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Bargaining in good faith in the New Zealand labour market: rhetoric or reality? Davenport, Geoff 1998

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Bargaining In Good Faith In The New Zealand Labour Market Rhetoric or Reality? by  Geoff Davenport LL.B.(Hons), B.Com, The University of Otago, 1993. A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF LAWS in THE FACULTY OF GRADUATE STUDIES THE FACULTY OF LAW We accept this thesis as conforming to the required standard  THE UNIVERSITY OF BRITISH COLUMBIA December 1998 © Geoff Colin Davenport, 1998.  In  presenting  this  thesis  in partial fulfilment  of  the  requirements  for  an  advanced  degree at the University of British Columbia, I agree that the Library shall make it freely available for reference and study. copying  I further agree that permission for  of this thesis for scholarly purposes  department  or  by  his  or  her  representatives.  may be granted It  is  by the head of my  understood  that  publication of this thesis for financial gain shall not be allowed without permission.  Department of  A7£ <£rt*&/e3,  The University of British Columbia Vancouver, Canada Date  DE-6 (2/88)  extensive  copying  or  my written  ABSTRACT N e w Z e a l a n d presently operates a "free m a r k e t " system o f employment and labour relations i n w h i c h there are no prescribed or mandatory bargaining procedures. W h e n this system w a s i n t r o d u c e d b y the E m p l o y m e n t C o n t r a c t s A c t 1991 (the " E C A " ) it represented a dramatic departure f r o m the previous system o f state regulated collective bargaining, c o n c i l i a t i o n and arbitration: a system that had existed i n N e w Z e a l a n d for almost a century. A l t h o u g h this change i n approach w a s supported b y free market advocates, it also generated considerable international and domestic criticism. In response to that criticism, a number o f N e w Z e a l a n d politicians stated i n 1996 that they w o u l d consider i m p o s i n g o n employers and employees a statutory duty to bargain i n g o o d faith. H o w e v e r , since the end o f 1996, v e r y little has o c c u r r e d i n respect o f this issue. Indeed, it n o w appears that the current N e w Z e a l a n d G o v e r n m e n t may have abandoned this p r o p o s a l altogether. I f this is, i n fact, the G o v e r n m e n t ' s decision, it ought to be v i e w e d w i t h concern, f o r it has been made w i t h o u t the benefit o f informed debate. L i t t l e , i f any, substantive consideration has been g i v e n to whether such a duty ought to be i n t r o d u c e d , and i f so, the f o r m it might take and impact it might have. I f an informed decision is to be made to enact a duty o f this nature, o r not, as the case m a y be, its merits must be the subject o f further debate. T h i s thesis w i l l endeavour to contribute to that debate by examining h o w one a p p r o a c h to the duty to bargain i n g o o d faith, that w h i c h applies i n B r i t i s h C o l u m b i a , C a n a d a , might operate i n N e w Z e a l a n d . T h i s examination w i l l consist o f six chapters. T h e first w i l l contextualise the N e w Z e a l a n d arguments o n whether a duty o f this nature ought to be i n t r o d u c e d into the E C A . C h a p t e r t w o w i l l then examine the duty to bargain i n g o o d faith as it applies i n B r i t i s h C o l u m b i a industrial relations. C h a p t e r three w i l l take that duty, and examine the extent to w h i c h it is currently replicated i n N e w Z e a l a n d . It w i l l be c o n c l u d e d that little o f the substance o f this duty is to be f o u n d i n the l a w w h i c h presently governs the N e w Z e a l a n d labour market. C h a p t e r four w i l l assess the costs o f introducing a duty o f this nature into the E C A , particularly i n terms o f reduced efficiency and freedom. C h a p t e r five w i l l identify a number o f specific issues that w i l l require resolution i f the duty is to operate effectively i n N e w Z e a l a n d , and the terms o f a suggested statutory amendment w i l l be proffered. It w i l l be c o n c l u d e d i n chapter six that i n t r o d u c i n g a duty t o bargain i n g o o d faith, a k i n t o that w h i c h applies i n B r i t i s h C o l u m b i a , w o u l d benefit N e w Z e a l a n d employers, employees and society as a w h o l e . Further, it w i l l be argued that such a duty must be i n t r o d u c e d i f labour bargaining i n N e w Z e a l a n d is to o c c u r i n any meaningful w a y for most employees. A n d finally, it w i l l be suggested that i f this duty is to be i n t r o d u c e d effectively, legislative amendment w i l l be required. F o r these reasons, it w i l l be asserted that the N e w Z e a l a n d G o v e r n m e n t ought to revisit the issue o f introducing into the E C A a statutory duty to bargain i n g o o d faith.  ii  TABLE OF CONTENTS  Abstract  ii  Table of Contents  iii  Acknowledgements Chapter One  Chapter Two  vi The New Zealand Debate Contexualised  1  1.1 L a b o u r Relations i n N e w Z e a l a n d P r i o r t o the E C A  1  1.2  4  T h e I n t r o d u c t i o n o f the E C A T h e Status o f B a r g a i n i n g Representatives  5  T h e F o r m o f B a r g a i n i n g and E m p l o y m e n t Contracts....  7  The Manner o f Bargaining  9  1.3  V i e w s and Consequences o f the A c t  11  1.4  T h e W i n d s o f Change  27  1.5  T h e H e r e and N o w  37  British Columbia Labour Relations and the Duty to Bargain in Good Faith  40  2.1  40  The D u t y Defined  2.2 T h e Substance o f the D u t y t o B a r g a i n i n G o o d F a i t h 2.3  Chapter Three  Statements o f P o l i c y Issued b y the B C B o a r d  48 61  2.4 T h e G o o d F a i t h C u l t u r e  64  2.5  66  Summary: G o o d F a i t h B a r g a i n i n g and the B C C o d e  Is Legislative Amendment Necessary in New Zealand?  68  3.1  68  T h e E x i s t i n g P r o v i s i o n s o f the E C A Section 57: H a r s h and Oppressive C o n d u c t  68  Section 12(2): B a r g a i n i n g A g e n t s  74  Section 64: L a w f u l Strikes and L o c k o u t s  82  Sections 7, 8 and 28: U n d u e Influence  83  Sections 19(4) and 43(a): A l t e r a t i o n t o T e r m s  86  S e c t i o n 64(2)(c): T h e P r o t e c t i o n o f Strikers  91  S e c t i o n 78: D i s p u t e R e s o l u t i o n  93  Section 104: M i s r e p r e s e n t a t i o n  94  S e c t i o n 18: T h e M i n i m u m C o d e  95  iii  3.2 T h e E m p l o y m e n t C o u r t and the Implied T e r m  97  3.3 D e v e l o p m e n t s i n the C o m m o n L a w G e n e r a l l y  108  Cases D e c i d e d o n the B a s i s o f G o o d F a i t h  109  The Re-Classification Debate  112  T h e Influence o f the C i v i l L a w  113  Express Agreements  116  3.4 C o n c l u s i o n : T h e E x i s t i n g . L a w i n N e w Z e a l a n d  Chapter Four  The Good Faith Debate in New Zealand 4.1  E f f i c i e n c y and the D u t y to B a r g a i n i n G o o d F a i t h  Chapter Six  120 120  E f f i c i e n c y ' s Pre-eminent Status  120  The Free M a r k e t Vision: Conflict Free Employment...  121  T h e C o n t i n u a t i o n o f C o n f l i c t U n d e r the E C A  125  T h e Efficiencies o f F r e e M a r k e t B a r g a i n i n g  134  D i s t r i b u t i v e Efficiency  142  Efficiency Implications o f the D u t y o f G o o d F a i t h  150  Efficiency G a i n s i n the B a r g a i n i n g P r o c e s s  152  The Avoidance o f Disputes  154  C o l l a b o r a t i o n and Innovation  156  D i s t r i b u t i v e Efficiency  157  Precedent F o r I m p o s i n g the D u t y o f G o o d F a i t h  157  4.2 F r e e d o m and the D u t y t o B a r g a i n i n G o o d F a i t h  Chapter Five  117  159  T h e Importance o f F r e e d o m i n the E C A  159  T h e D u t y to B a r g a i n i n G o o d F a i t h and F r e e d o m  160  H o w " F r e e " is the F r e e M a r k e t ?  163  D o e s F r e e d o m f o r O n e M e a n freedom F o r A l l ?  166  4.3 T h e R e m a i n i n g D e b a t e  174  4.4 C o n c l u s i o n : T h e G o o d F a i t h D e b a t e  179  182  The Specifics 5.1 T h e Individual - C o l l e c t i v e D i v i d e  182  5.2 E n f o r c e m e n t and R e l e v a n c e i n the I n d i v i d u a l Setting  187  5.3  192  Selection V e r s u s B a r g a i n i n g  5.4 A r b i t r a t i o n as a R e m e d y  194  5.5 E n f o r c e m e n t Generally  197  5.6 A Suggested A m e n d m e n t  198  204  Conclusions  iv  216  Bibliography Appendix One  C l a i m s o f B a d F a i t h as C o m p a r e d t o T o t a l C l a i m s  244  Appendix Two Appendix Three Appendix Four  C l a i m Trends: 1978-1997  245  O u t c o m e s o f C l a i m s o f B a d F a i t h : 1978-1997  246  First A g r e e m e n t A p p l i c a t i o n s : 1993-1997  247  v  ACKNOWLEDGEMENTS  T h e r e are a number o f people I w o u l d like to thank f o r their help and support i n relation to this thesis. First, the support and guidance p r o v i d e d by m y supervisor, P r o f e s s o r T o n y H i c k l i n g , has been surpassed only by his enthusiasm. H i s willingness to comment o n n u m e r o u s drafts and papers, and t o suggest avenues f o r further i n q u i r y has been greatly appreciated. P r o f e s s o r H i c k l i n g is a credit not only to the U n i v e r s i t y o f B r i t i s h C o l u m b i a , but also to the field o f industrial relations, to w h i c h he devotes considerable time and energy. I a m also indebted f o r the guidance p r o v i d e d by m y second reader, P r o f e s s o r J o e W e i l e r . H i s willingness t o take time out o f a hectic schedule to p r o v i d e advice o n m y thesis is v e r y gratefully a c k n o w l e d g e d . M y thanks must also go to Professor A l a n Geare, D o c t o r Ian M c A n d r e w , P r o f e s s o r M a r k H e n n a g a n and D o c t o r P a u l R o t h (all o f the U n i v e r s i t y o f O t a g o ) and to M r T o n y F o r d ( o f B e l l G u l l y B u d d i e W e i r ) all o f w h o m taught me to assess l a w and industrial relations i n a realistic, pragmatic and critical fashion. In addition, I a m v e r y grateful for the support and enthusiasm o f L i l l i a n O n g , D o c t o r W e s l e y P u e , and m y classmates, w h o all must take a great deal o f credit for the extremely r e w a r d i n g year I have spent at the U n i v e r s i t y o f B r i t i s h C o l u m b i a . I must also express m y unending gratitude to m y parents, C o l i n and M a r i o n , and to m y sister, Sandy, w h o have always encouraged me to tackle m y goals and t o be myself. L a s t l y , and most importantly, to m y wife, and best friend, D e b s . W e r e it not for y o u r l o v e and support, this thesis w o u l d never have been possible.  vi  CHAPTER 1: THE NEW ZEALAND DEBATE CONTEXTUALISED  1.1 Labour Relations in New Zealand Prior to the ECA  T h e E C A w a s enacted o n 15 M a y 1 9 9 1 .  1  P r i o r t o that date the system o f labour relations  i n N e w Z e a l a n d w a s based o n state facilitated collective bargaining w h i c h o c c u r r e d b e t w e e n unions (representing collectives o f employees) and employers o r their representatives, and w h i c h p r o d u c e d collective awards and agreements.  T h i s system  c o m m e n c e d w i t h the Industrial C o n c i l i a t i o n and A r b i t r a t i o n A c t 1894 (the " I C A A " ) . T h e stated p u r p o s e o f the I C A A w a s " t o encourage the f o r m a t i o n o f industrial unions and associations and t o facilitate the settlement o f industrial disputes b y c o n c i l i a t i o n and arbitration." W h i l s t there w e r e several versions o f labour relations legislation i n N e w Z e a l a n d f o l l o w i n g the I C A A , each r e v i s i o n retained a central f r a m e w o r k o f collective bargaining.  2  That is, o f course, until the enactment o f the E C A .  A w a r d s w e r e usually o c c u p a t i o n a l l y based, and generally covered most o r all o f the 3  country. These awards b o u n d all the employees and employers i n v o l v e d i n the w o r k t o w h i c h they applied, even although the vast majority o f those employers and employees had no input into a w a r d negotiations (an affect referred t o as "blanket c o v e r a g e " )  4  Asa  result, i n most w o r k p l a c e s u p w a r d s o f three o r four awards w e r e operative at any one time, depending o n the number o f w o r k classifications present. Agreements also tended t o be m u l t i - e m p l o y e r arrangements and applied to those parties w h o agreed to be c o v e r e d by them.  5  1  ECA, s. 1(2).  2  A. Geare, "The Proposed Employment Relations Act" (1993) 18 N.Z.J.Ind.Rel. 194 at 194.  Such as the Clerical Workers Award and the Meat Workers Award. The term "award" is misleading in that it suggests an arrangement imposed or awarded by a third party. In most cases, however, awards were negotiated by unions and employers. 3  4  LRA, ss. 160(2) and 165(b).  Prior to 1988 there were separate collective bargaining procedures for the public and private sectors. Following the enactment of the State Sector Act 1988, both sectors operated under a system of awards and 5  1  T h e b r o a d a p p l i c a t i o n o f these awards and agreements had three principal consequences: centralised w a g e fixing; the equalisation o f wages and other terms o f employment w i t h i n occupations; and the creation and enforcement o f settled w a g e relativities between occupations. Indeed, the overall trend i n w a g e movement w a s generally set b y only one o r two key awards.  6  T h u s , employees w i t h little bargaining p o w e r benefited f r o m deals  struck b y those i n stronger bargaining positions, a process k n o w n as " c o m p a r a t i v e w a g e justice".  U n i o n s enjoyed a p o s i t i o n o f prominence under this system o f labour relations. I n the first place, unions, rather than their members, w e r e parties to awards and agreements. A c c o r d i n g l y , the ability o f most employees t o enforce their terms o f employment stemmed f r o m their u n i o n m e m b e r s h i p . continuing  7  Secondly, a registered u n i o n enjoyed the exclusive  right t o negotiate o n behalf o f a certain sector o f the w o r k f o r c e .  8  and  Thus, no  other potential representative w a s able to challenge a registered u n i o n ' s status as authorised bargaining agent. A n d thirdly, c o m p u l s o r y u n i o n i s m , whether i m p o s e d b y statute o r b y u n i o n membership clauses, had existed i n the private sector i n N e w Z e a l a n d f r o m 1936 until the enactment o f the E C A , except f o r a b r i e f p e r i o d f r o m 1983 to 1 9 8 5 .  9  agreements. See J. Deeks & P. Boxall, Labour Relations in New Zealand (Auckland, Longman Paul, 1989) at 45. Usually the Metal Trades Award or the Drivers Award. See P. Carroll & P. Tremewan, "Organising Employers: The Effects of the Act on Employers and the Auckland Employers Association", in Employment Contracts: New Zealand Experiences, R. Harbridge ed., (Wellington, Victoria University Press, 1993) [hereinafter "New Zealand Experiences"] 185 at 190. 6  For example, a grievance had to be instituted by a union on behalf of its member. However, in practice an employee who was not a union member still had a statutory right to the terms and conditions set out in the applicable award or agreement; but he or she was responsible for any associated grievance. See R. Harbridge, "Bargaining and the Employment Contracts Act: An Overview", in New Zealand 7  Experiences, 31 at 34. 8  Usually an occupational sector, although this depended on the membership rule of the particular union.  9  A. Geare, The System of Industrial Relations in New Zealand, 2d rev. ed., (New Zealand, Butterworths,  1988) at 98-103.  2  T h e u n i o n membership scheme under the E C A ' s predecessor, the L a b o u r R e l a t i o n s A c t 1987 (the " L R A " ) , w a s based o n legally permitted c o m p u l s o r y membership clauses. These clauses h a d t o be agreed u p o n b y the u n i o n and employer parties t o the particular a w a r d o r agreement o r inserted pursuant t o a ballot o f e m p l o y e e s .  10  S u c h clauses w e r e  c o m m o n place i n the private sector, and, where present, c o m p e l l e d employees t o j o i n the applicable u n i o n o r face d i s m i s s a l .  11  A s a result, d u r i n g the tenure o f the L R A most  private sector w o r k e r s w e r e u n i o n members. T h e same w a s true i n the p u b l i c sector, although i n this sector h i g h membership levels were due primarily t o traditional w o r k e r allegiance rather than c o m p u l s o r y membership clauses, w h i c h were rarely i n c l u d e d i n p u b l i c sector awards and a g r e e m e n t s .  12  In terms o f specifics, there have been various estimates as t o the degree o f u n i o n i s m i n N e w Z e a l a n d d u r i n g the p e r i o d preceding the E C A . Studies have suggested that membership as a percentage o f the total salaried, full time, w o r k force fluctuated b e t w e e n 60 and 73 percent d u r i n g the p e r i o d f r o m 1985 until M a y 1 9 9 1 .  13  T h e percentage o f full  time w o r k e r s c o v e r e d b y collective awards and agreements w a s h o w e v e r , slightly higher than the percentage o f u n i o n members, due t o the affect o f blanket c o v e r a g e .  14  Those  remaining employees w h o were not u n i o n members and w h o were not c o v e r e d b y a c o l l e c t i v e a w a r d o r agreement,  1 0  15  were c o v e r e d b y c o m m o n l a w contracts o f service.  LRA, s. 61.  Such clauses were subject only to a very limited "conscience or deeply held personal conviction" exemption. See LRA, s. 83. 11  R. Harbridge & K. Hince, "Organising Workers: The Effects of the Act on Union Membership and Organisation", in New Zealand Experiences, 224 at 225-226. 1 2  Department of Labour Annual Reports (Wellington, Department of Labour, Various); Geare, supra note 9 at 81-82; R. Harbridge & K. Hince, "Unions and Union Membership in New Zealand 1985-1992" (1993) 18:3 N.Z.J.Ind.Rel. 352 at 355. 13  See R. Harbridge & K. Hince, "Bargaining and Worker Representation Under New Zealand's Employment Contracts Legislation: A Review After Two Years" (1994) 49:3 Les Presses de L'Universite Laval: Industrial Relations (Canada) 576. 1 4  v  1 5  Most executives fell within this category. See Deeks & Boxall, supra note 5 at 71.  3  T h e p r i m a r y purpose o f the bargaining regime that pre-dated the E C A w a s the p r o m o t i o n o f orderly collective bargaining. T o this end, the L R A p r o m o t e d u n i o n i s m , and 16  c o n c i l i a t i o n and arbitration played a central role. A c c o r d i n g to Geare:  W h i l e collective bargaining was seen as desirable i f peaceful solutions c o u l d be reached, the state p r o v i d e d conciliators to chair the bargaining sessions.  Strikes  and l o c k o u t s w e r e illegal and, i f negotiation failed, arbitration w a s p r o v i d e d to achieve a settlement.  1.2  17  The Introduction of the Employment Contracts Act  T h e E C A effected radical r e f o r m b y establishing a free market system o f employment and labour relations. In d o i n g so, the E C A swept away entirely the previous emphasis placed o n collective bargaining and the associated support p r o v i d e d by c o n c i l i a t i o n and arbitration, a system that had existed for 97 years. In substitution, there n o w exists a system o f employment and labour relations based o n e c o n o m i c liberalism. T h i s system endorses many o f the beliefs inherent in liberal economics i n c l u d i n g the p r i m a c y o f the i n d i v i d u a l and o f i n d i v i d u a l freedom, the inefficiency o f welfarism and the importance o f self-reliance. Consistent w i t h these beliefs, the E C A treats all employment as simply a matter o f contract to be negotiated i n a free labour market. " F r e e " i n this context essentially means a labour market that is not subject to state intervention or any legislatively i m p o s e d bargaining procedures.  Not only through granting unions the prominent status referred to previously, but also through provisions such as section 57 which guaranteed all union members a minimum of two paid union meetings per year and sections 56 and 196 which provided union officials with the right to enter worksites to interview members, inspect wage records and monitor compliance with existing awards and agreements. In reality, this broad right of access also provided unions with a valuable mechanism for organising. 1 6  Geare, supra note 2 at 194. The L R A did, however, introduce a degree of flexibility into the system by providing limited scope for strikes and lockouts, and by making arbitration voluntary provided both parties agreed to conciliation. 17  4  B a r g a i n i n g under the E C A is notable for three reasons: the status o f bargaining representatives; the form  o f bargaining and employment contracts; and the manner  of  bargaining.  The Status of Bargaining  Representatives  A v i e w central to the E C A is that employment contracts are arrangements between employers  and employees,  not between unions and employers o r their representatives as  w a s the case under the L R A .  1 8  W h i l e bargaining representatives  may be engaged by either  party, the p r e v i o u s system o f c o m p u l s o r y u n i o n i s m has been a b o l i s h e d .  19  M o r e o v e r , w h e r e a representative is engaged, that representative negotiates o n l y o n behalf o f those w h o have expressly appointed it. T h e sections i n the L R A that granted a registered u n i o n the exclusive right to negotiate o n behalf o f a particular g r o u p o f employees, and that extended the coverage o f awards and agreements t o all employees i n a particular sector o f the w o r k f o r c e , have not been replicated i n the E C A .  2 0  U n i o n s must  n o w actively recruit, and retain, members, and i n so d o i n g , compete w i t h other prospective representatives.  21  M o r e o v e r , membership, once secured, remains vulnerable,  for u n i o n membership is revocable at w i l l by an e m p l o y e e .  22  A s a result o f these changes,  In order for a union to be a party to an employment contract under the ECA, both the employer(s) and employee(s) bound by the contract must agree. ECA, s. 17. For example, an employee cannot be compelled by any contract or arrangement to join a union. ECA, s. 6. Accordingly, the compulsory membership clauses that operated under the LRA are no longer lawful. 19  Nor are "majority votes' and 'bargaining units', concepts central to labour relations in Canada and the United States of America, of any relevance under the ECA. 2 0  Significant competition for members has developed between unions, with a number of unions now representing employees who would traditionally have fallen outside their membership rules. As a result, it is not uncommon for more than one union to represent employees of the same work classification in the same workplace. Cf., the position in British Columbia, where certification provides a particular union with the exclusive right to represent all employees in the applicable bargaining unit (some of whom may not be union members at all). 21  Thus, successfully negotiating a collective contract in no way guarantees a union the right to act in any renewal negotiations that may occur. Rather, the securing of ongoing work depends on a union retaining membership. Again, this can be contrasted with the position in British Columbia. Once certified, a union remains the exclusive bargaining representative for all employees in the bargaining unit for all future  2 2  5  representation, bargaining and the content o f an employment contract are n o w the c o n c e r n o f each i n d i v i d u a l employee.  Significantly, w i t h the e x c e p t i o n o f one transitional p r o v i s i o n , the term " u n i o n " does not appear at all i n the E C A .  2 3  Reference is made only to the generic terms "representatives"  and " e m p l o y e e organisations". W h i l e an employee's representative may be a u n i o n , a representative f o r the purposes o f the E C A can be any individual, g r o u p o r o r g a n i s a t i o n .  24  A c c o r d i n g t o the G o v e r n m e n t i n p o w e r at the time the E C A w a s enacted, the use o f these generic terms reflected the f r e e d o m o f employees t o appoint any type o f bargaining agent, not just u n i o n s .  25  Others suggest the o m i s s i o n o f the t e r m " u n i o n " reflected a deliberate  strategy o n the part o f the G o v e r n m e n t t o direct labour relations a w a y f r o m the traditional institutions o f unions and collective b a r g a i n i n g .  26  Q u i t e clearly, then, the status o f unions (and all representatives) under the E C A is secondary t o that o f employers and employees, and far less significant than under p r e v i o u s legislation. A s H a r b r i d g e describes:  W h i l s t unions are free to play a role i n industrial relations under the [ E C A ] , they no longer have automatic and exclusive rights in the w o r k p l a c e .  27  negotiations, unless and until the union is decertified or the unit ceases to exist (by reason, for example, of employer liquidation). This is a startling turnaround, when one considers that nearly a third of all the sections in the LRA dealt with aspects of unionism. 2 3  Subject only to the right of the other negotiating party to object where a nominated representative has committed one of a number of prescribed criminal offences. ECA, s. 11. 2 4  2 5  See infra note 160 at 59.  J. Kelsey, The New Zealand Experiment: A World Model For Structural Adjustment? (Auckland, Auckland University Press, 1995) [hereinafter, "New Zealand Experiment"] at 181-183; Harbridge & Hince; supra note 12 at 225; W. Grills, "The Impact of the Employment Contracts Act on Labour Law: Implications For Unions" (1994) 19 N.Z.J.Ind.Rel. 85 at 89. 2 5  Harbridge & Hince, supra note 12 at 230. Consistent with the reduced status of unions, the provisions in the LRA which guaranteed paid union meetings, and general union access to worksites, have not been replicated in the ECA. Moreover, unions have no privileged position under other workplace legislation, such as the Health and Safety in Employment Act 1992 (the Act which governs standards of safety in all workplaces). In contrast, unions enjoy the automatic right to be involved in certain health and safety issues in British Columbia. For example, where an inspector from the Workers Compensation Board 2 7  6  The Form of Bargaining  and Employment  Contracts  T h e E C A o n its face expresses n o preference for the form  o f bargaining o r the form o f  employment contract t o be entered into. T h i s is a matter o f " c h o i c e " for the negotiating parties, the t w o options i n b o t h cases being " c o l l e c t i v e " o r " i n d i v i d u a l " . T h i s choice is set out i n section 9 o f the E C A , the material p o r t i o n o f w h i c h provides:  (a) A n y employee o r employer, in negotiating f o r an employment contract, m a y conduct the negotiations o n his o r her o w n behalf or may choose to be represented b y another person, g r o u p , o r organisation; and (b) A p p r o p r i a t e arrangements t o g o v e r n the employment relationship m a y be p r o v i d e d b y an individual employment contract o r a collective employment contract, w i t h the type o f contract and the contents o f the contract being, i n each case, a matter for negotiation...  ,  28  W h e t h e r the " n e u t r a l i t y " p r o v i d e d f o r i n section 9 (as regards the f o r m o f bargaining and contract t o be entered into) actually exists i n practice is, h o w e v e r , a source o f considerable debate.  A s a number o f commentators have noted, several p r o v i s i o n s w i t h i n the E C A  have the effect o f p r o m o t i n g individual bargaining and contracts at the expense o f their collective c o u n t e r p a r t s .  29  T h e most notable o f these provisions is section 19(4) w h i c h  inspects a worker's place of work, that worker is entitled to have a representative accompany the inspector (as is the employer). Where the operation is unionised, the worker's representative must be selected by the union. (See the Workers Compensation Act (R.S.B.C. 1996, c. 492, s. 72(4))). Similarly, occupational health and safety committees must have at least two members "chosen by and representing the workers" (two worker representatives is the minimum in a committee of four persons). (See the Occupational Health & Safety Regulations (BC Regulations, 296/97, reg. 3.5)). Thus, in unionised operations employees have the right to appoint union officials to these committees. Emphasis added. It is permissible, however, for an employee and employer to agree that some of the employee's terms of employment will be embodied in a collective contract and others in an individual contract. (See ECA, s. 19(2)). Remarkably, when the ECA was first mooted, the Government of the day contemplated giving individual contracts priority over collective contracts. See E. Dannin, Working Free: The Origins and Impact of New Zealand's Employment Contracts Act (Auckland, Auckland University Press, 1997) [hereinafter "Working Free"] at 98. This request was, however, viewed as too controversial, given the emphasis on collective bargaining that operated at the time. 2 8  See e.g., I. McAndrew & M. Ballard, "Negotiation and Dictation in Employment Contract Formation In New Zealand" (1995) 20:2 N.Z.J.Ind.Rel. 119 at 121; Dannin, Working Free, at 231; Harbridge, supra note 7 at 47; Grills, supra note 26 at 88-89; Horn et al, Employment Contracts, Employment Contracts Act and Indexes (Wellington, Brookers, 1997) [hereinafter "Horn"] at 1B-5. 2 9  7  p r o v i d e s that u p o n the expiry o f a collective contract, the employment relationship i n question converts t o a series o f identical individual contracts.  S e c t i o n 2 o f the E C A defines a collective  employment  contract  one e m p l o y e r and at least t w o employees and an individual  as one that covers at least  employment  contract  as one  that covers one employee and one employer. N o t a b l y , however, the f o r m o f the contract entered into does not depend o n the f o r m o f bargaining that may have preceded it. F o r example, employees c o u l d collectivise and seek t o negotiate a collective contract but the bargaining p o w e r and stance o f their employer may be such that the employees are c o m p e l l e d t o settle instead f o r individual contracts. I n short, c o l l e c t i v e a c t i o n w i l l not necessarily result i n a collective o u t c o m e .  30  In the same v e i n , an e m p l o y e r can sign employees t o a collective contract b y a p p r o a c h i n g each o f them i n d i v i d u a l l y .  31  A d d i t i o n a l l y , a collective contract may contain a " n e w  parties" clause w h i c h provides that a employee starting employment after the c o m m e n c e m e n t date o f the contract may b e c o m e a party t o that contract. W h e r e a clause o f this nature applies, it is possible for an employee to become a party t o a c o l l e c t i v e e m p l o y m e n t contract w i t h o u t being, o r having to become, a member o f the c o l l e c t i v e that may have negotiated i t .  3 2  In contrast, once a union has been certified in British Columbia, collective bargaining commences and, barring decertification, a collective agreement will result. 3 0  I. McAndrew, "The Process of Developing Employment Contracts: The Management Experience", in New Zealand Experiences, 165 at 172-173. As Boyd points out, many current collective contracts are nothing more than aggregations of individual agreements. See A. Boyd, "The Freedom of Association in the Employment Contracts Act 1991: What has it Meant for Trade Unions and the Process of Collective Bargaining in New Zealand" (1997) 28 Cal.West.Int.L.J. 65 at 70. 3 1  Such clauses are expressly permitted by section 21 of the ECA. By the same token, where an employer is not contractually obliged to offer an existing contract to a new recruit, the employer is free to engage the new employee on terms which differ from those specified in the contract(s) of its existing employees. A number of employers have used this process as a means of engaging new staff on salaries which are inferior to those of existing employees. See e.g., H. Roth, "Chronicle" (1992) 17:2 N.Z.J.Ind.Rel. 247 at 248; E. Rasmussen, "Chronical" (1997) 22:1 N.Z.J.Ind.Rel. I l l at 112 & 115. 3 2  8  T h e reference t o " c h o i c e " i n section 9 o f the E C A assumes an individual employee has sufficient p o w e r t o choose the f o r m o f bargaining and contract he o r she prefers. M o r e o v e r , b y n o t expressing any preference f o r the f o r m o f bargaining t o be entered into, the E C A presumes that negotiations between an individual employee and his o r her e m p l o y e r w i l l be as meaningful as those between an employer and a c o l l e c t i v e o f employees represented b y a bargaining agent. I n essence, the E C A assumes equality b e t w e e n an employee and an employer w i t h o u t the need f o r state intervention o r c o l l e c t i v e bargaining.  