 4 of the Convention.

Worker member, Italy – I am speaking on behalf of Italian, Belgian, Dutch, French, German, Irish, Norwegian, Spanish and United Kingdom Workers, as well as on behalf of Building and Wood Workers’ International (BWI).

Regarding the case the Committee is discussing today, I would like to once again stress one of the core principles just mentioned by previous speakers included in the Convention, that is the importance of strong and coordinated national collective bargaining systems.

I will quote the Committee of Experts’ report, an “uncoordinated system of collective bargaining has been operating in the country since the 1990s”, “with collective bargaining coverage at around 17 per cent for the last two decades, down from around 70 per cent 30 years ago. Most collective bargaining is confined to the enterprise level and most bargaining per se happens between individual employers and individual employees.” Such a system is simply incapable of producing decent work and social dialogue for the vast majority of workers and can only lead to more injustice and poor labour market outcomes.

Speaking from the Italian perspective and a tradition of industrial relations in which almost 90 per cent of workers are covered and protected by a national industry standard reached through industry-wide collective bargaining, I can only reaffirm that a strong, coordinated and well-functioning collective bargaining system is a precondition – quoting again the Committee of Experts’ report – to reduce “the negative factors of low wages and wage growth, the decoupling of wages from productivity growth”, as also said by the previous speakers “and poor labour practices vulnerability”.

We therefore strongly endorse the swift adoption and implementation by New Zealand of a new FPA, an employment regulatory landscape that provides an effective industry floor that supports firm-level collective bargaining and, as well, promotes a national well-functioning fair labour market.

Government member, Belgium – Belgium wishes to take the opportunity of the examination of the case of New Zealand to reaffirm its support for the Committee of Experts. The work that it carries out is the cornerstone of the ILO supervisory system. Its independence and impartiality are the basis for its authority.

With reference to the content of the case, Belgium takes note with interest of the explanations provided by the Government.

We wish to emphasize the importance of the role of collective bargaining as an essential element in preventing disputes and ensuring social peace.

Freedom of negotiation is not incompatible with measures and means that encourage recourse to bargaining, and which promote it. Article 4 of the Convention places emphasis in this regard on the need to take into account national conditions in the choice of the most appropriate measures.

Moreover, as indicated by the Committee of Experts, the guarantee of the voluntary nature of collective bargaining is indissociable from the principle of good faith bargaining if the machinery that is promoted in Article 4 of the Convention is to have any meaning.

However, there should be no constraint to conclude a collective agreement.

In conclusion, we wish to emphasize and recall the virtues of collective bargaining in improving the conditions of workers, as well as in the development of enterprises and the economy.

Observer, International Transport Workers’ Federation (ITF) – The ITF, as a representative organization of transport workers around the world, is painfully aware of the complete lack of industry-wide standards in New Zealand and its impact on workers across all transport modes. The “race to the bottom” in the country’s bus industry, which has caused chaos for workers and communities alike, is instructive.

The transition from industry bargaining to competitive tendering has had a catastrophic impact on wages. The lowest wage payable in the 1990 bus industry award was 66 per cent higher than the minimum wage. Today’s lowest rates are scarcely 10–15 per cent above the minimum wage.

All this, despite labour productivity in the transport and logistics sector having grown more than three times the rate of wages. If sector wages had kept pace with labour productivity, the average transport worker in New Zealand would have been $36,000 better off in 2021.

To cite an example of this “race to the bottom” in the bus industry, recently, in New Zealand’s capital city of Wellington, 70 per cent of the bus services for the region were put up for tender, in accordance with national regulations.

The company that had been providing the service had a collective agreement in place and so had no chance of winning the tender against new entrants with no collective agreements to honour. As expected, a new company won the tender and the collective agreement allowances for overtime, weekend, night and split shifts were removed completely.

The original provider still had 30 per cent of the bus routes and realized it would soon lose them when these remaining routes came up for tender. So, it sold the company to another entity, which then locked out the drivers to remove the collective agreement allowances.

The Regional Council and the community were horrified at the treatment of these frontline workers and “pandemic heroes”. But it should not come as any surprise when there are no industry standards in place. While there are some protections for vulnerable workers during a transfer of undertakings, these do not apply to bus drivers because they are deemed not vulnerable enough. Now, faced with low wages and poor conditions, the industry is unable to attract staff.

To conclude, New Zealand desperately needs to introduce a system to fix minimum standards and we believe that FPAs will provide that.

Observer, Public Services International (PSI) – Just a few days ago, one of our affiliates, the New Zealand Public Service Association, participated in a formal ceremony with the Government and employers to celebrate an equal pay settlement for several thousand clerical and administration workers employed in the New Zealand health sector.

This was the first to be completed under the recently amended Equal Pay Act. What has this got to do with New Zealand’s provisions for FPAs you might ask? Well, FPAs and New Zealand’s Equal Pay Act are in many key respects identical.

For instance, they both provide for unions and employers to arrange bargaining of a minimum standard on behalf of a whole industry or occupation and to ratify it, subject to a fixing process if negotiations become protracted and they are unable to reach agreement.

There are other similarities as well that I will invite the Committee of Experts to compare, but for time reasons I will skip from my speech today.

There are a couple of differences as well. One is that workers can opt out of the equal pay process, but of course not a single worker has, despite the fact that tens of thousands of workers have settled pay equity minimum standards in the past couple of years. This is because the equity minimum standards in the past couple of years do not impinge on workers’ rights in theory or practice – they underpin and strengthen them.

The second difference is that the process set out above and contained in the Equal Pay Act was unanimously supported by the social partners, including Business New Zealand.

