Bargaining for a new collective agreement was initiated in August 2011. From December 2011 strike action occurred and POAL locked out employees. At the heart of the dispute was the proposal by POAL to contract out some of the work being performed by MUNZ members. MUNZ applied to the Employment Court to determine the legality of POAL’s contracting out proposal but the Court has not yet finally decided the matter.

Further direct action was taken in February and March this year before POAL and MUNZ jointly applied to the Authority, in April, for access to facilitation on the ground that there had been protracted strikes and lockouts during the course of the bargaining.

Facilitation commenced on 8 May 2012 and has continued since then, with regular meetings of the parties.

Several key issues remain unresolved and the parties have sought recommendations from the facilitator as provided under the Act.

POAL has sought changes to the terms and conditions of employment because it considers that improvement in labour utilisation and productivity from stevedoring work is necessary for POAL to deliver better financial returns and allow closer performance to its competitor, Port of Tauranga. POAL also considers that the collective agreement restricts its ability to respond quickly enough to meet customer demand and that these have led to a loss of volume handled by the container terminal.

The approach of MUNZ at the beginning of facilitation was to express willingness to consider improvements to the way the Port operated so as to allow greater efficiency to be achieved. MUNZ considers that any change to the hours of employment of stevedores needs to be made with professional advice taken as to the health and safety implications of any significant alterations to the rostering system. MUNZ has proposed a number of changes to operations which it considers will help achieve the objectives of POAL while balancing employees’ needs for security and time with family. However, MUNZ says there is a need to ensure the new collective agreement protects employees’ terms and conditions of employment against the consequences of POAL contracting out any of the work.

Much work has been done by POAL and MUNZ to devise a system of rostering and allocating hours of work that will meet the requirements of both parties. However, to date a mutually acceptable rostering system has not been found. MUNZ has also proposed that any new roster be trialled for a period of time to measure what can actually be delivered through them, but POAL considers that a trial is not practicable or feasible within the limitations of time and the needs for its operations to continue.

The central matter on which the facilitator may make recommendations is the contracting out proposal. In June POAL announced that it had rescinded its earlier decision to appoint contractors. POAL also said it was willing to discuss a moratorium on contracting out for a period during the term of a collective employment agreement, provided operational KPIs could be met.

The health and safety concerns raised by MUNZ have been the subject of a report by an expert the union commissioned for that purpose, Dr Kathleen Callaghan. POAL also provided a report from its own expert, Mr Andrew Loader, who reached different conclusions. The Authority then engaged a recognised health and safety in employment expert, Associate Professor Sally Ferguson. She has now produced a report which is viewed as instructive and helpful.

The parties intend to meet again shortly to discuss the recommendations they seek and the delivery of those to them by the facilitator.

No doubt Mr Dumbleton’s recommendations will be eagerly waited in due course.

For a full copy of the report including details of the POAL and MUNZ proposals for a new agreement…

Comment:

From the outset our view has been there are only three broad areas for settlement:

1. POAL forgoes its right to contract out – rated as unlikely, or
2. MUNZ accepts POAL may contract out some of the work – also rated as unlikely, at least at this point in time, or
3. Some compromise where POAL retains the right in the agreement to contract out but agrees not to exercise that right for a specified period of time (perhaps up to the full term of a new agreement), subject to achievement of specific KPIs and flexible working rosters. However, even if such an agreement could be achieved, there is much fertile ground for dispute over attainment of KPIs and/or reasons for non-attainment.

The pay offer reflects a translation to a shortened pay scale for trained teachers from 13 January 2013. For the trained scale instead of the current 12 steps there will be only 10 with the bottom end receiving larger increases as three grades are rolled into one. The current minimum salary of $36,523 will increase to $44,400.

The term of the agreement will be from 1 January 2013 to 30 June 2015.

For more details on the new scales…

Establishing What Days are Public Holidays:

Under the Holidays Act employees are entitled to eleven Public Holidays per year, but only if the holidays fall on days that would otherwise be working days for them. That means some employees will not get eleven Public Holidays because some of them fall on days that are not otherwise working days for them. For example an employee who only works on Thursday and Friday will not get any public holidays over the Christmas/New Year period this year because they fall on a Tuesday and Wednesday.