33  The Manner of Bargaining  T h e t h i r d notable feature o f the E C A i n relation t o bargaining, is the absence o f any mandatory o r prescribed procedures. T h e A c t gives no guidance as t o h o w employment contracts are t o be negotiated, and, as such, leaves the parties t o determine the p r o c e d u r e for bargaining i n each case. A s one adjudicator has noted:  T h e A c t generally contemplates that there w i l l be ' n e g o t i a t i o n ' . That expression is used several times w i t h reference t o the f o r m a t i o n o f employment contracts. T h e r e are, h o w e v e r , no regulations, rules o r other machinery p r o v i s i o n s as t o the ' h o w ' , ' w h e n ' , ' w h e r e ' and ' f o r h o w l o n g ' i n respect o f the negotiation p r o c e s s .  A consequence o f this laissez faire p h i l o s o p h y is that the E C A does not, i n fact, require parties t o bargain at all. In the absence o f any obligation o f this k i n d , the N e w Z e a l a n d C o u r t o f A p p e a l has held that a party has the right t o refuse to b a r g a i n ,  35  stating, f o r  Cf., the US National Labor Relations Act (29 U.S.C. s. 151) which seeks to establish equality of bargaining power by collectivising employees and only then assuming equality exists. See E. Dannin, "Bargaining under New Zealand's Employment Contracts Act: The Problem of Coercion" (1996) 17 Comp. Lab.L.J. 455 at 464. 3 3  34  Buchanan v. Rodney District Council [1992] 2 ERNZ 578 (E.T.).  35  Eketone v. Alliance Textiles [1993] 2 ERNZ 783 (C.A.). [Hereinafter "Eketone"].  9  34  example, that " a n employer is free not to negotiate w i t h a n y o n e . "  36  The Employment  C o u r t has t a k e n an identical v i e w :  T h e legal p o s i t i o n is quite simple: employees are entitled t o appoint a representative and where they d o so the employer m u s t . . . negotiate, if at all, w i t h that representative.  37  A s a result, an employer can lawfully proffer a p r o p o s a l o n the basis o f "take it o r leave i t " , refuse t o discuss the matter at a l l , and i f any resistance arises, immediately l o c k o u t those employees w h o have refused to accede to its d e m a n d s .  38  T h o s e employees w h o are  l o c k e d out w i l l then have the right t o return t o w o r k o n l y i f they accept their e m p l o y e r ' s p r o p o s a l o r i f their e m p l o y e r v o l u n t a r i l y chooses t o end the l o c k out, something the e m p l o y e r is under n o l a w f u l obligation to d o .  3 9  M o r e o v e r , i f parties d o choose t o bargain, there is n o obligation t o bargain i n g o o d faith. A s K i e l y notes:  N e g o t i a t i o n s f o r employment contracts proceed o n the same basis as negotiations for any other contract, such as negotiations f o r an overdraft at the bank, o r  Ibid, at 787. The decisions of the Court of Appeal in this context are particularly significant for two reasons. First, they bind the New Zealand Employment Court and Employment Tribunal, the institutions with exclusive jurisdiction in New Zealand to hear employment related claims at first instance. And secondly, there is no right of appeal to the Privy Council on matters covered by the ECA. See De Morgan v. Director General of Social Welfare [1997] 3 NZLR 385 (P.C). 36  Service Workers Union ofAotearoa Inc v. Southern Pacific Hotel Corporation (NZ) Ltd [1993] 2 ERNZ 513. [Emphasis added].  37  A practise that has been judicially condoned in numerous cases. See e.g., Hyndman v. Air New Zealand Ltd [1992] 1 ERNZ 820 (E.C.); Hawtin v. Slellerup Industrial Ltd [1992] 2 ERNZ 500 (E.C.); Northern Distribution Union Inc v. 3 Guys Ltd [1992] 3 ERNZ 903 (E.C.). Note however, that the right to strike or lockout is not entirely unfettered. In order to be lawful under the ECA, a strike or lockout must relate to the negotiation of a collective contract; it must not occur while a collective contract is still in force; and it must not relate to a personal grievance, a dispute of right, matters dealing with freedom of association, or the issue of whether a collective contract will bind more than one employer. If the strike or lockout is to occur in an essential service, the requisite notice must also be given. See ECA, ss. 63-64. 3 8  Notably, the right to return to work is also subject to an employer's continuing right to effect restructuring and dismiss a striking employee on the basis of redundancy. See e.g., N. Newland, "Hawera Meatworks to be Dismantled: Deal Leaves Striking Staff Out of Work" (1996) The Daily News ( N Z ) , 22 October, 4. 3 9  10  negotiations f o r a lease w i t h the landlord. There is no obligation t o conduct these negotiations i n g o o d faith ... E m p l o y e r s c a n adopt a 'take it o r leave i t ' a p p r o a c h to negotiations, and the C o u r t w i l l not inquire as t o the reasonableness o f the employer's attitude.  40  T h e current free market a p p r o a c h t o bargaining is rendered complete b y the E C A ' s failure to prescribe any procedures f o r resolving bargaining impasses, other than e c o n o m i c sanctions (strikes and l o c k o u t s ) . Consistent w i t h its free market p h i l o s o p h y , the E C A discarded the c o n c i l i a t i o n and arbitration mechanisms incorporated i n the previous legislation, so that market forces c o u l d determine the manner and o u t c o m e o f bargaining i n each case. I n effect, the E C A represents the complete elimination o f the State's role as m o d e r a t o r and facilitator o f the bargaining process, the theory being that bargaining is n o w t o be facilitated, and moderated, b y the market place.  1.3 Views and Consequences of the E C A  A s w i t h most radical legislative reform, the E C A polarised its supporters and c r i t i c s .  41  M a n y w i t h business interests favoured the n e w free market philosophy. A c c o r d i n g t o B i l l B i r c h , the M i n i s t e r o f L a b o u r responsible f o r i n t r o d u c i n g the E C A , a free market system o f l a b o u r relations w o u l d eliminate inefficiencies and foster wide-spread prosperity:  That is what labour market r e f o r m is all about - increased p r o d u c t i v i t y and better w a y s o f d o i n g things, leading to better output, m o r e exports, better profits, a higher standard o f l i v i n g , and better wages. That is the b o t t o m line. It is time f o r us t o seek improvements i n o u r w o r k arrangements so that w e are m o r e efficient, m o r e p r o d u c t i v e , and m o r e export o r i e n t a t e d .  42  P. Kiely & A. Caisley, "The Legal Status of Bargaining under the Employment Contracts Act 1991: A Review of Recent Cases", in New Zealand Experiences, 53 at 68. 4 0  For discussion on the debate that surrounded the introduction of the ECA, and how it was reported in the media, see J. Scott, "Contesting Symbolic Space: The Struggle over the Employment Contracts Act 1991" (1996) 21:3 N.Z.J.Ind.Rel. 277. 41  Hansard, Parliamentary Debates of New Zealand (1991) 23 April, 1429. See also, B. Birch, "A Stepping Stone on the Path to Prosperity" (1991) The Dominion (N.Z.), 1 May, 10.  4 2  11  T h e a d o p t i o n o f market flexibility also found favour w i t h various employer organisations, a number o f w h o m lobbied strongly f o r the E C A . T h e N e w Z e a l a n d E m p l o y e r s ' F e d e r a t i o n (the " N Z E F " ) explained h o w it s a w the legislation w o r k i n g :  T h e E m p l o y m e n t C o n t r a c t s A c t has introduced absolute flexibility into labour relations. Irrespective o f whether they e m p l o y one person o r one thousand people, i n d i v i d u a l employers have the ability - indeed, the responsibility - t o w o r k w i t h their staff to reach an agreement that meets their j o i n t needs and aspirations. T h e focus must be o n w o r k i n g together, rather than w o r k i n g t o the dictates o f a bland, impersonal document fixed nationally and w i t h o u t i n d i v i d u a l e m p l o y e r s ' input o r r e s p o n s i b i l i t y .  43  T h i s " v i s i o n " w a s endorsed b y the N e w Z e a l a n d Business R o u n d t a b l e (the " N Z B R T " ) ,  4 4  w h i c h had argued that the institutional arrangements o f collective bargaining, and the legal procedures o f conciliation, arbitration and dispute settlement i n the L R A had interfered w i t h the effective o p e r a t i o n o f the labour m a r k e t .  T h e E C A was, i n its v i e w , a  45  considerable i m p r o v e m e n t o n the L R A .  L i k e w i s e , the E C A w a s heralded a m o n g international business groups as inspired and innovative. R e p o r t s i n the Economist "trail-blazing reforms", reform."  48  47  referred t o N e w Z e a l a n d ' s "brave r e c i p e " ,  46  and its  and t o the E C A as " a n international m o d e l for e c o n o m i c  S i m i l a r accolades appeared i n the Times*  9  the Wall Street Journal,  iQ  and the  A. Knowles, "We've Arrived But the Work's Just Starting", The Employer (Wellington, The New Zealand Employers Federation, 1991) June, 1 at 1. 4 3  4 4  A lobby group representing large companies and employers in New Zealand.  Deeks & Boxall, supra note 5 at 127. This was a viewed shared by the New Zealand Treasury (see Harbridge & Hince, supra note 12 at 236) but not necessarily by many small New Zealand employers (see I. McAndrew & P. Hursthouse, "Southern Employers on Enterprise Bargaining" (1990) 15 N.Z.J.Ind.Rel. 117 at 127). 4 5  4 6  Economist, (1990) 3 November, 19.  47  Economist, (1990) 13 November, 155.  ™Ibid. 4 9  "New Zealand Strides Down the Hard Road to Economic Recovery" (1992) 22 June.  5 0  "Kiwi School of Economics" (1994) 14 December.  12  Globe and Mail  51  A s it transpires, several jurisdictions have either replicated the E C A ,  or are considering d o i n g s o .  5 2  53  In stark contrast, many employees i n N e w Z e a l a n d v i e w e d the E C A as legislation that w o u l d undermine their collectives, w a g e s and j o b security. A t the time the E C A w a s enacted, 5 0 0 , 0 0 0 people ( a sixth o f the population) t o o k part i n demonstrations a n d strikes protesting against the l e g i s l a t i o n .  54  A c c o r d i n g to critics o f the E C A , its apparently  " n e u t r a l " stance i n respect o f bargaining w o u l d actually undermine employees because i n many instances individuals w o u l d have insufficient p o w e r t o insist o n meaningful bargaining. A s o p p o s i t i o n M e m b e r o f Parliament L i a n n e D a l z i e l argued:  A l l that [the E C A ] w i l l d o is establish unilateral management c o n t r o l over the w a y i n w h i c h labour is used rather than p r o v i d i n g positive measures that are needed so that the w o r k f o r c e can adjust and respond t o the e c o n o m i c changes i n a m o d e r n democratic society.  55  A s it turns out, the E C A has dramatically affected bargaining i n N e w Z e a l a n d .  Accurately  summarising that affect is, however, n o easy task. Unfortunately, the E C A p r o v i d e s f o r no central data collection. O n l y employers w h o are parties t o collective contracts c o v e r i n g t w e n t y o r m o r e employees are obliged t o file those contracts w i t h the  51  "Radically Sensible New Zealand" (1994) August.  See e.g., the Australian Workplace Relations Act 1996 (Cth.); the Western Australia Workplace Agreements Act 1993; the Victoria (Australia) Employee Relations Act 1992. See also, T. MacDermott, "Australian Labour Law Reform: The New Paradigm" (1998) 6:1 Can.Lab.& Emp.L.J. 127; R. Mitchell & R. Naughton, "Radical Labour Law Reform and the Demise of the Victorian Industrial Relations Systems" (1994) 19:3 N.Z.J.Ind.Rel. 275; R. Fells & C. Mulvey, "Changes in Western Australian Industrial Relations" (1994) 1.9:3 N.Z.J.Ind.Rel. 289. 5 2  Finland, The Netherlands, Germany, Sweden, Japan and Alberta (Canada) are all reported to be considering models based on the ECA. See Dannin, Working Free, at 4; E. Dannin, "We Can't Overcome? A Case Study of Freedom of Contract and Labor Law Reform" (1995) 16 Berkeley J.Emp. & Lab.L. 1 [hereinafter, ""We Can't Overcome"" at 7. 5 3  5 4  Dannin, "We Can't Overcome", at 82-84.  Hansard, Parliamentary Debates of New Zealand (1990) 19 December, 494-495. See also E. Dannin, "Labor Law Reform in New Zealand" (1992) 13:1 N.Y.L.S.Int. & Comp.L. 1 at 38-39. 5 5  13  Department o f L a b o u r .  5 6  A s the majority o f N e w Z e a l a n d w o r k sites are considerably  smaller than this, the i n f o r m a t i o n filed presents o n l y part o f the s t o r y .  57  T o m a k e matters  w o r s e , there is n o w a y for the G o v e r n m e n t to k n o w whether all large employers are c o m p l y i n g w i t h this filing requirement, nor have any steps been taken to enforce compliance.  58  It is, then, difficult to assess the accuracy o f the D e p a r t m e n t ' s statistics, a  deficiency noted b y a number o f researchers.  59  A s a result, it has been left largely to private studies t o ascertain the consequences o f the ECA.  Y e t , i n some instances, these studies have been o f questionable value. A c c o r d i n g  to D a n n i n , a number o f recent surveys have reflected the political interests o f those w h o c o m m i s s i o n e d them and have failed " t o meet w i t h basic research s t a n d a r d s . "  60  The  scarcity o f objective and reliable data has also been noted b y H a r b r i d g e :  ECA, s. 24. C.f, the LRA under which all awards and agreements had to be filed with the Department of Labour. The abolishment of this requirement was deliberate, and reflected the Government's desire that employment contracts should be negotiated to suit the requirements of a particular worksite, and not on the basis of industry or national relativities. See Harbridge, supra note 7 at 45. 5 6  More than a quarter of all New Zealand employees work in worksites of less than 10 employees (see J. Kelsey, "Employment and Union Issues in New Zealand, 12 Years On" (1997) 28 Cal.West.Int.L.J. 253 at 261), while the average New Zealand worksite comprises only eleven employees (see D. Harvey, "The Unions and the Government: The Rise and Fall of the Compact", in J. Deeks & N. Perry eds., Controlling Interests: Business, the State and Society in New Zealand (Auckland, Auckland University Press, 1992) at 63). This average is, however, greatly affected by a few large employers. Indeed, over 85% of all enterprises have less than six employees, with a further 7% having between 6 and 9 (see Statistics New Zealand, Business Activity Statistics 1997 (Wellington, Statistics New Zealand, 1997) at 96. Interestingly, British Columbia also has a high proportion of small workplaces. According to a 1994 report, 73% of all enterprises in British Columbia have less than 5 employees, and a further 18% have 5-19 employees. See M. Thompson, Rights and Responsibilities in a Changing Workplace: A Review of Employment Standards in British Columbia (Ministry of Skills, Training and Labour, 1993) at 145. 5 7  Report of the Minority of the Labour Select Committee on the Inquiry into the Effects of the Employment Contracts Act on the New Zealand Labour Market (Wellington, 1993) [hereinafter the "Minority Reporf] at 23. 58  Dannin describes the absence of data as "truly appalling" (Dannin, "We Can't Overcome", at 165), while Hughes refers to a "significant information gap". See J. Hughes, "Personal Grievances", in New Zealand Experiences 89 at 128. Even the International Labour Organisation cited the absence of objective data as a significant limitation in its study of New Zealand labour relations during the period 1992-1994. See infra note 160, at 87. 5 9  6 0  Dannin, Working Free, at 181.  14  T h e r e is a great shortage o f k n o w l e d g e about what is actually happening i n the labour market. R h e t o r i c and anecdotal evidence supporting one v i e w o r another have b e c o m e the primary mechanisms f o r evaluating the legislation. U n i o n s have a bag o f stories about hardships experienced b y individual w o r k e r s ; the M i n i s t e r o f L a b o u r has his b a g o f stories s h o w i n g h o w successful the legislation has been; and employers organisations have a selection o f kites they fly f r o m time t o time t o see whether further deregulation can be a c h i e v e d .  61  A c c u r a t e l y s u m m a r i s i n g the affects o f the E C A o n bargaining is also made difficult b y t h e fact that a number o f the legislative and e c o n o m i c initiatives i n t r o d u c e d i n the 1970s and 1980s p r o v i d e d some impetus f o r what f o l l o w e d .  62  H o w e v e r , despite these difficulties, it  can be fairly asserted that the E C A has resulted in, o r contributed significantly to, the f o l l o w i n g bargaining processes and outcomes:  1.  T h e focus o f bargaining has shifted f r o m national and o c c u p a t i o n a l agreements t o i n d i v i d u a l w o r k sites. A s a result, there has been a dramatic decline i n the number o f m u l t i - e m p l o y e r and industry agreements.  U n d e r the L R A , over 7 0 % o f N e w  Z e a l a n d employees were e m p l o y e d under multi-employer awards and agreements.  63  B y 1995 ( w i t h i n 5 years), this figure had d r o p p e d to 1 4 % ,  64  and b y  Harbridge, supra note 7 at 49. See also E. Rasmussen & J. Deeks, "Contested Outcomes: Assessing the Impacts of the Employment Contracts Act" (1997) 28 Cal.West.Int.L.J. 275 at 275, B. Easton, "The Economic Impact of the Employment Contracts Act" (1997) 28 Cal.Westlnt.L.J. 209 at 217. 61  Including for example, the corporatisation and privatisation of many State activities (including Telecom, NZ Rail and the Bank of New Zealand) which resulted in 35,000 redundancies; the elimination of export and domestic trade subsidies and tariffs; the restructuring of the taxation system (including the introduction of a goods and services tax); and the reduction of Government spending in health, education, community services, housing and the like. For discussion of these reforms see e.g., A. Sharp, ed., Leap into the Dark: The Changing Role of the State in New Zealand Since 1984 (Auckland, Auckland University Press, 1994); B. Jesson, Fragments of Labour: The Story Behind the Labour Government (Auckland, Penguine, 1989); I. Duncan & A. Bollard, Corporatisation and Privatisation: Lessons From New Zealand (Auckland, Oxford University Press, 1992); S. Walker, Rogernomics: Reshaping New Zealand's Economy (Wellington, GP Books, 1989). For discussion on the reforms dealing specifically with collective bargaining see G. Anderson, "Developments in the Legal Regulation of Collective Bargaining in New Zealand" (1990) 3 A.J.L.L. 227. 6 2  R. Mackay ed., Mazengarbs Employment Law (Wellington, Butterworths, 1997) [hereinafter "Mazengarbs"] at A/353B. 6 3  R. Harbridge & A. Honeybone, "External Legitimacy of Unions: Trends in New Zealand" (1996) 17 J.Lab.Res. 425 at 433-435.  6 4  15  1996, t o just 7%.  A c c o r d i n g t o figures released b y the Department o f L a b o u r i n  F e b r u a r y 1998, n o w only 2 % o f the 1621 active collective contracts o n its files c o v e r m o r e than one e m p l o y e r .  2.  66  M o s t N e w Z e a l a n d employees are n o w e m p l o y e d o n i n d i v i d u a l , rather than collective, c o n t r a c t s .  67  Estimates o f individual contract coverage range as h i g h as  7 8 % o f the salaried w o r k f o r c e .  68  T h i s represents a m a r k e d t u r n a r o u n d f r o m the  p o s i t i o n under the L R A w h e n , at times, as f e w as 2 8 % o f the w o r k f o r c e w e r e c o v e r e d b y i n d i v i d u a l contracts o f s e r v i c e .  69  Department of Labour - Industrial Relations Service, Survey of Labour Market Adjustment Under the Employment Contracts Act (Wellington, Department of Labour, August, 1997) [hereinafter, "Department of Labour 1997 Survey"] at 2. Department of Labour, Contract-The Report on Current Industrial Relations in New Zealand (Wellington, Department of Labour, 1998) Vol. 24, at 1. According to freemarket advocates, this reduction is the result of employers and employees choosing not to enter into multi-employer contracts. (See e.g., Roger Kerr, "The New Zealand Employment Contracts Act: Its Enactment, Performance, and Implications" (1997) 28 Cal.West.Int.J.L. 89 at 95). More likely, it is employers rather than employees exercising this choice, particularly given that employees cannot lawfully strike to secure such contracts (see infra notes 697-698). 6 6  A trend which is consistent with international developments. As Lord Wedderburn describes, there is an increasing paradox between "the global rise of multinational employers in international coalitions of collective capital" and "the decollectivisation of their employees". See Lord Wedderburn, Labour Law and Freedom: Further Essays in Labour Law (London, Lawrence & Wishart, 1995) at 286-287. 6 7  New Zealand Council of Trade Unions, Post-Election Priorities - A Union View (Wellington, Council of Trade Unions, 1996) at 62-63. This estimate accords with the findings of Harbridge, Rasmussen, and Boxall. See R. Harbridge & A. Crawford, "The Impact of New Zealand's Employment Contracts Act on Industrial relations" (1997) 28 Cal.West.Int.L.J. 235 at 249-250; Rasmussen & Deeks, supra note 61 at 279; P. Boxall, "Models of Employment and Labour Productivity in New Zealand: An Interpretation of Change Since the Employment Contracts Act" (1997) 22:1 N.Z.J.Ind.Rel. 22 at 26. C.f, the Department of Labour's account that only 49% of employees are on individual contracts. See Department of Labour 1997 Survey, at 18. Notably, however, the Department acknowledged that it could not rule out significant bias in its data, due to a response rate of just 42%. (See Department of Labour 1997 Survey, at 15). 6 8  The present coverage of collective contracts (between 20% and 30% of the workforce) may, however, overstate the present bargaining strength of unions in New Zealand. As some commentators have noted, a number of collective contracts have been renewed because this form of contract suited the employers in question, and not because their employees had the bargaining power to insist on this form of outcome. See e.g., A. Pringle, "The Pursuit of Flexibility in the New Zealand Supermarket: The Employment Contracts Act, Continuities and Discontinuities" (1993) 18 N.Z.J.Ind.Rel. 306 at 321; L. Hill, & R. Du Plessis, "Tracing the Similarities, Identifying the Differences: Woman and the Employment Contracts Act" (1993) 18:1 N.Z.J.Ind.Rel. 31 at 41. 6 9  16  3.  U n i o n membership has fallen considerably.  A c c o r d i n g t o the D e p a r t m e n t o f  L a b o u r , i n M a y 1991, 603,118 employees belonged to u n i o n s . 1997 this figure had fallen to 3 2 7 , 8 0 0  7 1  70  B y December  (a 4 6 % drop i n membership and, even  m o r e significantly, a 5 4 % drop i n u n i o n density, i n just six and a h a l f y e a r s ) .  4.  72  N o t surprisingly, considerable restructuring has o c c u r r e d w i t h i n and a m o n g unions. V a r i o u s unions have ceased t o e x i s t , organisations,  74  73  some have split into separate  w h i l e others have a m a l g a m a t e d .  75  Friction within union  hierarchies has also lead t o a number o f unions w i t h d r a w i n g f r o m the C o u n c i l o f T r a d e U n i o n s t o f o r m the N e w Zealand T r a d e U n i o n F e d e r a t i o n .  76  A figure which equated to 65% of the total, full time, salaried workforce (see Harbridge & Hince, supra note 12 at 228), and 41.5% of the total full time and part time salaried workforce (see A. Crawford, et al, "Unions and Union Membership in New Zealand: Annual Review For 1996" (1997) 22 N.Z.J.Ind.Rel. 212). 7 0  A level which equates to only 19.2% of the total full time and part time workforce. See Crawford et al, Unions and Union Membership in New Zealand: Annual Review for 1997 (Unpublished Research Note, July 1998) at 4. The difference in union membership as a percentage of the workforce (19.2%) and the coverage of collective contracts as a percentage of the workforce (around 25%) can be explained largely by "free-riding" (non-union members enjoying the benefits of a collectively negotiated contract). See R. Harbridge et al, Employment Contracts: Bargaining Trends & Employment Law Update 1996/1997 (Wellington, Victoria University, 1997) at 7. 71  According to Roger Kerr, this decline is the result of employees freely choosing not to join unions (see Kerr, supra note 66 at 96). While some of the reduction in membership will no doubt be due to such decision making, much of the decline is the result of union exclusion from workplaces, and employees becoming disillusioned with their union's inability to engage with employers, all of whom enjoy the lawful right to refuse to negotiate. See infra note 724-728 and accompanying text. 7 2  Such as the 18,000 member Communication and Energy Workers Union (Dannin, Working Free, at 282); and the 40,000 member Clerical Workers Union (M. Gay & M. MacLean, "Six Years Hard Labour: Workers and Unions under the Employment Contracts Act" (1997) 28 Cal.West.Int.L.J. 45 at 53). 7 3  For example, 300 customs workers resigned from the Public Service Workers Association ("PSA") in 1991 and formed the Customs Officers Association, while 1000 psychiatric workers resigned in 1992 and formed the National Union of Public Employees. See Dannin, Working Free, at 281-282. 7 4  See e.g., the New Zealand Engineers Union which merged with the Printing, Packaging and Media Union to form a membership of 60,000 (see Dannin, Working Free, at 292) and the merger of the Combined Union of Railway Workers, the National Union of Railway Workers and the Harbour Workers Union, to form the Maritime Transport Union (see A. Crawford, et al, "Unions and Union Membership in New Zealand: Annual Review For 1995" (1996) 21:2 N.Z.J.Ind.Rel. 188 at 192). 7 5  For a discussion on this split see Gay & MacLean, supra note 73; Kelsey, New Zealand Experiment, at 186-187.  7 6  17  5.  Consistent w i t h the decline i n multi-employer agreements, unions are n o w c o n d u c t i n g significantly m o r e negotiations than they w e r e before the E C A w a s enacted. T h e N a t i o n a l D i s t r i b u t i o n U n i o n , f o r example, c o n d u c t e d i n the order o f 700 negotiations d u r i n g the year after the E C A w a s passed, c o m p a r e d t o 55 d u r i n g the year b e f o r e .  77  Increasing w o r k l o a d s , i n c o m b i n a t i o n w i t h falling membership  dues, have meant that m a n y unions have f o u n d it impossible t o represent all existing members. A s a result, increasing numbers o f employees are l o s i n g representation, particularly those i n small and isolated w o r k sites, the secondary labour m a r k e t .  79  78  and those i n  A s K e l s e y has noted, "most unions [have] stopped  organising i n w o r k p l a c e s o f less than 10, effectively abandoning a quarter o f the workforce."  6.  8 0  A l t h o u g h unions are n o w c o n d u c t i n g m o r e negotiations, most employment contracts are f o r m e d w i t h o u t any u n i o n involvement. A c c o r d i n g t o a study b y M c A n d r e w c o n d u c t e d i n 1992, unions w e r e i n v o l v e d i n the negotiations o f o n l y 2 5 % o f collective employment c o n t r a c t s . finding.  82  81  A survey b y the N Z E F c o n f i r m e d this  A l t h o u g h this percentage n o w appears t o have i n c r e a s e d ,  83  it is, i n fact,  Kelsey, supra note 57 at 261. Dannin, "We Can't Overcome", at 102; J. Hector, et al, "Industrial Relations Bargaining in the Retail Non-Food Sector: 1991-1992" (1993) 18:3 N.Z.J.Ind.Rel. 326 at 340. 7 8  The secondary labour market comprises low skilled, low paid, employees such as many of those employed in the retail, cleaning, clerical and child care industries. Conversely, the primary labour market comprises highly paid and highly skilled employees: See J. Sayers, "Women, the Employment Contracts Act, and Labour Flexibility", in New Zealand Experiences, 210. 7 9  Kelsey, supra note 57 at 261. This view is supported by Gilson, whose research indicates that union coverage in New Zealand is positively correlated to organisational size. See C. Gilson & T. Wagar, "The Impact of the New Zealand Employment Contracts Act on Individual Contracting: Measuring Organizational Performance" (1997) 28 Cal.West.Int.L.J. 221 at 230 (note 29). Interestingly, in British Columbia bargaining units often comprise less than ten employees, and, by definition, a bargaining unit can comprise one employee. See BC Code, s. 1 (definition of "unit"). 8 0  81  McAndrew, supra note 30, at 180.  According to the NZEF, in 1992-1993 unions were used as bargaining agents in only a third of all collective contracts. New Zealand Employers Federation Members Employment Contracts Survey, April 1992 (cited in Carroll & Tremewan, supra note 6 at 187). 8 2  According to the Department of Labour, as at the end of 1997, unions had been involved in 68% of the active collective contracts on its files. (See Department of Labour, Contract-The Report on Current 8 3  18  misleading t o refer t o this trend as an "increase", given the c o n t i n u i n g decline i n the overall number o f collective c o n t r a c t s .  84  Additionally, according to Whatman,  as o f late 1993, unions w e r e i n v o l v e d i n the negotiation o f less than 6 % o f i n d i v i d u a l employment c o n t r a c t s ,  85  a trend w h i c h has c o n t i n u e d .  86  Accordingly,  based o n this data, less than 2 7 % o f all employment contracts are n o w negotiated by unions.  7.  N e w Z e a l a n d has experienced the c o n s o l i d a t i o n o f a bifurcated labour m a r k e t .  87  T h o s e employees w i t h bargaining p o w e r (usually those i n the p r i m a r y l a b o u r market) are n o longer limited b y inter-occupational relativities. A n d those i n the secondary labour market have largely been left b e h i n d .  88  A s H a r b r i d g e argues:  [T]here can be n o doubt that a bifurcated labour market has been further developed w i t h the industrially strong b e c o m i n g stronger and the industrially w e a k b e c o m i n g even weaker.  A n y concept o f comparative  employment justice has gone and the v e r y disparate findings indicate that ' m a r k e t rules' are the sole arbitrator o f employment negotiations. That f o r N e w Z e a l a n d is an astonishing t u r n a r o u n d .  89  Industrial Relations in New Zealand (Wellington, Department of Labour, 1998) Vol. 24, at 1). Harbridge suggests a higher degree of involvement, estimating that 87% of collective contracts are now negotiated by unions. See R. Harbridge et al, Employment Contracts: Bargaining Trends & Employment Law Update 1996/1997 (Wellington, Victoria University, 1997) at 14. These figures suggest that collective contracts are tending to be retained only where a union has a strong presence in a particular workplace.  8 4  8 5  R. Whatman, et al, "Labour Market Adjustment under the ECA" (1994) 19:1 N.Z.J.Ind.Rel. 53 at 60.  The Department of Labour 1997 Survey (produced in August 1997) reported that unions were involved in the negotiation of only 3% of concluded (new and renewed) individual employment contracts. See the Department of Labour 1997 Survey, at 27. 8 6  A market in which there exists an expanding wage differential between the primary and secondary labour markets.  8 7  8 8  Harbridge, supra note 7 at 49.  R. Harbridge, "Collective Employment Contracts: A Content Analysis", in New Zealand Experiences, 70 at 88. See also Rasmussen & Deeks, supra note 61 at 295; McAndrew, supra note 29 at 122; Whatman, supra note 85 at 71; Hector, supra note 78 at 340; R. Harbridge, & M. Street, "Labour Market Adjustment and Women in the Service Industry: A Survey" (1995) 20:1 N.Z.J.Ind.Rel. 23; S. Hammond & R. Harbridge, "The Impact of the ECA on Women at Work" (1993) 18:1 N.Z.Ind.Rel. 15. 8 9  19  K e n D o u g l a s concurs, having noted that the E C A has been:  [ A ] k e y instrument i n w i d e n i n g inequality i n the distribution o f i n c o m e , w e a l t h , and p o w e r i n N e w Z e a l a n d , b o t h between classes and w i t h i n classes.  8.  90  P a y cuts have meant that many i n the poorest sector o f the w o r k force have incurred a substantial loss i n i n c o m e c o m p a r e d to p r e - E C A levels, some suggest b y as m u c h as twenty p e r c e n t .  91  T h e effect o f these cuts has been exacerbated b y  their c o i n c i d i n g w i t h high unemployment, reduced G o v e r n m e n t spending o n social services  92  and cuts t o unemployment benefits.  93  A s K e l s e y argues, the b u r d e n o f  free market labour relations has fallen most heavily o n those w h o already had the least.  9.  94  C o n s e q u e n t l y , increasing numbers o f N e w Zealanders are l i v i n g i n poverty. A c c o r d i n g t o D a n n i n , those i n poverty rose f r o m 3 6 0 , 0 0 0 i n 1990 t o 5 1 0 , 0 0 0 i n  K. Douglas, "Forming Productive Partnerships for Greater Prosperity, Productivity and Parity" (1997) Address to the 11th Annual Industrial Relations Conference, New Zealand Institute of International Research. 9 0  P. Walker, "What Happens When You Scrap the Welfare State" (1994) The Independent (N.Z.), 13 March, 17. 