The Authority issued an interesting, and arguably controversial, decision with its release of this determination earlier this month.*  In the decision, the Authority was asked to decide if the Cooperative had validly initiated collective bargaining with HPS or not.

The Cooperative said its notice to initiate collective bargaining complied with the law while HPS said it was not bound to respond because it did not employ athletes (a statement of fact) and that there is no relevant employment relationship.

So put shortly, the Authority determined that its task was to decide whether collective bargaining could be initiated by the Cooperative in circumstances where the other party (HPS) does not employ employees within the intended coverage of the proposed collective agreement.

It concluded that collective bargaining could be initiated in those circumstances because a proper construction of the relevant provisions of the statute ( the Employment Relations Act) allowed of that outcome.  The Authority went on to imply , however, that it was clear that bargaining could never be concluded in those circumstances because ratification of any deal would be impossible (ratification requiring a member within the coverage of the agreement).

I suggest this decision will be controversial because here there is no common intention as to future employment.  Nor, to emphasize the point, does HPS want to employ persons within the proposed coverage clause.

So, without the prospect of employment and with the apparent acknowledgement that any collective negotiations could never be concluded within the terms of the Employment Relations Act, how is it possible for the Authority to conclude that bargaining could be initiated?

The relevant definitions in the statute, according to the Authority lead it to its conclusion.  For example, the definition of “employer” does not limit that concept to bodies employing or intending to employ staff within the relevant coverage clause; all that is required is that the employer employ some staff, as HPS does, and that the concept of employer must include “prospective employer”.  And, the definition of ‘employee’ similarly must include a “prospective employee” in reliance on AFFCO NZ LTD v NZ Meatworkers Union [2017]NZSC 135.

Moreover, nothing in the statute requires that there must be an employment relationship before bargaining can be initiated.

But what of the practical consequences of all this?  Is it practical to allow bargaining to be initiated in circumstances where it cannot legally be concluded?  Similarly, is it sensible for bargaining to be able to be initiated where there is no relevant employment relationship either existing or in prospect?

While we understand High Performance Sport has decided to challenge the Authority’s determination, we also understand that the parties have commenced bargaining for some form of collective agreement although, as we mention above, it is difficult to see how that agreement might be finalised given the present state of the parties.

Perhaps it has to be assumed that the parties’ positions will change as the matter progresses and perhaps their ultimate positions may be different from their starting positions.

Only time can answer those questions.

 

Summary written by James Crichton, Employment Relations Specialist & Barrister

 

*Full judgement: Athletes’ Cooperative Inc v High Performance Sport New Zealand Ltd [2024] NZERA 43

I have been involved in bargaining for collective agreements for over 25 years now and the bargaining environment over the last 12 months is nothing like I have ever seen before.  Expectations between Employees, Unions and Employers are wildly apart.  Bargaining is taking significantly longer and there is a greater willingness of Employees to resort to strike action if their claims are not being met.  The crux of these differences in 99% of cases is a focus on wage and salary increases for Employees.

Unions, having to be responsive of the desires of their members, are quite rightly pushing harder and seeking larger wage and salary increases with a focus on this, over and above other terms and conditions that are bargained for.  Employers are balancing massive increases in operational costs, supply chain inefficiencies, increases in overhead costs such as insurance premiums and interest on borrowings, as well as a shrinking economy and little to no growth for a sustained period of time.

In some ways it’s an imperfect storm.  Expectations versus realities and significant changes to the labour market over the last 2 years (famine to feast) as the result of the ending of COVID restrictions and the start of record-level immigration.

With the end of the financial year approaching there is a big focus for organisations on wage increases and asking – how are organisation’s planning to approach wage and salary increases in the coming financial year, and the future 2 to 3 years?

This is a critical question to ask in what is currently a tough economic time for both Employers and Employees.  Each organisation will have to look at the different conditions and challenges it is facing in the short, medium and long term, to balance those at times competing priorities to determine what, if any, increases may be right for it.

There are a multitude of different factors organisations should consider when determining the approach to remuneration, and in particular wage and salary increases.

Factors to Consider

For many years prior to COVID there was a big focus from organisations on an organisations EVP – the employee value proposition.  What is it that attracts and retains employees to work for us?  What are the overall factors that make our organisation a desirable place to work?