Before these pay equity industry standards were set, women workers in New Zealand across industries suffered from downward competitive pressure on their pay and conditions, and companies were able to underpay and undervalue these vulnerable and essential workers.

Unfortunately, the same thing is happening to many other low-paid vulnerable workers in New Zealand because there are not effective industry standards in place, like in many other developed economies. FPAs, like New Zealand’s Equal Pay Act, will be critical features of the system, features that are very much in line with the Convention and must proceed unhindered.

Government representative – I would like to begin by noting the range of contributions and comments made and to assure the Committee that we have listened very carefully to all of them, and we will certainly take all of them into account irrespective of the source.

As I mentioned before, the legislation has not yet been passed and is still a matter in progress. I would like to address a few specific points that have been raised.

First, I think to the Employer spokesperson, relating to the application of sections 33 and 50J of the Employment Relations Act. The first point I would like to make is that these provisions are not part of the Fair Pay Agreements Bill. These are completely separate, one relates to the ordinary process of collective bargaining in New Zealand and the other, of course, is a specialized process which involves collective bargaining in the setting of sectoral minimum terms and conditions.

The Employer spokesperson made some play of the fact that compulsory arbitration is generally incompatible with the principles of voluntary collective bargaining, and that is true. However, the focus here is on the word “generally”, and as we all know there are exceptions allowed to those principles, and one of them in particular is around the use of deadlocked bargaining where there is no other option.

Now to recast it in terms of the provisions of the Employment Relations Act, I would like to reiterate that section 33, relating to the duty of good faith, recognizes, in complete compatibility with the views of the Committee of Experts, that really the object of good faith bargaining cannot be separated from voluntary bargaining. If the parties are bargaining in good faith the assumption is that they intend an outcome to result unless this is genuinely not possible, and that prospect is absolutely recognized in our law. The provision for the compulsory fixing of the terms and conditions of a collective in those circumstances needs to be seen as a penalty for a serious and sustained breach of the duty of good faith. So, we cannot see how this impinges on the principle of free and voluntary collective bargaining, unless that principle is completely unconstrained, which of course it is not.

In terms of the use of compulsory arbitration for FPAs, again, the principles apply. Where it is simply impossible to reach any kind of outcome, the use of arbitration is not seen as incompatible.

The Employer spokesperson also noted the other category of the public service, and of course it is entirely possible that FPAs may apply in the public service where the use of arbitration would therefore not be incompatible.

I would like to go back, and I think the point was also made by the representative of the Government of Belgium. The Committee of Experts considers that under the Convention ensuring the voluntary nature of collective negotiations is inseparable from the principle of negotiation in good faith if the machinery to be promoted under Article 4 of the Convention is to have any meaning. The Committee of Experts recalls in this respect that the overall aim is the promotion of good faith collective bargaining with a view to reaching agreement. The Committee observes sections 31, 33 and 50J have not given any rise to any comments in the decade in which they have been in force. The Committee of Experts observes that the Act provides for significant consideration before section 50J can be applied, including rights of appeal to the Employment Court, etc. The Committee of Experts has asked for more information about the use of this provision, noting again that it has only been used once, and we are more than happy to provide information should such cases ever arise in future, and we would hope and expect that they would be extraordinarily rare.

I turn to comments made by the Employer representative from New Zealand, and he has made a number of points. I guess it is true there was a tripartite process and the employers did not agree ultimately with the conclusions, as is their right in any tripartite process. A tripartite process does not necessarily always result in tripartite agreement and we have never said otherwise. We have said that this arose from a tripartite process, but tripartite agreement is another matter. However, the majority of the Committee did recommend the principles and the mechanisms that have been taken up by the Government in the legislation.

Comments have also been made about the Cabinet process, and the point I would like to make here is this: the Government did not go into this process saying we are going to deliberately thumb our nose at the Convention. In fact, if you read through the relevant papers, and they are publicly available, they mention a careful analysis where, under each heading, whether or not the aspect of the FPAs will engage with the rights and obligations related to the Convention are carefully noted, and again in areas such as compulsory arbitration, although it is noted that these aspects of the legislation could challenge the principle of voluntary collective bargaining they are seen as essential to ensure that enforceable minimum terms are produced at the end of the process. But again, that needs to be seen in the context of what is allowed by the Convention and the use of compulsory arbitration as I have just laid out.

I also take issue, I think, with the comments that the Government is in control of the entire bargaining process. It is not at all uncommon, in fact it would be impossible for any legislatively based bargaining process to not be administered by an agency of the State. That does not mean the Government is directing the bargaining process or the bargaining outcomes, merely that the agencies of the State are administering the processes as set out in law for those outcomes to be negotiated, bargained and achieved, one way or the other.

A couple of points were also made that employers will not be able to control the scope or coverage of an FPA. This is simply incorrect. While a party that initiates FPA bargaining must specify the proposed scope, this can then be negotiated and altered during the bargaining process itself.

It has also been claimed that, if the public interest route, or the public interest test is used, that the public will not be consulted, and I want to clarify that the legislation explicitly allows the regulator to seek public submissions when deciding whether the initiation tests have been met.

I do not want to dwell on issues raised about whether or not the Government has delayed the consideration by the Committee of Experts of this case, or indeed any consideration of the FPA legislation. I will merely note that I disagree entirely. There has been correspondence, certainly between the Organisation of Employers and the Office, to which we were made privy at one point. We then sought engagement with the employers’ organization after that point, which proved impossible to achieve, initially due to their inability to meet with us, but I do not want to dwell on that at all.