Determining what would otherwise be a working day:

Where it is not clear “What would otherwise be a working day” the employer is required to take into account a number of factors such as the employment agreement, the employee’s work patterns and other relevant factors such as the roster, the reasonable expectations of the employer and the employee that the employee would work on the day concerned and whether, but for the day being a public holiday, the employee would have worked on the day concerned.

Requirement to Work on Public Holidays:

An employee may only be required to work on a Public Holiday if that day would otherwise be a working day for them.

Payment for Working on a Public Holiday:

Every employee who works on a public holiday is entitled to be paid a premium regardless of whether or not that day would otherwise be a working day for them. The premium for most employees is loosely described as time and a half. However, that is not 1.5 times their base rate. Rather it is what they would otherwise have been paid for working on the day (ie their relevant daily pay) plus half that amount again.

Technically the entitlement is described as the higher of:

• the portion of their Relevant Daily Pay or Average Daily Pay (less any penal rates) that relates to the time worked on the day, plus half that amount again, or
• the portion of their Relevant Daily Pay that relates to the time worked on the day

The second option is likely to prevail where an employee’s employment agreement entitles them to payment of double time rate for working on a Public Holiday.

Entitlement to an Alternative Holiday:

An employee who works on a Public Holiday which would otherwise be a working day for them is also entitled to a whole Alternative Holiday on pay at a later date.

For example, an employee called in to work for a few hours on a Public Holiday would get at least time and a half for the time worked plus a whole paid Alternative Holiday at a later date. Similarly an employee who works late on the evening before a holiday (e.g. until 12.30 am on Boxing Day) would get the period of time worked on the holiday at T 1.5 (in this case 30 minutes @ T 1.5) plus another whole alternative holiday at a later date even though they only worked half an hour into the Public Holiday.

So working an employee on a Public Holiday for only a short period of time can be expensive as they are entitled to a whole Alternative Holiday regardless of the length of time they work on the holiday.

Taking Alternative Holidays:

Alternative Holidays should be taken by mutual agreement between the employer and the employee. Subject to the express provisions of an employment agreement, in the absence of agreement the employer can make the decision, provided the employer makes the decision on a “reasonable basis”. Not less than 14 days’ notice is required.

Employees who do not take an Alternative Holiday within 12 months of becoming entitled to it may, with the agreement of their employer, cash up their entitlement to an alternative holiday by taking payment for the day instead of the paid time off.

Payment for Observing a Public Holiday:

Employees who would otherwise work on a Public Holiday but who take the day off are entitled to be paid their relevant daily pay for the day – i.e what they would otherwise have got if they had worked on that day of the week.

Employee On-Call on Public Holiday:

Employees who are “on-call” on a Public Holiday and who are called in to work are entitled to be paid the appropriate portion of their relevant daily pay for the time actually worked, plus half that amount again. They are also entitled to an Alternative Holiday on pay at a later date.

Employees who are “on call” on a Public Holiday but who are not called into work will only be entitled to an Alternative Holiday if the nature of the restriction imposed by the on call arrangement on the employee’s freedom of action is such that, for all practical purposes, the employee has not had a whole holiday. Any dispute on whether an on-call employee is entitled to an Alternative Holiday can be determined by a Labour Inspector from the Department of Labour. Guidelines issued by the Labour Department state as follows:

If the on-call employee is required to restrict his/her activities on the day concerned to the extent that they have not enjoyed a full holiday (e.g. if required to stay at home all day) but is not called out, then the employee is entitled to a full paid day off as an alternative holiday.

However, unless the employment agreement provides otherwise, an employee on call who is able to go to about their usual activities on the basis they are obliged to respond to a callout within say 2 hours, may not be entitled to an Alternative Holiday if they are not called out to perform any work on the Public Holiday.