While an organisation’s EVP is absolutely still relevant and critical long-term, I think one key thing that our emergence from COVID taught us is that where there is a labour supply shortage, cash is king!  While a lot of people may dismiss this, and I have heard a lot that pay is more of a hygiene factor than a true determinant of attraction, (which I agree with), in the conditions that we faced in emerging from lockdowns and a shortage of labour, it was a reality that wage and salary rates for most roles had to increase to meet the demands of the labour markets.

The flood of immigration since the last restrictions of COVID was removed, leading to NZ’s record immigration levels over the last year, has had a sobering impact on the availability of labour in many industries.

The current reality is that NZ is experiencing economic downturn and there are forecasts for a prolonged period of low growth in the NZ economy.  Where Employers were once struggling to find anyone who may in interested in a job, that situation has dramatically changed with record number of unsolicited CV’s and continued restructuring and downsizing becoming more common over the last 6 – 12 months.

Employees, coming from 2 years of reasonable increases in many industries where labour was difficult to find or significant increases when changing jobs, still have their expectations reasonable high in an often quoted “cost-of-living-crisis”.

However, everyone is facing significant challenges in terms of the costs they are experiencing from increases in; rent, mortgage interest rates, rates increases, insurance premiums and continued increases in prices of everyday goods and services.

I’ve seen an increase pressure on Employers to ensure any increases in pay rates meet the level of inflation (currently the Consumer Price Index (CPI) is 4.7% per annum to end of December 2023), to maintain relativities with increases in the minimum wage (2% from 1 April 2024) and are seen to be fair and reasonable while trying to meet at least the current Living Wage (currently $26 per hour and  set to further increase from 1 September 2024 in the range of an estimated further 5%-6%).

A common occurrence are Employees and Union quoting profit levels and CEO salaries (where these are publicly disclosed), during negotiations in efforts to “shame” Employers into agreeing to higher increases. It is my view that this approach often takes no account of the risks and relativities of organisational size, scope and medium to longer term impacts of providing increases beyond what may be prudent, given all the circumstances.

There has also been a recent push for Employers to consider the Household Living Costs Price Index, (HLCPI, – currently 7% per annum to the end of December 2023), as a more accurate measure of the real costs of living.  Stats NZ define that the purpose of the HLCPI is to provide insight into the cost of living for different household groups therefore the Unions may have a valid point.  However, if you look at the CPI vs HLCPI over time, CPI has historically been slightly higher until the recent impact of COVID from 2020.

All of these economic tools to measure the costs of living and operating in the economy usually bring a common and very true response from Employers, Employees and Unions – which is that each of us, (Employers, Employees and Unions), use the particular economic statistics that support the story we are trying to sell tell!

Throughout this time, we have also had a public sector whose levels of increases over the last 2-3 years has outstripped the private sector.  Certainty, growth in salaries and job security in the public sector, (at least up to the election and current change in government), have been unprecedented in the last 30 years.

You may be asking, how is the public sector’s growth relevant to your organisation and industry?  When there was once a limited pool of labour across NZ, the impact on private organisations was an increased  pressure to match the wage and salary levels offered in the public sector. This is despite private organisations having little ability to increase prices changed for goods and services to match the increase in labour costs, as well as all other costs faced by private sector employers, such as; supply chain and transport increases, insurance premium increases, borrowing cost increases.

So, with all this going on, what does it mean for Employers thinking about what should they do regarding wage and salary increases over the next year?

Take Care!  Reflect on what it is you are trying to achieve with your remuneration?  Consider the following:

These are the types of questions our Associates at Three60 Consult ask when working with our clients in collective bargaining to help us understand not just what we may have in terms of any mandate in bargaining, but so we can represent the reasons for any proposals to Employees and Unions aligned to the goals and objectives the organisation is seeking to achieve.  A lot of what is fuelling the high expectations from Unions and Employees is reference to; what’s happened in the past, how people perceive they are rewarded compared to others, and challenging these expectations at both a logical and emotional level is important to reaching outcomes that all involved can live with.

Setting you next budget for wage and salary increases is going to be more challenging than ever.  The specific factors that are present for your organisation and how you communicate and share these with your employees will be critical to managing expectations.  The next 12-24 months are likely to be extremely challenging for Employers in terms of setting remuneration levels, engaging in bargaining (where there are unions) and that fine balancing act between wage and salary levels and continuing to reinforce a positive overall EVP for all your employees.