I think, generally, I will conclude my comments at that point. Again, I reiterate that the legislation itself has not been fixed and I go back again to the overall objectives of the FPA system, as has been echoed I think in a number of the comments made to this point. The point here is that FPAs will serve a specific purpose of setting sectoral minimum terms and conditions where needed to address labour market issues. That involves collective bargaining, but also the setting of minimum terms and conditions on a sectoral basis. This is not uncommon.

The FPA system supplements, but will not replace, the existing collective bargaining framework and all of the rights and privileges and obligations under that continue to exist in parallel. And, of course, when an FPA agreement results in minimum terms and conditions those then may be bargained on top of, and in that process all of these other rights, basically the same as exist currently.

So, the operation of the FPA system will not interfere with our enterprise bargaining system, which will continue to operate in parallel.

I conclude, again, by noting that we remain open and receptive to the Committee’s comments and will take all comments made into careful consideration in the finalization of the legislation. I thank the Committee for its attention.

Worker members – We would like to thank the Government for the detailed information provided to the Committee and we also thank all the speakers for their contributions.

To fully realize the potential of collective bargaining, it is imperative that all workers enjoy this right, and we are therefore heartened by the Government’s efforts to ensure that screen industry workers can engage in free and voluntary collective bargaining. Similarly, we are pleased to see the Government take concreate action to codify the duty to bargain in good faith, a long-standing principle protected under the Convention.

Indeed, for collective bargaining and its intended labour market outcomes to be successful, both employers and trade unions must bargain in good faith and make every effort to come to an agreement. The reforms in New Zealand in this regard are fully in line with many collective bargaining systems around the world, which recognize the duty to bargain in good faith with the intent to reach an agreement. Also, the ability of the Employment Relations Authority to fix the terms of a collective agreement or an FPA provide a critical backstop without which collective bargaining could be thwarted by parties who can otherwise sustain serious breaches of good faith without sufficient consequence.

In this regard, we note that the ILO supervisory bodies have held that while Article 4 of the Convention in no way places a duty on the government to enforce collective bargaining, it is not contrary to this provision to oblige the social partners, within the framework of the encouragement and promotion of the full development and utilization of collective bargaining machinery, to enter into negotiations on terms and conditions of employment.

An FPA system buttressed by comprehensive bargaining support services is a great example of an upper-level bargaining initiative aimed at offering the social partners every chance to reach settlements. As a number of speakers have highlighted this morning, higher bargaining coverage sustained by sectoral bargaining and extension mechanisms leads to lower wage inequality and hence fewer low-paid employment.

As the OECD publication Negotiating our way up highlighted, the best outcomes in terms of employment, productivity and wages seem to be reached when sectoral agreements set broad conditions but leave detailed provisions to firm-level negotiations. This is precisely the path that New Zealand is taking with FPAs, which would set minimum sectoral or occupational standards which can be built on at the enterprise level. This system would also create a level playing field where good employers are not disadvantaged by paying reasonable industry-standard wages.

We trust that the Government will engage meaningfully with the social partners on any outstanding concerns that they may have in advance of the Fair Pay Agreements Bill being adopted, and we also call on the Government to provide the information requested by the Committee of Experts so that it may make further informed observations on the implementation in law and practice of the Convention in New Zealand.

In conclusion, we would like to reiterate the critical importance of the fundamental right to collective bargaining in lifting standards, reducing inequality and creating a level playing field. Together with the right to freedom of association, it enables the exercise of all other rights at work and it is well recognized that the promotion of collective bargaining is not just a stand-alone principle of international labour law. It has been integral to the mission of the ILO itself, since its establishment. Convention No. 98 is intended to serve the purpose, among other things, of promoting collective bargaining, and it is therefore evident that Article 4 is at the very heart of the Convention. For the avoidance of doubt, we would like to re-emphasize our full respect for the Committee of Experts and its pronouncements with regard to Article 4 of the Convention.

Employer members – We thank the Government representative for his submissions and we also thank all of those that took the floor to speak on this case.

We think it is of particular note that, taking into account the clear divergence of views on the application of Article 4 of the Convention, and more generally the obligations that flow from this Convention, the divergence of views expressed today demonstrates the need for renewed and reinvigorated social dialogue on this issue at the national level.

As we pointed out in our opening statement, Article 4 is based on the premise of voluntary negotiation and it is our view that both sections 31 and 33 specifically include aspects that compel negotiation. Also, in our view, it remains clear, despite the interventions today, that section 50J permits compulsory arbitration to fix the terms of a collective agreement where bargaining parties cannot reach agreement. And while I heard the Government representative talk about exceptions to these general principles, the Employers note that the Committee of Experts has long-standing jurisprudence on the question of compulsory arbitration, and the Committee of Experts itself has recalled that compulsory arbitration in the case where parties have not reached agreement is generally contrary to the principles of collective bargaining enshrined in the Convention. And, in fact, the Committee of Experts’ jurisprudence and observations talk about compulsory arbitration being acceptable in certain circumstances; that would be essential services, the public service and after protracted and fruitless negotiations, or in the case of acute crises.

So, there is a landscape in which the Committee of Experts has issued observations on this issue of compulsory arbitration, and it is not quite as simple as the Government representative has suggested.

We do note that the Fair Pay Agreements Bill is in Bill format, and I believe the Government representative talked about the fact that it has yet to be fixed. And, as a result, the Employer members, because this question involves allegations of a breach of a fundamental Convention, and clearly involves very different views between the various groups, we would encourage the Government to re-engage with the social partners with respect to the Fair Pay Agreements Bill to see if there is a way forward that ensures compliance with Article 4 of the Convention.

We would encourage the Government at this stage, since it has the ability to complete the provisions of the Fair Pay Agreements Bill, to work to ensure that any application of the Fair Pay Agreements Bill is purely voluntary, in compliance with Article 4 of the Convention.