Sickness or Bereavement on Public Holiday:

In the case of an employee scheduled to work on a Public Holiday who calls in sick (or suffers a bereavement) on that day, the day is to be regarded as a sick or bereavement leave as the case may be. The employee is entitled to be paid their relevant daily pay for the day which means the employee would receive the same amount as any other employee who had the day off on the holiday, but there is no entitlement to an Alternative Holiday.

Increases over the last few years have been as follows:

There was an interesting article in the NZ Herald recently concerning a case study in New Jersey. Two noted economists David Card and Alan Krueger examined the response of fast food restaurants to a rise in the State’s Minimum Wage and found that increasing the rate had increased employment. However, most economists still think the reverse is true.

New Zealand was the first country to introduce a minimum wage in 1894. Britain did not introduce one until 1999 and surprisingly Germany still does not have a minimum wage.

Based on OECD figures, in 2011 the minimum wage as a percentage of median earnings in the following countries was:

In addition to the changes initially announced, there are two important additions.

Part 6A, which governs the transfer of employment of employees in the cleaning, catering, orderly and laundry industries, has proved difficult or indeed impossible to apply. There has been extensive litigation over the matter in relation to which employees are entitled to transfer to the new employer, the apportionment of employee entitlements such as annual leave between the outgoing and incoming employers and the introduction of tactics where the outgoing employer has significantly increased employee benefits immediately prior to the changeover.

The good faith provisions in respect of restructuring have also caused significant unintended consequences. Presently under s4(1A)(c) an employer who is proposing to make a decision that will, or is likely to, have an adverse effect on the continuation of employment of employees must provide them with access to information and an opportunity to comment on the information before the decision is made. The Employment Court in Massey University v Wrigley made determinations that employers found unduly onerous, including the right of employees to have access to selection panel members’ interview notes.

An analysis of the proposed changes follows:

1.  Changes to Part 6A – transfer of vulnerable employees

• This section will not apply to any business with fewer than 20 employees, where it is the incoming employer. That means such employers will not be obliged to employ employees of the outgoing employer.
• The outgoing employer will be required to forward information relating to employee entitlements to the new employer, such as employment agreements, PAYE, wage, time and leave records.
• There will be a process to determine the apportionment of liability for service related benefits.
• Employees who elect to transfer to the new employer must notify the new employer of their decision within five working days.
• In addition there will be new penalties for non-compliance with Part 6A.

2.  Changes to Restructuring

• Beyond the general statement Government is intending to limit the information required to be made available to employees affected by restructuring, no further details are yet available.

3.  Extending flexible working arrangements

• Currently only care givers may make a request for flexible working arrangements.
• The employer must respond to the request within 3 months and may decline it.
• An employee may not make more than one request every 12 months.
• Government intends to extend the right to request flexible working arrangements to all employees and the time for the employer to respond to a request will be reduced from 3 months to 1 month.

4.  Removing compulsion to conclude a collective agreement

• Currently the parties must conclude a collective agreement, unless there is a genuine reason, based on reasonable grounds, not to.
• Government intends to remove that obligation by reverting to the pre-2004 provisions. It will also amend the obligation to continue to bargain on matters on which deadlock has been reached [s32(1)(ca)].
• The Government also intends to give the ERA the power to make a determination that bargaining has ended depending on the specific circumstances.
• The question is whether the above provides any real change. The duty of good faith would remain and that almost certainly would mean that there would be an obligation to make reasonable endeavours to settle a collective agreement.
• In that case small employers and/or those with low levels of union membership would not escape the significant time and cost incurred in unwanted collective bargaining.

5.  Removing the requirement to hire new employees on the collective agreement

• Government intends to permit new employees to be hired on different basis from any applicable collective agreement (including on less beneficial terms of employment).
• This would benefit employers unable to introduce necessary changes to terms and conditions of employment through the collective bargaining process.
• However, some creativity would be required in developing the new offer to discourage the new employee from simply joining the union and automatically becoming bound by the collective agreement provisions.
• Usually there is considerable scope to develop new terms of employment which benefit the employees concerned, which are not necessarily of a monetary nature.
• Note that the obligation to provide a copy of the collective agreement would remain.
• Note also that care would be required in drafting the IEA offer to prevent IEA benefits, such as a higher rate of pay, being retained by the employee should they join the union and become covered by the collective agreement.