91  The ECA was introduced as part of expansive economic reforms. Other changes included no general increases in Guaranteed Retirement Income rates from April 1991; no increase in social security benefits from April 1991; abolition of universal family benefit payments; and the introduction of new stand down and work test provisions for those claiming the unemployment benefit. See Harbridge, supra note 7 at 31. Initiatives of this kind have continued in recent times. For example, those aged between 16 and 17 years of age are no longer eligible for the unemployment benefit (see "Cuts to Teen Benefits Now In Force" (1998) One Network News, 1 January (http://www.tvone.co.nz)). In addition, most benefits are now subject to strict service and work-testing requirements. See e.g., "Dole Suspension Threatened" (1998) The Press (N.Z.), 23 April; NZPA, "Dying Man Told to Attend Workshop or Lose Benefit" (1998) The Press (N.Z.), 26 May. 9 2  In April 1991, for example, the weekly unemployment benefit for a single person between the ages of 20 and 24 was cut by 25% from $143.57 to $108.17. See M. O'Brien, "New Wine in Old Bottles: Social Security in New Bottles" (1991) Reports and Proceedings, Social Policy Research Centre, Sydney, at 45. According to recent New Zealand Governments, these cuts serve to ensure that those on the unemployment benefit have sufficient "incentive" to find work. 9 3  9 4  Kelsey, New Zealand Experiment, at 271.  20  1993,  95  a level w h i c h has reportedly continued t o rise.  W h i l s t the v a l i d i t y o f  these reports o b v i o u s l y depends o n h o w ' p o v e r t y ' is defined, this trend is nevertheless supported by the increasing demand f o r f o o d parcels i n some sectors o f N e w Zealand society,  97  petitions filed since 1 9 9 1 ,  the rapid expansion o f the number o f annual b a n k r u p t c y 98  and the fact that more employees than ever are  w o r k i n g f o r free just t o gain e x p e r i e n c e .  99  D e p e n d e n c y is b e c o m i n g an increasing  feature o f N e w Z e a l a n d society, a point noted b y K e l s e y :  T h e v i c t i m s o f r e f o r m were being forced into dependency o n the state. A t the same time, the state w a s shedding its responsibilities f o r their welfare. T h e r i g i d i d e o l o g y o f the reformers w a s brought face t o face w i t h h u m a n despair as stories o f poverty, suffering and tragic anomalies appeared i n the m e d i a almost every d a y .  10.  100  A g a i n s t this, many employees i n the primary labour market have secured significant pay increases since the enactment o f the E C A . F o r example, a study by H a r b r i d g e c o n d u c t e d a year after the E C A w a s passed revealed that although 4 7 % o f the 110,000 w o r k e r s surveyed had received pay cuts or no increase i n w a g e s d u r i n g the preceding 12 months, 1 9 % had received increases o f 7 % or m o r e .  1 0 1  W h i l s t there have been variations i n theses figures subsequently, the basic trend o f  Dannin, Working Free, at 171. According to Kelsey, by the end of 1993 one in six New Zealanders was considered to be living in poverty. See Kelsey, New Zealand Experiment, at 10. See also "Anglicans on the March over Poverty" (1998) The Press (N.Z.), 14 May; "Welfare System Built on Flawed Premise" (1998) The Press (N.Z.), 15 May. 9 6  Wellington Downtown Ministry, Passing the Buck (Wellington, Wellington Downtown Ministry, 1994); Manukau City Council, Poverty and Hardship (Manukau, Manukau City Council, 1992); L. Morgan, "Beneficiaries 'Sacrificed' by Government" (1992) Evening Post (N.Z.), 6 May, 5; M. Munro, "Voting for the Lash in the New Zealand Laboratory" (1993) Sunday Star Times (N.Z.), 31 October; O. Riddell, "New Zealand Should Learn Lesson From Los Angeles Tumult" (1992) Press (N.Z.), 9 May. 9 7  9 8  Kelsey, Rolling Back the State, at 335.  9 9  The Minority Report, at 3 and 5.  1 0 0  Kelsey, Rolling Back the State, at 337.  101  See Harbridge, supra note 89 at 78.  21  separation between the primary and secondary labour markets c o n t i n u e s .  1UZ  Even  former P r i m e M i n i s t e r J i m B o l g e r has a c k n o w l e d g e d this disparity, n o t i n g that those employees w h o have received w a g e increases have been counterbalanced b y those w h o have not, t o such an extent that f r o m 1990 t o 1995 the average real w a g e g r o w t h w a s just 0 . 1 % .  11.  1 0 3  E m p l o y e r s have, i n many cases, secured the r e m o v a l o f penal rates and enhanced their contractual discretion t o flexibly allocate w o r k .  1 0 4  F o r some, these  developments o c c u r r e d even before the E C A w a s passed, as a number o f unions engaged i n concessionary bargaining i n order to secure agreement before 15 M a y 1991.  1 0 5  T h e net result is that many employees are n o w w o r k i n g longer f o r less. ' 10  According to Dannin:  T h e E C A made w a g e cutting an easy o p t i o n w h e n employers faced financial difficulty o r w a n t e d higher profits. M o s t p o p u l a r w a s eliminating p r e m i u m o r penal wages f o r overtime, weekends, o r shift w o r k . W o r k e r s w e r e also d o i n g m o r e u n p a i d w o r k , so they received less m o n e y f o r t i m e w o r k e d . W o r k e r s were expected t o w o r k harder o r faster f o r n o increase in p a y and t o c o v e r f o r laid o f f employees o r increased w o r k l o a d s that, i n  Harbridge reports that the annual wage change in different industries ranged from 0.1% to 4.8% in 1994/1995, and from 2.8% to 7.6% in 1996/1997. See R. Harbridge et al, Employment Contracts: Bargaining Trends & Employment Law Update 1994/1995 (Wellington, Victoria University, 1995) at 12; R. Harbridge et al, Employment Contracts: Bargaining Trends & Employment Law Update 1996/1997 (Wellington, Victoria University, 1997) at 20. 1 0 2  1 0 3  E. Rasmussen, "Chronicle" (1996) 21 N.Z.J.Ind.Rel. 109 at 116.  1 0 4  Harbridge & Crawford, supra note 68 at 242; Hector, supra note 78 at 334; Pringle, supra note 69.  1 0 5  R. Macfie, "Unions Fold Under Pressure" (1991) National Business Review (N.Z.), 20 March, 2.  It is significant in this regard that the Minimum Wage Act 1983 provides in section 1 IB that the maximum number of hours to be worked per week by an employee is 40 unless the parties agree otherwise. In reality, many employees have no choice but to agree to work longer when requested to do so by their employers. For those on annual salaries, this extra work usually results in no extra pay. Moreover, many of those employees who are paid by the hour, are paid for overtime at their ordinary rate of pay. In contrast, the Employment Standards Act of British Columbia (R.S.B.C. 1996, c. 113) provides that an employer must pay overtime wages if it requires or allows an employee to work over 8 hours a day or 40 hours a week (s. 35). The rate of overtime pay is either 1.5 or 2 times the employee's ordinary rate, depending on the number of overtime hours worked. (See ss. 40 - 41). 1 0 6  22  the past, meant hiring a n e w w o r k e r . T h e average w o r k e r w a s experiencing an intensification o f w o r k .  12.  1 0 7  T h e N Z B R T , N Z E F and numerous employers have repeatedly claimed that the E C A has resulted i n enhanced p r o d u c t i v i t y . E x e c u t i v e D i r e c t o r o f the N Z B R T ,  1 0 9  108  B y w a y o f example, R o g e r K e r r ,  advised an A u s t r a l i a n conference i n 1993  that the E C A had l e d t o p r o d u c t i v i t y increases o f 1 7 % .  1 1 0  T w o years later K e r r  w r o t e that " r e m u n e r a t i o n has changed f r o m pay f o r attendance t o p a y f o r achievement.  T h e focus is o n p r o d u c t i v i t y and p r o f i t . "  1 1 1  Others are m o r e  sceptical, n o t i n g that many employers have simply cut w a g e s rather than introducing i n n o v a t i o n ; performance,  113  112  that most employment contracts d o not link p a y t o  and that the assertions o f K e r r and others regarding enhanced  p r o d u c t i v i t y frequently lack credible empirical support, and are, i n many instances, fundamentally f l a w e d .  1 1 4  A c c o r d i n g t o N e w Z e a l a n d economist, B r i a n E a s t o n :  T h e r e appears t o have been little e c o n o m i c benefit, i f any, f r o m the E C A , other than perhaps f o r employers at the expense o f w o r k e r s . I n particular, there is n o evidence o f significant p r o d u c t i v i t y gains ... ,  1 1 5  Dannin, Working Free, at 173. (Footnotes omitted). See e.g., W. Kasper, "Free To Work: The Liberalisation of New Zealand's Labour Market" (1996) 32 Policy Monograph 51 (Centre for Independent Studies, Sydney, 1996). 1 0 8  1 0 9  And an ex-employee of the New Zealand Treasury.  R. Kerr, "The Challenge for the 90's: Labour Reform in Australasia," (1993) Address to the Australasian Institute of Company Directors, 19 February, at 3. 1 1 0  R. Kerr, "Bargaining Under the Employment Contracts Act" [1995] N.Z.Emp.L.Bul. (N.Z.) 97. See also R. Kerr, "Employment, Productivity and Growth All Blossom Under the Employment Contracts Act" (1996) The Herald (N.Z.), 5 October. 1 1 1  K. Douglas, ""Organising Workers: The Effects of the Act on the Council of Trade Unions and its Membership", in New Zealand Experiences, 197 at 199; R. Ryan, "Flexibility in New Zealand Workplaces: A Study of Northern Employers" (1992) 17:2 N.Z.J.Ind.Rel. 129 at 145. 1 1 2  According to Harbridge, in 1994/1995, 84% of the 2688 contracts surveyed made no connection between pay and performance. See R. Harbridge et al, Employment Contracts: Bargaining Trends & Employment Law Update 1994/1995 (Wellington, Victoria University, 1995) at 17. 1 1 3  1 1 4  See e.g., Easton, supra note 61; Gilson & Wagar, supra note 80.  1 1 5  Easton, supra note 61 at 209.  23  13.  P r o p o n e n t s o f the free market also c l a i m that the E C A has led t o the creation o f n u m e r o u s n e w j o b s a n d the r e d u c t i o n o f unemployment. H o w e v e r , as w i l l b e discussed i n chapter four, there are deficiencies w i t h b o t h a s s e r t i o n s .  14.  116  I n terms o f bargaining conduct, there is considerable e m p i r i c a l and anecdotal evidence that many employers are engaging i n dictation rather than negotiation:  .  T h e r e is evidence that numerous employers are presenting contracts t o their staff o n the basis o f "take it o r leave i t " . have been u n s u c c e s s f u l .  118  1 1 7  L e g a l challenges t o this practice  D i c t a t i o n has been particularly prevalent i n  negotiations f o r individual contracts and i n negotiations f o r collective contracts that have not i n v o l v e d u n i o n s .  .  1 1 9  T h e r e is also evidence that contracts have been presented t o employees f o r signature w i t h o u t any m e n t i o n o f w a g e rates, suggesting that w a g e s are, at least in some instances, being set unilaterally and w i t h o u t d i s c u s s i o n .  •  120  S o m e employers have taken advantage o f the absence o f any o b l i g a t i o n t o disclose i n f o r m a t i o n material t o the negotiation o r re-negotiation o f an employment contract. I n one case, a G o v e r n m e n t department negotiated w i t h a w o r k e r a 3 % pay increase i n exchange f o r a 5 0 % reduction i n redundancy entitlements. T h e w o r k e r w a s made redundant t w o days later and received $ 2 0 , 0 0 0 less than he w o u l d have under his previous c o n t r a c t .  1 1 6  See infra notes 636-650.  1 1 7  The Minority  121  Report, at 5; McAndrew, supra note 30 at 171; Harbridge, supra note 89 at 88; Dannin,  Working Free, at 236-237. 1 1 8  See supra note 38.  1 1 9  McAndrew, supra note 29.  Harbridge, supra note 102 at 11; R. Harbridge & J. Lane, "The Effect of a Minimum Youth Wage in New Zealand" (1993) 18 N.Z.J.Ind.Rel. 275 at 278. 1 2 0  1 2 1  "Signed Up and Kicked Out" (1991) PSA Journal, July, at 3; Dannin, Working Free, at 278.  24  .  E m p l o y e r s have been successful i n unilaterally dictating the scope o f ^ negotiations. I n one instance, the N e w Z e a l a n d N u r s e s A s s o c i a t i o n sought t o raise w i t h an A r e a H e a l t h B o a r d issues o f training, w o r k p l a c e design and employer-employee c o m m u n i c a t i o n . T h e management negotiators rejected those topics outright, t a k i n g the intransigent stance that such issues fell outside the negotiations and w o u l d not be d i s c u s s e d .  .  122  E m p l o y e r s are also aware that there is n o legal requirement t o ever c o n c l u d e negotiations o r t o end a state o f l o c k o u t (unless their employees agree t o the terms proffered). A s a result, some employers have effected lengthy l o c k o u t s and appointed ' t e m p o r a r y ' outside replacement w o r k e r s i n the i n t e r i m .  .  123  V a r i o u s employers have utilised their p o w e r o f veto over bargaining t o undermine unions and collective bargaining. F o r instance, i n 1992 the D e p a r t m e n t o f S o c i a l W e l f a r e refused t o c o m m e n c e bargaining until the P u b l i c Service A s s o c i a t i o n (the " P S A " ) had p r o v i d e d it w i t h signed bargaining authorities f r o m each o f the D e p a r t m e n t ' s employees w h o w e r e represented by the u n i o n (6,259 i n all). A f t e r receipt o f the authorities ( p r o c u r e d b y the u n i o n at considerable expense and effort) the Department still refused t o b a r g a i n , stance w h i c h is l a w f u l under the E C A .  15.  124  1 2 5  P r o p o n e n t s o f the E C A have sought t o dismiss reports o f this type o f c o n d u c t as "anecdotal".  126  T h e y further argue that t o the extent such c o n d u c t does o c c u r , it  S. Oxenbridge, "Health Sector Collective Bargaining and the Employment Contracts Act: A Case Study of Nurses" (1994) 19 N.Z.J.Ind.Rel. 17 at 26. 1 2 2  See e.g., "New Zealand's Longest Lockout Sinks into Statistical Black Hole" (1992) National Business Review (N.Z.), 23 October. 1 2 3  1 2 4  "Bureaucratic DSW Tactic Backfires" (1992) Pub.Service.J. June.  Most, if not all, of the conduct noted would, if it arose in British Columbia, constitute evidence of a failure to bargain in good faith. See infra notes 210-235. 1 2 5  1 2 6  a  See the advice of the Public Sector, infra notes 186-187; Kerr, supra note 66 at 102.  25  arises only i n the m i n o r i t y o f c a s e s , E C A had been e n a c t e d .  128  127  and w o u l d have o c c u r r e d whether o r not the  Against this, critics o f the E C A cite empirical studies  indicating that dictation is n o w o c c u r r i n g i n the f o r m a t i o n o f most employment contracts,  129  and further, that this dictation is significantly m o r e likely t o o c c u r  n o w that unions have been eliminated f r o m the majority o f labour n e g o t i a t i o n s .  16.  C o n f l i c t has also c o n t i n u e d t o arise i n N e w Z e a l a n d w o r k places.  130  Immediately  f o l l o w i n g the passage o f the E C A there w a s a reduction i n strikes and l o c k o u t s .  131  H o w e v e r , between 1993 a n d 1996, strikes and l o c k o u t s o c c u r r e d m o r e frequently, w i t h the associated number o f days lost increasing every y e a r .  132  Since 1996, the  n u m b e r o f reported strikes and l o c k o u t s appears t o have d e c l i n e d ,  133  v a r i o u s queries have been raised as to the accuracy o f these f i g u r e s .  although  134  The  existence o f c o n t i n u i n g w o r k p l a c e conflict is also evidenced b y increases i n  A. Knowles, "The Employment Contracts Act 1991: An Employer's History" (1997) 28 Cal.West.Int.L.J. 75 at 86; P. Boxall, "Management Strategy and the Employment Contracts Act 1991", in New Zealand Experiences, 148 at 160. 1 2 7  1 2 8  Carroll & Tremewan, supra note 6 at 195.  1 2 9  See infra notes 558-568.  1 3 0  Harbridge, supra note 89 at 88; McAndrew, supra note 30 at 181.  Proponents of the ECA hailed this as evidence of reduced workplace conflict. See e.g., the references in Dannin, Working Free, at 304. In contrast, critics of the ECA argue that this initial decline was due to the severity of the economic depression that existed in the early 1990s, and to union disorganisation. See J. Henning, "The Employment Contracts Act and Work Stoppages" (1995) 20:1 N.Z.J.Ind.Rel. 77; Douglas, supra note 112 at 199; Harbridge & Crawford, supra note 68 at 244. 131  In 1993 over 23,000 workdays were lost to strikes and lockouts. By 1996, this figure had increased to 72,900. See the New Zealand Official 1997 Yearbook, 100th ed., (Wellington, Department of Statistics, 1997) at 363-364. 1 3 2  1 3 3  J. Kirk, "Work Stoppages Down" (1998) The Evening Post (N.Z.), 26 June, 13.  There are a number of limitations in the accuracy of the strike and lockout statistics reported by the Department of Statistics. Significantly, there is no legal compulsion on employers, employees and unions to report strikes and lockouts. Moreover, in order to be included in the Department's findings, a strike or lockout must involve at least one days action by 10 employees. And thirdly, the data omits various manifestations of conflict, such as the issuing of stopwork notices, worker marches, lunchtime meetings and the like. See Kirk, ibid. 1 3 4  26  employment related l i t i g a t i o n ,  135  employee d i s s a t i s f a c t i o n ,  136  and w o r k p l a c e  137  turnover.  1.4 The Winds of Change T h e domestic criticism o f bargaining under the E C A has been persistent and widespread. T h e E C A has been v a r i o u s l y described as " a direct repudiation o f those labour laws w h i c h support collective action and b a r g a i n i n g " , warfare",  139  138  as legislation w h i c h enacts "industrial  and as the " m o s t hostile anti-union legislation i n the O E C D . "  1 4 0  It has also  been said that collective bargaining i n N e w Z e a l a n d is n o w the "anti-thesis" o f bargaining;  141  that the process o f bargaining has c o l l a p s e d ;  142  and that the majority o f  employees feel c o m p e l l e d t o accept the terms offered t o them b y e m p l o y e r s .  143  Indeed a  j u d g e o f the N e w Z e a l a n d E m p l o y m e n t C o u r t recently stated that the " n e g o t i a t i o n s "  The number of claims filed in the Employment Tribunal and Employment Court have risen significantly over the last six years. For example, in itsfirstyear of operation (1991/1992) the Employment Tribunal received 2,332 applications for hearings (an average of 194 per month). This figure has increased in every subsequent year, to the extent that 5,144 claims were received in the year to June 1996 (an average of 428 per month, and an increase of 220% in just four years). See New Zealand Department of Labour, Annual Report for the Year Ended June 30, 1996. According to proponents of the ECA, this increase in litigation is due to the ECA expanding the personal grievance jurisdiction to all employees (whereas the LRA limited personal grievances to those covered by collective agreements and awards). However, while this expansion may serve to explain an initial increase in the claims filed, it fails to address the continuing increase that has occurred over a number of years, and the extent of that increase. 1 3 5  1 3 6  Whatman, supra note 85 at 66-68.  See e.g., E. Rasmussen, "Chronical" (1997) 22:1 N.Z.J.Ind.Rel. I l l at 111-118. Interestingly, the Department of Labour 1997 Survey reported a 31% level of employee turnover for the year to July 1996 (see Department of Labour 1997 Survey, at 57). 1 3 7  1 3 8  Dannin, Working Free, at 3.  1 3 9  Kelsey, Rolling Back the State, at 207.  R. Webster, "Operating under the Act: One Union's Experience", in New Zealand Experiences, 237 at 238. 1 4 0  G. Anderson, "Collective Bargaining and the Law: New Zealand's Employment Contracts Act Five Years On" (1996) 9 A.J.L.L. 103 at 132. 141  1 4 2  Dannin, supra note 33 at 490.  1 4 3  McAndrew & Ballard, supra note 29.  27  w h i c h take place under the E C A bear no resemblance to the actions n o r m a l l y associated w i t h that t e r m .  1 4 4  In his v i e w , negotiations under the E C A can be n o more than:  [ A ] presentation b y one intended party to the contractual relationship o f a f o r m o f contract t o the other and the f o r m e r ' s refusal to deviate f r o m its o f f e r .  145  In 1993 the N e w Z e a l a n d Parliament c o m m i s s i o n e d a select committee to investigate the impact o f the E C A o n the N e w Z e a l a n d labour market. F o r reasons best k n o w n to the politicians i n v o l v e d , t w o reports w e r e p r o d u c e d . O n e by the committee members w h o w e r e O p p o s i t i o n M e m b e r s o f Parliament (the Minority who were Government Members o f Parliament.  147  Report) * 1  6  and the other by those  A c c o r d i n g to the, Majority  Report:  A m u c h repeated statement by employees w a s that the A c t has g i v e n t o o m u c h p o w e r to employers. E m p l o y e e s feel powerless to negotiate suitable conditions i f employers refused to take account o f their wishes. ... [ A ] factor m u c h c o m m e n t e d u p o n is the l a c k o f a g o o d faith bargaining p r o v i s i o n i n the A c t . T h i s related to the feelings o f powerlessness w h i c h employees feel, to i n some w a y ensure an e m p l o y e r enters into meaningful n e g o t i a t i o n s .  T h e Majority  Report  148  also noted that the E C A :  [CJontains no p r o v i s i o n to ensure an employer actually bargains w i t h employees. U n i o n s t o l d the committee that i n many cases, employers either made a t o k e n attempt to negotiate, w i t h o u t t a k i n g o n b o a r d agent's concerns, and then offer a contract for signing; o r do not negotiate at all and offer a contract on a 'take it o r leave i t ' basis. U n i o n s said the effect o f a lack o f a g o o d faith bargaining requirement is that employees are denied the opportunity to have a say i n their conditions o f e m p l o y m e n t .  149  144  Northern Distribution Union, Inc\.  3 Guys Limited, [1992] 3 ERNZ 903.  145  Ibid, at 915. See also Hawtin, infra notes 389-390.  146  Supra note 58.  Report of the Labour Committee on the Inquiry into the Effects of the Employment Contracts Act 1991 on the New Zealand Labour Market (Wellington, 1993) [hereinafter the "Majority Report"]. 147  148  The Majority Report, at 16.  1 4 9  The Majority Report, at 38.  28  Y e t despite a c k n o w l e d g i n g these concerns, the Majority Report failed t o r e c o m m e n d the i n t r o d u c t i o n into the E C A o f a duty t o bargain i n g o o d faith, stating at 3 9 :  T h e committee listened t o the arguments w i t h interest, but felt the evidence presented i n favour o f a g o o d faith bargaining p r o v i s i o n w a s inconclusive. T h e r e w o u l d be substantial difficulty i n defining what " g o o d f a i t h " means i n an industrial context w i t h o u t leading t o considerable regulation o f the v a r i o u s parties' f r e e d o m to reach agreement relevant t o particular w o r k p l a c e s . T h e committee has n o r e c o m m e n d a t i o n to make o n this m a t t e r .  150  V a r i o u s commentators have subsequently called for the i n t r o d u c t i o n o f a duty t o bargain in g o o d faith. A n d e r s o n has argued that such a duty w o u l d enhance the prospects o f meaningful n e g o t i a t i o n .  151  D a n n i n takes a similar v i e w , arguing that any system o f l a b o u r  relations that fails t o require g o o d faith participation w i l l struggle t o deliver genuine bargaining.  152  A n d a c c o r d i n g t o Webster:  I n t r o d u c i n g [the E C A ] i n a time o f e c o n o m i c recession w i t h o u t even the barest a c k n o w l e d g e m e n t o f bargaining i n g o o d faith (included even i n U n i t e d States labour l a w ) has completely slanted the balance o f p o w e r against w o r k e r s and unions.  1 5 3  International criticism has also been levelled at the bargaining regime instituted b y the ECA.  1 5 4  I n F e b r u a r y 1993 the N e w Z e a l a n d C o u n c i l o f T r a d e U n i o n s filed a complaint  about the E C A w i t h the International L a b o u r O r g a n i s a t i o n .  155  The Council o f Trade  The Majority Report, at 39. Cf., the Minority Report, which recommended the complete repeal of the ECA. See the Minority Report, at 24. Anderson, supra note 141 at 127. See also, M. Wilson, "Contractualism and the Employment Contracts Act 1991: Can They Deliver Equality For Woman" (1994) 19:3 N.Z.J.Ind.Rel. 256, at 271. 1 5 1  Dannin, "We Can't Overcome", at 154. See also R. Macfie, "Employers Use of Lockouts Under the Employment Contracts Act 1991: A New Balance of Power" (1992) 17:3 N.Z.Ind.Rel. 319. 1 5 2  1 5 3  Webster, supra note 140 at 238.  Although, as noted, some jurisdictions have viewed the ECA as a model worthy of duplication. See supra notes 52-53. 1 3 4  Case No. 1698: "Complaint Against the Government of New Zealand Presented by the New Zealand Council of Trade Unions (NZCTU)", In Reports of the Committee on the Freedom ofAssociation (292nd Report), ILO Official Bulletin, Vol. 77:1, Series B (1994) 208. 1 5 5  29  U n i o n s alleged that the E C A contravened I L O C o n v e n t i o n s 8 7  1 5 6  and 9 8 .  1 5 7  T h i s led t o an  investigation b y the I L O ' s F r e e d o m o f A s s o c i a t i o n C o m m i t t e e , w h i c h lasted almost t w o years. T h e C o m m i t t e e ' s interim report w a s adopted b y the G o v e r n i n g B o d y i n M a r c h 1994,  1 5 8  and w a s d a m m i n g o f the E C A . O n e o f the report's many criticisms w a s that the  E C A failed t o support collective b a r g a i n i n g .  159  A f t e r further i n f o r m a t i o n gathering b y a direct contacts m i s s i o n , and a number o f subsequent cases i n the E m p l o y m e n t C o u r t and C o u r t o f A p p e a l , the I L O C o m m i t t e e issued its F i n a l D e c i s i o n , w h i c h w a s adopted i n N o v e m b e r 1 9 9 4 . whilst less critical than the interim r e p o r t ,  161  160  The Final Decision,  reiterated the C o m m i t t e e ' s c o n c e r n that the  E C A d i d not incorporate a duty t o bargain i n g o o d faith. O n this point the C o m m i t t e e stated:  W h i l e recognising that the question as t o whether one party adopts an amenable o r u n c o m p r o m i s i n g attitude t o w a r d s the demands o f the other is a matter f o r negotiation between the parties w i t h i n the l a w o f the land, the C o m m i t t e e stressed the i m p o r t a n c e w h i c h it attaches t o the principle that b o t h employers and trade unions should bargain i n g o o d faith and make every reasonable effort t o c o m e t o an agreement and that satisfactory labour relations depend p r i m a r i l y o n the parties' attitudes t o w a r d s each other and o n their mutual c o n f i d e n c e .  156  162  ILO Convention 87 Concerning the Freedom ofAssociation and Protection of the Right to Organise.  ILO Convention 98 Concerning the Application of the Principles of the Right to Organise and to Bargain Collectively. Although New Zealand has not ratified Conventions 87 and 98, the jurisdiction of the ILO to investigate this complaint stemmed from New Zealand's membership of the ILO. See the International Labour Organisation, Digest ofDecisions and Principles of the Freedom ofAssociation Committee; cited inMazengarbs, at A/203. 157  158  Supra note 155.  159  Supra note 155 at 235-238.  Case No. 1698: "Complaint Against the Government of New Zealand Presented by the New Zealand Council of Trade Unions (NZCTU)", In Reports of the Committee on the Freedom ofAssociation (295th Report), ILO Official Bulletin, Vol. 77:3, Series B (1994) 39. 1 6 0  1 6 1  For a description of the changes in the Committee's views see Anderson, supra note 141 at 105-108.  162  Supra note 160 at 80.  30  T h e G o v e r n m e n t o f the day, the N Z E F and the N Z B R T all sought t o marginalise the I L O ' s findings. T h e M i n i s t e r o f L a b o u r at the time, D o u g K i d d , asserted that the I L O ' s criticisms " d i r e c t l y challenge the democratic and parliamentary process o f member states" and that the " I L O risks being portrayed as a partisan advocate i n domestic p o l i c i e s . "  163  Similarly, Steve M a r s h a l l , the c h i e f executive o f the N Z E F claimed:  T h e I L O , i n its 75th year struggling to retain its former relevance has, i n c r i t i c i s i n g the E C A , f o u n d a m e t h o d o f reasserting i t s e l f .  164  H o w e v e r , the o p p o s i t i o n p o l i t i c a l parties i n N e w Z e a l a n d appeared t o take note o f what the I L O h a d said. I n 1995 N e w Z e a l a n d v o t e d b y w a y o f referendum to adopt a M i x e d M e m b e r P r o p o r t i o n a l ( " M M P " ) electoral system o f G o v e r n m e n t .  165  I n the lead u p t o the  first M M P election, a number o f political parties responded t o the international and domestic c r i t i c i s m o f the E C A b y pledging to modify the A c t t o include, amongst other things, a duty t o bargain i n g o o d f a i t h .  1 6 6  O n e o f the most v o c i f e r o u s advocates o f this  p r o p o s a l w a s the N e w Z e a l a n d First Party. A c c o r d i n g t o its Industrial R e l a t i o n s P o l i c y Release,  167  the party p r o m i s e d t o amend the E C A to require all employers and employees  to bargain i n g o o d faith. T h i s pledge w a s reiterated i n various m e d i a statements issued b y b o t h the leader and deputy leader o f the party, i n w h i c h they criticised the E C A f o r creating a significant imbalance o f bargaining p o w e r i n favour o f most e m p l o y e r s .  168  A s a result o f the election o n 12 O c t o b e r 1996, a C o a l i t i o n G o v e r n m e n t w a s f o r m e d b y the N a t i o n a l P a r t y (the previous G o v e r n m e n t ) and the N e w Z e a l a n d First Party. M a n y i n  1 6 3  D. Kidd, Speech to the Plenary Session of the ILO (1994) 8 June, at 2.  1 6 4  National Business Review (1994) 22 July.  1 6 5  Up until that time the New Zealand Government had been elected on a "first past the post" system.  See e.g., "Alliance Would Take the Free out of Free Enterprise" (1996) The Independent (N.Z.), 4 October, 26, which details the pledges of the New Zealand First, Alliance and Labour parties to enact legislation requiring good faith bargaining. See also P. Kiely, "Employment Law Under MMP" (1996) Proceedings of the New Zealand Law Society Employment Law Conference, 215. 1 6 6  1 6 7  New Zealand First Policy Release, Industrial Relations 2 (1996) 26 September.  See J. Hughes, "The Employment Court, 'Judicial Activism,' and the Coalition Agreement"'(1997) 28 Cal.West.Int.LJ. 167 at 169. 1 6 8  31  organised labour v i e w e d this result w i t h at least a degree o f o p t i m i s m , and l o o k e d ahead to the i n t r o d u c t i o n o f a duty t o bargain i n g o o d faith. Since the election, h o w e v e r , little has happened t o justify that o p t i m i s m . It w o u l d appear that in the course o f negotiating the terms o f the c o a l i t i o n , (negotiations w h i c h o c c u r r e d after the election), N e w Z e a l a n d First may w e l l have chosen t o renege o n its earlier pledge.  T h e Coalition  Agreement,  169  w h i c h records the terms o f agreement reached between  N a t i o n a l and N e w Z e a l a n d First, contains a section entitled Policy Relations.  A c c o r d i n g t o the eighth Key Initiative  of Policy  Area:  Industrial  detailed i n that section, the  C o a l i t i o n G o v e r n m e n t p r o m i s e d to:  Introduce the concept o f " f a i r " bargaining into the E m p l o y m e n t C o n t r a c t s A c t , b y describing areas where compliance is necessary to abide b y the principles u n d e r l y i n g the A c t (e.g. the obligation t o respect the choice o f the bargaining agent and not to undermine the bargaining process by bypassing the a g e n t ) .  170  A l t h o u g h it is b y n o means clear, this statement o f intent c o u l d be read as a substantial repudiation o f N e w Z e a l a n d F i r s t ' s pledge to introduce into the E C A a duty t o bargain i n " g o o d faith". A c c o r d i n g t o H u g h e s :  [ C j o n t r a r y t o the promise i n N e w Z e a l a n d F i r s t ' s policy, apparently the E C A w i l l not be substantively amended to introduce any f o r m o f g o o d faith bargaining p r o p e r l y so called. Instead, "fair b a r g a i n i n g " w i l l be represented b y statutory amendment t o incorporate the existing interpretation g i v e n t o the relevant p r o v i s i o n s o f the E C A . (This w i l l result, o f course, i n n o change t o the legal principles applicable p r i o r t o the general election, w h i c h N e w Z e a l a n d First has criticised as being unfairly biased i n the e m p l o y e r ' s f a v o u r ) .  171  S u c h a v i e w is supported b y statements subsequently released b y G o v e r n m e n t Officials. A c c o r d i n g t o M a x B r a d f o r d (the current M i n i s t e r o f L a b o u r ) the Coalition  (Wellington, The New Zealand Government, December 1996). 170  Ibid, at 41.  171  Hughes, supra note 168 at 171.  