We would also ask the Government to submit the Fair Pay Agreements Bill to the Committee of Experts for review and comment so that the Committee of Experts can issue observations to allow further understanding of all of the details in this regard.

Also, the Employer members request the Government to remove without delay the duty to conclude collective agreements from sections 31 and 33 of the Employment Relations Act. As well, the Employers request the Government to remove without delay provisions that permit the courts to fix the terms of a collective agreement as set out in section 50J.

Therefore, we would ask the Government to engage with the ILO on these issues so that it can be sure that it is in full compliance with Article 4 of the Convention and that it submit a report to the Committee of Experts by 1 September 2022 with the relevant information on the application of the Convention in both law and practice.

Conclusions of the Committee

The Committee took note of the oral and written statements made by the Government and the discussion that followed.

Taking into account the discussion, the Committee urges the Government, in consultation with the social partners, to:

- continue to examine, in cooperation and consultation with the social partners, the proposed new legislation (draft Fair Pay Agreements Bill and the draft Screen Industry Workers Bill) to consider the impact of the proposed legislation and to ensure compliance with the Convention;

- prepare, in consultation with the most representative employers’ and workers’ organizations, a report to be submitted to the Committee of Experts in accordance with the regular reporting cycle on these measures.

Government representative – New Zealand would like to thank the Committee and its Worker and Employer members. We appreciate the careful consideration you have given in the discussion of our case. We welcome the conclusions, and the Government will continue to consult the social partners as the FPA legislation progresses.

We will, as proposed by the Committee, also report back to the Committee of Experts on FPAs as part of our regular reporting on the Convention.

I would like to conclude by again thanking the Committee for its consideration and note our appreciation for the opportunity to provide information to it and receive its perspectives on this matter.

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The Committee notes the observations of Business New Zealand (BusinessNZ) and the International Organisation of Employers (IOE) received on 1 September 2021 and the Government’s reply thereto. The Committee further notes the observations of the New Zealand Educational Institute (NZEI) received on 6 September 2021 and the Government’s reply, as well as the observations of the New Zealand Council of Trade Unions (NZCTU) communicated with the Government’s report.

Scope of the Convention. In its previous comments, the Committee had noted that pursuant to an amendment from 2010 to the Employment Relations Act (ERA), workers engaged in film production work are considered to be independent contractors rather than employees, unless they have a written employment agreement that provides that they are employees and were thus not covered by the provisions of the ERA. The Committee requested the Government to take any necessary measures, in consultation with the social partners, to ensure that all film and television workers, including those engaged as self-employed workers, can fully enjoy the rights and guarantees set out in the Convention. The Committee notes with interest the Government’s indication that it established the Film Industry Working Group in 2017 consisting of industry, business and worker representatives to find a way to restore workers’ rights in the industry. The Working Group made recommendations in October 2018 suggesting a bespoke workplace relations regime for contractors in the screen industry which were accepted by the Government in June 2019 and given form in the Screen Industry Workers Bill, which is currently awaiting its second reading. The Bill will provide clarity about the employment status of people doing screen production work, introduce a duty of good faith and mandatory terms for contracting relationships in the industry, allow collective bargaining at the occupation and enterprise levels, and allow access to employment institutions to resolve disputes arising from contracting relations collective bargaining in the industry. The Committee trusts that the measures proposed will ensure that all film and television workers can fully enjoy the rights and guarantees set out in the Convention and requests the Government to transmit a copy of the final version of the Bill as soon as it has been approved and to provide information on its application in practice.

Article 4. Promotion of collective bargaining. In its previous comments, the Committee requested the Government to, in consultation with the social partners, review and assess the application of section 50(K) of the Employments Relations Act (ERA), which permits any party to apply to the Employment Relations Authority for a determination as to whether bargaining has concluded, with a focus on the restriction this provision may have on further initiation of bargaining, and its impact on the conclusion of collective bargaining agreements. The Committee further requested the Government to provide information on the impact of section 44A, B and C of the ERA which provided an opt-out possibility for employers presented with a notice initiating collective bargaining including them and other employers. The Committee notes with satisfaction the information provided by the Government that both these sections were repealed on 12 December 2018 through the Employment Relations Amendment Act and further notes a number of other amendments aimed at strengthening collective bargaining and union rights in the workplace.

Voluntary nature of collective bargaining. The Committee notes the detailed observations made by BusinessNZ and the IOE in which they assert that sections 31 and 33, as amended by the Employment Relations Amendment Act 2018, and 50J of the ERA, are inconsistent with the principle of free and voluntary collective bargaining enshrined in Article 4 of the Convention. In particular, the organizations refer to the obligation in sections 31 and 33 to conclude a collective agreement unless there is a “genuine reason”, based on reasonable grounds, not to, regardless of the fact that negotiations may be initiated by a union on behalf of as few as two unionised employees. Prior to the changes to these sections, employers and unions were required to bargain in good faith but bargaining could be terminated without agreement as long as it was clear that all matters had been considered and responded to in good faith. According to BusinessNZ and IOE, now, once bargaining is initiated, the process mandated by the good faith obligations must be followed to its logical conclusion no matter how many or how few employees are affected by the outcome.