6.  Giving employers the right to opt out of MECA bargaining

• Currently employers cited are required to constructively engage in the bargaining process.
• There is no compulsion to settle a MECA, but employers are still compelled to incur time and cost of the bargaining process. The proposed change would enable employers to opt out of MECA bargaining, provided they give written notice to the union(s) within 10 days of receiving the notice of initiation.
• Note that would not prevent the union(s) from then initiating bargaining with the employer for a single employer collective agreement (SECA).

7.  Pay Reductions for Partial Strike Action

• Partial strike action has increasingly become a weapon of choice for unions – for obvious reasons.
• The proposed change would enable employers to make pay deductions for partial strikes.
• The employer must provide written notice to an employee that their pay is being reduced, although the amount does not have to be specified.
• The process for determining the amount of deduction would be determined by comparing the time spent on the work not being performed as a proportion of the employee’s hours of work for the day in question.
• The Wages Protection Act will also need to be amended to allow for deduction of overpayments where it’s not possible to make the deduction in the pay period in which the partial strike occurs.
• If there is a dispute about the size of the deduction for the partial strike action, the usual employment relationship problem resolution processes are available – Mediation, ERA determination, Employment Court and so on.

8.  Requirement to provide notice of strike action

• Currently striking employees do not have to provide notice of strike action, except in essential services.
• Often employees just walk out and the employer may not even know they have gone.
• The proposed amendment requires written notice of strike action (except for H&S issues).
• The notice must set out the same information as is required for essential services – the period of notice being given, the nature of the strike, the location, start and end dates and clear identification of which employees will be striking. The notice must be detailed enough to allow the employer to know what is going to happen.
• On the face of it this is likely to reduce the incidence of wildcat strikes. However, there would be no minimum notice period so employees would be able to simply drop off a written notice on the way out, with the result that the employer may have no more warning than at present.

9.  Removing different time frames for initiation of bargaining

• Currently a union may initiate bargaining 60 days before expiry and the employer may only initiate 40 days before expiry.
• The proposal would permit both parties to initiate at the same time.
• Unions were concerned that allowing employers to initiate at the same time as unions would cause undue competition to initiate first because under s53(2) if the employer initiates bargaining the resultant collective agreement does not have the benefit of extension for up to 12 months after the stated expiry date.
• Government proposes to remove this anomaly, which should ensure the initiation of bargaining is a non-event.

In the September 2012 quarter compared with the June 2012 quarter:

• The seasonally adjusted number of filled jobs rose 0.3%.
• The seasonally adjusted number of full-time equivalent employees (FTEs) fell 0.1%.
• Average ordinary time hourly earnings rose 1.1%.

In the September 2012 quarter compared with the September 2011 quarter:

• The seasonally adjusted number of filled jobs rose 1.4%.
• The seasonally adjusted number of FTEs rose 1.6%.
• Average ordinary time hourly earnings rose 2.8%.

For more details www.statistics.govt.nz

Prices rose for cigarettes and tobacco (up 13%, reflecting a 14.49% rise in excise duty in January), rentals for housing (up 2.4%), and electricity (up 4.4%).

Prices were lower for telecommunication services (down 7.5%), audio-visual equipment (down 18%), and fresh milk (down 9.3%).

For more details see:  www.statistics.govt.nz/

In the year to the September 2012 quarter:

• Salary and wage rates (including overtime) increased 1.9%.
• Overtime wage rates increased 2.4%.
• Private sector salary and ordinary time wage rates increased 2.1%.

For more details: www.statistics.govt.nz

Not surprisingly the USU, ETU and APESMA unions have urged the employer, Endeavour Energy (which is owned by the NSW Government) to abandon further appeals against the matter and limit random drug testing to oral swabs.

