2024 offered a dynamic and challenging industrial relations environment in Aotearoa, with bargaining processes showcasing the complexities and opportunities of collective agreements.

Three60 Consult Founder, Paul Diver, reflects on collective bargaining in New Zealand in 2024.

 

Over the year, I participated in several significant bargaining processes, each offering unique experiences and insights.

Here are three examples:

MECAs – Multi-Employer Collective Agreements

A Multi-Employer Collective Agreement (MECA) sets the minimum terms and conditions of employment for a specific industry.

The unique challenge in this bargaining process is the need to facilitate multiple employers to reach agreement on an offer that can then be put to the Union and its members for consideration.

During 2024, each employer in this bargain had varying fiscal pressures and operating requirements. These competing interests made it challenging to bring a consensus position to the bargain.

National Award Bargaining had an advantage that it was undertaken with the benefit of a Conciliator to chair and provide leadership in the process. By taking a facilitative approach to the bargaining process, an acceptable outcome was reached.

Public Service Pay Adjustment – NZ Police (Constabulary) Collective Agreement

The NZ Police (Constabulary) Collective Agreement bargain played out in the public eye throughout 2023 up to July 2024.

The driving force behind this bargaining process was to bring pay increase uniformity across the State Sector. An obvious benefit would be moderation in pay increases (and therefore lower fiscal pressure). A sign up to PSPA would mean less pressure through industrial action. This approach worked for many state employees. However, the Police Constabulary employees did not ratify the PSPA offer. The election and the establishment of a new Coalition Government created a frustrating 6 month period where no progress was able to be made.

The next development was when Police and the Police Unions moved to bargaining in the first quarter of 2024 ultimately leading to ‘Final Offer Arbitration’ (“FOA”). FOA is a necessary statutory requirement because Police are barred from taking industrial action.

My experience of three recent FOA processes is that it drives an adversarial approach as the outcome is determined by an independent Arbitrator.

FOA may reduce or remove the parties’ bargaining accountability and the ability to bargain fundamental change. There is the reality of “win/lose” for the parties concerned.

While Police Constabulary bargaining is always undertaken with a Mediator chairing the process, a conciliation-style approach could potentially create a better process and outcome rather than jumping to FOA as a back stop.

Facilitated Bargaining – A Conciliation Model

Facilitated Bargaining, available under the Employment Relations Act, involves an Employment Relations Authority (ERA) member working with the parties using a conciliation-style approach. This model is characterised by:

In one instance, while the parties couldn’t reach an agreement during facilitated bargaining, the ERA member’s recommendation served as a crucial pathway to ratification. This demonstrated the value of skilled facilitation in guiding parties toward resolution, even when consensus feels out of reach.

Key takeaways

Each bargaining process in 2024 highlighted the importance of tailored approaches to address the specific challenges and dynamics of each situation. Whether through facilitation, conciliation, or arbitration, the industrial landscape continues to evolve, underscoring the need for adaptability, collaboration, and a focus on sustainable outcomes.

As we look ahead, refining bargaining processes to prioritise collaboration and accountability will be essential in navigating the complexities of industrial relations in Aotearoa.

If your organisation requires support around collective agreements in 2025, please get in touch.

New Zealand’s wage outlook has shifted dramatically as record migration, a cooling economy, and fiscal constraints take centre stage. Workers and employers negotiating wage and pay increases within collective agreements in 2025 face a changed environment, where balancing pay increases with economic realities is tougher than ever.

In this article, our team summarise the current trends and their potential impact on pay rates in 2025.

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The economy has hit a slow patch

New Zealand’s economy is grappling with significant headwinds. Sectors like construction, trades, retail, and logistics are facing notable slowdowns due to falling consumer demand, high interest rates, and reduced business investment. Economic uncertainty has pushed many employers to focus on cost-cutting, limiting room for wage growth and while there are some green shoots for a more promising 2025, the general outlook is still challenging.

Public sector budgets are also tightening, with the government directing agencies to further cut costs by 5%-6%, leaving limited flexibility for pay increases.