32  Agreement:  [P]roposes t o introduce fair bargaining t o p r o m o t e c o m p l i a n c e w i t h the u n d e r l y i n g principles o f the A c t . T h i s includes describing the obligations t o respect the choice o f bargaining agent and not undermine the bargaining process b y bypassing the agent, w h i c h have been underlined b y various court decisions since the E m p l o y m e n t C o n t r a c t s A c t w a s passed. F a i r bargaining w i l l reflect the N e w Z e a l a n d experience and is not to be modelled concepts of Good Faith Bargaining  on United States or  Canadian  1 7 2  B i l l B i r c h , the current M i n i s t e r o f Finance, has echoed these sentiments:  T h e C o a l i t i o n A g r e e m e n t states that the G o v e r n m e n t w i l l introduce the concept o f " f a i r " bargaining t o m o r e clearly outline the responsibilities o f parties under the ECA.  T h i s may include clarifying the obligations t o recognise and not t o bypass  an authorised agent. T h e basic principles o f the E C A w i l l remain ... I want t o emphasise that this is not " g o o d faith bargaining," N o r t h A m e r i c a n style. W e remain c o m m i t t e d t o a permissive f r a m e w o r k f o r industrial relations, the opposite o f the N o r t h A m e r i c a n system, w h i c h prescribes w h e n people must meet t o bargain and w h a t they have t o bargain, and a host o f other controls o n bargaining behaviour. T h e last six years have taught us that such control  is not  necessary.  173  Y e t , even these statements n o w appear to have been reneged u p o n . O n 23 July the C o a l i t i o n G o v e r n m e n t released its l o n g awaited "Industrial Relations P a c k a g e " .  1 7 4  Whilst  this package referred t o a number o f changes w h i c h w i l l be i n t r o d u c e d t o the personal grievance and remedial sections o f the E C A , no m e n t i o n w a s made o f i n t r o d u c i n g a duty o f " f a i r " bargaining. O n the contrary, M a x B r a d f o r d stated i n his s u p p o r t i n g release that:  T h e G o v e r n m e n t has also carefully considered the C o a l i t i o n A g r e e m e n t k e y initiative w i t h respect t o i n t r o d u c i n g the concept o f " f a i r " bargaining into the E m p l o y m e n t C o n t r a c t s A c t . A f t e r carefully examining the case law, the C o a l i t i o n  M. Bradford, "What Happens Now?" (1997) Address to the Industrial Relations Conference, Rotorua, 3 March, at 4. [Emphasis added]. See also, E. Edlin, "Bradford Puts Employment Issues Under Microscope" (1997) The Independent (N.Z.), 7 March, 2. 1 7 2  Address by the Minister of Finance, Bill Birch, to the Wellington District Law Society (1997) 7 June. [Emphasis added].  1 7 3  174  Industrial Relations Package, (Wellington, Coalition Government, 27 July, 1998).  33  G o v e r n m e n t c o n c l u d e d the case l a w supports fairness i n bargaining, given the interests o f b o t h parties t o an employment c o n t r a c t .  175  Subsequent t o M a x B r a d f o r d issuing this statement, the C o a l i t i o n G o v e r n m e n t has dissolved, w i t h the N a t i o n a l P a r t y n o w functioning as a m i n o r i t y G o v e r n m e n t , at least f o r the time b e i n g .  1 7 6  T h i s , c o m b i n e d w i t h B r a d f o r d ' s statement, may w e l l have signalled the  death o f what h a d already b e c o m e a remote prospect at b e s t .  177  W h a t is most remarkable about this " b a c k - d o w n " is that it o c c u r r e d w i t h o u t any substantive and i n f o r m e d debate. T h e G o v e r n m e n t has stated that the current l a w is sufficient; that it supports fairness; but provides no justification o r reasoning f o r that c o n c l u s i o n . B r a d f o r d asserts the G o v e r n m e n t has " c o n s u l t e d w i d e l y " ,  1 7 8  but fails t o  specify w i t h w h o m , and what w a s said. I n effect, the N e w Z e a l a n d p u b l i c is asked simply to trust the G o v e r n m e n t ' s judgement.  D e t e r m i n i n g w h y " g o o d f a i t h " bargaining w a s watered d o w n to "fair b a r g a i n i n g " and then abandoned altogether is difficult, primarily because b o t h N a t i o n a l and N e w Z e a l a n d First agreed t o keep their c o a l i t i o n negotiations c o n f i d e n t i a l .  179  H o w e v e r , it is possible t o glean  at least a partial explanation f r o m a document w h i c h has subsequently been made public. In the course o f the c o a l i t i o n negotiations, the v a r i o u s political parties i n v o l v e d sought particular i n f o r m a t i o n f r o m v a r i o u s G o v e r n m e n t departments and a g e n c i e s .  180  The  M Bradford, "Industrial Relations Package - Good For New Zealand" (1998) Executive Government News Release, 27 July, 2. 1 7 5  See e.g., H. Bain, "Peters Walks Out. Shipley Now Running a Minority Government" (1998) The Dominion (N.Z.), 13 August, 1. 1 7 6  Primarily because the calls for the introduction of bargaining controls into the ECA emanated from the New Zealand First Party and not the National Party (who introduced the ECA in the first place). Indeed, it now appears the Minority National Government may be reconsidering all policy initiatives introduced by New Zealand First. See N. Venter, "All Coalition Legislation Under Review" (1998) The Dominion (N.Z.), 26 August, 2; "Nats aim to axe NZ First Policies" (1998) The Waikato Times (N.Z.), 26 August, 1. 1 7 7  178  Supra note 175.  1 7 9  Hughes, supra note 168 at 170.  Including the Department of Labour. For the sake of simplicity, these departments and agencies will be referred to herein as the "Public Service". 1 8 0  34  questions asked, and the answers given, have been recorded i n a document entitled Information Parties  Supplied  by the Public  Taking Part in Coalition  Service  in Response  Formation  to Requests made by  Political  Talks.  lu  R e q u e s t 501 i n c l u d e d the f o l l o w i n g :  W h a t are the implications o f amending the E m p l o y m e n t C o n t r a c t s A c t t o : 1. E n s u r e a neutral bargaining environment between employer and employee b y extending g o o d faith provisions t o all employers and employees (i.e., to apply t o all contracts, collective and individual, and all bargaining a g e n t s ) .  182  T h e response o f the P u b l i c Service w a s far f r o m enthusiastic, and included the f o l l o w i n g statements:  183  "regulations are not always successful i n affecting people's behaviour.  Rather  they m a y encourage game playing a r o u n d the rules rather than the development o f the employment relationship." " g o o d faith bargaining provisions increase the l i k e l i h o o d o f third party interventions i n the bargaining process.  T h i s m a y reduce the degree to w h i c h  agreements reached reflect the needs o f l o c a l situations." "greater perscriptiveness over bargaining arrangements risks r e d u c i n g flexibility and adaptability t o changing circumstance." "greater prescription over the process is also likely t o increase the costs associated w i t h bargaining and the degree o f litigation i n v o l v e d . " "experience overseas has suggested that once g o o d faith bargaining p r o v i s i o n s are established there is potential f o r their coverage to extend over time, partly t h r o u g h j u d i c i a l decision m a k i n g . "  N o t one o f these statements w a s supported b y specific research o r data. T h e P u b l i c Service then went o n t o suggest that g o o d faith bargaining is already p r o m o t e d b y the existing l a w i n N e w Z e a l a n d :  (Wellington, State Services Commission, February 1997). Ibid, at 217. The document released to the author is not paginated, hence all page references have be calculated by the author. 1 8 2  183  Ibid, at 219.  35  T h e r e is a range o f provisions i n the E m p l o y m e n t Contracts A c t w h i c h set some limits o n bargaining behaviour, and w h i c h may contribute t o the establishment o f g o o d faith b a r g a i n i n g .  184  Perhaps most significant, however, w a s the Services' willingness to treat concerns regarding e x p l o i t a t i o n and bad faith conduct under the E C A as " a n e c d o t a l " , but the alleged costs o f i n t r o d u c i n g a duty to bargain i n g o o d faith as " f a c t " .  185  T h i s inconsistency  is illustrated b y the f o l l o w i n g four excerpts:  Anecdotally,  there is a perception  that employers use the o p t i o n o f not negotiating  to resist claims considered legitimate b y employees, particularly i n the context o f i n d i v i d u a l negotiations. N e w contracts at the point o f hire may also be offered o n a " t a k e it o r leave i t " basis, w i t h o u t negotiation. I n the absence o f reliable data the extent o f this perception  cannot be accurately assessed. I n addition, it is not clear  whether o r not this a p p r o a c h can be attributed t o a l a c k o f g o o d faith bargaining • •  provisions.  186  T h e r e is also a perception  that employers may refuse to re-negotiate contracts  after they expire. I n practice there are a w i d e range o f reasons w h y contracts m a y not be immediately re-negotiated and employees are always c o v e r e d b y an employment contract. ... T h e voluntary nature o f the bargaining f r a m e w o r k a l l o w s a range o f bargaining behaviours, and a range o f outcomes. It is a matter o f perception "problem".  as t o the extent t o w h i c h these behaviours and o u t c o m e s constitute a 1 8 7  T h e E m p l o y m e n t C o n t r a c t s A c t liberalised bargaining processes and o p t i o n s and has contributed t o adjustment processes over a p e r i o d o f sustained e c o n o m i c g r o w t h and employment g r o w t h . A m e n d i n g the E m p l o y m e n t C o n t r a c t s A c t t o reintroduce procedures incurring  significant  transaction  costs o r constraining  o u t c o m e s should only be considered i f the identifiable benefits f r o m d o i n g so are sufficient to offset these c o s t s .  188  Ibid, at 221. Hughes, supra note 168 at 174. Ibid, at 132. [Emphasis added]. Ibid. [Emphasis added]. Ibid, at 465. [Emphasis added].  36  T h e uncertainty that results f r o m increased litigation, the u n d e r m i n i n g o f the finality o f c o n c l u d e d contracts; and the need f o r the courts over time, t o develop a consistent a p p r o a c h out o f w i d e l y divergent ad h o c situations w o u l d be l i k e l y t o have a significant impact o n the efficient functioning o f the l a b o u r market, w i t h f l o w - o n effects to l o w e r e m p l o y m e n t .  189  N o t only d o these comments represent an unbalanced approach t o the issue o f g o o d faith bargaining, as H u g h e s argues, they also represent the P u b l i c Service seeking simply to reinforce existing G o v e r n m e n t p o l i c y .  1 9 0  I n the end result, a significant c o m p o n e n t o f  N e w Z e a l a n d F i r s t ' s manifesto appears t o have been cast aside o n the basis o f conjecture and unsubstantiated rhetoric.  1.5 T h e " H e r e and N o w "  T h e f o r e g o i n g serves to contextualise the N e w Z e a l a n d debate o n i n t r o d u c i n g a duty t o bargain i n g o o d faith into the E C A . A s is apparent, the call f o r this duty arose i n response to the changes implemented i n N e w Z e a l a n d employment and labour relations b y the E C A . T h e dramatic s w i n g f r o m state facilitated collective bargaining t o free market employment and l a b o u r relations has left many questioning whether the current legislation has gone t o o far. Y e t , recent statements made b y the N e w Z e a l a n d G o v e r n m e n t suggest that earlier pledges f o r r e f o r m are n o w i n jeopardy.  These statements highlight the need f o r timely  and i n f o r m e d debate o n the need for a duty o f this nature, and the possible consequences o f its i n t r o d u c t i o n .  Y e t , i f such debate is t o m o v e beyond the conjecture w h i c h arguably pervades many o f the N e w Z e a l a n d G o v e r n m e n t ' s recent statements o n this issue, a substantive frame o f reference is required. I n other w o r d s , w i t h o u t an example t o w o r k f r o m , this debate w i l l struggle t o m o v e b e y o n d the abstract. T h e example t o be used i n this thesis i n that w h i c h applies i n B r i t i s h C o l u m b i a , Canada. B r i t i s h C o l u m b i a , has been selected f o r a number o f  Ibid, at 466. [Emphasis added]. Hughes, supra note 168 at 174.  37  reasons.  I n the first place, although various labour relations j u r i s d i c t i o n s i n v o k e a duty o f  this n a t u r e ,  191  many o f the fundamental issues that arise i n respect o f the duty d o so i n  each j u r i s d i c t i o n . C o n s i d e r i n g a number o f jurisdictions w o u l d , then, be o f limited value. Secondly, the selection o f one j u r i s d i c t i o n is appropriate given that the purpose o f this thesis is to consider one possible approach to the issue, rather than a d v o c a t i n g one single a p p r o a c h as best suiting N e w Zealand. S u c h an assertion w o u l d be premature w i t h o u t there first h a v i n g been debate o n various options.  T h i r d l y , i n terms o f selecting a particular j u r i s d i c t i o n , C a n a d a , like N e w Z e a l a n d , is a member o f the c o m m o n w e a l t h w i t h a legal system that is, f o r the most part, derived f r o m British common l a w .  1 9 2  C o m m o n a l i t y such as this enhances the relevance o f the C a n a d i a n  approach. M o r e o v e r , the duty t o bargain i n g o o d faith has been operative i n C a n a d a f o r over fifty years, and, as such, a considerable and valuable b o d y o f j u r i s p r u d e n c e has developed o n the issue. A n d finally, the focus has been n a r r o w e d further t o B r i t i s h C o l u m b i a , because the manner i n w h i c h the duty t o bargain i n g o o d faith is applied i n this p r o v i n c e is largely indicative o f the p o s i t i o n taken throughout Canada. Indeed, a r e v i e w o f labour l a w texts i n C a n a d a reveals the l a w o n g o o d faith bargaining to be remarkably h o m o g e n e o u s throughout the various Canadian jurisdictions, w i t h labour boards routinely referring t o and a d o p t i n g cases decided i n other p r o v i n c e s .  193  B e f o r e consideration is g i v e n t o the a p p r o a c h taken in B r i t i s h C o l u m b i a , it is important t o note the limitations o f such an assessment. It is readily conceded that what m a y w o r k i n one j u r i s d i c t i o n m a y not necessarily succeed in another. A s one c o m m e n t a t o r has noted,  Including the United States of America, Australia and Japan. See W. Hodge, "Employment Law" [1995] N.Z.L.Rev. 107 at 123.  191  1 9 2  The civil law system in Quebec aside.  See e.g., G. Adams, Canadian Labour Law, 2d ed. (Canada, Law Book Company, 1997) at para. 1.230 [hereinafter "G. Adams"]; D. Corry, Collective Bargaining and Agreement. Negotiation, Strategy and the Law (Ontario, Canada Law Book Company, 1997) [hereinafter "Corry"] at 8.1 - 8.4. Accordingly, while reference will be made primarily to British Columbia legislation and case law, decisions of general application issued by labour boards in other Canadian provinces will also be referred to where appropriate. 1 9 3  38  c o m p a r i n g different labour laws poses "nearly insurmountable problems because it ultimately reaches into a c o m p a r i s o n o f social structures and a t t i t u d e s . "  194  H o w e v e r , although these difficulties cannot be ignored, as w i l l be discussed i n chapter five, idiosyncrasies o f a particular j u r i s d i c t i o n can be a c c o m m o d a t e d f o r i n an appropriate statutory amendment. M o r e o v e r , there is m u c h to be c o m m e n d e d i n countries seeking t o learn f r o m the experiences o f others, particularly w h e n their o w n experience is limited o r non-existent. That is precisely the case at hand, for N e w Z e a l a n d has never p r e v i o u s l y enacted a statutory duty to bargain i n g o o d faith i n labour r e l a t i o n s .  195  A domestic  c o m p a r i s o n is, then, impossible, and it is suggested that d r a w i n g o n a concrete example, albeit one f r o m a foreign j u r i s d i c t i o n , is a considerable improvement o n i n v o k i n g conjecture and rhetoric.  C. Summers, "Comparison in Labor Law" (1985) 7 Indus.Rel.L.J. 2. See also H. Collins, "Methods and Aims of Comparative Contract Law" (1991) 11:3 Ox.J.L.S. 396. 1 9 4  In 1995 the Alliance Party sought to introduce into Parliament the Employment Contracts (Employment Rights) Bill, which made mention of the concept of good faith bargaining, but the Bill was defeated at its first reading. See Hansard, Parliamentary Debates of New Zealand (1995) 22 March, 63456365. See infra notes 777-778, for a discussion of the one other previous instance where a duty of this nature was drafted into statute, but was not enacted (due to a change in Government). 1 9 5  39  CHAPTER 2: BRITISH COLUMBIA LABOUR RELATIONS AND THE DUTY TO BARGAIN IN GOOD FAITH  2.1 The Duty Defined In C a n a d a a u n i o n certified in respect o f a bargaining unit and the employer o f that unit are o b l i g e d b y statute t o bargain i n g o o d f a i t h .  196  T h i s statutory duty w a s i n t r o d u c e d i n t o  C a n a d a b y federal W a r t i m e L a b o u r Regulations. These regulations w e r e enacted i n 1944,  1 9 7  and w e r e based o n the A m e r i c a n W a g n e r A c t o f 1935.  T h e duty w a s  subsequently i n c o r p o r a t e d into federal l a w i n 1948 and p r o v i n c i a l l a w shortly t h e r e a f t e r . T h e d u t y is presently e m b o d i e d i n the C a n a d a L a b o u r C o d e  1 9 9  198  and i n various p r o v i n c i a l  statutes i n c l u d i n g the B r i t i s h C o l u m b i a L a b o u r Relations C o d e (the " B C C o d e " ) .  2 0 0  W h i l e there are m i n o r differences i n the w o r d i n g used i n some o f these statutes, the general a p p r o a c h is illustrated b y section 11(1) o f the B C C o d e :  A trade u n i o n o r employer must not fail o r refuse to bargain collectively i n g o o d faith i n B r i t i s h C o l u m b i a and to m a k e every reasonable effort to c o n c l u d e a collective a g r e e m e n t .  201  This statutory duty is confined to collective bargaining. There is presently no equivalent duty in Canada in respect of the negotiation of individual employment contracts (contracts of service). The extent to which the Canadian common law has recognised a duty of good faith in employment dismissals and in the negotiation of non-employment relationships will be discussed in chapters three and four, respectively. 1 9 6  PC 1003, 1944, s. 10(2).  1 9 7  A. Forrest, "Labour Legacy in Question; Canada Post-War Labor Law PC 1003" (1995) 29:1 Canada Dimension 29. 1 9 8  199  R . S . C . 1985, c. L-2, s. 50.  R.S.B.C. 1996, c. 244, ss. 11 and 47. See also Alta., Labour Relations Code, S.A. 1988, c. L-1.2, s.58; Man., Labour Relations Act, R.S.M. 1987, c. L 10, ss. 62 and 63(1); Ont., Labour Relations Act, R.S.O. 1995, c. L.2., s. 17; N.B., Industrial Relations Act, R.S.N.B. 1973, c. 1-4, s. 34; N.S., Trade Union Act, R.S.N.S. 1989, c.475, s. 35(a); P.E.I., Labour Act, R.S.P.E.I. 1988, c. L - l , s. 22(a); Que., Labour Code, R.S.Q. 1977, c. C-27, s. 53; Nfld., Labour Relations Act, R.S.N. 1990, c. L - l , s. 71. 2 0 0  See also section 47. The requirements of "good faith and reasonable efforts" are also found in the Canada Labour Code and in the statutes of Alberta, Manitoba and Ontario. The New Brunswick, Nova Scotia and Prince Edward Island statutes all refer to a standard of "reasonable efforts", whilst the Quebec Code requires negotiations to be carried out "diligently and in good faith". Newfoundland's statute refers  2 0 1  40  O n c e triggered b y the issuing o f a notice t o bargain (or the actual commencement o f bargaining, w h i c h e v e r o c c u r s first), the duty subsists until the final r e s o l u t i o n o f an agreement.  202  T h e duty continues, f o r example, notwithstanding the appointment o f a  mediator o r the commencement o f arbitration o r a strike o r l o c k o u t .  T h e t e r m " g o o d f a i t h " is not defined i n the B C C o d e .  2 0 4  2 0 3  It has, then, been left t o the  B r i t i s h C o l u m b i a L a b o u r Relations B o a r d (the " B C B o a r d " ) and, t o a lesser degree, appeal courts, t o determine the scope o f the duty o n a case b y case b a s i s .  205  Whilst  incapable o f one single definition, the duty t o bargain i n g o o d faith can be v i e w e d as a set o f p r o c e d u r a l requirements developed b y tribunals and courts over time.  These  requirements are aimed at bringing the parties to the bargaining table to:  [0]utline their issues, present their proposals, articulate the u n d e r l y i n g rationale [for those proposals] and make every reasonable effort t o reach c o m m o n g r o u n d i n order t o enter into a collective a g r e e m e n t .  206  In a d d i t i o n t o mandating certain procedural requirements, the duty is also aimed at eliminating b a d faith conduct. A s the B C B o a r d has stated:  only to good faith, while the Saskatchewan legislation requires the parties to meet and bargain towards a collective agreement. See ibid. NABET and CKLWRadio Broadcasting Ltd (Re), 11 C.L.L.C. 16,110 (Can.); CALPA and Eastern Provincial Airways Ltd, 84 C.L.L.C. 16,012 (Can.). 202  Centre Jubilee Centre v. United Steelworkers of America, 95 C.L.L.C. 220-005 (O.L.R.B.); New Method Laundry and Dry Cleaners, 57 C.L.L.C. 18,059 (O.L.R.B.); Glass, Molder, Pottery & O 'rs and Barber Industries, 89 C.L.L.C. 16,024 (Alta. L.R.B.). 203  2 0 4  Nor in any other collective bargaining legislation in Canada.  Such cases now generally take the form of unfair labour practice claims, although prior to the 1970s the usual avenue for securing compliance with the duty was through a prosecution in the general courts. Then, in the 1970s, labour boards, or their equivalent, were given jurisdiction over the duty, and a body of jurisprudence involving unfair labour practice claims has since developed. See G. Adams, at para. 10.1440; D. Carter, The Expansion of Labour Board Remedies. A New Approach to Industrial Conflict (Kingston, Industrial Relations Centre, 1976). 2 0 5  2 0 6  Corry, at 8-1.  41  T h e duty t o bargain i n g o o d faith places an onus o n the parties t o engage i n a process o f give and take, o f m a k i n g acceptable c o m p r o m i s e s , and o f seeking solutions t o the issues before them. T h i s is the real f o r m and process o f contracting that society seeks t o preserve w h e n it l o o k s at the u n d e r l y i n g values o f f r e e d o m o f contract. O u r society does not seek t o protect the c o n d u c t o f a party w h o seeks t o deliberately frustrate o r prevent the rights o f another party t o engage in the process o f free collective b a r g a i n i n g .  207  T h i s c o m m e n t is indicative o f the approach that has been taken b y the B C B o a r d w h e n assessing a c l a i m that a party has failed t o bargain i n g o o d faith. In essence, it is easier t o identify b a d faith c o n d u c t than it is t o state what it is that a party must d o i n order t o bargain i n g o o d faith. A s a result, the duty has been applied b y the B o a r d so as t o prohibit certain bad faith c o n d u c t .  208  T h u s , i n order t o m a k e out a c l a i m that its counterpart has  failed t o bargain i n g o o d faith, an applicant w i l l be required t o adduce sufficient evidence o f p r o h i b i t e d conduct.  In terms o f assessing a party's conduct, the test applied b y the B C B o a r d is b o t h subjective and objective:  B o a r d decisions have established that the question o f whether a party is bargaining in g o o d faith is g o v e r n e d b y b o t h an objective and a subjective test. T h e subjective test relates t o the m o t i v a t i o n o f the parties. I f it is determined that one o f the parties is o n l y g o i n g t h r o u g h the motions, that party has failed the subjective test o f bargaining i n g o o d faith. T h e B o a r d can, however, determine that a party is failing t o m a k e every reasonable effort t o c o n c l u d e a collective agreement b y an objective analysis o f that party's a c t i o n s .  209  Yarrow Lodge Limited and HEU (Re) (1994), 21 C.L.R.B.R. (2d) 1 (B.C.) [hereinafter "Yarrow Lodge"] at 25. (Sub nom, Yarrow Lodge Ltd v. Hospital Employees Union, 94 C.L.L.C. 16,047 (B.C.)). 207  G. Adams, at para 10.1400. To some extent, however, this is a matter of phraseology. By describing a prohibited act in the negative (i.e., a "refusal" to do something), the BC Board is, in effect, saying that a party is obliged to carry out that act (hence the description of the duty as encompassing a set of procedural requirements). 2 0 8  Labour Relations Board of British Columbia, Information Bulletin No. 10: Duty to Bargain in Good Faith (Effective 4/1/1995) at 2. See also Royal Oak Mines Inc v. Canada (Labour Relations Board) (1996), 133 D.L.R. (4th) 129 (S.C.C.) where the Supreme Court discusses the subjective and objective limbs of good faith bargaining; and further, G. Adams, at para. 10.1575. 2 0 9  42  In practice, however, the distinction between the objective and subjective limbs o f the duty is frequently blurred, for a c o u r t ' s or adjudicator's conclusions regarding the subjective test are often g r o u n d e d i n a g l o b a l assessment o f a p a r t y ' s conduct. C o n d u c t w h i c h m a y evidence breach o f either (or both) the subjective o r objective elements o f g o o d faith bargaining includes:  1.  R e f u s i n g to bargain, w i t h o u t proper r e a s o n .  210  A justifiable reason c o u l d be that  the other party has refused t o specify w h o has authority to bargain o n its behalf,  2  or that an impasse has been reached and that a further session w o u l d not be fruitful.  212  2.  I m p o s i n g unjustified o r extraneous preconditions t o b a r g a i n i n g .  3.  R e f u s i n g to meet o n a timely b a s i s ,  4.  S e n d i n g a representative to the bargaining table w h o does not have authority t o  214  213  or a v o i d i n g meetings.  settle o r k n o w l e d g e o f the issues i n v o l v e d i n the n e g o t i a t i o n s , changing the m a k e u p o f a negotiating t e a m .  215  o r frequently  2 1 6  5.  S e e k i n g to dictate the makeup o f another party's negotiating t e a m .  6.  R e f u s i n g to disclose one's proposals o r d e m a n d s .  7.  R e f u s i n g to explain and justify one's p r o p o s a l s .  2 1 7  218  219  Kaycee Enterprises v. Industrial Wood & Allied Workers of Canada, hoc. 1-85, 96 C.L.L.C. 220-024 (B.C.L.R.B.). 2 1 0  BFCSD andDiversey Wyandotte Inc. (Re), [1985] O.L.B.Rep. 405 (Ont.).  211  IAMLoc.  2X2  2309 andNordair Ltd (Re), 85 C.L.L.C. 16,023 (Can.L.R.B.).  BC Rail Ltdv. Council of Trade Unions on BC Rail, 93 C.L.L.C. 16,072 (B.C.L.R.B.); School District No. 44 (North Vancouver) and North Vancouver Teachers Association (Re), 92 C.L.L.C. 16,067 B.C.I.R.C.); Northwood Pulp & Timber Ltdv. CEP Loc 603, 95 C.L.L.C. 220-001 (B.C.L.R.B.). 2 1 3  214  Starbucks Corporation and N.A.A.A.I.W.U. Loc. 3000 (1997), 35 C.L.R.B.R. (2d) 244 (B.C.).  L.I. UNA., Loc. 1059 v. Old Oak Properties Inc, [1996] O.L.R.B.Rep. 648 (Ont.); Fotomat Canada Ltd, [1981] 1 Can.L.R.B.R. 381 (Ont.). 215  Labour Relations Board of British Columbia, Information Bulletin No. 10: Duty to Bargain in Good Faith (Effective 4/1/1995) at 4. 2 1 6  217  British Columbia Telephone Co., [1977] 2 Can.L.R.B.R. 404 (Can.).  Celgar Pulp Co. v. Pulp, Paper & Wood-Workers of Canada, Locals 1 & 15 (1991), 13 C.L.R.B.R. (2d) 161 (B.C.I.R.C.).  2 1 8  43  8.  R e f u s i n g to discuss or explore the proposals o f the other s i d e . "  9.  R e f u s i n g to disclose such i n f o r m a t i o n as is necessary to ensure rational and  22  informed discussion (such as the wages rates, benefits, and classification structures o f those represented by the u n i o n ) . 10.  Deliberately tabling an inflammatory p r o p o s a l w h i c h w o u l d likely p r o v o k e a breakdown in negotiations.  11.  2 2 1  222  E n g a g i n g i n "surface b a r g a i n i n g "  223  ( g i v i n g the appearance o f engaging i n  collective bargaining w i t h no real intent t o ever conclude an a g r e e m e n t ) .  224  12.  "Boulwarism".  13.  E f f e c t i n g a misrepresentation or refusing or failing to disclose material i n f o r m a t i o n ,  2 2 5  whether solicited or u n s o l i c i t e d . 14.  226  Insisting o n demands that are i l l e g a l , B C Code,  2 2 8  227  contrary to the p r o v i s i o n s o r scheme o f the  or b e y o n d the p o w e r o f the other party to g r a n t .  229  Canadian Association of Industrial, Mechanical and Allied Workers, and Noranda Metal Industries Limited, [1975] 1 Canadian L.R.B.R. 145 (B.C.) [hereinafter, "Noranda"]; Corry, at 8-15. 2 1 9  2 2 0  Pulp & Paper Industrial Relations Bureau, 77 C.L.L.C. 16,109 (B.C.L.R.B.); Corry, at 8-15.  Starbucks Corporation and N.A.A.A.I.W.U., Loc. 3000 (1997), 35 C.L.R.B.R. (2d) 244 (B.C.); HeyWay '-Noqu' Healing Circle for Addictions Society v. B. C. Government and Service Employees' Union (B.C.L.R.B. No. B414/95) (B.C.); Noranda, at 162. Claims of poor financial performance, for example, will require supporting information. 221  Royal OakMinesv. Canada (Labour Relations Board) (1996), 133 D.L.R. (4th) 129 (S.C.C.); Tan Jay Co. andl.L.G.W. Loc 286 (Re) (1986), 16 C.L.R.B.R. (N.S.) 350 (Man.).  2 2 2  2 2 3  The Daily Times and Toronto Typographical Union No. 91, [1978] 2 Canadian L.R.B.R. 446 (Ont.).  Yarrow Lodge at 29. A history of "anti-union animus" and unfair labour practices may be relevant in determining whether an inflexible position constitutes "surface bargaining". See Starbucks Corporation and N.A.A.A.I.W.U. Loc. 3000 (1997), 35 C.L.R.B.R. (2d) 244 (B.C.). 2 2 4  A term coined in the 1940s in the United States after Lemuel Boulware, then vice president of General Electric, who promoted the strategy of presenting a one off proposal on the basis of "That's it. Either take it or leave it". For United States authority prohibiting this practice, see e.g., N.L.R.B. v. General Elec. Co. 418 F.2d 736 (2d Cir. 1969). The term "ultimatum bargaining" has been used analogously in British Columbia. See e.g., School District No. 44 (North Vancouver) and North Vancouver Teachers Association (Re) (1992), 17 C.L.B.R. (2d) 254 (B.C.). 2 2 5  Starbucks Corporation and N.A.A.A.l. W. U. Loc. 3000 (1997), 35 C.L.R.B.R. (2d) 244 (B.C.); Noranda, at 162; Westinghouse Canada Ltd, 80 C.L.L.C. 16,053 (O.L.R.B.). 2 2 6  Kaycee Enterprises v. Industrial Wood & Allied Workers of Canada, Loc. 1-85, 96 C.L.L.C. 220-024 (B.C.L.R.B.); Northwood Pulp & Timber Ltdv. CEP Loc 603 (1994), 23 C.L.R.B.R. (2d) 298; Vancouver Symphony Society v. IATSE Loc. 118(1993), 17 C.L.R.B.R. (2d) 161 (B.C.I.R.C.); V. /. Care Management Ltdv. I.U.O.E. Loc. 822 (1993), 19 C.L.R.B.R. (2d) 153; 94 C.L.L.C. 16,004 (B.C.); Otis 227  44  15.  S e e k i n g t o undermine the relationship between a u n i o n and its members (by, for example, sending bargaining material t o employees w i t h o u t first having discussed it w i t h their u n i o n ) .  16.  2 3 0  B y p a s s i n g a u n i o n (without its consent o r acquiescence) and negotiating directly with employees.  17.  231  Suddenly tabling a n e w demand or r e v o k i n g an existing offer w i t h o u t a c o m p e l l i n g 232  reason. 18.  R e n e g i n g o n agreements made d u r i n g the course o f b a r g a i n i n g .  19.  W i t h d r a w i n g f r o m negotiations w i t h o u t p r o p e r reason (for example, w i t h d r a w i n g before a genuine impasse is arrived a t ) .  20.  233  234  T a k i n g a strike v o t e w i t h o u t first having discussed all collective bargaining issues in dispute.  235  Elevator Co Ltd v. International Union of Elevator Constructors, Loc. No 82 (1973), 35 D.L.R. (3d) 566 (B.C.C.A.). For discussion on the scope of "illegality" in this context, see D. Carter, "The Duty to Bargain in Good Faith: Does it Affect the Content of Bargaining" in K. Swan & K. Swinton eds., Studies in Labour Law (Toronto, Butterworths, 1983) at 35. An example would be an insistence by an employer that it not be required to re-engage striking employees following settlement (see Labour Relations Board of British Columbia, Information Bulletin No. 10: Duty to Bargain in Good Faith (Effective 4/1/1995) at 4). See also Health Employers Association of British Columbia and BC Government and Service Employees Union (1997) 33 C.L.R.B.R. (2d) (B.C.). Note that section 49(3) of the BC Code provides that a party is not required to execute an agreement that conflicts with a requirement of or under the Code. 2 2 8  2 2 9  2 3 0  Western Wholesale Drug Ltd v. R.W.D.S.U, [1971] 4 W.W.R. 207 (B.C.S.C.). B.C. Hydro and Power Authority (B.C.L.R.B. No. B 395/94) (B.C.).  By, for example, proffering contracts or proposals directly to staff rather than to their authorised representative. See e.g., Roto-Rooter Canada Ltd v. U.A.JA.P.P.I., Loc. 170, [1997] B.C.L.R.B.D. No. 35 (B.C.); Glenwood Label and Box Manufacturing Ltd and Communication, Energy and Paperworkers Union of Canada, Loc. 226, [1996] B.C.L.R.B.D. No. 300 (B.C.); CUPE and Canadian Broadcasting Corporation (1995) 27 C.L.R.B.R. 100 (Can.); Cariboo College v. Cariboo College Faculty Association (1983), 4 C.L.R.B.R. (N.S.) 320 (B.C.).  