Story: Law and the economy

Page 4. Employment law

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Industrial Conciliation and Arbitration Act 1894

The Industrial Conciliation and Arbitration (I. C. and A.) Act 1894 addressed a situation where arbitration decisions brought down by an existing Arbitration Court were ignored by employers. Under the act it was voluntary for unions to register with the court, but it was compulsory for employers. Any registered union could bring any employer before the Arbitration Court, and the court's decisions were legally binding.

Many disputes concerned wages; and the I. C. and A. Act enabled compulsory wage setting. Minimum wage legislation was also developed in New Zealand in the 1890s. In 1936 the I. C. and A. Act was amended to provide a 40-hour working week and compulsory union membership.

Centralised wage setting, with minimum wages for an entire industry set by a single arbitrator, was common practice until 1973. However, it was abandoned at times of employer pressure, notably between 1932 – the low point of the 1930s economic depression – and 1937.

This framework came under pressure as inflation gained momentum in the late 1960s, and it was replaced in a sequence of five acts, beginning with the Industrial Relations Act 1973, which relaxed the statutory restrictions on employment relationships.

Employment acts 1991 and 2000

The employment acts of 1991 and 2000 had differing philosophical bases, reflecting differences in the outlook of the governments which introduced them.

National’s Employment Contracts Act 1991 stipulated that employment should be managed by contracts between employer and employee, who could set whatever terms and conditions they agreed on.

Labour’s Employment Relations Act 2000 placed limits on the kinds of arrangements that could be entered into between employer and employee; for instance, unions alone were allowed to negotiate collective contracts with employers.

Other factors affecting employment law

Employment law varies amongst nations, and differences between the employment rates of OECD countries have been attributed to different employment laws.

Employment law is affected by other related laws, such as those that set liquor and shop trading hours. In the 1960s New Zealand employers had to pay additional wages for any employment engaged in outside the five-day 40-hour working week. This was supported by the regulation of shop trading hours, which were limited by law to little more than these hours.

In the later 20th century employment legislation changed, in large part because of social change. Women once had low participation rates in the paid labour force, reflecting the social mores of the day, which were buttressed by employment and trading laws. Laws passed in the 1970s and 1980s ended such restrictions. The development of employment legislation thus illustrates that the legal framework of economic activity is responsive to social change.

How to cite this page:

Lewis Evans, 'Law and the economy - Employment law', Te Ara - the Encyclopedia of New Zealand, (accessed 18 April 2024)

Story by Lewis Evans, published 11 Mar 2010