Record migration eases labour market pressure in 2024

Over the last 18 months, New Zealand has experienced a record migration boom, with net migration exceeding 110,000 people annually. This has alleviated labour shortages in many industries, particularly in entry-level and mid-skilled roles. It will take some time for this workforce increase to reduce. With a larger workforce available, employers in sectors like retail, hospitality, and logistics are less likely to offer significant pay increases to attract or retain staff.

For highly skilled sectors, NZ simply cannot produce enough skilled workers like healthcare and IT, migration has provided some relief, but shortages persist, meaning modest pay increases may still be on the table.

Wage growth likely to slow across sectors

While inflationary pressures were a major driver of wage demands in previous years, inflation has eased significantly, dropping to 2.2% in the year ended September 2024. This means unions may face tougher negotiations when seeking pay increases above the cost of living.

Union expectations: high hopes, tough conversations

Unions, however, are still coming to the table with high expectations from their members. Many are pushing for wage increases that outpace inflation to make up for the perceived erosion of real wages over previous years.

Public sector unions argue that the cost-of-living crisis, particularly in essentials like housing and food, remains acute and justifies increases of 5% or more. The NZNO, representing nurses and other professionals, are pushing back hard against offers as low as 0.5%, calling them an insult to already stretched workers and are taking strike action. Union leaders are emphasising not just pay but also improved working conditions, particularly in sectors like education and healthcare, where staff shortages have led to increased workloads and burnout.

Increased activism and its possible impact

Union activism is on the rise. Workers in healthcare, education, and even private sectors like retail and logistics have increasingly turned to strikes and other industrial actions to demand better deals.

Challenges for workers and unions

Workers in sectors hit hard by economic slowdowns may find it challenging to negotiate meaningful wage growth. While unions can point to rising living costs and past inflationary impacts, employers are likely to counter with economic realities, such as declining revenues, reduced project pipelines and increasing number of layoffs.

Public sector workers may face particularly tough negotiations, as the government pushes agencies to reduce spending. Nurses, for instance, have reportedly been offered just 0.5% increases in recent collective bargaining, sparking dissatisfaction and a planned strike action on 3 December with further rolling strikes after this across the country.

Here’s how we think wage increases in collective bargaining could shape up in 2025:

Final thoughts: 2025 – A tough year ahead for wage growth

The outlook for pay rate increases in 2025 is more restrained than in previous years. While workers in essential or highly skilled industries might still secure modest increases, most sectors are likely to see smaller gains, reflecting a cooling economy, easing labour shortages, and tight public and private sector budgets.

For workers, this means keeping expectations realistic while pushing for additional benefits where possible, such as flexible working arrangements or training opportunities. For employers, transparent communication about financial constraints will be critical to maintaining trust during negotiations.

If your organisation would like advice around collective bargaining in New Zealand, please get in touch.

Senior Associate Maureen Glassey writes about the responsibility of employers to conduct workplace investigations into issues that affect their employees’ wellbeing.

Hard on the heels of the COVID-19 pandemic is a widespread malaise which is affecting the New Zealand employment landscape, and one for which so far, there is no 100% effective vaccine.

The malady is genuine and the impact on the organisation and its employees real. The symptoms fall under the broad umbrella of “wellbeing issues”. Affected employees may complain about non-specific anxiety, stress, and mental health issues which they attribute to the workplace. 

Although the presenting symptoms seem exacerbated wherever there is an increased pressure to return to work in the office, conversely, working from home is not a cure.

Fortunately, most mature organisations have teamed up with such independent counselling providers as EAP, Raise, or the free government “Need to Talk” 1737 service, and are able to offer their staff the professional support they need. 

With best practice, employers are usually able to support staff with sick leave and special leave. However, at some stage, after a period of recovery, the employee will need to be reintegrated safely back into the workplace. Unless the original issue has been addressed, the employee is likely to relapse swiftly.

There have been a couple of cases recently in the Employment Relations Authority, such as Perry and The Warehouse Group Ltd [2023] NZERA 773, where large sums of compensation have been awarded to employees whose wellbeing had been impacted because of their work environment. These outcomes should serve as a salutary warning to employers to listen carefully whenever employees complain of work-related stress and anxiety. But what to do?

At its heart, a complaint of workplace stress and mental anguish is a complaint no different to others. The complainant needs to be heard, they need to be acknowledged, and they need their employer to follow a robust process in the same way they would respond to an allegation of bullying or harassment in the workplace.

