It's More Than Tinkering - Changes to The Employment Relations Act

The Employment Relations Amendment Bill (No 2) has received assent and is now in force although most of the changes don’t come into effect until 1 April 2011.  However, given the substantial nature of some of the changes an "early bird" consideration is warranted. We only address those changes that we believe will have most impact on employers.

Employers should note that one of the compliance changes in the amendments is the strict requirement that employers retain a copy of individual employment agreements or individual terms and conditions of employment. This may have been best practice for most employers but now it is essential.

A copy must be retained even if the employee does not sign or agree to the terms and conditions. If an employer does not retain a copy of the IEA they may be subject to a penalty up to $20,000. There is no indication in the amendments as to how long an employer must keep this information.

One of the more publicised amendments is the extension of the 90-day trial period option to all employers (it was limited to those employers with fewer than 20 employees).

Trial periods in the right situation are helpful to employers however the Employment Court in Smith v Stokes Valley Pharmacy (2009) Ltd has reminded us that the compliance with, and application of, the trial period provisions in the ERA 2000 will be applied very strictly. This is because the statutory trial period provisions exclude the fair procedure that is otherwise expected before a termination can lawfully occur.

For those employers with a union presence in the workplace there is an ability to control access to a greater degree than before. Under the Employment Relations Act 2000 there have been several challenges to union access to the workplace by employers. It would be fair to say that the rub of the cases has gone against employers in the majority of the access decisions.

The new amendments set out a process which a union representative must follow before entering the workplace. Before entering a workplace a union representative must request and obtain the consent of the employer. However the employer must not unreasonably withhold consent, must respond to the request no later than 2 working days after the request was received and must give reasons in writing if consent is withheld. In addition if the employer does not respond within 2 working days then consent is obtained by default.

Employers will have to carefully consider their reasons to withhold access consent. Unreasonably withholding consent or failure to give reasons in writing for withholding consent can attract penalties. It must also be remembered that a union has a statutory good faith employment relationship with an employer. Therefore employers should stick to reasons such as health & safety, commercial sensitivity, security and business productivity to better determine when union access should occur. It is doubtful that a commercial business employer could continually deny union access. It is the ‘when’ not ‘if’ the union will have access that employers will control.

Communications with employees during collective bargaining

This is a topic that has been an issue for some years with allowable communications swinging from a complete ban to the Court of Appeal’s view that the right to communicate directly with employees is preserved as long as:

• the employer’s communications do not undermine or do anything that is likely to undermine the bargaining; or
• the union's authority, and
• as long as the communications do not amount to negotiating directly or indirectly with union represented employees during collective bargaining

Now an employer can communicate its proposal for the collective agreement to its employees. However, the rest of the good faith criteria in section 32 continue to apply as will any bargaining code the parties agree to prior to engaging in collective bargaining. Therefore, it is likely that the employer’s limited right to communicate with employees during collective bargaining will in reality be of minimal use.

If you have never been exposed to the great ‘would’ v ‘could’ debate that followed the introduction in 2004 of s103A which introduced an objective test for justified dismissal or action then below is a simple 101.

The ‘could’ application that reigned before the introduction of s 103A allowed an employer to apply a range of possible disciplinary action options to a particular misconduct. The ‘would’ application seemed to mean that there was only 1 fair and proper action that a reasonable employer could take which required the ERA or a Judge to review and determine on an objective basis.

The amendments retain the objective criteria but reintroduce the ‘could’ application and provide a series of things that the ERA or Court must consider when applying the justification test. These considerations should not be strangers to employers when they apply a fair process and include whether:

• having regard to the employer’s resources there was a sufficient investigation before dismissal or taking disciplinary action;
• the employer raised its concerns with the employee before dismissal or taking disciplinary action;
• the employer gave the employee a reasonable opportunity to respond to the concerns before dismissal or taking disciplinary action;
• the employer genuinely considered the employee’s explanation before dismissal or taking disciplinary action.

Employers will be delighted to know that the amendments also mean that the ERA or Court cannot decide that there has been an unjustified action or dismissal solely because of a defect in the employer’s process if the defects were minor or technical and did not result in the probability that the employee was treated unfairly.

The hope is that the changes will mean that the employer’s process will not be subjected to minute or pedantic scrutiny so that if an action or dismissal is otherwise justifiable it will not fall over because of a minor or technical defect.

Finally, for those employers who are required to attend an ERA investigation meeting it will pay to know that your cooperation in that process is essential. The amendments arm the ERA with the ability to award a monetary penalty against a person who obstructs or delays an Authority investigation. Obstructive/delaying behaviour will include failing to attend an Authority investigation.

The ERA will also now have the ability to dismiss any proceedings it considers to be frivolous or vexations. This may indeed be good news to those employers who are forced into the full ERA investigation process when a claim has no merit.

Updated: February 2011