2 3 1  2 3 2  Graphic Centre (Ontario) Inc, [1976] 2 Can.L.R.B.R. 118 (Ont.).  Kaycee Enterprises v. Industrial Wood & Allied Workers of Canada, Loc. 1-85, 96 C.L.L.C. 220-024 (B.C.L.R.B.).  2 3 3  North Vancouver School District No 44 v. North Vancouver Teachers Association, 92 C.L.L.C. 16,067 (B.C.I.R.C.); Marian Regional High School Education Committee v. Catholic Secondary School Teachers Association (1988), 6 C.L.R.B.R. (2d) 102 (B.C.I.R.C.). 234  CiticB.C. Inc. and Power Consolidation (China) Pulp Inc. (1992), 13 C.L.R.B.R. (2d) 161 (B.C.I.R.C.); BC Rail Limited (B.C.L.R.B. No. B131/93) (B.C.).  2 3 5  45  These actions can be contrasted w i t h a number w h i c h have been held not t o constitute evidence o f a breach o f the duty, including:  1.  H a r d bargaining (taking an u n c o m p r o m i s i n g p o s i t i o n o n an issue, whilst at the same time genuinely seeking a r e s o l u t i o n )  2.  2 3 6  Sending t o employees non-coercive c o m m u n i c a t i o n s detailing such matters as the status o f the w o r k p l a c e or its operation, the o u t c o m e o f negotiation m e e t i n g s ,  237  the l i k e l y effect o f industrial action, and proposals already p r o v i d e d t o u n i o n officials. 3.  238  Shutting an o p e r a t i o n d o w n because o f financial necessity, notwithstanding the existence o f unresolved labour n e g o t i a t i o n s .  4.  239  C o n t i n u i n g t o operate d u r i n g a strike or l o c k o u t , subject t o the prohibitions o n using replacement l a b o u r .  5.  240  F a i l i n g t o reach agreement o r make concessions.  In respect o f this final point, it is important t o note that the u n d e r l y i n g p h i l o s o p h y o f the duty:  [EJmbraces " a freedom o f contract" rationale, that the parties are best able t o determine the content o f their agreement and, failing agreement, each has recourse  APS Architectural Precast Structures Ltd v. C.S.W.U. Loc. 1611, [1998] B.C.L.R.B.D. No. 233 (B.C.); Marian Regional High School Education Committee v. Catholic Secondary School Teachers Association (1988), 6 C.L.R.B.R. (2d) 102 (B.C.I.R.C.); Western Canada Steel Ltd'v. C.A.I.M.A.W, Loc. 6, 91 C.L.L.C. 16,016 (B.C.I.R.C.). 2 3 6  Glenwood Label and Box Manufacturing Ltd and Communication, Energy and Paperworkers Union of Canada, Loc. 226, [1996] B.C.L.R.B.D. No. 300 (B.C.).  237  Insurance Corporation of British Columbian. Office & Technical Employees Union, Loc. 378, [1978] 1 Can.L.R.B.R. 53 (B.C.).  238  Starbucks Corporation andN.A.A.A.I. W. U. Loc. 3000 (1997), 35 C.L.R.B.R. (2d) 244 (B.C.). See also BC Code, s. 63(1). 2 3 9  2 4 0  For discussion on these prohibitions, see infra notes 252-253.  46  to e c o n o m i c sanctions. T h e cases therefore reveal a reluctance b y labour boards t o r e v i e w the fairness o f proposals... .  2 4 1  ... [ A c c o r d i n g l y ] a resulting impasse i n bargaining w i l l not be f o u n d t o stem f r o m breach o f the duty o f g o o d faith i f it can be said that the proponent is merely u s i n g its e c o n o m i c p o s i t i o n t o negotiate terms w h i c h favour its legitimate i n t e r e s t s .  242  In accordance w i t h this philosophy, the B C B o a r d has repeatedly refused t o enter into a n assessment o f whether a particular p r o p o s a l is r e a s o n a b l e .  243  A s the B C B o a r d has stated:  A failure t o reach a collective agreement because o f a determination not t o m a k e the concessions necessary t o secure the consent o f the other side is not, i n and o f itself, an unfair labour practice. It w o u l d be inconsistent w i t h the fundamental p o l i c y o f the C o d e - the fostering o f free collective bargaining - f o r the B o a r d t o evaluate the substantive positions o f each party, t o decide w h i c h is the m o r e reasonable, a n d then t o find the other party t o be c o m m i t t i n g an unfair l a b o u r practice f o r not m o v i n g i n that direction. ... T h e theory o f the C o d e is that each side i n collective bargaining is entitled t o adopt the contractual proposals w h i c h are i n its o w n interest, t o stick firmly t o its bargaining positions, and then t o rely o n its e c o n o m i c strength i n a strike t o force the other side t o m a k e c o n c e s s i o n s .  24  A c c o r d i n g l y , the B C B o a r d w i l l not inquire into the substance o f a party's p r o p o s a l , except i n certain limited circumstances:  In regulating the statutory duty t o bargain i n g o o d faith n o w contained i n S e c t i o n 11 o f the C o d e , the B o a r d is primarily concerned w i t h the process o f collective bargaining. T h e r e m a y nonetheless be occasions where the substance o f collective bargaining (i.e., a p r o p o s a l being advanced b y o n e o f the parties) overlaps w i t h process o r otherwise calls for scrutiny. T h e circumstances i n w h i c h the B o a r d w i l l intervene are where specific demands are illegal, are inconsistent w i t h the l a w and p o l i c y o f the statute, o r constitute evidence o f bad faith bargaining  2 4 1  G. Adams, at para. 10.1400.  2 4 2  G. Adams, at para. 10.1540.  2 4 5  See recently, APS Architectural Precast Structures Ltdv. C.S.W.U. Loc. 1611, [1998] B.C.L.R.B.D. No. 233. See also AccurpressManufacturing Limited (B.C.L.R.B. No. 70/93). 2 4 3  2 4 4  Noranda, at 159.  NorthwoodPulp & Timber Ltdv. CEP Loc 603 (1994), 23 C.L.R.B.R. (2d) 298 (B.C.) at 319-320. A proposal which is extreme in its unreasonableness is likely, for example, to constitute evidence of bad faith conduct. For discussion on the extent to which labour boards examine the substance of proposals, see B. Adell, The Duty to Bargain in Good Faith: Its Recent Development in Canada (Kingston, Industrial 2 4 5  47  N o r is the B C B o a r d w i l l i n g t o intervene i n negotiations between parties c o m m i t t e d t o achieving a resolution, even although considerable " t o - i n g arid f r o - i n g " m a y o c c u r i n the process, i n c l u d i n g the use o f l a w f u l strikes and l o c k o u t s . A s w a s noted i n the Noranda case, w h i l e the duty requires adherence to certain fundamental principles o f reasonable bargaining procedure, the B o a r d has recognised that it "must exercise considerable restraint i n intervening i n negotiations between parties w h o are c o m m i t t e d t o reaching a collective agreement."  246  In summary, then, the duty to bargain g o o d faith compels preparation, attendance, disclosure o f one's proposals, justification, consideration o f counter-proposals, d i s c u s s i o n and perseverance w i t h bargaining until either a settlement o r a genuine impasse is reached. T h e duty also prohibits conduct likely t o undermine rational and constructive bargaining. B e y o n d that, it is generally f o r the parties t o determine what is agreed u p o n ,  2 4 7  and, i n the  usual course, p r o v i d e d b o t h parties have bargained i n g o o d faith, each w i l l be entitled t o effect e c o n o m i c sanctions i n the event o f impasse.  2.2 The Substance of the Duty to Bargain in Good Faith  T o appreciate fully the nature o f the duty t o bargain i n g o o d faith as it applies i n B r i t i s h C o l u m b i a , it is necessary to l o o k b e y o n d the core enacting p r o v i s i o n , t o those sections o f the B C C o d e that give the duty substance and support.  First, as noted, the duty t o bargain i n g o o d faith is triggered b y a notice t o bargain, w h i c h can b e g i v e n b y either party. T h e recipient o f the notice is o b l i g e d t o c o m m e n c e  Relations Centre, 1980) and B. Langille & P. Mackless, "Beyond Belief: Labour Law's Duty to Bargain" (1988) 13 Q.L.J. 62. 2 4 6  Noranda, at 161.  Note, however, the potential for arbitration in relation to first collective agreements (see infra notes 291-292) and for the imposition of terms in extreme cases (see infra notes 308-316). 2 4 7  48  bargaining w i t h i n ten days.  W h e r e an existing collective agreement is due t o expire and  the parties have not g i v e n notice 90 days or more before the expiry date, notice is deemed to be g i v e n and b o t h parties are then obliged t o commence b a r g a i n i n g .  249  These  p r o v i s i o n s support the o b l i g a t i o n o f g o o d faith by establishing an enforceable commencement mechanism, thereby reducing the o p p o r t u n i t y for procrastination o r deliberate delay.  S e c o n d l y , the B C C o d e encourages g o o d faith bargaining by restricting alternatives. S e c t i o n 59(1) o f the C o d e prohibits employers and unions effecting strikes o r l o c k o u t s until after they have bargained collectively i n accordance w i t h the requirements o f the C o d e . A l t h o u g h this section does not require the discussion o f a particular checklist o f proposals o r d e m a n d s ,  250  before a party can take a strike (or l o c k o u t ) v o t e they must have  discussed w i t h the other party their respective positions o n the issues i n d i s p u t e .  251  A  failure t o d o so w i l l likely result i n a labour board h o l d i n g that a strike o r l o c k o u t notice is invalid, thereby sending the parties back t o the bargaining table.  A d d i t i o n a l l y , section 62(1) o f the B C C o d e provides that:  I f employees are l a w f u l l y o n strike or l a w f u l l y l o c k e d out, their health and welfare benefits, other than pension benefits o r contributions, n o r m a l l y p r o v i d e d directly o r indirectly by the employer to the employees must be continued i f the trade u n i o n tenders payment t o the employer or t o any person w h o was before the strike o r l o c k o u t obligated t o receive the payment.  T h i s p r o v i s i o n eliminates one avenue o f bad faith bargaining conduct: the ability o f employers t o exert pressure o n their employees not t h r o u g h bargaining, but b y cancelling their health and welfare benefits. I f permitted t o occur, conduct o f this k i n d c o u l d impact  2 4 8  BC Code, s. 46.  2 4 9  BC Code, s. 46(4).  Otic BCInc and Power Consolidated (China) Pulp Inc & Ors and Woodworkers of Canada, Locs. 1 and 151, (I.C.R. No. C170/91), upheld (1992), 13 C.L.R.B.R. (2d) 161 (B.C.I.R.C.). 2 5 0  251  Ibid. See also Yarrow Lodge, at 11.  49  significantly o n the w e l l - b e i n g o f b o t h striking o r l o c k e d out employees, and their dependants, thus p r o v i d i n g considerable (albeit b a d faith) leverage i n a bargaining dispute.  T h e B C C o d e also restricts the use o f replacement labour d u r i n g a strike o r a l o c k o u t . S e c t i o n 68(1) o f the B C C o d e prohibits the use o f outside replacement w o r k e r s t o c o v e r for employees w h o are lawfully striking o r l o c k e d o u t ,  2 5 2  w h i l e section 68(2) further  p r o v i d e s that an existing employee cannot be directed against his o r her w i l l t o p e r f o r m the w o r k o f a striking o r l o c k e d out c o l l e a g u e .  253  These provisions c o u l d be v i e w e d as  enhancing the prospects o f g o o d faith bargaining (to the extent that they require an employer t o l o o k t o an agreed resolution as the primary means for ending an impasse, rather than simply engaging replacement w o r k e r s and continuing a strike o r l o c k o u t indefinitely),  254  and C a n a d a .  2 5 5  although this v i e w is not universally endorsed throughout B r i t i s h C o l u m b i a  See e.g., Davis Wire Industries Ltd (Re), [1998] B.C.L.R.B.D. No. 148 (B.C.); A.B. Lumber Co. (Re), [1998] B.C.L.R.B.D. No. 53 (B.C.); Fletcher Challenge Canada Ltd (Re), [1997] B.C.L.R.B.D. No. 387 (B.C.); Glenwood Label and Box Manufacturing Ltd and Communication, Energy and Paperworkers Union of Canada, Loc. 226, [1996] B.C.L.R.B.D. No. 300 (B.C.). Section 68 is often used by unions as an organising tool, in that employees are encouraged to vote for the certification of a union on the basis that they will then have the option of striking in furtherance of their contractual demands whilst protected against the use of outside replacement workers. See M.A. Hickling, "Flexibilization of the Workplace: Observations on Aspects of the Canadian Position" (Paper delivered to the XVth International Congress on Comparative Law, Bristol, 1998) at 45. 2 5 2  It is of interest to note that while the BC Code does not specifically address the issue of whether lawfully striking employees can be dismissed, section 1(1) of the Code provides that a persons "does not cease to be an employee within the meaning of this Code by reason only of ceasing work as a result of (a) a strike that is not contrary to this Code ... [or] ... (c) a lockout." In practice, unions will generally insist that striking employees are re-engaged as a condition of settlement (see Corry, at 9-44). Moreover, a refusal to re-engage a striking worker after a strike has concluded (or a refusal to arbitrate the matter) could expose an employer to an unfair labour practice claim (on the basis of discriminatory conduct against union members). For these reasons, the issue of employers refusing to re-engage strikers seldom arises. 2 5 3  2 5 4  A practice which has occurred in New Zealand. See supra note 123.  Only British Columbia and Quebec operate this prohibition, Ontario having repealed a similar provision in 1995. Given that good faith bargaining is already a prerequisite to an employer effecting a lockout, it could be argued that the prohibition on the use of replacement workers serves primarily to enhance the bargaining power of unions and the associated vulnerability of employers to shut down, rather than promoting good faith bargaining. Because of these conflicting views, this type of prohibition was, and remains, controversial. See e.g., J. Baigent et al., A Report to the Honourable Moe Sihota Minister of Labour. Recommendations for Labour Law Reform (Ministry of Labour and Consumer Services, September 1992) at 43-44; P. Weiler, Reconcilable Differences (Toronto, Carswell, 1980) at 77-78; D. Carter, The Changing Face of Labour Law ((Kingston, Industrial Relations Centre, 1993) at 8; G. 2 5 5  50  T h i r d l y , the B C C o d e facilitates g o o d faith bargaining b y restricting the ability o f an e m p l o y e r to alter the terms o f its employees' employment d u r i n g negotiations. In the case o f a recently certified u n i o n , f o r example, an employer is unable to effect changes until f o u r months after the date o f certification o r until the date an agreement is executed, whichever occurs  first.  256  C e r t a i n restrictions also apply i n cases w h e r e parties are seeking  to negotiate the renewal o r replacement o f an expired a g r e e m e n t . o f the B C B o a r d is o b t a i n e d ,  258  257  Unless prior approval  unilateral changes effected i n breach o f these restrictions  w i l l g r o u n d an unfair labour practice c l a i m .  2 5 9  G o o d faith is enhanced b y these  restrictions, f o r w i t h o u t them an employer c o u l d seek t o undermine o r discredit a u n i o n , o r " p u n i s h " its employees f o r having chosen t o engage i n collective bargaining, b y altering terms unilaterally d u r i n g negotiations.  F o u r t h l y , the B C C o d e reinforces the obligation o f g o o d faith b y restricting what an e m p l o y e r can c o n v e y directly t o its employees d u r i n g the certification p r o c e d u r e and  Hopkinson, "Holding the Line: A Defence of Anti-scab Laws" (1996) 4 Can.Lab.& Emp. L.J. 137. Other provinces have sought a middle ground by prohibiting the use of professional strike breakers. See e.g., Man. Labour Relations Act (s. 14(1), (2)) and Ont. Labour Relations Act 1995 (s. 78). In the most recent review of the BC Code, the reviewing panel recommended a relaxation of the prohibition, to the extent that employers would be permitted to move managers between different places of operation. See V. Ready, S. Lanyon, M. Gropper & J. Matkin, Managing Change in Labour Relations - The Final Report (Labour Relations Code Review Committee, 25 February, 1998) [hereinafter "Managing Change"] at 5 & 59-60. BC Code, s. 45(l)(b). Notably, the 1998 review on the BC Code recommended the extension of the four month period to eight months. See Managing Change, at 53-54. 2 5 6  BC Code, s. 45(2), which prohibits the unilateral alteration of any term or condition of employment until a strike or lockout occurs, or an agreement is reached, or the union is decertified (a period often referred to as the "statutory freeze" period). This provision was enacted in response to the decision in Paccar of Canada Ltd v. C.A.I.M.A. W. (1990), 62 D.L.R. (4th) 437 (S.C.C.) in which the Supreme Court held that the previous restrictions on unilateral alteration applied only to first agreements. 2 5 7  2 5 8  BC Code, s. 45(3).  See e.g., D&D Pallets and Lumber (Re), [1998] B.C.L.R.B.D. No. 273 (B.C.); J.R.J. Trucking Ltd and Teamsters Loc. 213 (1994) B.C.L.R.B. No. B505/94 (B.C.). Interim relief against alterations of this nature may also be available, pending a full hearing of an unfair labour practice claim. See e.g., RBA Canada Inc and Loc. 213 of the International Brotherhood of Electrical Workers, [1997] B.C.L.R.B.D. No. 31 (B.C.). Note, however, that unilateral changes can be effected after the expiry of a collective agreement and the statutory freeze period. C.f, the binding effect of terms of employment in New Zealand notwithstanding the expiry of a collective employment contract, at least in theory. See infra notes 404405.  2 5 9  51  subsequent negotiations.  Sending c o e r c i v e o r intimidating c o m m u n i c a t i o n s t o a n  employee i n an attempt t o influence his o r her initial decision t o v o t e f o r certification w i l l constitute a breach o f an employee's right t o freedom o f a s s o c i a t i o n .  260  Sending such  c o m m u n i c a t i o n s f o l l o w i n g certification w i l l likewise contravene the duty t o bargain i n g o o d faith. Similarly, an employer w i l l be i n breach o f the duty i f it bypasses a certified u n i o n (without the u n i o n ' s consent o r acquiescence) and negotiates directly w i t h its employees.  261  T h e distinction between direct bargaining and permissible c o m m u n i c a t i o n s  is c o v e r e d , i n part, b y section 8 o f the B C C o d e , w h i c h provides:  N o t h i n g i n this C o d e deprives a person o f the freedom to c o m m u n i c a t e t o an employee a statement o f fact o r o p i n i o n reasonably held w i t h respect t o the e m p l o y e r ' s business.  T h e B C B o a r d has elaborated o n this p r o v i s i o n i n a number o f decisions, i n c l u d i n g Cardinal  Transportation  v . CUPE Loc. 561 and Ors.  262  I n order t o c o m p l y w i t h section  8, the statement made must b e accurate ( i f it is a statement o f fact) o r reasonably held ( i f it is an o p i n i o n ) , particularly i n the final stages o f negotiations o r where employees are directed t o attend " c a p t i v e " meetings d u r i n g w o r k t i m e .  2 6 3  H o w e v e r , m i n o r inaccuracies  in statements c o n v e y e d w i l l s e l d o m i f ever constitute a breach o f the duty. I n this regard, the B o a r d has taken a pragmatic approach b y recognising that i f it:  BC Code, ss. 4(1), 6 & 9. See e.g., Cardinal Transportation v. CUPE Loc. 561 and Ors (1996), 34 C.L.B.R. (2d) 1 (B.C.) [hereinafter "Cardinal Transportation"]; Milton Ventures Ltd v. Teamsters Loc. 213, [1996] B.C.L.R.B.D. No. 281 (B.C.).  2 6 0  Some collective agreements expressly contemplate additional direct negotiations between employer and employee. Examples include the collective agreements governing major league baseball, hockey and basketball (all of which are played in Canada and the United States). In each of these sports, the applicable collective agreement sets out the core provisions, but allows players to negotiate their own salaries directly with the owners or general managers of their teams. See B. Burke, "Negotiation Involving Agents and General Managers in the NHL" (1993) 4 Marq.S.L.J. 35. Moreover, even where a collective agreement makes no mention of direct negotiations, a union may be held to have delegated its authority to bargain if it consents or acquiesces to direct negotiations. See M. A. Hickling, "Status of Collateral, Ancillary or 'Side' Agreements in Labour Relations" (Continuing Legal Education Society of British Columbia, December 1986) at 17. 2 6 1  2 6 2  2 6 3  Cardinal Transportation. Ibid. See also B.C. Hydro and Power Authority (B.C.L.R.B. No. B 395/94) (B.C.).  52  [ W ] e r e asked t o evaluate every d i s t o r t i o n o f fact o r inflation o f o p i n i o n contained in material w r i t t e n d u r i n g heated collective bargaining disputes, [it] w o u l d be d o i n g little e l s e .  264  C o m m u n i c a t i o n s that w i l l clearly fall outside the scope o f section 8 w i l l include c o m m e n t s w h i c h are disparaging o f a u n i o n o r a u n i o n official o r w h i c h constitute an anti-union campaign;  265  statements w h i c h w o u l d reasonably have the effect o f c o e r c i n g , i n t i m i d a t i n g  or exercising undue influence over an employee as regards his o r her d e c i s i o n t o engage i n c o l l e c t i v e bargaining t h r o u g h a representative; been discussed w i t h the u n i o n .  266  and proposals o r offers that have not yet  2 6 7  Fifthly, g o o d faith bargaining is enhanced b y section 49(3) o f the B C C o d e , w h i c h p r o v i d e s that i f " a n agreement is reached as the result o f collective bargaining, b o t h parties must execute i t . " T h i s section w a r d s against a party reneging o n a p r e v i o u s l y agreed settlement.  268  W h e t h e r an "agreement" has been reached, is a question o f fact t o b e  determined objectively b y reference t o all the circumstances o f a particular c a s e .  269  T h e B C C o d e further facilitates g o o d faith b y requiring that all collective agreements contain certain specified provisions, i n c l u d i n g a m i n i m u m one year t e r m ; committee p r o v i s i o n " ;  2 7 1  2 7 0  a "consultation  a clause prohibiting strikes and l o c k o u t s d u r i n g the t e r m o f the  2 6 4  Noranda, at 161.  2 6 5  Ibid. See also Paladin Security Group Ltd (Re), [1998] B.C.L.R.B.D. No. 45 (B.C.).  See e.g., Cardinal Transportation; JackJuusola Sales Ltd (Canadian Tire Kamloops) (Re), [1998] B.C.L.R.B.D. No. 147 (B.C.); Semiahmoo Management Ltd (Re), [1998] B.C.L.R.B.D. No. 12 (B.C.). 2 6 6  2 6 7  See e.g., B.C. Hydro and Power Authority (B.C.L.R.B. No. B 395/94) (B.C.).  2 6 8  See e.g., British Columbia Institute of Technology v. B.C.G.E.U., [1976] 2 Can.L.R.B.R. 356 (B.C.).  White Spot Ltd and Canadian Food and Associated Services Union, [1976] 1 Canadian L.R.B.R. 145 (B.C.); Berger andRainer Trucking Ltd, [1974] 1 Canadian L.R.B.R. 465 (B.C.); DeMarco Health Care Inc and Hospital Employees Union (B.C.L.R.B. No. B237/97) (B.C.). 2 6 9  2 7 0  BC Code, s. 50(1).  BC Code, s. 53. In the absence of an agreed clause, the following clause applies by default: "On the request of either party, the parties must meet at least once every two months until this agreement is terminated, for the purposes of discussing issues relating to the workplace that affect the parties or any employee bound by this agreement." (See BC Code, s. 53(3)). For discussion on the operation of clauses of this nature, see e.g., Pacific Press and GCIU, Loc. 25-C (1995), B.C.L.R.B. No. B52/95. 2 7 1  53  agreement,  272  and clauses detailing procedures f o r the resolution o f g r i e v a n c e s  disputes o f r i g h t .  2 7 4  273  and  T h e B C C o d e also provides that where requested b y a u n i o n  negotiating a first collective agreement, an employer must agree that all employees i n the bargaining unit w i l l p a y u n i o n d u e s .  275  I n rendering these clauses mandatory, the B C C o d e  removes t h e m as a source o f bargaining conflict, and facilitates the o r d e r l y settlement o f particular disputes that m a y arise d u r i n g the t e r m o f an agreement.  In so d o i n g , the C o d e  fosters c o - o p e r a t i o n and the avoidance o f acrimonious e c o n o m i c sanctions.  T h e B C C o d e also recognises that bargaining c a n be impeded b y employers that operate i n m o r e than one p r o v i n c e , o r i n m o r e than one corporate f o r m . S e c t i o n 52 o f the C o d e provides that an extra-provincial c o m p a n y must appoint a resident o f B r i t i s h C o l u m b i a as its bargaining representative,, o r face one being appointed b y the M i n i s t e r o f L a b o u r .  2 7 6  C o m p a n i e s cannot, then, use the p r o v i n c i a l line, o r the existence o f a distant head office, to frustrate collective bargaining. I n addition, section 3 7 o f the C o d e details a " s u c c e s s o r " e m p l o y e r p r o c e d u r e w h i c h w a r d s against employers seeking to evade the duty t o bargain in g o o d faith b y r e s t r u c t u r i n g . Ltd (re) and Hospital  277  Employees'  A s the B C B o a r d noted i n Wilson Place  Management  Union: * 21  [Section] 3 7 c a n play an important role where a u n i o n seeks t o enforce the duty t o bargain i n g o o d faith against an employer that arbitrarily shifts its w o r k force f r o m the p a y r o l l o f one legal entity t o a n o t h e r . 2 7 2  BC Code, s. 58.  2 7 3  BC Code, s. 84(1).  2 7 4  BC Code, s. 84(3).  279  BC Code, s. 6(3)(f). This is the minimum union security clause which an employer must agree to when requested, and is known as the "Rand Formula". See G. Adams, at para. 10.1550; Corry, at 2-15.  2 7 5  A review of BC Board decisions failed to locate any reported instance where the Minister of Labour had exercised the power conferred by this section, presumably because employers would be loath to be represented by an appointee.  2 7 6  For discussion on "successor employers" see e.g., Wilson Place Management Ltd (Re), [1997] B.C.L.R.B.D. No. 397 (B.C.); Napier Intermediate Care Home Ltd (Re), [1997] B.C.L.R.B.D. No. 191 (B.C.). 2 7 7  2 7 8  2 1 9  Ibid. Ibid, at 5.  54  Similarly, section 38 provides the B C B o a r d w i t h the p o w e r t o treat t w o o r m o r e employers as one f o r the purposes o f the C o d e ,  2 8 0  a p o w e r w h i c h can also b e utilised t o  prevent an e m p l o y e r evading the duty o f g o o d faith. D e p e n d i n g o n the circumstances o f a particular case, it may be possible for a u n i o n t o i n v o k e both sections 3 7 and 3 8 .  2 8 1  T h e duty o f g o o d faith derives further, and considerable support f r o m the v a r i o u s dispute r e s o l u t i o n procedures p r o v i d e d for i n the B C C o d e , i n c l u d i n g m e d i a t i o n and arbitration. I n terms o f m e d i a t i o n , the A s s o c i a t e C h a i r o f the M e d i a t i o n D i v i s i o n m a y appoint a m e d i a t o r t o assist i n the negotiation o f a first collective a g r e e m e n t .  282  H e o r she can also  appoint a mediator t o assist i n the negotiation o f any collective agreement, p r o v i d e d at least one party has applied i n w r i t i n g for the appointment o f a m e d i a t o r .  283  Significantly, i f  a m e d i a t o r is appointed under either o f these procedures, the parties are p r o h i b i t e d f r o m striking o r l o c k i n g out for a prescribed p e r i o d .  2 8 4  A d d i t i o n a l l y , the M i n i s t e r o f L a b o u r can, at any time, appoint a m e d i a t i o n officer i f the M i n i s t e r considers that an appointment is l i k e l y t o facilitate s e t t l e m e n t ,  285  and he o r she  also has the p o w e r to appoint a special mediator to assist i n collective b a r g a i n i n g . C o d e further p r o v i d e s for the appointment o f F a c t F i n d e r s Commissions,  2 8 8  2 8 7  286  The  and Industrial Inquiry  b o t h o f w h i c h can be utilised t o resolve bargaining impasses.  See e.g., Landmark Completion Contractors et al and I. A.B.S.O.I. W. Loc. 97 and O 'rs, [1996] B.C.L.R.B.D. No. 309 (B.C.); Emit Anderson Construction Co Ltd et al and WOE, Loc. 115 et al (1995), B.C.L.R.B. No. B265/95 (B.C.). 2 8 0  2 8 1  See e.g., White Spot Ltdv. CAW-Canada, 98 C.L.L.C. 220-018 (B.C.S.C.).  2 8 2  BC Code, s. 55. See infra notes 291-293 and accompanying text.  2 8 3  BC Code, s. 74(1).  2 8 4  See BC Code, ss. 60(3)(b)(iv) and 55.  2 8 5  BC Code, s. 74(4).  2 8 6  BC Code, s. 76.  2 8 7  BC Code, s. 77.  2 8 8  BC Code, s. 79.  55  These procedures, together w i t h others such as L a s t Offer V o t e s ,  2 8 9  facilitate g o o d faith  bargaining b y p r o v i d i n g avenues f o r settlement that a v o i d the a c r i m o n y and conflict inherent i n e c o n o m i c sanctions. S u c h procedures can be extremely effective. F o r example, an experienced mediator can enhance the prospects o f a g o o d faith settlement b y the use o f v a r i o u s techniques i n c l u d i n g reality checks, issue identification and contextualisation, caucusing, shuttle d i p l o m a c y and confidential discussions. T h e existence o f a number o f different dispute resolution procedures also has the a d d e d benefit o f a l l o w i n g the A s s o c i a t e C h a i r o r the M i n i s t e r to select the process most likely to resolve a particular dispute.  T h e B C C o d e also provides f o r " m e d / a r b " negotiating a first collective agreement. B C Code,  1.  2 9 1  290  i n cases where a u n i o n and an e m p l o y e r are  T h i s procedure is n o w set out i n section 55 o f the  and can be summarised as f o l l o w s :  E i t h e r party t o c o l l e c t i v e negotiations may apply t o the A s s o c i a t e C h a i r o f the M e d i a t i o n D i v i s i o n f o r the appointment o f a mediator i f they have failed t o bargain a first agreement and the employees have v o t e d t o strike. A mediator must be appointed w i t h i n five days and the parties must supply the mediator w i t h a list o f disputed issues and their positions i n respect o f those issues.  2.  O n c e an application for first agreement mediation is made, the parties m a y not strike o r l o c k o u t until such time as the A s s o c i a t e C h a i r directs that they m a y d o so.  2 8 9  BC Code, s. 78.  2 9 0  A process that combines mediation and arbitration.  Section 55 was enacted in January 1993. Prior to that, first collective arbitration was governed by section 137.5 of the Industrial Relations Act 1979 (amended by the Industrial Relations Reform Act 1987), and before that, by section 70 of the Labour Code 1973 (enacted by the Labour Code of British Columbia Act 1973). Initially a remedial response to unfair labour practice claims, the first agreement procedure is now considerably broader in scope. For discussion on the history of the procedure in British Columbia and the current policy of the BC Board as regards section 55, see Yarrow Lodge, and infra notes 317-321. 2 9 1  56  3.  I f an agreement cannot be secured w i t h i n 2 0 days o f the appointment o f the mediator, the mediator must r e c o m m e n d t o the A s s o c i a t e C h a i r one o r m o r e o f the following:  4.  .  p r o p o s e d terms and conditions f o r consideration by the parties;  .  the appointment o f a mediator-arbitrator t o conclude an agreement ("med/arb");  .  the referral o f the dispute to arbitration by a single arbitrator o r a b o a r d ;  •  a l l o w i n g the parties t o strike and l o c k o u t .  I f the mediator recommends terms o f settlement and they are not accepted b y the parties, o r i f a collective agreement is not c o n c l u d e d w i t h i n 2 0 days o f the submission o f the m e d i a t o r ' s report, the A s s o c i a t e C h a i r must direct one o f three methods f o r r e s o l v i n g the dispute: med/arb, arbitration, o r a l l o w i n g the parties t o effect e c o n o m i c sanctions. I f the A s s o c i a t e C h a i r directs med/arb o r arbitration, neither party m a y effect a strike o r l o c k o u t .  2 9 2  T h i s p r o c e d u r e provides considerable support f o r g o o d faith bargaining, f o r as P a u l W e i l e r has noted:  T h e l a w needs t o be concerned about a different first-contract history, one w h i c h poses a major threat t o the integrity o f the statutory representation scheme.  There  are stubbornly anti-union employers w h o i n spite o f the certification, refuse t o accept the right o f their employees t o engage i n collective bargaining. T h e y simply decide t o fight the battle o n a different front, t o g o t h r o u g h the m o t i o n s o f negotiations and t o try to talk the u n i o n ' s bargaining authority t o an early demise.  293  Similar processes are utilised in seven other Canadian jurisdictions. See Canada Labour Code, R.S.C. 1985, s. 80; Man., Labour Relations Act, R.S.M. 1987, c. L 10, s. 87; Ont., Labour Relations Act, R.S.O. 1995, c. L. 2, s. 43; P.E.I., Labour Act, R.S.P.E.I. 1988, c. L - l , s. 22(2) to (6); Que., Labour Code, R.S.Q. c. C-27, s. 93.1 - 93.9; Sask., Trade Union Act, s. 26.5; Nfld., Labour Relations Act, R.S.N. 1990, c. L - l , s. 81 -83. P. Weiler, Reconcilable Differences (Toronto, Carswell, 1980) at 50. See also J. Sexton, "First Contract Arbitration: A Canadian Invention" (1991) Lab.Arb.Y.B. 231; C. Backhouse, "The Fleck Strike: A Case Study in the Need For First Contract Arbitration" (1980) 18:4 Os.H.L.J. 495.  