The Committee notes the Government’s indication that the amendments to sections 31 and 33 ensure that parties genuinely attempt to reach an agreement but they will not have to settle a multi-employer collective agreement if their reason not to do so is based on reasonable grounds. According to the Government, these provisions seek to encourage the full utilisation of the process for good faith collective bargaining by putting in place mechanisms that require parties to make every effort to conclude an agreement, consistent with the duty of good faith. The underlying assumption is that if employers and unions are bargaining in good faith, they intend to reach a collective settlement and that this should result in an agreement unless they are genuinely unable to conclude. The Government indicates that the provisions originally resulted from a review of the principal Act giving rise to amendments in 2004 which identified the need to address the issue of “surface bargaining” where engagement was on matters of form rather than substance, or where deadlocks on some individual issues led to deadlock on the entire negotiation. These provisions were removed in 2015 but restored in 2018 returning the situation to that which existed from 2004 to 2015. The Government adds that the provisions do not make settlement mandatory as good faith bargaining may not always result in a collective agreement in all cases and hence the recognition of “genuine reason” and considers that if the parties are negotiating in good faith they should be able to provide genuine reasons for not being able to conclude. The Government therefore states that it does not agree with the views of BusinessNZ that the provisions impose an absolute duty to conclude contrary to Article 4. Finally, the Government considers that the number of employees affected by the outcome is irrelevant.

The Committee further notes that BusinessNZ and the IOE also refer to section 50J which permits the courts to compulsorily fix the terms of a collective agreement where the bargaining parties have not been able to conclude. In their view, this constitutes arbitrary imposition of compulsory arbitration contrary to the principle of free, voluntary negotiation. They note that while this provision was introduced on 1 December 2004, it was not an issue in practical terms until it was first invoked in February 2019 in a case in which bargaining had been protracted and acrimonious and had come to a standstill.

The Committee notes that the Government for its part rejects the interpretation that this amounts to arbitrary imposition of collective agreement terms and states that section 50J does not apply simply because the parties cannot reach agreement over a particular matter or more generally. The Government emphasizes that the section provides a specific remedy of last resort for a serious and sustained breach of the duty of good faith. In such cases, the Employment Relations Authority may make a determination fixing the provisions of the collective agreement following the application of a party only if all of the following conditions are met: the breach of duty relates to bargaining; it was sufficiently serious and sustained as to significantly undermine bargaining; all other reasonable alternatives for reaching agreement have been exhausted; fixing the provisions of the agreement is the only effective remedy for the party affected; and the authority considers it is appropriate in the circumstances so to do. The Government adds that the Committee in its 2012 General Survey (paragraph 247) has already referred to the need for measures to address improper practices in collective bargaining such as proven bad faith and unwanted delays and that compulsory arbitration may be acceptable when, after protracted and fruitless negotiations, it becomes obvious that the deadlock will not be broken without some initiative by the authorities. The Government emphasizes that the sole case of the use of this remedy in this 15-year period involved protracted bargaining over several years and the prior use of mediation and facilitation and the matter was brought before the Employment Court which held that the employer had breached the duty of good faith in 2015 and continued to do so by delaying and attempting to frustrate bargaining. The Government asserts that there was thus neither an arbitrary process nor outcome but rather a prolonged process involving careful consideration by independent bodies and the need to provide a remedy to the affected party only when specific conditions are met and after all other avenues have been exhausted.

Finally, the Committee notes the observations of the NZCTU which support the 2018 amendments to the Act, which it considers have advanced the extent to which New Zealand law gives effect to its obligations under the Convention to develop mechanisms for the promotion of collective bargaining, support the rights of workers and their unions to freely organize, and protect union members from discrimination.

The Committee observes that the amendment to section 31 of the Act specifically provides that the object of Chapter 5 on collective bargaining includes the duty of good faith that requires parties bargaining for collective agreements to conclude a collective agreement unless there is a genuine reason, based on reasonable grounds, not to, while section 33 which previously provided that the duty of good faith did not include a duty to conclude an agreement has been replaced by a section defining the elements for determining what may or may not constitute “genuine reason”. In this respect, section 33 subsection 2 specifies that “a genuine reason not to conclude an agreement does not include opposition or objection in principle to bargaining for, or being a party to, a collective agreement or to including rates of wages or salary in a collective agreement or disagreement about including a bargaining fee clause” and adds the situation of unsettled pay equity claims. Subsection 3 provides that opposition to concluding a multi-employer collective agreement is a genuine reason if that opposition is based on reasonable grounds. The Committee notes that these provisions, which had been effective in the country for over a decade in the past and have been reintroduced, do provide a certain flexibility to employers in the collective bargaining process not to conclude an agreement based on notions of good faith and genuine reason and that the amended section 33 appears to principally aim at deterring situations where a party is simply in principle opposed to bargaining or including wage rates or where there is disagreement about a bargaining fee clause. The Committee further observes, however, that section 50J providing for the possibility of the Employment Relations Authority to fix provisions of a collective agreement where there has been a serious and sustained breach of the duty to bargain collectively in good faith is connected with the re-introduction of the amendments to sections 31 and 33 and may therefore also be invoked where a breach of the duty to bargain collectively in good faith concerns the non-conclusion of a collective agreement without genuine reason. The Committee considers that, under the Convention, ensuring the voluntary nature of collective negotiations is inseparable from the principle of negotiation in good faith if the machinery to be promoted under Article 4 of the Convention is to have any meaning. The Committee recalls in this respect that the overall aim of this Article is the promotion of good faith collective bargaining with a view to reaching an agreement on terms and conditions of employment. The Committee observes that sections 31, 33 and 50J as currently drafted had not given rise to any comments by the social partners for the decade in which they were jointly in force until the application of section 50J in 2019 imposing a collective agreement for a period of 14 months on an employer found to have been in serious and sustained breach of the duty of good faith. The Committee observes that the Act provides for significant consideration before section 50J can be applied, including the right of appeal to the Employment Court for a determination of the existence of a serious and sustained breach. The Committee notes that more information would be required in order to determine whether the good faith obligation in section 33 may hinder the voluntary nature of collective bargaining. Recalling the limited circumstances in which compulsory arbitration may be imposed as referred to by the Government and BusinessNZ and IOE, the Committee requests the Government to provide detailed information on the use and practical implementation of sections 31, 33 and 50J and in particular on any specific cases where genuine reason not to conclude a collective agreement was either found to be present or not and the resulting consequences.