 

Good luck and let me know if you have any questions!

 

Written by Adrian Tocker, Senior Associate

Ph: 021 791 044

email: [email protected]

Local Politics is Rough and Tumble, but its about learning strategies to be resilient throughout the rough and tumble.

As we enter the second year of the triennium, elected members and council officers are faced with a few challenges including that most councils across New Zealand are predicting potentially large rates increases and/or controversial changes to their annual budget in order to fund essential infrastructure and services.

Compounding these challenges is the threat that such unpopular decisions will result in upset within the community and abuse being directed to elected members. A prime example is where abuse pops up on social media platforms, carefully crafted news articles and even in emails sent directly to members. Unfortunately, the abuse can spill into threats of physical violence or public confrontation at community meetings or worse by directly impacting an elected member’s private life.

Managing and determining how to respond to any form of abuse can be a minefield both for the recipient but also for those council officers who advise and are charged with health and safety responsibilities.

It’s hard for anyone to ignore abuse, but for elected members who are passionate about a decision, more so, especially when the protagonist is posting statements which are simply wrong or reputationally damaging. If a member does respond, sometimes even the most innocuous response will fuel a gas lighter on a mission.

Performing under constant threat of criticism eventually gets exhausting, even for the toughest politician and there are a number of accounts where gifted politicians have crumbled under pressure. The Siouxsie Wiles employment dispute has shone a light on just how extreme online abuse can become and the capacity for otherwise reasonable New Zealanders to target public figures. Equally this case, puts on notice those PCBU charged with providing a safe work environment for their employees, which includes elected members.

Although resilience can be learned there is a line between building resilience and soldiering on. Abuse has an accumulative effect.  Well-being is not a by-product of sheer determination but is an ongoing process which requires external support. Resilience training helps but is not enough of itself, rather a key element in suite of tools which includes risk assessment, learned behaviour, accountability and acknowledgement.

At Three60 Consult we are passionate about local governance and our experts’ run workshops aimed at ensuring those elected members brave enough to stand for their community have the tools to do so safely and resolutely. Sign up to our Newsletter here and receive information on our Governance Webinars and Workshops.

 

Written by Maureen Glassey, Senior Associate.

Get in touch with Maureen here

An action taken by an Employer which has derived solely from a disputed interpretation of an employment agreement cannot be pursued as a personal grievance.

Breen and Prime Resources [2023] NZEmpC 199 has distinguished the difference between a personal grievance (s103) and a dispute (s129) and identifies that there is no jurisdiction to investigate a claim for a personal grievance when the claim itself falls solely within the scope of the dispute procedure.

 

Background Facts

The dispute between the parties started when Prime Resources expressly believed that the Employee had not been working full time during lockdown. Relying on a clause in the employment agreement around deductions for hours not worked, Prime Resources sought confirmation from the Employee to deduct from their full pay. The Employee objected to this reduction.

The parties attended mediation, where it was agreed that Prime Resources would make a late payment to the Employee for the full pay for the period in question, however notwithstanding that, following the mediation the Employee raised a personal grievance for being unjustifiably disadvantaged by the late payments.

While the Authority found that the company had unjustifiably disadvantaged the Employee with one deduction (but not the other) and made an award, the Employee was dissatisfied with the quantum of the award and challenged part of the result. Prime Resources responded by challenging the entire decision, on the basis that there was no jurisdiction.

Why did the Court find a PG was the incorrect forum for this issue?

The Chief Judge of the Employment Court states in this judgement that there is a clear intention in the Employment Relations Act 2000 (ERA2000) to draw a distinction between personal grievances, such as unjustified dismissals and unjustified disadvantages, and disputes. This is seen by how the ERA2000 is written and structured.

Personal Grievances are available, so parties have the option to receive compensatory awards, and s103 of the ERA2000 explicitly states that an unjustifiable action by the Employer does not include any action (disputed or undisputed) depriving solely from the interpretation, application or operation of any provision of any employment agreement.

On the other hand, s129 of the ERA2000 states that a dispute exists where there is a dispute about the interpretation, application, or operation of any employment agreement, and any person bound by the agreement or any party to the agreement may pursue that dispute in accordance with Part 10.