2 9 3  57  T h e B C C o d e promotes g o o d faith bargaining not only at the time o f contract f o r m a t i o n , but also d u r i n g the tenure o f an agreement.  It does so b y p r o v i d i n g f o r dispute r e s o l u t i o n  procedures i n respect o f matters arising after settlement. F o r example, section 54 o f the C o d e provides, i n part:  (1) I f an e m p l o y e r introduces o r intends t o introduce a measure, p o l i c y , practice or change that affects the terms, conditions o r security o f employment o f a significant number o f employees to w h o m the collective agreement applies, (a) the employer must give notice t o the trade u n i o n that is party t o the collective agreement at least 6 0 days before the date o n w h i c h the measure, p o l i c y , practice o r change is t o be effected, and (b) after notice has been given, the employer and the trade u n i o n must meet, i n g o o d faith, and endeavour t o develop an adjustment plan ... ,  2 9 4  A failure t o c o m p l y w i t h section 54 w i l l g r o u n d an unfair labour practice c l a i m and m a y expose an employer t o an a w a r d o f d a m a g e s .  295  F i n a l l y , g o o d faith bargaining receives considerable support f r o m the remedial p o w e r s o f labour boards. A s noted, a failure t o bargain i n g o o d faith w i l l g r o u n d an unfair l a b o u r practice c l a i m w h i c h , i f successful, c a n result i n w i d e ranging remedies. F o r example, a party i n breach o f the duty c a n be ordered t o attend m e e t i n g s , the aggrieved party i n the course o f " b a d f a i t h " n e g o t i a t i o n s ;  296  297  pay the costs i n c u r r e d b y cease, and desist f r o m ,  Section 54 replaced the previous "technological change" provisions which existed in the former Labour Code, and which continue to exist in a number of other Canadian jurisdictions (see e.g., Canada Labour Code, R.S.C. 1985, c. L-2, s. 51-52; Man., Labour Relations Act, R.S.M. 1987, c. L 10, ss. 83-86). Interestingly, in the recent review of the BC Code, no submissions were received from employers regarding section 54, while those from unions tended to call for a strengthening of the procedure (by, for example, the introduction of arbitration where parties failed to agree on an adjustment plan). See Managing Change, at 22. 2  See e.g., D&W Warehousing Ltd (Re), [1997] B.C.L.R.B.D. No. 208 (B.C.); University of British Columbia and Faculty Club Society and CUPE, Locs. 116 & 2950 (1994), B.C.L.R.B. No. B371/94 (B.C.); Canada Safeway Ltd (Re), [1997] B.C.L.R.B.D. No. 75.  2 9 5  Kaycee Enterprises v. Industrial Wood & Allied Workers of Canada, Loc. 1-85, 96 C.L.L.C. 220-024 (B.C.L.R.B.).  2 9 6  297  Kaycee Enterprises, (ibid.); Kidd Brothers Produce Ltd, [1976] 2 C.L.R.B.R. 304 (B.C.L.R.B.).  58  certain c o n d u c t ; bad f a i t h ;  2 9 9  298  r e m o v e f r o m the bargaining table a p r o p o s a l p r e v i o u s l y presented i n  re-table a p r o p o s a l previously w i t h d r a w n in bad f a i t h ;  it w o u l d be w i l l i n g t o e x e c u t e ; table;  302  301  300  table a contract that  disclose information pertinent t o issues o n the bargaining  agree t o a particular proposal that is guaranteed by l a w (such as the m i n i m u m  u n i o n security c l a u s e ) ; bargaining.  303  o r execute an agreement reached as a result o f collective  304  C a n a d i a n labour boards have also, o n o c c a s i o n , ordered employers t o pay their employees c o m p e n s a t o r y damages f o r the loss o f opportunity t o negotiate a collective agreement, w h e r e that loss has resulted f r o m the e m p l o y e r ' s breach o f the duty t o bargain i n g o o d faith.  305  T h i s practice has been rare, presumably because labour boards d o not w i s h t o  b e c o m e e m b r o i l e d i n assessing what parties w o u l d have agreed u p o n had they negotiated i n g o o d faith f r o m the outset (an necessary assessment i n the calculation o f quantum). H o w e v e r , the B C B o a r d arguably has the p o w e r t o grant relief o f this k i n d under section 133 o f the B C C o d e ,  3 0 6  and one c o u l d envisage instances where compensatory damages  Glenwood Label and Box Manufacturing Ltd and Communication, Energy and Paperworkers Union of Canada, Loc. 226, [1996] B.C.L.R.B.D. No. 300.  2 9 8  2 9 9  CCH Canadian Limited, 74 C.L.L.C. 16,114 (O.L.R.B.).  3 0 0  Fotomat Canada Limited, [1981] Can. L.R.B.R. 381 (Ont.).  CJA General Workers Union, Loc. 1030 andMoorewoodIndustries, [1987] O.L.R.B.Rep. 92 (Ont.); Royal OakMinesIncv. Canada (Labour Relations Board) (1996), 133 D.L.R. (4th) 129 at 161 (S.C.C.). 301  See e.g., Westinghouse Canada Ltd, 80 C.L.L.C. 16,053 (O.L.R.B.). The prospect of being ordered to disclose financial information serves to deter employers from making false or unsustainable claims of financial hardship. 3 0 2  3 0 3  Kamloops News Inc. v.I.T.U. Loc. 226, [1981] 2 Can.L.R.B.R. 356 (B.C.).  3 0 4  See supra note 268.  See e.g., Radio Shack, [1980] 1 C.L.R.B.R. 99 (O.L.R.B.); affirmed (1980) 80 C.L.L.C. 14,017 (Div. Ct.); G. Adams, at 10-128. For discussion on damages being awarded against a union for loss of this kind, see Canada Cement Lafarge Ltd and U.C.I.G.W.I. andAnor, [1981] 1 Can.L.R.B.R. 236 (Ont.).  3 0 5  Section 133(l)(b) provides the BC Board with the power to order a person to "rectify a contravention of the Code"; while section 133(l)(d) permits the Board to make an order setting the monetary value of an injury or loss suffered by a person as a result of a contravention of the BC Code. 3 0 6  59  might be an effective remedy, particularly where a party has been guilty o f p r o l o n g e d and flagrant breaches o f the duty t o bargain i n g o o d f a i t h .  307  T r a d i t i o n a l l y , it h a d been considered that labour boards l a c k e d the j u r i s d i c t i o n t o i m p o s e entire agreements o n parties, except where there existed express statutory p o w e r t o d o so (such as i n the case o f arbitrated first collective agreements).  308  by Royal Oak Mines Inc v . Canada (Labour Relations Board)  3,09  This view was modified In this case, the  S u p r e m e C o u r t u p h e l d a decision b y the C a n a d a L a b o u r Relations B o a r d t o order the parties t o agree o n a collective agreement w i t h i n a prescribed p e r i o d o r have o n e i m p o s e d t h r o u g h arbitration. H o w e v e r , i n endorsing this remedy, the Supreme C o u r t emphasised the extreme circumstances i n v o l v e d i n the case. T h e dispute had i n v o l v e d an extremely a c r i m o n i o u s 18 m o n t h strike; brawls and violence had been c o m m o n place o n the picket line;  3 1 0  nine replacement employees had been murdered i n an e x p l o s i o n (in respect o f  w h i c h a striking w o r k e r w a s subsequently convicted); beatings, death threats and b o m b threats w e r e c o m m o n place; and the possibility o f i m p o s i n g martial l a w had been considered b y Y e l l o w k n i f e  3 1 1  and federal officials.  G i v e n these extraordinary circumstances, an extraordinary remedy w a s held t o be justified.  312  According to C o r y J :  The BC Board has indicated that damages for "loss of opportunity" to bargain could be awarded in an appropriate case. See Fletcher Challenge Canada Ltd and CEPU, Loc. 1092, [1997] B.C.L.R.B.D. No. 255. Although this decision was concerned with a breach of section 68 (the prohibition on engaging replacement workers during a strike), and not a general breach of the duty to bargain in good faith, arguably the statements of the Board in this case are cast in sufficiently broad terms to be of general application to other unfair labour practice claims. See e.g., Re Canadian Union of Public Employees and Labour Relations Board (Novia Scotia) (1983), 1 D.L.R. (4th) 1 (S.C.C.) [the "Digby School Board' case].  3 0 8  3 0 9  (1996), 133 D.L.R. (4th) 129; 96 C.L.L.C. 210-011; [1996] 1 S.C.R. 369 (S.C.C).  151 criminal charges were laid in respect of one day's violence alone, and over 40 strikers had been dismissed for their actions on the picket line. 3 1 0  3 1 1  The town in which the mine was located.  See e.g., Lamer CJC at 133; "[Exceptional and compelling reasons" will be required in order to justify this remedy." 3 1 2  60  In fashioning an order the b o a r d w a s obliged t o take into account the l o n g violent and bitter history o f the dispute. M o r e o v e r , the facts o f this case are so extraordinary that, i f it w e r e necessary, the b o a r d w a s justified i n g o i n g t o the limits o f its p o w e r s i n i m p o s i n g a r e m e d y .  313  C r i t i c a l i n the C o u r t ' s finding was the impact o f the dispute o n the small and isolated c o m m u n i t y o f Y e l l o w k n i f e . T h e strike, and the resulting violence had, i n effect, d i v i d e d the t o w n s h i p . In C o r y J ' s o p i n i o n :  T h e impact o f the dispute had extended w e l l b e y o n d the c o m p a n y and the u n i o n i n v o l v e d . Therefore, the order had t o take into account the very real p u b l i c interest i n r e s o l v i n g the dispute fairly yet e x p e d i t i o u s l y .  314  ... T h e remedy struck an appropriate balance between the p u b l i c interest and the interests o f the p a r t i e s .  315  W h i l e Royal Oak Mines admittedly represents an extreme illustration, it nevertheless serves t o highlight the w i d t h o f the B C B o a r d ' s p o w e r s .  3 1 6  T h o s e p o w e r s serve b o t h as an  effective deterrent against bargaining conduct inconsistent w i t h the duty o f g o o d faith and as a source o f meaningful relief i n cases o f non-compliance.  2.3 Statements of Policy Issued by the B C Board  T h e duty t o bargain i n g o o d faith acquires substance not only f r o m s u p p o r t i n g p r o v i s i o n s i n the B C C o d e , but also f r o m statements o f p o l i c y issued b y the B C B o a r d . T h e B C  Supra note 309 at 154. The Supreme Court distinguished its previous decision in the Digby School Board case primarily on the basis that the remedial powers set out in the Canada Labour Code were held to be more extensive than those in the Nova Scotia legislation (the statute at issue in the earlier case). 3 1 3  3 1 4  Supra note 309 at 158.  3 1 5  Supra note 309 at 166.  Although the remedial powers of the BC Board as regards unfair labour practice claims (see BC Code, ss. 14 & 133) are not expressed in identical terms to those considered in Royal Oak Mines (Canada Labour Code, s. 99(2)), the BC Board's powers are arguably broad enough to permit it to impose an agreement in extreme cases. For example, section 133(l)(a) of the BC Code provides, in part, that the BC Board may "order a person to do anything for the purposes of complying with the Code." [Emphasis added]. 3 1 6  61  B o a r d ' s d e c i s i o n i n Yarrow Lodge is an illustrative e x a m p l e .  317  T h e B o a r d used the  o p p o r t u n i t y o f this dispute t o set out i n detail its p o l i c y as regards the first collective agreement p r o c e d u r e set out in the B C C o d e . important g u i d e l i n e s :  1.  3 1 8  Included i n that p o l i c y w e r e a number o f  319  T h e first contract procedure is not simply about b a d faith conduct; it is t o b e used to repair a b r e a k d o w n i n first contract negotiations, whether o r not the c o n d u c t leading t o the b r e a k d o w n constitutes a breach o f the duty t o bargain i n g o o d faith.  2.  T h e appointment o f a mediator should o c c u r i n a timely fashion, so as t o aid the parties i n b u i l d i n g a relationship and fostering a bargaining process.  3.  W h e r e the parties are unable t o conclude an agreement notwithstanding the assistance o f a mediator, the mediator shall identify the " s t u m b l i n g b l o c k ( s ) " in his or her report, together w i t h a recommendation(s). an important feature o f the p r o c e s s .  4.  S u c h reports are t o constitute  320  A r b i t r a t i o n is t o be v i e w e d as an exceptional remedy; collective bargaining is t o be v i e w e d as the preferred vehicle for achieving a collective agreement.  5.  W h e r e an agreement is t o be i m p o s e d t h r o u g h arbitration, it t o o should be i m p o s e d in a t i m e l y fashion, so as t o a v o i d an irreparable b r e a k d o w n i n the employment relationship.  6.  W h e r e a collective agreement is i m p o s e d t h r o u g h arbitration, it ought not t o include innovative o r unusual c l a u s e s .  321  T w o features o f this p o l i c y statement are o f particular significance. T h e first is its detail ( w h i c h has p r o v i d e d valuable guidance t o employers, unions, mediators and arbitrators  317  Supra note 207.  3 1 8  BC Code, s. 55 (see supra notes 291-292).  3 1 9  Yarrow Lodge, at 28-33.  For discussion on the time restriction for the filing of a mediator's report, see Famous Players Inc. and Cineplex Odeon Corporation (B.C.L.R.B. No. B125/95) (B.C.).  3 2 0  See e.g., Nanaimo Youth Resource Centre (Wiseman House) v. HSA BC (1995), 48 L.A.C. (4th) 421 (B.C.).  3 2 1  62  alike). The second is the manner in which the policy was formulated. In addition to hearing from the parties involved in the case, the B C Board accepted submissions from more than 10 interveners, including the British Columbia Government, the Business Council o f B C and the B C Federation of Labour, thus ensuring it canvassed a wide range o f views prior to the policy's formulation.  The policy statement in Yarrow Lodge is but one example o f the guidance the B C Board has provided on those aspects o f the B C Code which impact upon the duty to bargain in good faith. Policy statements and information bulletins have been released on all manner of issues, including direct communications to employees during the bargaining process; the first contract procedure,  323  322  the extent to which the Board will take into account the  substance o f a bargaining proposal when determining whether a party has failed to bargain in good faith;  324  the scope o f the duty to bargain in good faith;  appointment o f mediators, of fair representation.  facilitators  and fact-finders;  325  the procedures for the  and the content o f the duty  329  The publication o f these policies and guidelines is commendable. N o t only do they provide guidance to employers and unions, they also foster consistency in mediation and arbitration proceedings. Perhaps most importantly, however, they illustrate a  Cardinal  Transportation.  Labour Relations Board of British Columbia, Information Bulletin No. 14: First Collective Agreements (Effective 4/1/1995).  3 2 3  324  Northwood Pulp & Timber Ltdv. CEP Loc 603 (1994), 23 C.L.R.B.R. (2d) 298 (B.C.).  Labour Relations Board of British Columbia, Information Bulletin No. 10: Duty to Bargain in Good Faith (Effective 4/1/1995). 3 2 5  Labour Relations Board of British Columbia, Information Bulletin No. 13: Mediator Officer and Services (Effective 4/1/1995); Labour Relations Board of British Columbia, Practice Guideline No. Mediator 2: The Appointment of a Mediator(s) in Essential Service Disputes (Effective 4/1/95). 3 2 6  Labour Relations Board of British Columbia, Practice Guideline No. Mediator 3: The Appointment of a Facilitator to Assist Parties in Developing a More Co-operative Relationship (Effective 4/1/95). 3 2 7  Labour Relations Board of British Columbia, Information Bulletin No. 15: Fact Finders (Effective 4/1/1995). 3 2 8  Labour Relations Board of British Columbia, Practice Guideline No. ADJ-3: The Duty of Fair Representation - What Does it Mean? (Effective 22/2/1994). 3 2 9  63  preparedness o n the part o f the B C B o a r d t o take a pro-active role in p r o m o t i n g c o m p l i a n c e w i t h the duty o f g o o d faith: a role w h i c h is far preferable t o one o f simply i m p o s i n g "after the event" sanctions i n instances o f p r o v e n breach.  2.4 The Good Faith "Culture"  W h i l s t it is necessary t o l o o k t o the B C C o d e and the B C B o a r d ' s statements o f p o l i c y as the source o f the duty t o bargain i n g o o d faith i n B r i t i s h C o l u m b i a , an assessment o f the duty w o u l d be incomplete w i t h o u t also considering the decisions o f the B C B o a r d , together w i t h those cases w h i c h have gone o n to j u d i c i a l review, and the statistics kept b y the B C B o a r d o n the applications it receives.  That is t o say, it is also necessary t o  consider the extent t o w h i c h the duty is being h o n o u r e d b y the parties rather than being enforced b y the B C B o a r d and the courts.  In c a r r y i n g out this assessment, one notices something very significant. In recent times in B r i t i s h C o l u m b i a there have been very few cases i n v o l v i n g claims that a party has failed t o bargain i n g o o d faith. Indeed, an assessment o f the statistics kept b y the B C B o a r d (or its equivalent) o v e r the last twenty years reveals a number o f interesting results. F i r s t , as noted i n A p p e n d i c e s one and t w o ,  3 3 0  the number o f claims i n v o l v i n g allegations that a  party has failed t o bargain i n g o o d faith have been minimal i n c o m p a r i s o n t o the o v e r a l l number o f unfair labour practice claims ( 9 . 3 % ) . M o r e o v e r , as A p p e n d i x three illustrates,  331  o f those claims w h i c h have i n v o l v e d allegations o f bad faith bargaining, 7 5 %  have been settled v o l u n t a r i l y between the parties, 1 5 % have been dismissed, 2 . 5 % have been w i t h d r a w n , and i n only 7 . 5 % o f cases has the B C B o a r d (or its equivalent) ruled that a v i o l a t i o n o f the duty has occurred. T h i s statistic translates into an average o f less than three findings per year.  Infra pages 216-217. Infra page 218.  64  T h e absence o f controversy surrounding the duty t o bargain i n g o o d faith is further evidenced b y the statistics kept i n relation t o the first collective agreement procedure. O v e r the p e r i o d f r o m 1973 (when section 70 o f the L a b o u r C o d e o f B r i t i s h C o l u m b i a A c t 1973 w a s enacted) to the beginning o f 1993 (when section 137.5 o f the Industrial R e l a t i o n s A c t 1979 w a s replaced b y section 55 o f the B C C o d e ) , only 12 collective agreements w e r e i m p o s e d t h r o u g h a r b i t r a t i o n . four,  3 3 3  332  A n d , as is illustrated b y A p p e n d i x  f r o m the time section 55 w a s enacted until the end o f 1997, 8 0 % o f the 175 first  agreement applications disposed o f w e r e v o l u n t a r i l y settled; 8 % w e r e w i t h d r a w n , 4 % went o n to strikes and l o c k o u t s , and just 5 . 1 % resulted i n arbitration.  A number o f conclusions can be d r a w n f r o m these statistics. First, the duty t o bargain i n g o o d faith is an accepted component o f labour relations i n B r i t i s h C o l u m b i a . neither c o n t r o v e r s i a l o r e x c e p t i o n a l .  335  3 3 4  It is  A reading o f the decisions o f the B C B o a r d further  reveals that w h e r e disputes have continued t o arise, they have tended t o b e i n respect o f smaller employers w h o have had little o r no experience o f the duty n o r dealings w i t h unions. F o r those employers w i t h a history o f u n i o n relations, c o m p l i a n c e w i t h the duty t o bargain i n g o o d faith is n o w the expected, and effected, n o r m . Y e t , even where "first  See the Annual Reports of the BC Board and the Industrial Relations Council of British Columbia (1974-1993). One of the primary reasons for the scarcity of imposed agreements was that under the 1973 Code a discretion vested in the Minister of Labour in respect of whether any dispute would be referred to the Labour Board. As it transpired, this discretion was seldom exercised. For a discussion on the operation of the procedure under the 1973 Code, see D. Cleveland, First Agreement Arbitration in British Columbia: 1974-1979 (Masters Thesis, University of British Columbia, 1982). 3 3 3  See infra page 219.  As it is in the other jurisdictions in Canada. For this reason, the duty cannot be said to suit the agenda of any one particular genus of political party. The duty is as accepted in Ontario (where the Progressive Conservative Government presently holds power) as it is in British Columbia (which is currently governed by the New Democrat Party). 3 3 4  It is notable that in the reviews of the BC Code (conducted in 1992 and 1998) neither employers nor unions called for the repeal of the duty to bargain in good faith. Set Managing Change; J. Baigent, et al., A Report to the Honourable Moe Sihota Minister of Labour. Recommendations for Labour Law Reform (Ministry of Labour and Consumer Services, September 1992). 3 3 5  65  t i m e " negotiations have encountered difficulties, the first contract procedure has resulted in an o v e r w h e l m i n g level o f voluntary settlement.  336  Secondly, the absence o f litigation suggests that the standard o f conduct required b y the duty has been adequately defined, largely b y the B C B o a r d . Parties k n o w i n advance what is expected o f them. T h e y can also recognise w h e n their counterparts are acting i n breach o f the required standards, and c a n challenge that conduct at the bargaining table.  A n d thirdly, the m e d i a t i o n functions included i n the enforcement mechanisms o f the duty appear t o be w o r k i n g w e l l . W h e n bargaining disputes d o arise, mediators have been made available t o assist the parties. A s the statistics referred to reveal, this has resulted i n the vast majority o f claims being resolved voluntarily and w i t h o u t the need f o r litigation o r arbitration.  2.5 Summary: Good Faith Bargaining and the BC Code  T h e duty to bargain i n g o o d faith i n B r i t i s h C o l u m b i a derives m u c h o f its meaning f r o m the j u r i s p r u d e n c e developed b y the B C B o a r d . V a r i o u s obligations have been d e v e l o p e d over time, the breach o f w h i c h w i l l support a c l a i m that a party has failed t o bargain i n g o o d faith. H o w e v e r , it is impossible t o appreciate the full affect o f the duty as it applies in B r i t i s h C o l u m b i a w i t h o u t canvassing the B C C o d e i n its entirety. M u c h o f the content and effectiveness o f the duty stems f r o m supporting provisions. V a r i o u s sections i n the B C C o d e g o v e r n h o w the duty commences and operates.  Others serve to facilitate g o o d  faith b y inhibiting b a d faith conduct, and b y p r o v i d i n g procedures f o r dispute resolution. Still others g o v e r n the consequences o f breach.  Often it is a case of educating parties about a process with which they are unfamiliar. The experience in British Columbia has shown that initial and timely assistance from mediators can be extremely effective in facilitating bargaining.  3 3 6  66  M u c h o f the d u t y ' s effectiveness has stemmed f r o m the pragmatism o f the enforcement b o d y , i n this case the B C B o a r d . G e n e r a l l y speaking, the duty has been developed i n B r i t i s h C o l u m b i a i n a practical fashion by B o a r d officials w h o appreciate the complexities and realities o f industrial bargaining. T h i s pragmatism is evidenced by the B o a r d ' s willingness to take a proactive stance t h r o u g h the f o r m u l a t i o n o f policies and guidelines. T h e result o f the B o a r d ' s efforts speak for themselves.  T h e duty is not the subject o f  significant levels o f litigation, and where unfair labour practice claims do arise, the vast majority are resolved t h r o u g h mediation and voluntary settlement.  A s a final point, it is important to note that w h i l e the duty has encouraged g o o d faith bargaining, it has not eliminated industrial conflict i n B r i t i s h C o l u m b i a . Q u i t e clearly strikes and l o c k o u t s continue to o c c u r .  3 3 7  Y e t , as the statistics o n the first collective  agreement p r o c e d u r e indicate, there w o u l d have been many m o r e strikes and l o c k o u t s w e r e it not for the duty and its supporting mechanisms. M o r e o v e r , the existence o f e c o n o m i c sanctions cannot be taken to mean that the duty is ineffective.  Q u i t e the  contrary, a fundamental feature o f the duty is that parties ought to be able to strike and l o c k o u t p r o v i d e d they have first bargained in g o o d faith. W h a t the absence o f litigation over the duty indicates, is that parties i n B r i t i s h C o l u m b i a are m a k i n g every reasonable effort to secure agreement, and are d o i n g so i n g o o d faith, before resorting to e c o n o m i c sanctions.  In sum, the duty to bargain i n g o o d faith has played, and continues to play, a v e r y relevant and important role i n securing and p r o m o t i n g industrial harmony i n B r i t i s h C o l u m b i a .  See infra page 179.  67  CHAPTER 3: IS LEGISLATIVE AMENDMENT NECESSARY IN NEW ZEALAND?  B i l l B i r c h and M a x B r a d f o r d have said that a duty t o bargain i n g o o d faith is not needed i n N e w Z e a l a n d employment and labour r e l a t i o n s .  338  T h e y are supported i n this v i e w b y the  P u b l i c Service, w h i c h has stated that N e w Z e a l a n d l a w , and i n particular, the E C A , already p r o m o t e s g o o d faith b a r g a i n i n g .  339  O n e w a y t o test these v i e w s is t o consider the  extent t o w h i c h the existing l a w i n N e w Z e a l a n d replicates the duty t o bargain i n g o o d faith, as it applies i n B r i t i s h C o l u m b i a .  3.1 The Existing Provisions of the ECA  Section 57: "Harsh and Oppressive " Behaviour  S e c t i o n 57(1) o f the E C A provides:  W h e r e any party t o an employment contract alleges(a) That the employment contract, o r any part o f it, w a s p r o c u r e d b y harsh and oppressive behaviour o r b y undue influence o r b y duress, o r (b) That the employment contract, o r any part o f it, w a s harsh and oppressive w h e n it w a s entered into,that party m a y apply t o the C o u r t f o r an order under this section. W h e r e a party makes out a claim under section 57(1), the E m p l o y m e n t C o u r t has the p o w e r t o set aside an employment contract (either w h o l l y o r i n part) o r t o a w a r d compensation, o r b o t h .  338  Supra notes 172-175.  3 3 9  Supra note 184.  3 4 0  ECA, s. 57(4). The Court does not, however, have the power to re-write a contract or impose terms of employment on the parties. See infra note 490. 3 4 0  68  T h e E C A does not define what is meant b y "harsh and oppressive", " u n d u e influence" o r " d u r e s s " , except t o say that "the C o u r t shall have no j u r i s d i c t i o n t o set aside o r modify, o r grant r e l i e f i n respect o f any employment contract under the l a w relating t o unfair o r unconscionable bargains."  341  T h i s section w o u l d appear t o c o v e r m u c h o f the g r o u n d that falls w i t h i n the scope o f a duty t o bargain i n g o o d faith, given that a considerable range o f bad faith c o n d u c t w o u l d arguably fall w i t h i n the plain meaning o f "harsh and oppressive", " u n d u e influence" o r "duress". Y e t , o n closer examination, it is apparent that section 57 has a number o f significant limitations.  T h e first is that section 57 has been held t o apply o n l y to c o n c l u d e d employment contracts.  342  T h e section cannot, then, be used i n a proactive manner t o initiate o r guide  negotiations, n o r t o require parties to persist w i t h bargaining i n a meaningful manner u n t i l either a settlement o r a genuine impasse is reached. T h e most an aggrieved party can d o is seek a retrospective r e v i e w o f b a d faith conduct after they have acceded t o another party's demands. B y then m u c h o f the damage i n terms o f conflict, the entrenchment o f v i e w s and o p p r e s s i o n w i l l have o c c u r r e d .  M o r e o v e r , g i v e n this limitation, it is difficult t o envisage the available sanctions c o u n t e r i n g b a d faith bargaining effectively.  I f a contract is set aside, the parties are b a c k t o "square-  o n e " - presumably further polarised as a result o f the litigation - and w i t h o u t the benefit o f a m e c h a n i s m w h i c h c o u l d then foster g o o d faith in any subsequent negotiations. A l t e r n a t i v e l y , i f c o m p e n s a t i o n is awarded, an employer may w e l l v i e w this as a cost o f achieving its objectives, and its employees have no guarantee that such c o n d u c t w i l l not o c c u r again.  3 4 1  ECA, s. 57(7).  For example, in United Food and Chemical Workers ofNZ and Ors v. Talley [1992] 3 ERNZ 423 (E.C.) [hereinafter "Talley"], a number of employees alleged that oppressive tactics were used by their employer to obtain a contract variation. Notwithstanding that the employer's conduct was held to be in breach of the section, those employees who refused to agree to the variation were denied relief. 3 4 2  69  T h e second limitation o f the section is that it prohibits class a c t i o n s .  343  A n individual  employee cannot, then, derive support f r o m a collective action i n v o l v i n g a number o f his or her colleagues.  I f an employee is to challenge an employment contract under section  57, he o r she w i l l , i n most cases, be required to step f o r w a r d as an individual plaintiff. N o r c a n the E m p l o y m e n t C o u r t grant relief o f its o w n m o t i o n : must apply f o r this r e l i e f .  3 4 5  3 4 4  a party t o the contract  346  O n e might question h o w realistic these requirements are. It is arguably naive t o expect an employee t o take the witness stand, and describe h o w he o r she has been oppressed b y a manager, w h e n that employee k n o w s that immediately f o l l o w i n g the hearing he o r she must, once again, w o r k under the supervision and c o n t r o l o f that manager. Ironically, those employees w o r s t affected b y this k i n d o f oppression (such as those w i t h o u t the support o f a strong u n i o n presence i n the w o r k p l a c e ) w i l l be those least likely t o have the resolve to confront their employer i n this m a n n e r .  347  T h e third, and most fundamental, limitation inherent i n section 57 is its scope, w h i c h has been restricted i n a number o f respects.  In the first place, the ambit o f section 57 is  u n d e r m i n e d b y subsection 7, w h i c h , as noted, prohibits the granting o f relief o n the basis  3 4 3  Adams v. Alliance Textiles [1992] 1 ERNZ 982 (E.C.) [hereinafter "Adams"] at 990; Talley, at 430.  While a bargaining representative can bring an action under section 57, this can only occur when the representative is a party to the contract, something which is occurring less and less under the ECA.  3 4 4  3 4 5  Such as in a case brought before the Court under another section of the ECA.  3 4 6  ECA, s. 57(3).  In Adams the Employment Court found it material in its decision to dismiss the claim under section 57 that the witnesses, while in the witness box, were not assertive in their criticism of their employer's conduct. The Court took this lack of outrage to indicate an absence of employer coercion. However, as the union's counsel has subsequently pointed out, a more plausible explanation is that the employees did not have the personal strength to publicly confront their employer. See "Interview with Robyn Haultain", noted in Dannin, supra note 33 at 477 (note 117). Interestingly, those same employees launched a nationwide petition calling for the introduction of good faith bargaining (see H. Roth, "Chronicle" (1992) 17:2 N.Z.J.Ind.Rel. 247 at 257). 347  70  o f unfairness o r unconscionability.  T h i s restriction raises the threshold f o r intervention  b y the E m p l o y m e n t C o u r t b e y o n d that w h i c h applies t o all other contracts i n N e w Zealand.  3 4 9  I m p l i e d i n this anomaly is the highly questionable assumption that all parties  to a l l employment relationships (including all employees) are less vulnerable t o oppressive behaviour and e x p l o i t a t i o n than other kinds o f contracting parties, i n c l u d i n g i n d i v i d u a l consumers.  T h e ambit o f section 57 has been further n a r r o w e d by the E m p l o y m e n t C o u r t , w h i c h has chosen to merge together the apparently separate grounds for relief set out i n sections 5 7 ( l ) ( a ) and 5 7 ( l ) ( b ) .  A c c o r d i n g to the C o u r t i n Adams:  [T]here w i l l be f e w cases i n w h i c h the C o u r t w i l l grant relief by reason o f harsh and oppressive behaviour, undue influence o r duress unless the contract p r o c u r e d b y these methods involves some substantive injury o r detriment t o the party subjected t o such t r e a t m e n t .  350  T h i s v i e w not o n l y undermines the plain w o r d i n g o f the section, it also ignores the fact that particular negotiating conduct may fail t o secure a contract that is sufficiently unbalanced t o be v i e w e d as harsh and oppressive, but yet m a y still cause the aggrieved party considerable emotional distress, humiliation and financial outlay (in the f o r m o f p a y i n g f o r an advisor, f o r e x a m p l e ) .  