HRM603: COMPARATIVE STUDIES IN INDUSTRIAL

OR EMPLOYMENT RELATIONS

INDUSTRIAL OR EMPLOYMENT RELATIONS IN

NEW ZEALAND
 CONTENT
 Objectives
 Introduction
 Background
 IR parties & Institutions in New Zealand
 Key Features & Process of ER/IR in New Zealand
 Current changes/trends in ER/IR in New Zealand
 Summary & conclusion
 OBJECTIVES
At the conclusion of this topic, you should be able
to:

1. Describe the various IR parties & institutions in

New Zealand.
2. Critically examine the main key features &
processes of New Zealand ER/IR System.
3. Explore the current trend/changes in ER/IR in
New Zealand
4. Compare & contrast the main key features of
New Zealand's ER/IR system with other
countries ER/IR Systems
 INTRODUCTION
 New Zealand has a colorful industrial or employment
relations history
 It has ventured through a full range of industrial or
employee relations systems over past 30 years
 Each system has given a different shape and character to
Collective bargaining in NZ
 Since 1894, the predominant system was one of
compulsory conciliated bargaining, backed by arbitration,
if needed
 Amidst the reform of 1980s, substantially more - and
more decentralized – bargaining was intended by the
Labour government’s 1984-1987 legislative initiatives
 INTRODUCTION (CONT)
 However, in the bigger scheme of things, the impact in
terms of collective bargaining was minimal
 The State Sector Act of 1988 did more to stimulate
‘enterprise‘ based collective bargaining
 It also changed the nature of collective bargaining, but its
immediate impact was limited to the public sector
 Between 1890s and 1980s, more and more involvement
in collective bargaining
 This system also required a cadre of talented negotiators
and mediators, accomplished at guiding parties towards
agreements, and putting out ‘bush fires’ in the process
 BACKGROUND
 1770 - British Colony - British IR Influenced NZ IR
 Population: 4.9 Million (July 2019 est.)- CIA, Factbook
2020)
 Labour Force – 2.65 Million (est. 2017- CIA, Factbook
2020)
 Labor force by occupation - Agricultural: 6.6%;
Industry: 20.7%; Services: 72.7.% (2017 est.)
 Unemployment rate of – 4.7% (2017 est.- CIA, Factbook
2020)
 BACKGROUND (CONT)
 GDP: $201.4 billion (2017 est.) US$ (PPP) – PER
CAPITA 39000 US$ (CIA, Factbook 2020)

 GDP Growth Rate 3% (2017 est. - CIA, Factbook 2020)

 (2016- 4.1%, 2015 – 4.2%)

 Inflation rate of 1.9 % (2017 est)

 POLITICAL/LEGAL ENVIRONMENT
 NZ legal system is based on English law

 New Zealand's legal system is not based on an enacted

legal constitution, but legal right & obligations in NZ are
from law enacted by NZ parliament and from the
common law developed by courts that make up NZ’s
judiciary (National Labour Law Profile – New Zealand,
2011)

 Government Type: Parliamentary democracy (New

Zealand Parliament) under a constitutional monarchy;
 POLITICAL/LEGAL ENVIRONMENT
Executive Branch

 Chief of the State: Queen ELIZABETH II; represented

by Governor General - Rt Hon Dame Patsy Reddy (since
August 2016)

 Head of government: Prime Minister Jacinda Ardern

(since 26 October 2017)
 Political party: Labor Party

 Cabinet: Executive Council appointed by the governor

general on the recommendation of the Prime minister
 POLITICAL/LEGAL ENVIRONMENT
Legislative branch:
 The legislative power is vested in the unicameral House
of Representatives - commonly called parliament (usually
120 seats; 71 members directly elected in single-seat
constituencies, including 7 Maori constituencies, by
simple majority vote and 49 directly elected by
proportional representation vote; members serve 3-year
terms)
 Elections: last held on 23 September 2017 (next to be
held by November 2020)
 POLITICAL/LEGAL
ENVIRONMENT
 Judicial branch:
 The judicial power is vested in the judges who
are independent and subject only to the law
 Supreme Court; Court of Appeal; High Court;
District Court;
 Note - judges appointed by the governor
general
 PARTIES TO IR – TRADE UNIONS
 The Trade Union Act (1908) –sets out the legal basis for
TU
 In 1991, Employment Contract Act (ECA) was enacted –
it was a direct attack on the Unions’ power base.
 ECA (1991) abolished the union’s monopoly position,
restricting the union’s ability to pursue multi-employer
bargaining.
 The tax exemption of unions fund was also abolished in
1991
 Since the ECA (1991), unions found it difficult to
organize at many work sites.
 PARTIES TO IR – TRADE UNIONS
 By mid 1990s, there were no union presence in many
enterprise in private sector, which use to have TU.
 Industrial action, strikes and lockouts had decreased/
were at their lowest point due to weaken TU movement.
 Trade union density decreased.
- Union density declined in the period of 1991 to 1998
from 41.5% to 17.7% respectively ( Rasmussen et.al.,
2006)
 The minimum number of members required to form a
union is 15.
 PARTIES TO IR – TRADE UNIONS
Main TU Confederation
 NZCTU – New Zealand Council of Trade Union (main
umberral body)
Aim: to protect the interests of TUs

 1983- Trade Union Federation was formed as an alternate

body from core blue color workers.