It is likely that complainants in such cases will have heightened vulnerability. As vulnerable complainants, they may also struggle to clearly articulate the exact nature of their complaint, the alleged behaviours, and the persons responsible for their experience. 

However, the Health and Safety at Work Act 2015 sets out the obligations for employers to provide safe and legally compliant workplaces. This includes engaging meaningfully with vulnerable complainants, even when at first assessment, their complaint appears vague and far-reaching. 

The employer still needs to establish the facts by way of a workplace investigation. Having established the facts, they will then need to take such reasonable action as to ensure they are confident they are providing a healthy, safe workplace and meeting their obligations as a good employer.

If your organisation requires support around workplace investigations to identify and address claims of work-related stress and anxiety by employees, please get in touch.

Many businesses in New Zealand have staff out on the road or in safety-sensitive workplaces on a daily basis. With the well-publicised intention of the Coalition Government to commence random roadside drug testing, this often complicated issue has become a focal point again after a long period of relative quiet, with potential implications for drug and alcohol policies.  

Add to the mix the introduction of the Medicinal Cannabis Scheme in 2020, and drug and alcohol policies are in a changing space. Senior Associate Raymond Wheeler writes about what employers should be considering to prepare for the changes.

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Medicinal cannabis in the workplace in New Zealand 

Cannabis in New Zealand is synonymous with recreational drug use and remains a Class C drug, illegal to possess or consume. 

However, the Medicinal Cannabis Scheme has legalised a platform for people to access and legitimately use cannabis when appropriately prescribed. 

This can then create uncertainty if a non-negative result is returned during testing for cannabis: is the result due to recreational or prescribed use?

Ensure your drug and alcohol policies are up to date and fit for purpose

For any employer, a good place to start in being prepared for this situation is to review its current drug and alcohol policies. Look to update these if necessary to consider the legal status of medicinal cannabis, and consider whether saliva or swipe testing (vs urine) is accurate enough to survive third-party scrutiny.  

Employees are normally required in drug and alcohol policies to disclose what medications they are taking, and this should be encouraged. For staff working in safety-sensitive roles, this requirement is vital so that employers are aware when an employee has been prescribed medicinal cannabis, what – if any – side effects it may have, and what the impact may be on their ability to safely perform the work they are employed to do.

What to do if an employee has tested positive for medical cannabis

If this situation arises, it would be critical for an organisation to work with its employees and medical professionals to ensure the balance of the parties’ obligations to the Health and Safety at Work Act and the NZS/AS standards of its drug and alcohol policies are not breached.

There is also the added complexity of the employee rights under the Human Rights Act (which protects employees from discrimination based on disability, for which medical cannabis may now be prescribed under the Medicinal Cannabis Scheme). 

What to look out for around medicinal cannabis in the workplace

A trend being observed is that when an employee has tested non-negative under a drug and alcohol policy, the employee subsequently presents a prescribed medicinal cannabis medical certificate, and the contentious and complex debate continues.

If you would like support to ensure your drug and alcohol policies are fit for purpose to manage this emerging trend, and the implications of medicinal cannabis use in the workplace, please get in touch. 

Working from home – and the extent and ways it might be addressed in employment policies – has become a discussion point recently due to the Coalition Government’s position that working from home is not an entitlement.

Senior Associate Raymond Wheeler outlines what employers and employees should be aware of.

 

The Coalition Government’s position on public sector employees working from home has created considerable conversations, with some agreeing that working in offices increases productivity, promotes collaboration, is better for employees’ mental health, and can help create a vibrant culture within an organisation. There has also been added commentary relating to increased foot traffic around offices bolstering retail and hospitality businesses.

Others in the conversation have said there is no evidence there are productivity increases while working in the office. Mention has been made, too, of additional costs for employees related to parking, fuel and transport costs, and additional childcare costs. There is also potential loss of productivity while waiting in infrastructure congestion due to the increase of people moving around, and concern that the public transport system is viewed as unreliable. 

So, how do employers and employees navigate differing views around working from home, and what does the law say?

For Employers

An employer and employee should have a fully signed, clear employment agreement that details the location/s where work will be performed. 