For its part Endeavour Energy said it is committed to protecting employees and the public from the foreseeable risks presented by employees who may be unfit for work due to drug or alcohol use. It said it had been advised that urine testing was the most accurate and effective way of detecting the foreseeable risk of an employee being unfit for work due to drug or alcohol use.

The unions accepted that there should be a drug and alcohol policy to identify whether employees were fit for duty and did not oppose random testing.

The parties had agreed in their 2010 enterprise agreement to refer their differences regarding the proposed drugs policy to FWA for conciliation and /or arbitration.

Conciliation was not successful and the arbitral proceedings extended over 5 days.

Endeavour proposed urine testing and the unions saliva testing. The Senior Deputy President considered the expert evidence and found the introduction of urine testing would be unjust and unreasonable. He found that saliva testing in accordance with AS4760-2006 was appropriate. He also determined several other aspects including the acceptable blood concentration to be applied, pre-employment and pre-placement testing, the process for random testing and the criterion to be applied for cause/suspicion, accident or post incident testing.

The Senior Deputy President determined he should “not seek to interfere with the right of the employer to manage his own business unless he is seeking from the employees something which is unjust and unreasonable”.

He concluded that “urine testing is more accurate in that it is more likely to pick up whether an employee has at some stage taken certain substances” but added that “an employer has no right to dictate what drugs or alcohol its employees take in their own time. In fact it would be unjust and unreasonable to do so”.

He found that both tests were susceptible to cheating. While neither method tests directly for impairment, a method which tests for recent consumption only (oral testing) is more likely to identify someone who is impaired.

Not only is urine testing potentially less capable of identifying someone who is under the influence of cannabis, it also has the disadvantage that it may show a positive result even though it is several days since the person has smoked the substance. That means the person may be found to have breached the policy even though their actions were in their own time and in no way affect their capacity to do their job safely at the time of the test.

On appeal, Endeavour stated that the expert evidence indicated that urine testing had a more substantial deterrent value and that the oral test was more likely to result in a negative test before the impairing effects of cannabis has worn off. Endeavour argued that the Senior Deputy President had placed inappropriate weight on the evidence given by witnesses who were not toxicologists.

Endeavour also submitted that the Senior Deputy President erred in not following the approach adopted by Lawler VP in CFMEU v HWE Mining Pty Limited as that decision reached a different conclusion on the appropriate testing method. It also argued the Senior Deputy President failed to give adequate weight to the duties and obligations of employers under the Work Health and Safety Act 2011.

The appeal was dismissed on the basis that the approaches and policies to be adopted by employers on drug and alcohol testing will depend on what is deemed appropriate to their needs and circumstances. In the circumstances of this case it was decided it was open and appropriate for the Senior Deputy President to conclude that oral fluid testing for drugs should be adopted as part of the new drugs and alcohol policy of Endeavour Energy.

With regard to the HWE Mining decision, that employer was proposing to introduce saliva testing alongside a continued role for urine testing as compared with the introduction of a new policy by Endeavour Energy. Also whereas concerns were expressed in the HWE case in 2010 concerning the efficacy of the on-site fluid testing, since that time there have been significant improvements in the reliability of on-site oral fluid testing devices.

The review panel comprised Professor Emeritus Ron McCallum AO, the Honourable Michael Moore, and Dr John Edwards and the terms of reference were determined by Employment and Workplace Relations Minister Bill Shorten to examine and report on whether the Fair Work legislation is operating as intended and in accordance with the objects of the Act.

Enterprise bargaining and agreement making

The most significant areas of reform when the Fair Work Act was introduced were to enterprise bargaining and agreement making. The introduction of scope orders and majority support determinations, the concept of bargaining representatives, and the good faith bargaining obligations have been the subject of much case law. The recommendations are that:

• The good faith bargaining obligations apply in respect of negotiations to vary an enterprise agreement, and when bargaining for a greenfields agreement.
• FWA be empowered to intervene in bargaining disputes (including negotiations for a greenfields agreement), to assist parties through a process of conciliation.
• An employer intending to make a greenfields agreement must notify all unions with possible representation rights of that fact.
• FWA have ‘last resort’ arbitral powers to resolve an impasse in negotiations for greenfields agreements.
• Opt-out clauses be prohibited in enterprise agreements.
• An employer be required to lodge a notice of employee representational rights with FWA, for publication on its website.
• Prohibit a union official from being appointed a bargaining representative for employees for whom that union does not have coverage, and
• The application of the better off overall test be monitored to ensure that it is not being implemented in too rigid a manner or resulting in agreements being inappropriately rejected.