 1987 - The NZ Council of Trade Unions formed to

replace Federation of Labor.

 2000- Both merged to from the NZCTU.

 PARTIES – EMPLOYERS ASSOCIATION
 1970 - New Zealand Business Roundtable (NZBRT)
was formed.

 NZBRT is one of the most influential of the employer

lobby groups. Membership of the Roundtable is by
invitation only and restricted to the chief executives
(CEO’s) of about 57 of New Zealand’s largest companies.

 The New Zealand Employer’s Federation (NZEF) and the

NZ Manufacturers’ Federation (NZMF) are most
representative of employers’ interests.
 PARTIES – EMPLOYERS ASSOCIATION
 In 1997 Auckland Employers Association and Auckland
Manufactures Association amalgamated creating the
largest employers association in NZ. (It has
membership base of over 4000)
 It draws membership from private and public sectors
and represents large, medium and small enterprises
 PARTIES – EMPLOYERS ASSOCIATION
 The amalgamation between branches of the NZEF and
MF also created a stronger lobbying position under NZ’s
novel election system where more political parties can
influence government policy

 Under the ECA, the NZEF has focused on its lobbying

position and on developing coherent policy positions for
its member organizations since it no longer has a
bargaining role.
 THE ROLE OF STATE
 Plays a very active role in ER/IR environment (The state
is the most important employer )

 State has passed a number of laws to regulate IR and ER:

a) In 1894 - Liberal government passed the first IR

legislation, -Industrial Conciliation and Arbitration
Act (1894)

- Its purpose was to strengthen the role of unions as well

as provide a legal procedure for settling workplace
conflict and enforcing industrial agreements.
 THE ROLE OF STATE
i) Provided a legal procedure of settling industrial disputes

ii) Setup conciliation/mediation/arbitration process

iii) Provided the room for minimum wages & working

conditions

iv) Enforced ‘ Industrial Agreements’ (Awards)

v) Legalized/ recognised existence of TU

 THE ROLE OF STATE (CONT)
b). Minimum Wage Act 1983 – sets out minimum wages
rates for employees.

Minimum wage rates are set in New Zealand through

Minimum Wage Orders

The Government has announced that the

adult minimum wage will rise on 1 April 2020 to
$18.90 per hour - from the current rate of $17.70
per hour
 THE ROLE OF STATE (CONT)
c). The Equal Pay Act (1972) - an Act which seeks to
remove and prevent discrimination, based on the sex of
an employee, in the rates of remuneration paid to
employees

d). The Holidays Act (1981) - sets out minimum

entitlements to four weeks paid annual holiday; special
leave (for sickness, bereavements ) for each 12 month
period of employment; and 11 days of public holidays
per year
 THE ROLE OF STATE (CONT)
e) The Bill of Rights Act (1990) - sets out fundamental
freedom such as freedom of association, freedom of
peaceful assembly, freedom of expression

f) The Health and Safety in Employment Act (1992) -

this Act requires employers and employees to take steps
to maintain a safe work place

g). The Human Rights Act 1993 - this Act expressly

prohibits discrimination on certain stated grounds
including sex, race, family status, political opinion.
 THE ROLE OF STATE (CONT)
h). Employment Contracts Act (1991) – Major turning
point of IR in NZ

i) Favoured employers (known as employer’s charter)

ii) It abolished the ‘arbitration court’ which was established

in 1894 (compulsory Arbitration worked for 100 years)

iii) Abolished the award system of setting wages and union

monopoly rights, and promoted an enterprise-bargaining
model in the private and public sectors
 THE ROLE OF STATE (CONT)
iv) Promoted shift from ‘industry level’ CB to ‘enterprise
level’
v) Gave employers right to make ‘individual contracts
(Not individualism’
vi) Weakened the TU, number of TU declined. TU used the
strategy of Amalgamation
vii) Started the ‘de- regulation of business and de-
regulation of IR and labor market – Major Reforms.

viii) Public sector Reforms – selling of government owned

firms & statutory organization
 THE ROLE OF STATE (CONT)
 1999 – 2008 (Labour Government) - Helen Clark’
 NZ introduced Employment Relation Act on 2nd October
2000 which collective Bargaining was re-established.
 Though Employment Relations Act 2000 did not re-
introduce compulsory unionism and award system but it
strengthen CB and union activity in various ways:
 It re-introduced the right to strike in association with
multi-employer collective contracts
- it made collective contract a right for employees
- Duty of ‘good faith bargaining’ was introduced – inspired
by North American Practices
FEATURES & PROCESSES OF ER/IR IN NZ
Collective Bargaining
 CB traditionally were centralised.

 Collective bargaining can occur at any level within the

labour market, including nationally, and at the level of
industry, multi-employer, specific enterprise .