Employers should take the opportunity to review their employment agreements and policies to make sure there has been no variation to a location of work – or, if it has changed, that this change has been agreed to. 

At this time, employers may want to think about: would WFH (flexible working arrangements) provide the benefits and outcomes the business requires to meet its values and goals?

For Employees

Employees should be aware that there’s no statutory right to work from home. If the wording in their employment agreement clearly states a location of work, there is an obligation that the employee complies with the agreed terms and conditions of the employment agreement. Any change to their employment agreements must be mutually agreed, confirmed, and recorded in writing.

What Does The Law Say Around Working From Home?

Employees do have a statutory right to request a variation of their working under Part 6AA Flexible Working of the Employment Relations Act 2000. Employers must respond no later than one month, and an employer may refuse a request only if it cannot be accommodated on certain grounds. 

Due to the extent of current publicity surrounding this topic, employers should be aware that they may experience an uptake of requests to vary their employment agreements.  

If you would like support to ensure your employment policies are being complied with, or to manage any employment relationship matters that may arise around working from home, please get in touch. 

The Coalition Government recently announced a proposal to enhance clarity when determining whether someone is a contractor or an employee. 

The principle of providing certainty to employers, employees, and independent contractors as to how they are classified and the implications arising from their status is sound.

However, what we have seen to date appears too light on detail for such parties to be able to draw firm conclusions and alleviate status anxiety.

The proposed “gateway test” has four requirements: 

  1. There must be a written contract stating the person is a contractor.
  2. The business must not restrict the worker from working for other companies, including competitors.
  3. The business must not require the worker to be available at specific times or for a minimum number of hours or it must allow them to subcontract their work.
  4. The contract must not be liable to be terminated if the worker declines additional tasks beyond the existing agreement.

The scope for unfair treatment Is a source of concern 

While further detail will emerge in time, the gateway test as it stands has the potential for unintended consequences. 

Just as there are opportunistic employees, there are also less scrupulous employers who may use such an approach to avoid the costs of actual employment and exploit workers who have less knowledge about their employment rights. 

The potential for unfair treatment in this area is concerning, especially given the number of examples we already have of other forms of workplace exploitation, amid limited resourcing at MBIE to effectively enforce compliance with legislation.

As with most areas of workplace legislation, the devil and the angels are in the details. The hope is that the proposed legislation will crystalise the intent of these changes to provide clarity and support innovative ways of working, without giving unintended licence to those less scrupulous who seek to take advantage of others for their own benefit.

If you would like advice on ensuring your organisation’s employment policies are in line with current legislation, or HR support around employment agreements, please get in touch.

Despite recent glimmers of positivity in the economy, it remains vital to resolve workplace conflict in a timely manner, for the well-being of the parties and the organisation itself.

Senior Associate Lisa McWilliams-Smith outlines the key steps before, during, and after mediation.

The mediation process remains the primary problem-resolution mechanism under the Employment Relations Act. 

Mediation has the unique twin benefits of confidentiality along with ‘off the record’ discussions (also called ‘without prejudice’ discussions).* 

After conducting hundreds of mediations each year at MBIE, my observation is that it is a rare situation where parties do not gain a greater understanding of the situation, the other party, themselves and the business or organisation. 

Mediation allows the parties to hit ‘pause’ on the dispute in a neutral context, then with a skilled facilitator, tailor an appropriate process, providing the best chance of a satisfactory outcome.

Preparing for mediation

Mediation is not Court, or a Wimbledon-like tennis match of legal argument across the table designed to impress the mediator. Mediation is a space to present your point of view and then work on crafting a solution that resolves the problem for both parties.

Before coming to mediation, it is important to be clear about a number of things:

Note: it is counterproductive where one party is in the dark about why they have been invited to mediation. In these circumstances, the lack of clarity about the purpose for mediation may be seen as an ambush when the reason is tabled. In such circumstances, any resolution may be delayed and the relationship between the parties is very likely to be damaged.

At mediation

After mediation

 

*Anything specifically and only discussed at mediation may not later be used at the Employment Relations Authority, the Employment Court or any other jurisdiction. 

Our mediators are experienced in helping to resolve a broad range of disputes and conflicts in the workplace. For more information around our mediation services, please get in touch.