The dispute procedures are usually used in cases where parties seek declaratory relief (i.e. a statement from the Court), which can be used to commence further proceedings such as a breach of contract claim, a compliance order application, and/or a penalty action.

As the company’s actions were found to be based on a genuine interpretation of the employment agreement clause, the Employee’s claim related to an action deriving from an interpretation of an employment agreement and this meant the dispute procedure applied.

The personal grievance and the previous Authority decision therefore had to be set aside.

What are the implications of this?

Christina Inglis, Chief Judge, made a reasonable observation that arguably every unjustified disadvantage claim engages issues about interpretation, application and operation of employment.

It is reasonable for people to be asking – does this mean the process for raising PGs has changed?

The short answer is no.  This outcome will not mean that people have to change how they craft their claim (i.e. picking between a PG or a dispute) – and it is unlikely that we will see employees and their advocates do this!

Rather the case puts people on notice that they need to carefully review the facts of the case.

If there are mixed facts, involving both interpretation etc of an employment agreement together with other ancillary factors like perhaps the behaviour of the employer around the issue, then a disadvantage grievance may be appropriate.

But if the argument between the parties is solely concerned with the interpretation, application or operation of any employment agreement, then the dispute is the proper resolution path. And the result of this is that if the matter goes to the Authority as a personal grievance, then there will likely be an unsatisfactory outcome.

On 6 April 2023 the ERA issued a determination in the case of Associations of Professional and Executive Employees Inc and Anor v The Secretary for Education, which answered the question of whether unpaid interns were in fact employees. The answer, in this case, was yes.

What’s interesting about this case is that it involved students undertaking a practicum placement with the Ministry of Education that was required to complete their university degree programmes. The interns were paid a scholarship, by the Ministry of Education, for the 40 week period they were on placement, the terms of which required them to repay the scholarship if they did not complete the full internship.

 

The ERA considered the following factors in determining if the interns were undertaking “work” in accordance with s6(1)(a) of the Employment Relations Act 2000:

(a) the constraints placed on the freedom the intern would otherwise have to do as she or he pleases – The intern was found to be restrained as they were required to attend work at specific times and follow Ministry directions in undertaking the work.

(b) the nature and extent of responsibilities placed on the person – The intern was found to bare the same responsibilities as other employees, as they were undertaking work that would otherwise be undertaken by an employee of the Ministry.

(c) the benefit to the Ministry of having the intern perform the role – It was determined that there was benefit to the Ministry in having an intern perform the role, which was not the actual work undertaken, but the long term strategic benefit to the Ministry of growing potential recruits. The operational benefit of developing interns skills meant that interns were contributing to its business.

 

 In determining if the intern was an employee the Authority also considered:

(d) did the intern work for hire or reward? It was found that the scholarship provided to the intern, the value of the supervision, and the prospect of future employment amounted to reward.

(e) did the arrangements amount to a contract for service (employment)? After applying the all relevant matters, integration and economic reality tests, the Authority concluded that the arrangement amounted to employment.

 

The Authority determined that the nature of the arrangement meant an intern was undertaking work on what was effectively a fixed term basis, and therefore is entitled to be paid in accordance with the applicable Collective Agreement. They are also entitled to be paid for other minimum entitlements such as KiwiSaver, annual holiday and sick leave. The Authority confirmed that the scholarship already paid should be considered as part payment of what is due when calculating the arrears owed.

This determination has turned on its head the way that organisations have traditionally considered internships. We have historically worked under the assumption that if an internship was operating as part of a practicum requirement to achieve a qualification it was not an employment relationship. The decision has also reiterated the well-established fact that “reward” for work undertaken does not need to be monetary.

 

The Authority member made interesting commentary on the recent significant changes to what is considered “work”, including the change to sleep overs being considered work rather than rest, contractors being considered employees, and ‘on call’ being considered work. This decision builds on those changes, and is likely to have wide ranging impacts on how practical training is undertaken moving forward, including for education in industries such as trades, medical, teaching, legal and accounting to name a few.

While this case provides good guidance, it is important to note that this Authority determination is not precedent setting – and because of the wide reaching implications we would expect this decision to be challenged in the Employment Court, so watch this space!

If your organisations engages interns or any form of voluntary work or unpaid training, then we can assist with specific advice on how this case may impact your arrangement.