Fair pay agreements. The Committee notes the concerns raised by BusinessNZ and the IOE in relation to the Government’s announced intention to introduce Fair Pay Agreements (FPAs) covering all employees in an industry or occupation. Only unions would be allowed to initiate bargaining for an FPA and they will specify whether it will be industry-based or occupationally based, as well as the scope and coverage. There is no ability for employers to opt out and any disputes will go to compulsory arbitration with no right of appeal against the terms that are fixed. According to BusinessNZ and the IOE, many of the proposed provisions of the FPA process are also physically cumbersome, unworkable and ultimately ineffective. On the initiation of the process, BusinessNZ and the IOE indicate that the union must show that it represents at least 1000 workers or 10 per cent of the workforce or it is in the public interest to have an FPA for that industry or occupation. It is then for the Government to administer the public interest test, thus inserting itself into the FPA bargaining process. Secondly, they note that union density is very low particularly in the private sector where it is around 9 per cent which means that almost any industry or occupation can be forced into bargaining for an FPA by a union that represents a tiny fraction of the workforce to be covered. In their view, this would be contrary to the principle whereby the most representative organizations have primacy of rights to collective bargaining. They further raise concerns about the mode for ratification of an FPA through a simple majority vote of employers and employees, with smaller employers’ votes to be weighted according to the number of employees. Two failed ratification votes however will result in an arbitrated outcome being imposed, without a right of appeal. They consider this contrary to the principle of free and voluntary collective bargaining as well as of the good faith obligations in the domestic law governing collective bargaining generally, while further observing that extensive good faith obligations in the Act will be difficult to meet with respect to ratification. Finally, they refer to a number of statements of the Government which they consider demonstrate the Government’s cognizance that its proposals would not be in compliance with the Convention and maintain that the nature of all of the alleged breaches is so significant that failure to address them risks weakening the ILO core values and integrity of the standards supervisory system.

The Committee notes the Government’s indication that FPAs are the result of a long, considered and inclusive policy process undertaken over several years. The Government indicates that the FPA Bill is expected to be introduced later in 2021, however at this point the legislation is yet to be drafted, tabled in Parliament, and heard by the Select Committee (including the hearing of public submissions), let alone be voted into law and take effect. The Government nevertheless provides context to the FPA system including entrenched weaknesses in the labour market with wages lagging behind increases in labour productivity and low-quality jobs having grown significantly in prevalence. A decentralised and uncoordinated system of collective bargaining has been operating in the country since the 1990s with the result that most employees are not covered in a union or by a collective agreement, with collective bargaining coverage at around 17 per cent for the last two decades, down from around 70 per cent 30 years ago. Most collective bargaining is confined to the enterprise level and most bargaining per se happens between individual employers and individual employees. The Government also indicates that there is increasing evidence of a race to the bottom in some sectors and believes that the current employment regulatory landscape does not promote effective multi-employer or occupational or cross-industry bargaining at levels that might reduce the negative factors of low wages and wage growth, the decoupling of wages from productivity growth, poor labour practices vulnerability, and an over-reliance on statutory minimum conditions as the norm rather than a floor for bargained terms and conditions. The Fair Pay Agreement Working Group recommended an approach to developing an FPA system to create a new bargaining mechanism to set binding minimum terms at the industry or occupation level. According to the Government, these will build on national minimum standards and provide a new floor for enterprise level collective agreements where an FPA has been concluded, thus improving outcomes for employees with low bargaining power. Firms will benefit from better sector-wide co-ordination and dialogue, which should reduce transaction costs and allow parties to capitalise on the potential to address industry or occupation-wide issues and opportunities. The level playing field provided by FPAs will support firms to improve wages and conditions without fear of being undercut on labour costs by competitors and create incentives to increase profitability or market share through increased investment in training, capital and innovation. The Government adds that it is therefore important to note that the policy elements that have been developed to date reflect New Zealand’s particular situation and the factors that have led to it (as noted above) and that the key aim of an FPA system is to drive enduring, transformational system-wide change benefitting workers – in particular those in low paid jobs, or in sectors where there is low or no effective collective representation or bargaining. To embed and support this change requires specific measures to incentivise use of the system and generate effective and wide-reaching outcomes that demonstrate its benefits. In light of the rationale and objectives for FPAs, the Government considers that it is appropriate that only workers, through unions, be able to initiate bargaining for an FPA. As regards the threshold for triggering negotiation, the issues raised by BusinessNZ regarding the generally low level of unionisation in New Zealand actually highlight why this level of threshold is necessary. Employees will be represented in bargaining by registered unions. Unions other than the one that applies to initiate FPA bargaining, will be able to decide whether they want to be a bargaining party to that FPA. Union bargaining parties will also have an obligation to represent non-union members within coverage. The Government further contends that it is not ‘inserting itself into the bargaining process’ as alleged by BusinessNZ – the administration of legislative frameworks for collective bargaining by the competent authority is a common and necessary feature of bargaining systems generally. Nor is the extension of bargaining outcomes to employers and workers not directly involved in the original bargaining a unique feature of FPAs, which will apply to whole sectors or occupations once settled. The Collective Agreements Recommendation, 1951 (No. 91) of the ILO makes explicit provision in its guidance for this. The use of arbitration also needs to be seen against the objective of FPAs of promoting sectoral collective bargaining as a means of addressing the situation of low paid, vulnerable workers and the fact that industrial action by either side will be prohibited within the FPA system. Only if all other reasonable alternatives for settling the dispute have been exhausted or a reasonable time period has elapsed within which the bargaining sides have used their best endeavours to identify and use reasonable alternatives to negotiate and conclude a FPA, and bearing in mind that industrial action is not permitted within the FPA system, will the Authority then be able to proceed to determine the matter. The Government reiterates that, although compulsory arbitration is generally seen as inconsistent with Convention No. 98, it is permissible in specific circumstances as highlighted in the 2012 Committee’s General Survey (paras. 247 and 250), including when, after protracted and fruitless negotiations, it becomes obvious that the deadlock will not be broken without some initiative by the authorities or in its use in first agreements.