Conflict in the workplace can arise from misunderstandings, differing opinions, stress, or other interpersonal dynamics both inside and outside the workplace. Effective de-escalation techniques can prevent these conflicts from growing into more serious issues. 

Senior Associate Campbell Gourlay outlines key strategies and skills to de-escalate conflict within the workplace.

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And I’ve been putting out fire
With gasoline – David Bowie 

When was the last time that you told someone to “just calm down”, and like magic, the person immediately stopped whatever behaviour caused you to tell them to calm down in the first place?

If my own personal experience in the home environment with my domestic general manager and genetic offspring is reflected elsewhere, then not often if ever would be the resounding answer to that question.

So how in the work environment do you de-escalate or manage conflict without the equivalent of throwing petrol on a fire?

Understand the headspace you are in

First rule of thumb would be to take a deep breath and check in with yourself – are you in the right head space to deal with conflict? Because that will dictate what happens next. If you’re not in the right frame of mind it’s less likely you will be able to objectively respond and the potential to ignite the issue is high.

So, if you are not in the right head space, then create some space. That might be as simple as getting the people who are in conflict separated to pause whatever discussion, or argument is underway with an undertaking to talk to both groups or parties to gain an understanding of the issue or the cause of conflict.   

Understand the source of the conflict

So what is the issue? What is the source of the conflict? Identifying this is key to addressing how you approach de-escalation. 

To do this you will need to dig a bit deeper. What is it you may have observed or witnessed or has been reported to you? To establish the issue you will need to ask questions and listen to understand. Keeping an open mind and a neutral mindset, channel your inner Switzerland  – chocolate and watches optional. 

Listed below are some key strategies and skills to use when you approach a conflict and attempt to de-escalate within the workplace. The individual or specifics of a situation may dictate the order you apply some of these strategies, but for my money number one is the key.

  1. Staying calm and composed (importantly ensure you are in the right head space to do this)
  2. Active listening 
  3. Clear and respectful communication
  4. Empathy and validation, when appropriate 
  5. Setting boundaries, what is appropriate and what is not 
  6. Problem-solving approach
  7. Seek external support
  8. Healthy and unhealthy conflict

Healthy and unhealthy conflict

It should be noted that some conflict within the workplace is healthy and allows people to challenge the status quo to sense test ideas. This usually occurs in a high trust environment or within a workplace culture where it is understood that challenging an idea or a process is not personal and does not diminish or minimise an individual’s value or identity in doing so.  

However, conflict outside of conditions inevitably impacts on organisational culture, individual and team productivity, attraction and retention of the best people.

Knowing when to seek an independent mediator

Sometimes it takes an external person to intervene and facilitate a way to resolve a conflict. This can happen if it has been a long standing unresolved issue, also when the people trying to de-escalate and resolve are not seen as impartial for some reason by the people in conflict.

If that is the case for you, get in touch with our conflict resolution team who have been dealing with conflict since Angus from ACDC was in short pants.  

There are key considerations to be reconciled when contemplating exit negotiations, whether under the current provisions of the Act or those contemplated by the Employment Relations (Termination of Employment by Agreement) Amendment Bill.

Senior Associate Lisa McWilliams-Smith writes about the proposed changes, requirements of the current legislation, and what employers and employees should consider when faced with exit negotiations.

Member’s Bill ‘Termination of Employment by Agreement’

To refresh your memory; the Policy behind the Bill is to allow an employer to initiate ‘protected negotiations’ without risk that the employee will bring any PG against the employer (as a consequence of the employer’s exit proposal or indeed any other cause of action).

Should the bill be passed into law, the employer would be able to propose dismissal to an employee, by requesting the employee to sign a settlement agreement for specified compensation, in return for the employee waiving their entitlement to raise any PG; ultimately by mutual consent.

An agreement made under subsection (1) of the Bill will only be enforceable if the  employer has advised the employee to seek independent advice about the exit proposal and the employer has given the employee a reasonable opportunity to obtain independent advice before signing.

Further, negotiations leading up to the proposal to terminate would be inadmissible in any proceeding before the Authority, unless the communication was compiled with a dishonest purpose or to plan or commit an offence.

