The Employment Contracts Act 1991
For almost a century after it was passed in 1894, the Industrial Conciliation and Arbitration Act gave trade unions a dominant role in New Zealand industrial relations. In 1991 there was a rapid fall in union membership as a percentage of the labour force when the Employment Contracts Act (ECA) made union membership voluntary, and allowed anyone to bargain on behalf of workers.
Employees could choose to work under either an individual or collective employment contract, which affected only the specific employers and employees who signed the agreements. Bargaining over contracts and disputes was entirely voluntary. Unions had no special status in the process because the ECA promoted direct bargaining between employer and employee. If they could not agree, the dispute went to an Employment Tribunal and, if necessary, to an Employment Court. By 1999 the Tribunal had a backlog of over 3,000 cases, so it took up to a year to deliver a ruling.
The Employment Relations Act 2000
In 2000, after the election of a Labour government, the Employment Relations Act (ERA) once again promoted mediation to resolve industrial disputes. Under the ERA, an employer and employee or union must deal with each other in good faith and not do anything to mislead each other. The Act set up free mediation services for employers and employees. If no agreement could be reached, or if one side refused to attend a hearing, the Employment Relations Authority (which took over from the Employment Tribunal) could decide on the case. If either side was unhappy with the decision, they could go to the Employment Court, which had to consider further mediation before making a final decision.
After the Employment Relations Act was passed in 2000, more than a hundred new unions were registered under the Act. These were mostly very small, and they included the first-ever union covering professional rugby players.
Union membership remained voluntary, so individual workers could still negotiate their own terms of employment. However, collective bargaining by unions was encouraged. A collective agreement is a contract between an employer and a union. An individual union member could negotiate extra terms to this contract if they were consistent with the collective agreement.
Strikes and union membership
Under the ERA workers could legally strike while their union was negotiating a collective agreement or when there was a serious health and safety issue at work. Workers in essential services, such as the supply of fuel, power and water, or emergency services, were required to advise their employer in advance of a planned strike.
As in the first years after the Industrial Conciliation and Arbitration Act 1894, since the 1990s New Zealand has had a very small number of strikes compared with similar countries. This was partly due to legislation such as the Employment Relations Act, which encouraged industrial disputes to be solved by mediation at an early stage. It also reflected New Zealand’s internationally low rate of union membership – in 2008, only about one in five workers belonged to a union. As in other developed countries, New Zealand had a high proportion of part-time and temporary jobs, making it much harder for workers to combine in industrial actions such as strikes.