The Committee notes the observations of the NZCTU supporting the development of legislation to allow bargaining of industry standard agreements, to be known as Fair Pay Agreements. In its view, the direction indicated by the Government for the development of this legislation gives effect to Article 4 of the Convention by implementing mechanisms appropriate to the country’s national conditions for the negotiation and regulation of terms and conditions at an industry sector level. The Government’s development of the Fair Pay Agreement mechanism has proceeded on the basis of recommendations from a tripartite working group, with the participation of the NZCTU and BusinessNZ and which were developed in the context of New Zealand’s specific national conditions, including the absence of existing effective mechanisms to facilitate industry-level sector bargaining. The Committee further notes the NZEI’s view that there is an urgent need for this system to be developed to address previous lacunae and for education to take place to ensure that both employers and employees understand the potential benefits the system can afford them and are able to engage effectively in the system.

The Committee observes that the FPA system is aimed at promoting collective bargaining, especially for low-paid workers and those in vulnerable situations, where trade union representation has been particularly low and, according to the Government, is based on recommendations emanating from a tripartite working group including the main social partners in the country. While no legislation has apparently yet been drafted, the Committee takes note of a number of concerns that have been raised by BusinessNZ and the IOE and the explanations provided by the Government. As regards the initiation of negotiations, while the Committee observes that it has found over the years a variety of industrial relations systems to be in conformity with the Convention including those that are not based on a system of most representative organizations, the Committee does consider that nothing should impede the possibility of representative employers’ organizations or multiple employers in the industry or occupation to initiate negotiations should they so wish. As regards the concern that any disputes will go to compulsory arbitration with no right of appeal against the terms that are fixed while employers are not able to opt out, the Committee first wishes to recall that compulsory arbitration in the case that the parties have not reached agreement is generally contrary to the principles of collective bargaining. In the Committee’s opinion, compulsory arbitration is only acceptable in certain specific circumstances, namely: (i) in essential services in the strict sense of the term, that is those the interruption of which would endanger the life, personal safety or health of the whole or part of the population; (ii) in the case of disputes in the public service involving public servants engaged in the administration of the State; (iii) when, after protracted and fruitless negotiations, it becomes obvious that the deadlock will not be broken without some initiative by the authorities; or (iv) in the event of an acute crisis. As regards the possibility of employers to opt out, while duly noting the Government’s distinction between an agreement which covers the industry or sector fully at the outset and a collective bargaining agreement between some parties in a given industry or sector and extended through government action to cover the entire sector, the Committee considers that a number of the principles set out in Recommendation No. 91, namely, that the collective agreement covers a number of the employers and workers concerned which is, in the opinion of the competent authority, sufficiently representative bearing in mind the specific conditions, and that the employers and workers to whom the agreement would be made applicable should be given an opportunity to submit their observations, are a sound basis for development of industry-wide agreements. In light of the above, the Committee requests the Government to take the above considerations into account in its drafting of the FPA Bill and requests it to transmit a copy of the proposed provisions as soon as they are drafted.

COVID-19. Finally, the Committee notes the comments of the NZEI concerning the challenges of the COVID-19 pandemic and that, throughout the pandemic response, the Government has consulted with education unions ahead of all advice going out to schools; been responsive to feedback; continued to pay the salaries and wages of school employees and provided additional funding in specific circumstances, such as supporting vaccinations. The Committee further notes the NZEI concerns however that in the early childhood sector, which is largely privately operated, the impact has been much more severe. There is very limited collective agreement coverage in the sector and few other industrial mechanisms for setting out employment terms and conditions for employees, while employers exercise considerable power over decision making with little or no union engagement. The NZEI emphasizes that the COVID-19 response requires a carefully nuanced conversation and unions should be involved. As regards vaccinations, the NZEI indicates that the Ministry of Education has also consulted with education unions on recent advice about vaccination and generally been responsive to feedback. The Government in its reply adds that it is conscious of the need to achieve an appropriate balance of individual rights, workplace health and safety duties and public health objectives and has been consulting with affected sectors and unions – directly and via the peak union body, the NZCTU, throughout the process of policy development.

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The Committee notes the observations of Business NZ and the New Zealand Council of Trade Unions (NZCTU) communicated with the Government’s report.