Conducting exit negotiations now

In the meantime, exit negotiations will only be ‘off the record’ if they are clearly understood by both parties to be in a ‘without prejudice’ context, for example, during a confidential mediation.

At mediation (private or held at MBIE) the parties and the mediator are bound by strict conditions of confidentiality. That means nothing that is said may be used in evidence or relied upon elsewhere. The ‘cloak of confidentiality’, the neutral context and the insights of the mediator allow the parties to get to the heart of the problem between them without fear that what they say can be used against them elsewhere.

Leading up to mediation, careful thought will need to be given to how to approach an exit. Hard positions or strong feelings once voiced cannot be unsaid and may be counterproductive to the parties parting ways in a dignified, reasonable fashion.

Pre-mediation with your lawyer or representative and the mediator is the perfect time to plan the substance of your half of the mediated exit conversation, i.e. the possibility of an exit, why, when, how and the possible inclusion of specific terms and conditions.

Opening up an exit negotiation outside of mediation may be perilous for the employer, given the inherent inequality of bargaining power, the mutual obligation to maintain a productive employment relationship and the real risk of claimed employment disadvantage if the employee is surprised by the employer’s proposal and not inclined to leave.

If discontinuation of employment is contemplated, the best practice approach in the current context includes meeting the requirements of natural justice, good faith and the current legislative provisions set out at s103A of the Employment Relations Act 2000.

Employers, and employees, may want to consider seeking advice and support at an early stage if they wish to open up delicate exit negotiations in a strategic, measured fashion towards the best outcome for all.

This time of year typically sees a large number of collective agreements up for renewal. With this in mind, what does good faith in collective bargaining look like?

In this article, Senior Associate Raymond Wheeler recaps what good faith in collective bargaining means, how it can aid bargaining, and also how the term can be misused .

What does good faith in collective bargaining mean?

The requirement for good faith in collective bargaining is set out in Employment Relations Act 2000. The Act requires that parties to an employment relationship deal with each other in good faith, acting in a way that meets their obligations of mutual trust and confidence.

In relation to collective bargaining, the Act doesn’t stipulate how the parties are to bargain, only that it must occur in good faith. So what does good faith look like in action? While there are a number of relevant sections of the Act, key requirements are that parties involved in bargaining must not act in a misleading or deceptive way, and must be responsive and communicative to maintain productive and constructive relationships.

In simple terms, everyone involved in bargaining must commit to fair conduct and consistent communication. Given that collective agreements will all eventually settle at some point, adherence to the principles of good faith in the bargaining process will not only help get the job done, but help to ensure goodwill in the ongoing employment relationship.

Claims of breach of good faith in collective bargaining

Due to the nature of bargaining there will always be differing opinions at the table. Most often, these centre around increases to wages or salaries, or any terms and conditions that have a cost attached. The allegation of ‘bad faith’ is often levelled at employer bargaining teams when unions disagree with the proposals presented, and recently, the term ‘clawback’ has become a common theme.

However, differences of opinion between parties do not constitute a breach of good faith and litigation around alleged breaches can be time-consuming and a distraction from reaching an agreement. An example of a potential breach of good faith is when a party during bargaining produces a Handout or Notice which contains mis-leading, mis-quoted statements that attempts to influence a parties respective position.

Preventing claims of bad faith in collective bargaining

The bargaining process inherently presents diametrically opposed views. Before the renewal process hits an impasse or standstill, or there are behaviours and actions that result in claimed breaches of good faith, it is important to have a shared understanding of the rules of the game.

Prior to commencing bargaining, a Bargaining Process Agreement (BPA) should be developed and signed, providing processes that allow parties to achieve solutions and conclude bargaining in an effective and efficient manner. This could include agreeing to providing joint statements or progress reports from time to time where the communication will be factual and accurate, or non-critical.

Always remember at some point a collective agreement will settle. Along the way, a well thought out BPA can be instrumental in resolving the issues that can arise in an often-stressful environment with strong characters with differing agendas. Bargaining undertaken in good faith, with clear guidelines, will ultimately strengthen the ability of everyone involved to achieve the objective of mutual trust and confidence in the employment relationship.

For more information around our collective bargaining services, please get in touch.