Industrial action

Two recommendations are particularly worthy of note.

The first is to restrict access to protected industrial action to situations where bargaining has commenced voluntarily, or a majority support determination has been obtained. This, in effect, reverses the decision of the Full Federal Court in the JJ Richards case which found that unions and employees could obtain protected action ballot orders and commence industrial action before bargaining had commenced.

The second is to remove the current powers of the Minister to terminate protected industrial action by way of ministerial declaration. The current provision providing that power has not been utilised in the three years that the Fair Work Act has been in effect. Fair Work Australia will retain its limited power to terminate protected industrial action on application by the federal Minister, some state Ministers, or a bargaining representative.

General protections

The panel has recommended changes to the adverse action provisions. These proposed changes, in effect, reverse the majority decision of the Full Federal Court in Board of Bendigo Regional Institute of Technical and Further Education v Barclay [2012] HCA32. In that case, Justices Gray and Bromberg found that a decision maker can be ‘infected’ with prohibited reasons by an ‘unconscious bias’.

The panel’s recommendation is to make clear that the central consideration about the reason for taking adverse action is the subjective intention of the decision maker. The High Court of Australia has subsequently confirmed that the subjective intentions of the employer are relevant in determining whether it has taken adverse action against an employee.

Another recommended change which will be welcomed by employers is to reduce the timeframe for bringing a general protections claim relating to termination of employment from 60 days to 21 days.

Unfair dismissal

The bulk of the panel’s recommendations to the unfair dismissal laws are designed to make applicants more accountable for their claims. Under the proposals, costs orders will be available against applicants who unreasonably fail to discontinue a proceeding or agree to terms of settlement. The tribunal will also have the power to dismiss unfair dismissal applications ‘on the papers’ where an applicant fails to comply with directions or orders, or fails to attend a proceeding. More rigour will be expected of applicants in providing information relating to the dismissal on the initial application form. These proposed amendments were in response to numerous submissions from employers expressing their frustration about the need to pay ‘go away’ money to settle unmeritorious unfair dismissal applications.

The panel recommended the time for lodging an unfair dismissal claim be extended from 14 days, to 21 days, in line with the proposed timeframe for general protections claims.

Transfer of business

In a change also likely to be welcomed by employers, the panel recommends amendments to the transfer of business provisions which will provide greater flexibility for employees who want to transfer employment within a corporate group. In such circumstances, the employee’s previous industrial instrument will not transfer with them.

The safety net

The panel recommends a number of relatively minor amendments to the National Employment Standards. Of note are the recommendations that employees absent from work on workers’ compensation do not accrue annual leave, and that annual leave loading is not payable on termination of employment. The panel also recommends that requests for flexible working arrangements be made available to a broader range of carers.

Individual flexibility arrangements (IFAs) were seemingly included in the Act to compensate the loss of statutory individual employment agreements (AWAs). The current IFA provisions have proven to be unworkable for employers, and are rarely used. Of some surprise then is the proposal that employers lodge IFAs with the Fair Work Ombudsman. This would allow, in the panel’s view, the Ombudsman to investigate, in its absolute discretion, whether the use of IFAs are being abused by employers. Other proposed changes will see the maximum period for unilateral notice of termination of an IFA extended from 28 days to 90 days.

Implications for employers

Given the terms of reference, it was not anticipated that the sweeping changes sought by employers would be endorsed for the panel. The recommendations are, in effect, a mixed bag for employers. There are proposed changes which no doubt will be welcomed, while others will be met with caution, concern or alarm.