Scope of the Convention. In its previous comments, the Committee had noted that pursuant to an amendment from 2010 to the Employment Relations Act (ERA), workers engaged in film production work are considered to be independent contractors rather than employees, unless they have a written employment agreement that provides that they are employees. The Committee had requested the Government to indicate whether film and television workers employed as independent contractors enjoyed the protection of the rights in the Convention and the manner in which they are able to engage in collective bargaining. The Committee notes the Government’s indication that, where a worker agrees to be an employee, the worker will have the right to bargain collectively. The Committee further notes the observations of the NZCTU stating that: (i) the 2010 amendment excluded an entire industry (film production work including video game production work) from the protections of employment law; (ii) that it has been argued that collective bargaining by these workers would be prohibited by the Commerce Act 1986 on price-fixing grounds; and that (iii) even if it were interpreted that these workers could bargain collectively, they would not enjoy the guarantees and protections applicable to employees, including against acts of anti-union discrimination. The Committee must recall once again that the rights enshrined in the Convention, including as to collective bargaining and protection against anti-union discrimination, are fully guaranteed to all workers (regardless of whether they are engaged as employees or as independent contractors) with the sole possible exceptions of the armed forces and the police, as well as public servants who are engaged in the administration of the State. Taking into account the recent information about the Government’s steps to address this question, the Committee requests the Government to take any necessary measures, in consultation with the social partners, to ensure that all film and television workers, including those engaged as self-employed workers, can fully enjoy the rights and guarantees set out in the Convention. To this end, the Committee suggests that the Government and the social partners concerned may wish to identify the particularities of self-employed workers that have a bearing on collective bargaining and the other rights and guarantees set out in the Convention, so as to develop specific mechanisms relevant to them.

Article 4. Promotion of collective bargaining. The Committee notes the information provided by the Government concerning the introduction, through an amendment in 2014, of a new section 50(K) to the ERA. Section 50(K) allows any party to bargaining for a collective agreement to apply to the Employment Relations Authority for a determination as to whether bargaining has concluded because of difficulties in concluding bargaining. Said Authority may then direct the parties to try to resolve the difficulties by mediation or further mediation. If the Authority determines that bargaining has concluded, none of the parties may initiate further bargaining earlier than 60 days after the date of the declaration without the agreement of the other party or parties concerned. The Government states that the aim of the 2014 legislative amendment, including section 50(K), is to allow for increased choice and flexibility for negotiating parties, to tackle ineffective bargaining and to increase fairness and balance in the collective bargaining process. The Government also informs that in this amendment process, as is routinely the case for the development of relevant laws and regulations, tripartite consultations took place with the most representative organizations of employers and workers (Business NZ and the NZCTU). The Committee also notes the observations of the NZCTU, stating that the provision hinders the promotion of collective bargaining as the 60-day period where parties cannot reinitiate bargaining without agreement creates undue delay in negotiations and restricts strike action for a 100-day period (because industrial action cannot be commenced for 40 days after bargaining is initiated). The Committee requests the Government to, in consultation with the social partners, review and assess the application of section 50(K) of the ERA and its impact on the conclusion of collective bargaining agreements and, in light of such review, consider the introduction of any adjustments or other measures that could be necessary so as to ensure that the provision contributes to the promotion of collective bargaining. The Committee requests the Government to provide information in this regard.

The Committee further notes that the NZCTU also states in its observations that the 2014 legislative amendment introduced in section 44A, B and C of the ERA an opt-out possibility for employers presented with a notice initiating collective bargaining including them and other employers, which allows any employer to write to the other parties communicating the discontinuation of their participation in such multi-employer bargaining process. The NZCTU claims that allowing employers to opt out of multi-employer collective agreement negotiations hinders the promotion of collective bargaining and denies workers the opportunity to bring bargaining leverage to bear on the question of employer coverage. The Committee notes that the Government responds to these observations by noting that: (i) before the amendment the employers had to take part in meaningful negotiations even if they did not sign the multi-employer collective agreement; and (ii) employers may choose not to take part because they do not want to bargain together with competitors, as bargaining can be expensive in terms of time and resources, or if they believe that the multi-employer collective agreement will not meet their organization’s needs. The Committee requests the Government to inform on the impact of this amendment on the number of multi-employer collective agreements concluded and their coverage.

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Scope of the Convention. The Committee notes the Government’s indication that the Employment Relations Act 2000 was amended in 2010 so that workers engaged in film production work are considered to be independent contractors rather than employees, unless they have a written employment agreement that provides they are employees. The Committee further notes the observations of the New Zealand Council of Trade Unions (NZCTU) in this regard that this amendment effectively removed all film and television workers from a direct employment relationship. The NZCTU indicates that as a result there are questions concerning their right to bargain collectively, as several employers have argued that the negotiation of standard terms is prohibited by the Commerce Act, 1986 on price-fixing grounds. Recalling that the rights enshrined in the Convention are fully guaranteed to all workers with the sole exception of workers in the public sector who are engaged in the administration of the State, the Committee requests the Government to indicate whether film and television workers employed as independent contractors enjoy the protection of the rights in the Convention and the manner in which they are able to engage in collective bargaining.

Article 4. Compulsory arbitration. The Committee notes the Government’s indication that Parliament is currently considering further amendments to the Employment Relations Act, including changes to some collective bargaining provisions. The Committee notes that section 12 of the Employment Relations Amendment Bill provides that a party to bargaining for a collective agreement may apply to the Employment Relations Authority for a determination as to whether bargaining has concluded. The Authority must direct that mediation or facilitation be used before it investigates the matter, unless it considers that it would be unlikely to result in the parties resolving those difficulties. If the Authority determines that bargaining has concluded, a 60-day grace period applies before bargaining can be re-initiated, unless the parties agree otherwise. The Committee trusts that the amendments will be submitted to a tripartite dialogue and requests the Government to indicate the aim of section 12 of the Bill and to provide a copy of the legislation once enacted.

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The Committee takes note of the Government’s first report. It takes note with satisfaction of the provisions of the Employment Relations Act (ERA) and its 2004 amendment which give effect to the provisions of the Convention and constitute the primary legislation providing recognition of the right to organize and collectively bargain in New Zealand.