 Centralized to decentralized bargaining

FEATURES & PROCESSES OF ER/IR IN NZ
Disputes

 Shifting from collective to individual disputes

Since the introduction of the Employment Contract Acts,
there has been a significant growth in claims brought to
the Employment Tribunal

 Large majority applications were in respect of individual

grievances alleging unjustified dismissal. This growth
was due to people on individual employment contracts
gained access to the Employment Tribunal and the
Employment Court
FEATURES &PROCESSES OF ER/IR IN NZ
Disputes (cont)
 The ER Act places a heavy emphasis on mediation

 Wherever an employment relationship problem arises the

parties are encouraged to attempt to resolve it through
discussions amongst themselves
 If parties are unable to resolve the problem themselves,
either party can seek the assistance of a mediator from the
Department of Labour
 If mediation is also unsuccessful in resolving the problem,
either party can ask for a determination (a decision) from
the Employment Relations Authority.
 FEATURES & PROCESSES OF ER/IR IN NZ
 The Authority has wide powers to grant remedies and to
determine the merits of a particular problem.

 If either party is dissatisfied with the decision of the

Authority, it may ask to have the matter heard afresh by
the Employment Court.

 In limited cases, there is then a right of appeal from the

Employment Court to the Court of Appeal.
FEATURES & PROCESSES OF ER/IR IN NZ
 Disputes between unions and employers in the context
of collective bargaining or collective agreements are
dealt with in the same fashion and in the same
institutions as above

 In certain types of disputes, the Employment Court

rather than the Employment Relations Authority has
jurisdiction in the first instance to decide the claim. 
This includes applications for injunctions to prevent a
threatened strike or lockout.
(National Labour Law Profile: New Zealand, 2016)
 CURRENT TREND/ ISSUES
 1990s – introduction of HRM

 Global shift of productions – shift of Australian and New

Zealand firms to East Asia – Malaysia, Indonesia, China,
Pacific Islands (Fiji - 10 New Zealand Garment firms
moved to Fiji

 Decline in Manufacturing & increase in services sector

employment (e.g. financial services, call centers, etc)

 Labour Market Flexibility e.g. flexibility in working

hours mostly for women workers
 CURRENT TREND/ ISSUES (CONT)
 Increase in part-time employment

 Majority part-time workers are women (75% of all part-

time work are carried out by women)

 Introduction of pay based on “Performance Management

System” (PMS) i.e. productivity based pay, productivity
bargaining/ bonus payments which promotes idea of
efficiency and hard work.
 CURRENT TREND/ ISSUES (CONT)
 Shifts of CB from centralised to de-centralized system
 Decline in Trade Union Density. Trade Unions are getting
weaker because of the pressure by employers & ‘global
competition’. Due to decline in TU membership, IR/ER
landscape is changing in and New Zealand.
 2009- Global economic crisis. Decline of jobs in most
sectors in New Zealand, 20,000 people were jobless
 1990s- Massive shift from collectivism towards
individualism including a shift from nationwide
arrangements to workplace arrangements
 2020 – slow down of the economy is likely due to the
ConVid 19.
 CONCLUSION & SUMMARY
 Every employee in New Zealand must have a written
employment agreement that is agreed upon and signed by
an employee before they start work (ERA 2000)

 Employment agreements come in a variety of shapes and

sizes depending on the job description, but there are
certain mandatory clauses that every employment
agreement must contain by law.

 Under the Act there are two types of employment

agreements that cover all employees, regardless of
profession or industry. These are individual employment
agreements and collective agreements
 CONCLUSION & SUMMARY (CONT)
 Individual employment agreements are negotiated
directly between an individual and their employer, and
bind only those parties.
This means as an employer, you negotiate the terms of
individual contracts with each employee directly.

 Collective agreements are negotiated between a

registered union and an employer on behalf of
employees.

 A collective agreement is only relevant and legally

binding for employees who are members of a union.
 CONCLUSION & SUMMARY (CONT)
 This means that multiple employees can have identical
contracts depending on their role within the business.

 For example, your administration staff could have the

same conditions set out in their collective agreements
based on the outcome of union–employer negotiations
(known as collective bargaining).
 BIBLIOGRAPHY
 

Bamber, G.J., Lansbury, R.D., & Wailes, N. (2004). International and comparative
employment relations: Globalization and the developed market economies,
(4th ed.). NSW, Australia: Allen & Unwin.
 
CIA-The World Factbook-New Zealand. Retrieved March 19th, 2020 from
http://teacherlink.ed.usu.edu/tlresources/reference/factbook/geos/nz.html
 
National Labour Law Profile: New Zealand. Retrieved March 19th, 2020 from
http://www.ilo.org/public/english/dialogue/ifpdial/info/national/nz.htm.
 
 Rasmussen, E., Hunt, V., & Lamm, V. (2006). New Zealand employment relations:
Between individualism and social democracy. Labour and Industry, 17 (1), 21-
40.Retrieved May 4th, 2011 from
http://mams.rmit.edu.au/hf95rc8dnkkkz.pdf