351  S u c h damage ought to be compensatable  irrespective o f the contractual outcome, yet under the C o u r t ' s v i e w o f section 57, it is not.  When the Employment Contracts Bill was debated in Parliament, a number of opposition Members of Parliament unsuccessfully lobbied for the exclusion of this restriction, and the express extension of the section to cover unfair and unconscionable contracts. See Hansard, Parliamentary Debates of New Zealand (1991) 30 April, 1600-1608. 3 4 8  Hughes, supra note 168, at 186. Consumer contracts, for example, can be set aside on the basis of unconscionability, yet the same relief is not available to employees and employers. Not only is the Employment Court prohibited from granting such relief (whether in a claim under section 57, or otherwise), the exclusive jurisdiction of the Employment Court likely prevents employers and employees from seeking relief of this kind elsewhere (although see Horn, para. EC 57.23). 3 4 9  3 5 0  Adams, at 1014.  351  Mazengarbs, at para. 57.5.  71  H o w e v e r , perhaps the most significant restriction o n the scope o f section 57 stems f r o m the p h i l o s o p h i c a l underpinnings o f the E C A . A s noted, this legislation assumes equality o f bargaining p o w e r between an employer and an individual employee.  A c c o r d i n g l y , the  " n o r m a l " operation o f the employment relationship is not to be v i e w e d as harsh and oppressive.  A s D a n n i n has noted:  There is no reason t o believe that Parliament w a s unaware o f the employee's n o r m a l dependence o n and subservience t o the e m p l o y e r and the e m p l o y e r ' s c o n t r o l o f the w o r k p l a c e . ... Parliament must also not have intended t o define the n o r m a l employment relationship as illegal duress. A s a result o f what w a s the n o r m at the time the E C A w a s enacted, an employee has a heavy b u r d e n t o p r o v e illegal c o e r c i o n .  3 5 2  T h i s v i e w has been substantiated b y decisions o f the E m p l o y m e n t C o u r t and the C o u r t o f A p p e a l , b o t h o f w h i c h have stated that the employment relationship does not carry w i t h it any p r e s u m p t i o n o f undue i n f l u e n c e .  353  T h e difficulties facing a claimant under section 57 w e r e starkly demonstrated b y the E m p l o y m e n t C o u r t ' s decision in Adams.  354  In this case the employer sought t o introduce  a n e w collective contract that reduced penal rates f o r overtime and night w o r k and phased out v a r i o u s existing entitlements, i n c l u d i n g l o n g service leave. T h e p r o p o s e d contract also  3 5 2  Dannin, Working Free, at 244-245.  Adams (E.C.) at 1031. This aspect of the Employment Court's decision in Adams was confirmed on appeal by the Court of Appeal. See Eketone (supra note 35) at 796. By way of comparison, the Canadian Supreme Court has taken the view that employment relationships (and their formation) typically involve unequal bargaining power. In Wallace v. United Grain Growers ((1998), 152 D.L.R. (4th) 1) the Supreme Court endorsed Swinton's comment that "the terms of the employment contract rarely result from an exercise of free bargaining power in the way that the paradigm commercial exchange between two traders does." (at 32). See also Slaight Communications v. Davidson, [1989] 1 S.C.R. 1038 (S.C.C), and W. Rayner, The Law of Collective Bargaining (Ontario, Carswell, 1995) at 2-2. Similarly, in the United States on America, the National Labor Relations Act is predicated on the view that "the inequality of bargaining power between employees who do not possess full freedom of association or actual liberty of contract, and employers who are organised in the corporate or other forms of ownership association substantially burdens and affects the flow of commerce ... by depressing the wage rates and purchasing power of wage earners... ." (See 29 U.S.C.S. s. 151, Findings and Declaration of Policy (West Supp.) at 270). 3 5 3  3 5 4  Supra note 343.  72  permitted the c o m p a n y t o change all conditions o f employment at w i l l , v a r y an e m p l o y e e ' s starting time b y u p t o sixteen hours a day, and t o c o n t r o l individual pay rates unilaterally based o n the c o m p a n y ' s o w n rating o f employees. N o t surprisingly, the u n i o n responsible for negotiating the previous a w a r d v i g o r o u s l y o p p o s e d these changes.  A l l i a n c e responded b y " i n v i t i n g " employees t o attend meetings d u r i n g w o r k time ( f r o m w h i c h the u n i o n w a s e x c l u d e d ) ,  355  w h e r e u p o n it w a s suggested t o staff that they r e v o k e  their u n i o n authorities and sign the p r o p o s e d contract. M a n y w h o refused w e r e subsequently denied overtime ( w h i c h significantly reduced their take h o m e pay). A f t e r an extremely a c r i m o n i o u s dispute, the majority o f staff signed. T h e remainder w e r e l o c k e d out.  W h e n the c o m p a n y began signing staff directly t o its n e w contract the u n i o n sought relief on b e h a l f o f its members f r o m the E m p l o y m e n t C o u r t . T h e u n i o n argued, i n part, that the contract h a d been p r o c u r e d b y harsh and oppressive behaviour. T h e E m p l o y m e n t C o u r t disagreed, stating that:  T h e behaviour c o m p l a i n e d o f must strike the court as reprehensible, as m o r a l l y b l a m e w o r t h y and as meting out intolerable treatment. It w i l l n o r m a l l y have elements o f deliberation and o f unwarranted severity. D e c e p t i v e o r misleading statements o f the k i n d alleged and aggressive marketing b y strong personalities d o not strike m e as a m o u n t i n g t o the behaviour described i n the s u b s e c t i o n .  356  T h e E m p l o y m e n t C o u r t went o n t o say that w h i l e a l o c k o u t c o u l d possibly c o m p r i s e duress and o p p r e s s i o n i f it had the effect o f "finally b r i n g i n g employees t o their knees b y virtually starving them into s u b m i s s i o n , "  357  that had not o c c u r r e d i n the present case.  The plaintiffs' statement of claim alleged that the employees had been "invited" (i.e., directed) to attend these meetings. See Adams, at 1024. Adams, at 1027. This interpretation of section 57 has subsequently been endorsed by the Court of Appeal. See United Food and Chemical Workers Union v. Talley [1993] 2 ERNZ 360 (CA.) at 378. 3 5 6  351  Adams, at 1029.  73  Since Adams there have been occasions where employees have successfully i n v o k e d section 5 7 .  3 5 8  S u c h results have, however, been f e w and far between, and have been  notable for the severity o f the employers' conduct. In Talley, for example, the employer p r o v i d e d its employees w i t h the choice o f either accepting a contractual v a r i a t i o n ( w h i c h w o u l d have absolved the employer f r o m deducting u n i o n fees) or i n c u r r i n g a unilaterally i m p o s e d w a g e cut. T h i s unlawful threat was effective i n securing the v a r i a t i o n , but w a s described b y the C o u r t as amounting to "oppressive and tyrannical a r r o g a n c e " .  359  Similarly, i n Marsh, the employer w a s held t o have secured a replacement agreement by u n l a w f u l l y threatening t o breach its employees' existing contracts o f employment.  T h e suggestion that o p p r e s s i o n b o r d e r i n g o n starvation, or u n l a w f u l threats, w i l l be needed i n order for employees to successfully i n v o k e section 57 illustrates the limited scope o f the section. I n short, then, although this section may have p r o m i s e d m u c h as regards the p r o m o t i o n o f g o o d faith bargaining, it has, in fact, delivered little.  Section  12(2): Recognition of Bargaining Agents  S e c t i o n 12(2) o f the E C A provides:  W h e r e any employee or employer has authorised a person, g r o u p , or organisation to represent the employee or employer i n negotiations for an employment contract, the employee or employer w i t h w h o m the negotiations are being undertaken shall, subject t o section 11 o f this A c t , recognise the authority o f that person, g r o u p , o r organisation to represent the employee or employer i n those n e g o t i a t i o n s .  360  See e.g., Talley; affirmed in United Food and Chemical Workers Union v. Talley [1993] 2 ERNZ 360 (C.A.); Craig v.R&P Fraser Pty Ltd and Waikato Beef Packers Ltd (1995) 4 NZELC 98,327; Marsh v. Transportation Auckland Corporation Ltd [1996] 2 ERNZ 266 (E.C.), affirmed, Transportation Auckland Corporation Ltdv. Marsh [1997] ERNZ 532 (C.A.).  3 5 8  3 5 9  Talley, at 456.  3 6 0  Emphasis added.  74  R e c o g n i t i o n o f a bargaining agent is fundamental t o the duty t o bargain in g o o d faith i n British Columbia.  3 6 1  O n its face, then, the E C A w o u l d appear t o already encompass a  significant p o r t i o n o f the duty. A g a i n , however, appearances are misleading.  W h i l e it is true that section 12 requires an employer t o recognise an employee's bargaining agent, the section does not require the employer t o negotiate w i t h that agent. T h e employer still retains the lawful right t o refuse t o bargain at all. W h e t h e r employees are able t o persuade an employer t o engage w i t h their agent w i l l depend o n their bargaining strength, not o n section 12, f o r as the C o u r t o f A p p e a l has noted, section 12 has n o role t o play i f negotiations have not started:  S e c t i o n 12(2) is predicated o n the v i e w that negotiations f o r an employment contract are under way between the employer and the employees' authorised representative.  362  A c c o r d i n g l y , notwithstanding the existence o f section 12, the freedom o f employees t o be represented i n negotiations can be o v e r - r i d d e n b y employers w h o have the bargaining p o w e r t o refuse t o negotiate.  T h i s is somewhat ironic given that i n 1990 the M i n i s t e r o f  L a b o u r suggested i n his drafting instructions for the E C A that the e m p l o y e e ' s c h o i c e o f bargaining agent ought t o be subject t o a p o w e r o f veto o n the e m p l o y e r ' s p a r t .  363  A l t h o u g h this suggestion w a s considered t o o controversial t o be adopted in the legislation, for m a n y employees, this is exactly what occurs i n p r a c t i c e .  364  W h a t is m i s s i n g f r o m section 12 is any enforceable obligation t o actually c o m m e n c e bargaining and t o persist w i t h the process until either a settlement o r a genuine impasse is  361  Supra notes 230-231, & 265-267.  3 6 2  Capital Coast Health v. NZ Med Lab Workers Union [1996] 1 NZLR 7 (CA.) at 19. Emphasis added.  3 6 3  Mazengarbs, at A/315.  C.f., the position in British Columbia, where the makeup of a counterpart's negotiating team cannot be used a reason to refuse to bargain. See supra note 217. 3 6 4  75  reached. T h e C o u r t o f A p p e a l has glossed over this deficiency, stating i n a recent case that:  N e g o t i a t i o n s are ... a process o f mutual discussion and bargaining, i n v o l v i n g putting f o r w a r d and debating p r o p o s a l and counterproposal, persisting, c o n c e d i n g , persuading, threatening, all w i t h the objective o f reaching what w i l l probably be a c o m p r o m i s e that the parties are able t o accept and live w i t h .  3 5 5  W h a t the C o u r t failed t o a c k n o w l e d g e was that whether this process o c c u r s as described depends not o n section 12, but solely o n the respective p o w e r and inclination o f a particular employer and its employees.  A n d , as H a r b r i d g e and H i n c e have p o i n t e d out:  G i v e n the current e c o n o m i c recession experienced i n N e w Z e a l a n d , the p o w e r t o decide whether or not t o bargain rests almost exclusively w i t h the e m p l o y e r .  366  W h a t , then, does section 12 mean? Its operative'scope has, i n fact, been limited t o the issue o f whether an employer can bargain directly w i t h its employees w h e n those employees have authorised a representative t o bargain o n their behalf. W h i l s t this issue is easily stated, r e s o l v i n g it has p r o v e n t o be considerably more difficult.  F r o m an e m p l o y e e ' s perspective, the E m p l o y m e n t C o u r t ' s initial interpretation o f section 12 w a s far f r o m p r o m i s i n g . I n Adams, the C o u r t held that employees w h o had authorised a bargaining representative t o negotiate o n their behalf, c o u l d still be approached directly b y their employer and persuaded t o r e v o k e those authorities and enter into direct negotiations. T h e C o u r t reasoned that b y seeking the w i t h d r a w a l o f those authorisations, the employer was, i n fact, recognising the authority o f the bargaining a g e n t .  367  Capital Coast Health v. NZ Med Lab Workers Union [1996] 1 NZLR 7 (CA.) at 19. Harbridge & Hince, supra note 14. Adams, at 1024.  76  N o t surprisingly, the u n i o n appealed this decision t o the C o u r t o f A p p e a l . A l t h o u g h the appeal w a s dismissed as moot sub nom, President C o o k e questioned the E m p l o y m e n t C o u r t ' s interpretation o f section 12:  I a m disposed t o think that once a u n i o n has established its authority t o represent certain employees ... then the employer fails t o recognise the authority o f the u n i o n i f the employer attempts t o negotiate directly w i t h those employees.  T o g o behind  the u n i o n ' s b a c k does not seem consistent w i t h recognising its authority. T h e contrary argument advanced for the employer here is that authority can be recognised b y t r y i n g t o persuade the giver o f the authority t o r e v o k e it. That seems t o m e a rather cynical argument not necessarily i n accordance w i t h the true intent, meaning and spirit o f the e n a c t m e n t .  368  Justice G a u l t also made an interesting comment regarding the relevance o f I L O conventions 8 7 and 98 t o the interpretation o f section 12:  A s w e made clear i n Noort...  it is appropriate t o have reference t o the terms of,  and decisions u p o n , international instruments dealing w i t h fundamental rights w h e n interpreting the scope o f those rights under o u r ... legislation. ... It is not o p e n t o the C o u r t s t o depart f r o m the plain meaning o f the statute but w h e r e it c a n b e done ... the statute is t o be given meaning consistent w i t h the freedom o f association as internationally r e c o g n i s e d .  369  G a l v a n i s e d b y these comments, the E m p l o y m e n t C o u r t set about interpreting section 12 w i t h a v i e w t o ensuring that employee collectives w e r e meaningfully recognised. resulted i n t w o p r o m i s i n g decisions i n New Zealand Medical Laboratory  Inc v. Capital Coast Health Ltd,  310  This  Workers Union  and Ivamy v. New Zealand Fire Service  Commission  311  In Med Lab Workers, the employer, C a p i t a l Coast H e a l t h , and the plaintiff u n i o n entered into negotiations f o r a n e w collective employment contract. T h o s e negotiations w e r e  3 6 8  Eketone, at 787.  3 6 9  Eketone, at 795.  3 7 0  [1994] .2 ERNZ 93 (E.C.) [hereinafter "MedLab Workers"].  3 7 1  [1995] 1 ERNZ 729 (E.C.) [hereinafter "Ivamy"].  11  unsuccessful. A s tensions g r e w , C a p i t a l Coast H e a l t h sent to its staff v a r i o u s letters and m e m o r a n d a personally attacking u n i o n officials and criticising the u n i o n f o r delaying settlement.  T h e employer also called a meeting directly w i t h staff to discuss its p r o p o s e d  collective contract. A l t h o u g h some staff refused to discuss this matter w i t h o u t their bargaining agent present, many w e r e persuaded to attend.  T h e u n i o n responded b y seeking an injunction f r o m the E m p l o y m e n t C o u r t . T h e u n i o n alleged that the employer was in breach o f section 12 b y virtue o f its actions i n bypassing and belittling the u n i o n . T h e E m p l o y m e n t C o u r t agreed, and granted the injunction. A c c o r d i n g to the C o u r t , no less than seven letters and m e m o r a n d u m sent out b y the employer w e r e i n contravention o f section 12. A c c o r d i n g to the C h i e f Judge, those c o m m u n i c a t i o n s "that had the effect o f undermining the authority o f the representative" w e r e i n breach o f section 12, "regardless o f the employer's m o t i v e " .  3 7 2  In Ivamy the F i r e Service C o m m i s s i o n attempted to negotiate a n e w collective contract w i t h its fire-fighters. Its proposals w e r e met w i t h resistance by the fire-fighters' u n i o n . In an effort to advance its position, the C o m m i s s i o n sent its employees an i n f o r m a t i o n pack consisting o f a revised p r o p o s a l , the details o f w h i c h had not previously been given to the fire-fighters' u n i o n , and an offer o f a $ 4 0 0 0 incentive payment for those employees w h o accepted the n e w p r o p o s a l by a specified date. A l t h o u g h the C o m m i s s i o n ' s stated intention w a s to p r o v i d e the u n i o n w i t h a c o p y o f the information pack at the same time the i n f o r m a t i o n w a s sent to the C o m m i s s i o n ' s employees, due to an administrative error the i n f o r m a t i o n p a c k w a s received by the fire-fighters w e l l before their u n i o n . I n response, the u n i o n c o m m e n c e d an action under section 12, alleging the C o m m i s s i o n w a s attempting to negotiate directly w i t h its employees, and thus by-pass the u n i o n .  O n c e again the E m p l o y m e n t C o u r t agreed w i t h the plaintiff. A c c o r d i n g to the C o u r t , the employer had acted deliberately so as to:  Med Lab Workers, at 127-128.  78  [BJelittle the u n i o n , t o reduce its importance and standing i n the eyes o f its members and t o prejudice its ability t o represent them or t o d o so e f f e c t i v e l y .  373  C h i e f Judge G o d d a r d further stated that:  I f the employer had anything t o say o n the subject o f the negotiations, at any rate by a d v o c a c y o f its terms, it should say it all t o the representatives and none o f it t o the e m p l o y e e s .  374  T h e rulings i n Med Lab Workers and Ivamy signalled a significant advance f r o m the p o s i t i o n taken b y the E m p l o y m e n t C o u r t i n Adams, and appeared t o inject a degree o f substance into section 12 b y restricting the scope for employers t o engage i n b a d faith and destructive bargaining t a c t i c s . Lab  375  That substance was, however, short lived. B o t h Med  Workers and Ivamy w e r e overturned b y the C o u r t o f A p p e a l .  In the Med Lab Workers appeal, the C o u r t o f A p p e a l stated:  O n c e [the negotiating] process is under w a y w i t h an authorised representative participating, the process may not be conducted directly w i t h any party so represented.  [ H o w e v e r ] , the p r o v i s i o n o f factual i n f o r m a t i o n [directly t o  employees] does not impinge o n that p r o c e s s .  376  In Ivamy the d e c i s i o n o f the E m p l o y m e n t C o u r t was overturned b y a majority o f three j u d g e s t o t w o . A c c o r d i n g t o the majority, the actions o f the C o m m i s s i o n i n f o r w a r d i n g the i n f o r m a t i o n p a c k s directly t o its employees d i d not breach section 12. I n reaching this c o n c l u s i o n , the C o u r t affirmed what it had said i n the Med Lab Workers appeal, and went o n t o state:  373  Ivamy, at 739.  374  Ivamy, at 764.  The conduct of the employers in Ivamy and Med Lab Workers would, had it occurred in British Columbia, have clearly contravened the duty to bargain in good faith. See supra notes 265-267.  3 7 5  3 7 6  Capital Coast Health v. NZ Medical Laboratory Workers Union [1996] 1 NZLR 1 (CA.) at 19.  79  T h e issue here is the construction and application o f the statutory o b l i g a t i o n i m p o s e d o n employers in s. 12(2). ... T h e p r o v i s i o n o f factual i n f o r m a t i o n may w e l l o c c u r i n such manner as to be persuasive.  Indeed seldom w i l l information be  p r o v i d e d so as to be entirely free f r o m any element o f persuasion, at least as to its veracity.  Therefore it does not advance matters to test c o m m u n i c a t i o n s solely by  reference to whether it tends to persuade.  W h a t are significant, i f there is  attempted persuasion, are the subject matter and the target.  W h o does it persuade  and o f what? I f . . . there is persuasion o f employees to exclude the representative and enter into contracts direct w i t h the employer, then plainly it is persuasion o f a k i n d that is inconsistent w i t h the e m p l o y e r ' s obligation under s 12(2). I f it is persuasion as to the reasonableness o f an employer's stance o n a particular issue w h i c h all parties understand is the subject o f negotiations between  representatives,  it need not amount to a failure to recognise an authority so as to contravene section 1 2 ( 2 ) .  377  O n the facts o f the case before it, the majority c o n c l u d e d :  T a k e n as a w h o l e and read objectively (and not w i t h regard t o what c o m b a t i v e recipients might want to read into them) the documents m o r e appropriately fall w i t h i n factual statements as to the C o m m i s s i o n ' s p o s i t i o n i n the negotiations than w i t h i n direct negotiations o f terms and conditions o f e m p l o y m e n t .  378  T h e fire-fighters' U n i o n w a s not impressed. N o r w a s Justice T h o m a s , w h o delivered one o f the t w o m i n o r i t y judgments.  I n his v i e w , c o n d o n i n g the C o m m i s s i o n ' s c o n d u c t w o u l d :  [Sjeriously reduce the effectiveness o f a bargaining agent to represent  employees  in negotiations for a collective contract [and] ... a l l o w a strategy o n the part o f the employer w h i c h is alien to b o t h the letter and spirit o f s 1 2 ( 2 ) .  377  379  New Zealand Fire Service Commission v. Ivamy [1996] 2 NZLR 587 (CA.) at 599-600.  Ibid, at 602. The same approach was taken by the Court of Appeal in its decision in Airways Corporation of New Zealand v. New Zealand Airline Pilots Association IUOWInc [1996] 2 NZLR 622 (C.A.), which was released on the same day as its decision in Ivamy. In Airways Corporation, the employer solicited feedback directly from staff during negotiations about the employer's proposals conduct which was held not to breach section 12. In contrast, conduct of this nature has been held to breach the duty to bargain in good faith in Canada. See e.g., CUPE and Canadian Broadcasting Corporation (1995) 27 C.L.R.B.R. (2d) 110 (Can.). 3 7 8  3 7 9  Ibid, at 603.  80  [I]t is not t o be unexpected that employers and employees alike may c o n c l u d e that c o l l e c t i v e bargaining i n the f o r m recognised i n the E m p l o y m e n t C o n t r a c t s A c t is largely v i t i a t e d .  380  H o w e v e r , notwithstanding T h o m a s J ' s dissent, the C o u r t o f A p p e a l ' s rulings i n the Ivamy and Med Lab Workers appeals represent the current state o f the l a w o n section 1 2 .  381  These cases represent a dramatic departure from the E m p l o y m e n t C o u r t ' s post-Adams interpretation o f the section, and o f the A p p e l l a t e C o u r t ' s o w n comments i n Eketone. It w a s significant, f o r example, that the C o u r t o f A p p e a l made n o m e n t i o n i n either appeal o f G a u l t J ' s c o m m e n t i n Eketone that section 12 ought t o be interpreted i n a c c o r d a n c e w i t h the I L O ' s conventions o n freedom o f a s s o c i a t i o n .  382  W h a t e v e r the reason for this change i n approach, the effect o f these decisions is clear. T h e r e are n o w any number o f w a y s i n w h i c h employers can seek t o undermine c o l l e c t i v e bargaining (assuming, o f course that bargaining even c o m m e n c e s ) .  383  In the first place, a  bargaining representative w i l l find it v e r y difficult to co-ordinate a measured bargaining strategy, i f it has n o w a y o f k n o w i n g what proposals have been, o r w i l l be, sent directly t o its members, and w h e n .  3 8 4  Secondly, it is one thing for u n i o n representatives and employers (or their representatives) to exchange disparaging remarks t o one another across the bargaining table: it is quite  Ibid, at 621. Not surprisingly, the response to these decisions has been as polarised as the debate on the ECA itself. Contrast, for example, S. Moran, "Ivamy and Airways - The Implications for Employees" (1996) New Zealand Law Society Employment Law Conference Papers 163 (which is critical of these decisions) with D. Broadmore, "Airways - The Facts: Ivamy and Airways - The Implications for Employers" (1996) New Zealand Law Society Employment Law Conference Papers 169. 3 8 1  According to Gay and McLean, this judicial turn-around may have been politically motivated. They argue that the Court of Appeal may have taken the approach it did in Eketone because the final ILO report was pending, but that once that report had been released, the Court of Appeal restored the previous "free market" interpretation of section 12. See Gay & MacLean, supra note 73 at 59. 3 8 2  See e.g., the comments of Justice Thomas in New Zealand Fire Service Commission v. Ivamy [1996] 2 NZLR587 (CA.) at 620-621.  3 8 3  Cf., the position in British Columbia, where all negotiating proposals must be directed through the certified union, unless it agrees or acquiesces to proposals being sent directly to staff. See supra note 230. 384  81  another t o expose employees t o those comments w i t h o u t expecting at least some o f t h e m to b e c o m e disillusioned w i t h their decision to appoint a r e p r e s e n t a t i v e .  385  T h i r d l y , any  direct c o m m u n i c a t i o n s , whether disparaging o r not, may w e l l serve t o undermine the reputation o f representatives i n the eyes o f their principals. A s L o r d C o o k e noted i n his m i n o r i t y j u d g m e n t i n the Airways c a s e ,  386  direct c o m m u n i c a t i o n s necessarily carry w i t h  them an insinuation that the representative cannot be trusted t o c o n v e y i n f o r m a t i o n accurately t o and f r o m its m e m b e r s .  387  F i n a l l y , the distinction between permissible persuasion o n the one hand, and u n l a w f u l direct negotiation o n the other, is arguably meaningless. P r o v i d e d an employer expresses a willingness t o continue negotiations w i t h the representative, it can seek to influence the o u t c o m e o f those negotiations t h r o u g h direct c o m m u n i c a t i o n s w i t h its employees.  Indeed,  employers may w e l l consider it more profitable t o spend greater time and resources o n direct c o m m u n i c a t i o n s than o n bargaining w i t h a representative, g i v e n the potential f o r significant gains i n negotiations i f a representative's membership can be fragmented and undermined.  In sum, section 12, as currently interpreted, contributes very little to g o o d faith conduct. O n e might say, i n fact, that the C o u r t o f A p p e a l ' s interpretation o f section 12 encourages the v e r y opposite.  Section 64: Lawful Strikes and Lockouts  In order t o be l a w f u l , a l o c k o u t must relate t o "the negotiation o f a collective e m p l o y m e n t •300  contract."  "ICQ  I n Hawtin v . Skellerup Industrial  Ltd,  the plaintiff employees sought t o  If for no other reason than the employer having the ability to simply ignore its employees stated wish that all bargaining communications should to be directed to their representative. 3 8 5  3 8 6  Supra note 378.  387  Supra note 378 at 626.  3 8 8  ECA, s. 64(l)(b). [Emphasis added].  3 8 9  [1992] 2 ERNZ 500 (E.C).  82  argue that before they c o u l d be lawfully l o c k e d out, their employer had t o have engaged i n genuine negotiations.  T h e E m p l o y m e n t C o u r t disagreed:  [ N ] e g o t i a t i o n i n a primary sense [means] 'conferring w i t h another w i t h a v i e w t o c o m p r o m i s e o r agreement.' H a v i n g said that, however, I h o l d that such a process o f negotiation is not required as a prerequisite to a lawful l o c k o u t . ... T h e phrase, w i t h i n its particular context, 'relates t o the negotiation o f a collective employment contract', enables an employer, I h o l d , t o peremptorily and w i t h o u t any p r i o r process o f negotiations w i t h its affected w o r k force, ... present an otherwise l a w f u l collective employment contract t o its particular employees and t o u n c o m p r o m i s i n g l y insist that unless they accept the collective terms w i t h i n a prescribed time, they w i l l then be l o c k e d o u t .  390  T h i s finding served t o eliminate yet another possible basis u p o n w h i c h an o b l i g a t i o n to bargain i n g o o d faith i n N e w Zealand labour relations might have been g r o u n d e d .  Sections 7, 8 and 28: Undue Influence, Preference and Dismissal in Relation to Union Membership, Involvement or Representation  S e c t i o n 8(1) o f the E C A provides:  (1) N o person shall exert undue influence, directly o r indirectly, o n any other p e r s o n w i t h intent t o induce that other person(a) t o become o r remain a member o f an employees organisation o r a particular employees organisation; o r (b) T o cease t o be a member o f an employees organisation o r a particular employees organisation; o r (c) N o t t o become a member o f an employees organisation o r a particular employees organisation; o r (d) I n the case o f an i n d i v i d u a l w h o is authorised to act o n b e h a l f o f employees, not t o act o n their behalf or t o cease t o act o n their behalf; o r (e) O n account o f the fact that the other person is, o r , as the case m a y be, is not a member o f an employees organisation o r o f a particular employees organisation, t o resign f r o m o r leave any e m p l o y m e n t .  391  Ibid, at 536. A bargaining strategy of this nature would clearly constitute boulwarism in British Columbia. See supra note 225. 391  Emphasis added.  83  S e c t i o n 7 is o f similar effect, prohibiting an employer f r o m conferring any preference (as regards hiring o r the terms o f employment offered) b y reason o f an employee's membership o r non-membership o f an employees organisation. L i k e w i s e , section 28 o f the E C A prohibits the discrimination o f an employee (defined as differential treatment o r dismissal) b y reason o f the employee's involvement i n the affairs o f an employees organisation. " I n v o l v e m e n t " is w i d e l y defined as i n c l u d i n g h o l d i n g an office i n the organisation o r representing it o r any employees i n negotiations.  O n e w o u l d expect these provisions t o reduce bad faith and discriminatory c o n d u c t i n labour bargaining. Y e t it is important t o note that notwithstanding these sections, a n employer remains free t o pressure an employee t o leave a u n i o n , so l o n g as that pressure does not cross the line f r o m lawful persuasion t o " u n d u e " influence. T h e C o u r t o f A p p e a l has reinforced this distinction, b y stating that employers are not required t o b e " u n i o n neutral": rather they are free, at any time, " t o express v i e w s against u n i o n i s m " .  3 9 2  A d d i t i o n a l l y , these sections fail t o address undue influence i n respect o f an e m p l o y e e ' s d e c i s i o n t o authorise his o r her u n i o n t o bargain o n his o r her b e h a l f .  393  T h i s anomaly  arises because the E C A creates a d i c h o t o m y between membership and representation; the latter is not treated as f l o w i n g automatically f r o m the f o r m e r .  394  A c c o r d i n g l y , u p until the  time o f authorisation, employers remain free t o impress u p o n their employees (often i n captive settings) the 'dangers' o f authorising a particular, or any, bargaining representative.  395  S u c h 'persuasion' is not expressly covered b y sections 7, 8 o r 2 8 ,  3 9 2  Eketone, at 786.  3 9 3  Dannin, Working Free, at 202; Grills, supra note 26 at 92.  3 9 6  nor  MP Jim Anderton unsuccessfully sought to introduce into the Employment Contracts Bill the notion that an individual's membership of a union would constitute prima facie evidence of the authority of the union to represent that individual. See Hansard, Parliamentary Debates of New Zealand (1991) 23 April, 1580. 3 9 4  E. Dannin, "Solidarity Forever? Unions and Bargaining Representation Under New Zealand's Employment Contracts Act" (1995) 18:1 Loy.L.A.Int. & Comp.L.J. 1 at 49-50. 3 9 5  84  is it p r o h i b i t e d b y s e c t i o n 12 w h i c h applies only once a representative has been authorised to act i n negotiations.  397  T h e vulnerability o f employees i n this regard is heightened b y the manner i n w h i c h the E C A limits u n i o n access to the w o r k p l a c e . A l t h o u g h a u n i o n has a guaranteed right t o enter a w o r k p l a c e t o discuss the status o f negotiations w i t h those it r e p r e s e n t s ,  398  access  for the purpose o f securing n e w members and authorisations is at the sole discretion o f the employer.  399  O n c e again, then, employers are lawfully able t o exercise a p o w e r o f veto.  S o m e employers have used this p o w e r t o a l l o w ' e m p l o y e r friendly' unions access t o the w o r k p l a c e , w h i l s t denying this privilege to other prospective representatives.  400  Others  have been m o r e aggressive, steadfastly refusing access t o any unions. K e l s e y ' s d e s c r i p t i o n o f the N a t i o n a l D i s t r i b u t i o n U n i o n ' s experience illustrates the extent o f resistance unions have encountered:  O n c e the [ E C A ] w a s passed, the ... N D U . . . m o v e d to secure benchmark contracts w i t h major employers, especially at the national c o m p a n y level. S o m e w e r e c o operative.  Others displayed a range o f tactics w h i c h became increasingly familiar:  refusing t o negotiate w i t h unions, preventing access, running anti-union campaigns, pressuring n o n - u n i o n members to sign contracts, threatening mass redundancy o r loss o f investment, appointing consultation groups i n w h i c h the  There is an argument that pressure of this kind could amount to indirect influence on a representative under section 8(l)(d). (See the obiter comments of Judge Goddard in Med Lab Workers, at 128, although the Judge's comments in that case were principally directed at pressure exerted on an employee after they had authorised a union to bargain on their behalf). 3 9 6  According to the ILO, the ECA gives insufficient protection against actions intended to interfere with an employee's decision to authorise a union to bargain on his or her behalf. See supra note 155 at 231. 3 9 7  3 9 8  ECA, s. 14. See also Foodstuffs (Auckland) Ltdv. N.D.U. [1995] 1 ERNZ 110 (C.A.).  ECA, s. 13. Cf, the broad rights of entry enjoyed by unions under the LRA (see supra note 16). In British Columbia, unions can, with the permission of the employer or the BC Board, access employees who reside on property controlled by an employer or a third party, for the purposes of recruitment (BC Code, s. 7(2)). Moreover, restraints on union activity (such as contract clauses prohibiting union activity on employer premises by employees during workbreaks) may also breach section 4(1) of the BC Code, which provides all employees with the freedom to participate in lawful union activities. See e.g., Cominco Ltd and CAIMAW[1981], 3 Can.L.R.B.R. 499 (B.C.). 3 9 9  In Adams, for example, (supra note 343) the employer created and funded the Mosgiel Independent Thought Society, and encouraged its employees to join. 4 0 0  85  u n i o n w a s only part, and encouraging the appointment o f w o r k p l a c e representatives t o speak f o r all w o r k e r s , w i t h unions representing o n l y a f e w .  4 0 1  O n e further source o f bad faith conduct must be added t o the N D U ' s already extensive list. U n d e r sections 12 and 59 o f the E C A , a bargaining representative (such as a union) must establish its representative authority for each separate act o f representation. A c c o r d i n g l y , a u n i o n is required t o p r o d u c e authorities f o r the renegotiation o f a contract that is about t o expire. A s noted i n respect o f the Department o f S o c i a l W e l f a r e ,  4 0 2  this  requirement has p r o v i d e d employers w i t h the opportunity t o frustrate bargaining and deplete the resources o f unions, b y i m p o s i n g onerous evidential requirements as prerequisites t o bargaining c o m m e n c i n g . A s D a n n i n has pointed out:  T h e r e has been little oversight t o prevent employers f r o m m a k i n g the d e c i s i o n o n g r o u n d s other than g o o d faith doubt as t o the w o r k e r s ' authorisation o f the union.  403  T h e actions described b y the N D U , and those effected b y the D e p a r t m e n t o f S o c i a l W e l f a r e , c a n hardly be said t o be w i t h i n the realm o f g o o d faith bargaining, yet none o f these actions are prohibited b y sections 7, 8 o r 28.  Sections 19(4) and 43(a): No Unilateral Alteration of Terms of Employment  A m e t h o d b y w h i c h employers can seek t o exert bargaining pressure and undermine unions is t h r o u g h the unilateral alteration o f terms o f employment during the bargaining process. A s noted, this practice is prohibited f o r a specified p e r i o d b y section 4 5 o f the B C C o d e , a p r o v i s i o n that provides considerable support for the duty t o bargain i n g o o d faith i n B r i t i s h Columbia.  Kelsey, supra note 57 at 265. Once again, many, if not all of these actions would constitute a breach of the duty to bargain in good faith in British Columbia. 4 0 1  4 0 2  Supra notes 124-125.  4 0 3  Dannin, Working Free, at 207.  86  T h e E C A w o u l d appear to p r o v i d e similar, i f not m o r e extensive, p r o t e c t i o n . S e c t i o n 43(a) states that employment contracts are to'"create enforceable rights and o b l i g a t i o n s " , w h i l e section 23 p r o v i d e s that any v a r i a t i o n t o a collective employment contract requires the agreement o f the parties affected b y the variation. S e c t i o n 19(4) further provides that f o l l o w i n g the expiry o f a collective c o n t r a c t ,  404  the employment relationship continues o n  the same terms and conditions except that the collective contract is deemed t o have been replaced b y a series o f identical individual contracts ( w h i c h can then be altered o n l y b y agreement).  405  These p r o v i s i o n s suggest that unilateral changes t o terms o f employment are p r o h i b i t e d at any t i m e .  4 0 6  T h i s w a s certainly the v i e w taken b y the E m p l o y m e n t C o u r t w h e n employers  argued that they had the right t o alter terms o f employment p r o v i d e d the alteration enhanced their e c o n o m i c efficiency. In rejecting this argument the E m p l o y m e n t C o u r t stated:  It is quite fallacious t o regard some obligations under an employment contract (for example, t o pay wages) as being important and others ... as being some w a y subsidiary and requiring t o be c o m p l i e d w i t h only i f the party o n w h o m the o b l i g a t i o n rests sees fit. T h e cardinal rule is that employment contracts create enforceable rights and obligations ... ,  4 0 7  Y e t the n o t i o n that employment contracts create b i n d i n g rights has p r o v e n vulnerable. F o r t w o and a h a l f years employers managed t o persuade the E m p l o y m e n t C o u r t that unilateral changes t o terms o f employment c o u l d be lawfully i m p o s e d , p r o v i d e d they w e r e referred t o as " p a r t i a l l o c k o u t s " .  4 0 8  T h i s tenuous argument w a s first accepted b y the  4 0 4  All collective employment contracts must specify an expiry date. (See ECA, s. 21).  4 0 5  NZ Residential Doctors Association v. Otago AHB [1991] 1 ERNZ 1206 (L.C.).  C.f., the position in British Columbia, where the terms of a collective agreement can be altered after the agreement and the "statutory freeze" period have both expired. See supra note 259. 4 0 6  N.L.G.O.U. V.Auckland City [1992] 1 ERNZ 1109 (E.C.) at 1127-1128. See also N.Z.P.S.A. v. Electricity Corp [1991] 2 ERNZ 365 (E.C.) at 379. 407  This was a practice whereby an employer would wait until an existing collective contract expired, and then unilaterally reduce wages or other entitlements whilst at the same time requiring its employees to turn up for work and perform their jobs in full. 4 0 8  87  E m p l o y m e n t C o u r t i n Paul & NZ Community Services Union v . NZ Society for the Intellectually  Handicapped  409  a case i n w h i c h the J H C imposed a 3 3 % r e d u c t i o n i n the  pay rates o f its employees b y describing the i m p o s e d r e d u c t i o n as a l o c k o u t rather than a unilateral change t o terms o f employment.  It w a s not until June 1994 ( t w o and a half years later) that the C o u r t changed its m i n d o n this i s s u e .  410  I n Witehira v. Presbyterian Support Services (Northern)  4 1 1  the F u l l C o u r t  4 1 2  held that partial l o c k o u t s w e r e not l a w f u l , stating:  It cannot be the p o s i t i o n that the l a w allows an employer, b y resorting t o a so called partial l o c k o u t , t o free itself f r o m the obligation t o pay w a g e s w h i l e c o n t i n u i n g to be entitled to receive the benefit o f w o r k . ... W e find it unthinkable that parliament ever intended that employers c o u l d w i t h h o l d w a g e s w i t h o u t suffering any halt i n p r o d u c t i o n .  413  U n f o r t u n a t e l y , this j u d i c i a l enlightenment arrived t o o late for those employees w h o had already signed o f f o n unilaterally i m p o s e d reductions t o their terms o f employment, h a v i n g believed there w a s n o viable a l t e r n a t i v e .  4 0 9  414  [1992] 1 ERNZ 65 (E.C).  Legal challenges against partial lockouts during the intervening period were singularly unsuccessful. See e.g., Prendergast v. Associated Stevedores Ltd [1991] 2 ERNZ 728 (E.C); Petricevich v. Transportation Auckland Corporation Ltd [1992] 3 ERNZ 807 (E.C); Hawtin v. Skellerup Industrial Ltd [1992] 2 ERNZ 500 (E.C); Northern Distribution Union (Inc) v. 3 Guys Ltd [1992] ERNZ 903 (E.C); United Food and Chemical Workers Union of New Zealand v. Talley [1992] 3 ERNZ 423 (E.C).  4 1 0  4 1 1  [1994] 1 ERNZ 578 (E.C).  Which sits as a bench of two or three, whereas in the usual course Employment Court hearings are presided over by a single judge. 4 1 2  Supra note 411 at 592. This judicial turn-around is made all the more remarkable by the fact that one of the three judges sitting on the full bench in Witehira was the judge who decided the Paul case, and that the finding in Witehira was unanimous. The ruling in Witehira has since been endorsed by the Court of Appeal. See Transportation Auckland Corporation Ltd v. Marsh [1997] ERNZ 532 (C.A.). As a point of interest, the inclusive definition of a "lockout" in the BC Code clearly envisages a cessation of work. (See BC Code, s. 1). 4 1 3  Employees presented with a partial lockout prior to the ruling in Witehira had three options: accede to the demand; refuse and risk dismissal, or go on strike. For those employees without bargaining leverage and economic security, this was no choice at all. See Macfie, supra note 152. 4 1 4  88  W h a t is m o r e , the decision i n Witehira d i d not signal the end o f unilaterally i m p o s e d changes to terms o f employment.  S o m e employers have simply continued t o impose  unilateral reductions despite the illegality o f their a c t i o n s .  415  M a n y have a v o i d e d the  censure because o f the e c o n o m i c vulnerability o f their e m p l o y e e s .  416  It has o c c u r r e d t o  other employers t o use the threat o f restructuring and redundancy to 'secure' n e w and less costly labour arrangements.  T h e standard scenario involves an employer pleading financial  hardship or insufficient profitability; requesting its w o r k f o r c e to agree either to a v a r i a t i o n o f an existing collective agreement or to a less favourable renewal (depending o n w h e n the demand is made); and advising its staff that i f this does not occur, the o p e r a t i o n w i l l b e c l o s e d d o w n , d o w n s i z e d or contracted o u t .  4 1 7  W h i l s t i n theory any resulting changes are  bilateral, the reality is frequently something different.  In some instances, the threat is enough. F a c e d w i t h the prospect o f redundancy, employees have agreed t o reduced entitlements. I n other cases the threat has been carried out. A i r N e w Z e a l a n d , for example, closed d o w n its catering function at A u c k l a n d airport and brought i n contractors, resulting i n the dismissal o f 159 s t a f f . hospitals d i d the s a m e .  419  418  M a n y o f the p u b l i c  Similarly, the Department o f C o n s e r v a t i o n used a department  w i d e restructuring process to justify numerous redundancies.  T h i s type o f " w h o l e s a l e " restructuring continues to be popular a m o n g N e w Z e a l a n d employers.  420  F o r example, o n the 5th o f M a y 1998 the N e w Z e a l a n d F i r e Service  announced that all o f its fire-fighters w o u l d be made redundant as o f the end o f July, and  4 1 5  Dannin, "We Can't Overcome", at 122 (note 684).  4 1 6  See e.g., the Minority Report, at 7.  A practise that was noted by the Employment Court without criticism in United Food and Chemical Workers Union ofNZ v. Talley [1992] 3 ERNZ 423 (E.C.) and Davis v. Ports of Auckland Ltd [1991] 3 ERNZ 475 (E.C). 4 1 7  See Unkovich v. Air New Zealand [1993] 1 ERNZ 526. According to Statistics New Zealand, there was a 22% increase in the use of contractors over the period from 1991 to 1996. (See Statistics New Zealand, Labour Market 96 (Wellington, Department of Statistics, 1997) at 123). 4 1 8  4 1 9  See e.g., the Minority Report, at 6.  4 2 0  See e.g., the Minority Report, at 10-12.  89  then invited t o reapply f o r a significantly reduced number o f j o b s .  4 2 1  T h i s announcement  was apparently made w i t h o u t any p r i o r consultation w i t h staff and their u n i o n , and its t i m i n g i n the m i d d l e o f contract negotiations w a s far f r o m coincidental. It has since been r u m o u r e d that the N e w Z e a l a n d P o l i c e and the State Services C o m m i s s i o n (in respect o f all secondary s c h o o l teachers) are considering t a k i n g the same a p p r o a c h .  422  A s the f o r e g o i n g illustrates, the n o t i o n that the E C A prohibits the unilateral alteration o f employment contracts has been, and remains, largely illusory. A l t h o u g h v a r i a t i o n requires agreement (at least since June 1994), i n reality the consequences o f employees not acceding t o p r o p o s e d changes is often dismissal. S u c h dismissal c o u l d be l a w f u l ( o n the grounds o f a genuine redundancy), o r unlawful, but f o r those w i t h o u t the resources t o challenge an u n l a w f u l dismissal t h r o u g h the legal system, the legality o f their termination matters little. T o argue, then, that the protection w h i c h c o u l d be fostered by a duty o f g o o d faith bargaining is not required i n N e w Z e a l a n d because there is n o prospect o f unilaterally i m p o s e d changes t o employees' contracts, is t o ignore reality.  It is, nonetheless, important t o a c k n o w l e d g e that a duty t o bargain i n g o o d faith w o u l d not prevent restructuring per se, n o r should i t .  4 2 3  B u t what the duty c a n d o is prevent  employers m a k i n g unsubstantiated threats o f contracting out simply as a means o f levering concessions f r o m staff. Threats o f contracting out w o u l d have t o b e substantiated w i t h explanatory material.  T h e duty w o u l d also prevent employers f r o m unilaterally deciding t o contract out w i t h o u t first discussing this w i t h their staff and p r o v i d i n g them w i t h an o p p o r t u n i t y to consider  This proposal has now been challenged in the Employment Court. See M. Stevens, "Consultation Called a Sham" (1998) The Evening Post (N.Z.), 6 August, 9; D. Gee, "Sweeping Changes Anger Firefighters" (1998) The Press (N.Z.), 8 May; "Firemen Doubt Sackings Legal" (1998) The Press (N.Z.), 9 May. 4 2 1  S. Iosefa, "Teachers Fear Mass Sackings" (1998) The Press (N.Z.) 20 May; "Horror at Plans for Layoffs in Police" (1998) The Press (N.Z.), 11 May. 4 2 2  4 2 3  See e.g., Starbucks Corporation, supra note 239.  90  their o w n bargaining stance.  A s a consequence, this duty c o u l d w e l l serve t o encourage  the parties t o w o r k t o w a r d s an agreed resolution that allows for the c o n t i n u a t i o n o f employment, rather than the far m o r e disruptive alternative. T h i s w o u l d signify an i m p r o v e m e n t o n the present position, w h i c h comprises numerous employers v i e w i n g wholesale restructuring as the "easy" o p t i o n , w h e n ultimately it may constitute a less than i  424  o p t i m u m result.  Section 64(2)(c) - The Protection of Strikers - Dismissal and Replacement  T h e E C A does not expressly address the issue o f whether s t r i k i n g employees c a n b e dismissed, although it provides i n section 46(2)(c) that a lawfully striking employee cannot be sued for breach o f contract. T h e E m p l o y m e n t C o u r t has interpreted this p r o v i s i o n t o mean that an employee w h o is lawfully o n strike cannot be d i s m i s s e d .  425  H o w e v e r , the value o f this finding is undermined i n N e w Z e a l a n d , i n t w o important respects.  First, it can take months t o process an unjustified dismissal c l a i m t h r o u g h the  E m p l o y m e n t T r i b u n a l . T h u s , barring interim r e l i e f ,  426  an employee must face a  considerable p e r i o d o f uncertainty and, i n many cases, unemployment.  Secondly, unlike  the B C C o d e , the E C A permits the use o f outside replacement labour. E m p l o y e r s can, f o r example, l o c k out existing employees for as l o n g as it takes t o secure their agreement t o a n e w and inferior employment contract, and hire replacement employees i n the interim. A c c o r d i n g l y , i f an e m p l o y e r ' s demands are sufficiently extreme, there m a y b e n o practical difference between dismissing striking employees, and replacing t h e m o n a " t e m p o r a r y "  4 2 4  See infra note 593.  Bickerstaffv. Healthcare Hawkes Bay Ltd [1996] 2 ERNZ 680 (E.C.) at 689. This interpretation overrides the common law position that all striking employees can be dismissed. (See Miles v. Wakefield Metropolitan District Council [1987] AC 539 (H.L.)). 4 2 5  Which must be obtained in the Employment Court, and is, as a result, prohibitively expensive for many employees. 4 2 6  4 2 7  See supra note 123.  91  O n e might argue that the legality o f employers utilising replacement labour has n o t h i n g t o d o w i t h g o o d , o r b a d , faith: that it simply relates t o the legitimate options available t o (and hence the bargaining p o w e r of) employers. Indeed, employers might argue that the right to use replacement labour is simply the equivalent o f employees obtaining alternative employment, o r receiving financial support f r o m their u n i o n , w h i l e s t r i k i n g .  428  Y e t , the difficulty w i t h this analysis is that it fails to address the manner i n w h i c h some N e w Z e a l a n d employers have utilised replacement employees.  It must be remembered that  u n l i k e the p o s i t i o n i n B r i t i s h C o l u m b i a , the right to engage replacements under the E C A does not co-exist w i t h a duty t o bargain, let alone a duty t o bargain i n g o o d faith. C o n s e q u e n t l y , employers are able t o appoint replacement w o r k e r s as an alternative bargaining at all, and as a means o f destroying u n i o n s .  429  to  In this context, then, the ability  to use replacements cannot be described simply in terms o f a legitimate bargaining o p t i o n . It is, i n fact, fundamental t o whether bargaining occurs at all. A s a result, this entitlement serves t o encourage destructive and intransigent tactics and reduces the l i k e l i h o o d o f parties bargaining i n g o o d faith.  Although it may be possible for striking employees to derive income in this manner, it must be noted that employees in New Zealand who are unemployed because they or their colleagues are on strike, are prohibited from collecting the unemployment benefit, except in extreme cases where a refundable special needs grant may be payable. See the Social Security Act 1964, s. 58; Mazengarbs, A/1430. The position in Canada is similar. A claimant who has lost his or her employment by reason of a work stoppage attributable to a labour dispute at his or her workplace is, save for limited exceptions, ineligible for the unemployment insurance benefit. See the Employment Insurance Act (S.Can 1996, c.23, s. 36). In Canada the objectives of this prohibition are said to be the preservation of government neutrality during labour disputes and the avoidance of the inequity of using an employer's contributions to the unemployment insurance fund to finance a strike against the employer. (See White v. R (1994), 94 C.L.L.C. 14,015 (sub nom, White v. Canada (1994) 111 D.L.R. (4th) 517 (CA.)) which was decided under the predecessor to section 36 - section 31 of the Unemployment Insurance Act, R.S.C. 1985, c-U. 1). For discussion on the operation of unemployment insurance benefits in Canada generally, see M. A. Hickling, Labour Disputes and Unemployment Insurance in Canada and England (Canada, CCH, 1975). This contrasts with the position in British Columbia, where bargaining in good faith is a prerequisite to any lockout. See supra notes 250-251. 4 2 9  92  Dispute  Resolution  T h e E C A p r o v i d e s the E m p l o y m e n t T r i b u n a l w i t h j u r i s d i c t i o n to offer mediation assistance i n any matter where it deems its involvement w i l l i m p r o v e o r maintain an employment r e l a t i o n s h i p .  430  I n theory, then, mediation is available i n the context o f  bargaining disputes. H o w e v e r , neither the E m p l o y m e n t C o u r t n o r the E m p l o y m e n t T r i b u n a l has j u r i s d i c t i o n t o c o m p e l parties t o attend mediation. T h u s , m e d i a t i o n w i l l not o c c u r unless b o t h parties agree. I n most cases one or b o t h o f the parties w i l l resist, preferring instead t o utilise their bargaining p o w e r . A s a result, instances o f such assistance being sought are r a r e .  431  W i t h o u t legislative amendment, this reluctance t o mediate is u n l i k e l y t o change.  T h i s is  because the E C A encourages a party t o maximise its o w n bargaining position. It does this by setting f e w limits o n the exercise o f bargaining p o w e r .  4 3 2  T h i s a p p r o a c h is consistent  w i t h the neo-classical e c o n o m i c theory that each party w i l l seek its o w n rational advantage.  433  A s D a n n i n notes:  Judge P a l m e r [an E m p l o y m e n t C o u r t judge] has pointed out that the E C A a l l o w s employers to negotiate contracts directly w i t h their employees; thus it contemplated each side w o u l d seek its o w n advantage.  T h i s means that the  employer and employee must be prepared to use every w e a p o n available. T h e E C A offers nothing t o protect parties i f they refuse to use the p o w e r they have o r if, w h e n they use it, they are u n s u c c e s s f u l .  434  ECA, s. 78. See also C. Spell, "The Evolution of Rights Disputes and Grievance Procedures: A Comparison of New Zealand and the US" (1997) 28 Cal.West.Int.L.J. 199 at 202. A study by McAndrew in 1992 revealed that only 3 out of the 557 employers who returned legible responses had sought the assistance a Tribunal mediator in a bargaining dispute. See McAndrew, supra note 30 at 176. 4 3 1  4 3 2  As noted, section 57 sets a high threshold for judicial intervention. Supra note 349.  S. O'Byrne, "Good Faith in Contractual Performance: Recent Developments" (1995) Can.Bar.Rev. 70 at 76; Gilson & Wagar, supra note 80 at 223-4; Kelsey, Rolling Back the State, at 348-349. 4 3 3  4 3 4  Dannin, Working Free, at 245.  93  I m p o s i n g a duty to bargain i n g o o d faith w o u l d help counter this resistance to mediation. A t t e n d a n c e c o u l d not be v i e w e d as a sign o f weakness i f attendance w a s mandatory. M o r e o v e r , as w a s discussed i n relation to the B C C o d e , the use o f a mediator i n a bargaining dispute can have numerous b e n e f i t s .  Unfortunately, w i t h o u t legislative  435  amendment, those benefits w i l l continue to elude the majority o f N e w Z e a l a n d employers and employees.  Section 104: Misrepresentations  and Misleading  and Deceptive Conduct  R e l i e f may be available i n circumstances where a party to an employment contract has p r o c u r e d that contract t h r o u g h m i s r e p r e s e n t a t i o n , misleading o r deceptive c o n d u c t .  437  436  o r where a party has engaged i n  H o w e v e r , although these avenues w o u l d appear t o  p r o v i d e redress f o r bad faith bargaining, in truth they are o f limited value. I n the first place, complete silence w i l l rarely amount t o a misrepresentation. T h e jurisprudence o n misrepresentation cannot, then, be used as a basis for i m p o s i n g a duty t o disclose i n f o r m a t i o n pertinent t o a particular b a r g a i n .  438  Secondly, although these p r o v i s i o n s  prohibit certain conduct, they d o not impose any positive duties (such as t o bargain, t o justify a p r o p o s a l , t o consider a counterproposal, and the like). A n d finally, as is the case i n respect o f section 57, these avenues act only i n retrospect.  O n l y after b a d faith c o n d u c t  Supra page 56. ECA, s. 104(4) and the Contractual Remedies Act 1979 (although it remains unclear as to whether such claims fall within the jurisdiction of the Employment Court or the courts of ordinary jurisdiction. See Nitschev. Classic Air Ltd (Unreported, 13/6/1996, WEC 4A/96)). 4 3 6  Fair Trading Act 1986, ss. 9 & 12. Section 12 provides: "No person shall, in relation to employment that is, or is to be, or may be offered by that person, or any other person, engage in conduct that is misleading or deceptive, or is likely to mislead or deceive, as to the availability, nature, terms or conditions, or any other matter relating to that employment." 4 3 7  In the end result, New Zealand employers are under no obligation to supply financial information to employees in the course of bargaining (other than the employees' own wage records). See J. Brown, "Disclosure of Financial Information - Are New Zealand Employees and Unions Missing Out" (1996) 21:3 N.Z.J.Ind.Rel. 233; J. Brown, "Accounting to the Workforce" (1992) 17:2 N.Z.J.Ind.Rel. 207. In contrast, the duty to bargain in good faith in British Columbia compels disclosure of material information, both solicited and unsolicited. See supra note 226. 4 3 8  94  has o c c u r r e d c a n a party seek t o litigate. B y then, m u c h o f the damage w i l l have been done, f o r as A n d e r s o n has noted:  [T]he costs and delays that are inevitably associated w i t h d r a w n out litigation are often fatal t o organising and bargaining i n i t i a t i v e s .  439  Section 18 and The Minimum Code  A l t h o u g h section 18 o f the E C A provides that the content o f an employment contract is t o be determined b y negotiation, certain m i n i m u m employee entitlements are guaranteed b y statute. F o r example, all employees over the age o f 20 are entitled t o a m i n i m u m w a g e o f $7 per hour, w h i l e those between the ages o f 16 and 2 0 are entitled t o an h o u r l y m i n i m u m of $4.20.  4 4 0  E m p l o y e e s are also entitled to a m i n i m u m o f eleven p u b l i c holidays a year,  fifteen days annual leave, five days annual sick leave, and a specified p e r i o d o f parental leave.  441  W h i l e an employer and an employee m a y agree t o m o r e favourable terms, i n the  absence o f agreement, o r where a contract contains inferior terms, these statutory entitlements w i l l apply.  T h i s m i n i m u m code serves as a safety net. S o m e might argue this net renders superfluous a duty t o bargain i n g o o d faith; that is to say, that such a duty is not necessary because all employees are protected f r o m the purportedly excessive bargaining p o w e r o f employers. T h e r e are, h o w e v e r , t w o primary reasons f o r treating such an argument w i t h scepticism. First, it assumes that the m i n i m u m code delivers t o all employees an acceptable standard  Anderson, supra note 141 at 134. The Adams litigation is a case in point. By the time the case reached the Court of Appeal, the contract in question had been replaced, and, as a result, the Court of Appeal dismissed the union's claim. 4 3 9  These levels were introduced in March 1997. See the Minimum Wage Act 1983 and the Minimum Wage Order 1997. See also "Adult Minimum Hourly Wage to Rise to $7" (1996) The Dominion (N.Z.), 3. According to the NZBRT, this protection should be abolished because it creates a barrier to employment. See J. Sloan, "Towards Full Employment in New Zealand: A Response to Employment: A Report of the Prime Ministerial Task Force on Employment (1994) at 28-33; Kelsey, New Zealand Experiment, at 195. 4 4 0  4 4 1  The Holidays Act 1981 and the Parental Leave and Employment Protection Act 1987.  95  o f living. It does not. I n the first place, the m i n i m u m w a g e has no application t o those under the age o f 16. T h e y must fend for themselves. T h i s has resulted i n the e x p l o i t a t i o n o f s c h o o l children i n part time positions o f e m p l o y m e n t ,  442  and a resulting displacement o f  existing employees i n favour o f this cheap source o f l a b o u r .  443  N o r d o those aged between 16 and 17 escape vulnerability. T h o s e i n this age bracket are n o w ineligible f o r the unemployment b e n e f i t .  444  A s a result, those 16 and 17 year olds  w h o have left s c h o o l have n o alternative but t o accept whatever w o r k they c a n find, o r g o w i t h o u t . I n terms o f the adult entitlement, it is important t o note that rather than ensuring the m i n i m u m w a g e keeps pace w i t h inflation, the N e w Z e a l a n d G o v e r n m e n t has instituted cuts.  445  T h i s is u n d o u b t e d l y one o f the reasons w h y so many N e w Zealanders currently  live b e l o w the p o v e r t y line.  T h e second fallacy that underlies the m i n i m u m code is that it is necessarily adhered t o . T h o s e most desperate f o r employment are also those least likely t o be able t o insist o n , o r enforce, their l a w f u l entitlements. I f a j o b is offered at b e l o w the m i n i m u m w a g e , insisting o n a l a w f u l level o f pay w i l l , m o r e often than not, mean that the applicant i n question w i l l be passed over. A n d then t o seek t o enforce one's entitlement after securing a j o b not only costs money, it also w i l l usually result i n dismissal at the hands o f a resentful employer. G i v e n these barriers t o enforcement, it is remarkable that the E m p l o y m e n t T r i b u n a l heard o v e r 3 0 0 arrears claims i n 1996 a l o n e .  446  T h i s statistic speaks v o l u m e s f o r  employee vulnerability w h e n one considers that the vast majority o f arrears claims are u n l i k e l y t o be filed.  The National Distribution Union, for example, has identified cases of young workers being paid $1.50 and $2.00 per hour. National Distribution Union, Under Contract: A BriefReport on the Use of the ECA in the Retail Sector (Wellington, National Distribution Union, Undated) at 3. 4 4 2  4 4 3  A practice that is particularly prevalent in the shop sales industry.  As of 1 January 1998. See "Cuts to Teen Benefits Now In Force" (1998) One Network News, 1 January. See http://www.inl.co.nz. 4 4 4  4 4 5  Supra note 93.  New Zealand Department of Labour, Annual Report for the Year Ended June 30, 1996 (Wellington, Department of Labour, 1996). 4 4 6  96  A duty t o bargain i n g o o d faith w i l l not stop all exploitation o f vulnerable employees. B u t that is not the point. T h e point is that there is little validity to the c l a i m that a duty to p r o m o t e meaningful bargaining is not needed because all employees are already protected f r o m employer o p p r e s s i o n b y an adequate m i n i m u m c o d e .  4 4 7  3.2 The Employment Court and The Implied Obligation to Bargain in Good Faith  S o o n after the E C A w a s enacted, unions sought to argue that the provisions in the A c t w h i c h dealt w i t h bargaining ought t o be interpreted i n accordance w i t h C a n a d i a n and A m e r i c a n authorities o n g o o d faith bargaining. I n Adams, the C h i e f Judge rejected this argument, stating:  U n d e r C a n a d i a n legislation there is some p r e o c c u p a t i o n w i t h bargaining i n g o o d faith and all that that involves and a b o d y o f rules has been built u p o n e o f w h i c h , for example, distinguishes between surface bargaining and hard bargaining. N o such controls exist i n N e w Zealand. T h e C a n a d i a n cases influenced b y this consideration must be put t o one s i d e .  448  U n i o n s responded b y arguing that the duty t o bargain i n g o o d faith w a s a c o m p o n e n t o f the i m p l i e d t e r m o f trust and confidence, w h i c h N e w Z e a l a n d courts had recognised i n  cases such as Telecom South Limited v. Post Office Union:  There is an i m p l i e d t e r m i n every employment contract t h a t . . . employers w i l l not, w i t h o u t reasonable and proper cause, conduct themselves i n a manner calculated  There are, in addition, one or two other provisions in the ECA that could be viewed as promoting good faith conduct, at least at the periphery. Section 16 prohibits a party from resiling from a settlement reached between representatives until such time as the other party has had a reasonable opportunity to ratify. See NZ Engineering Union Inc v. Shell Todd Oil Services (NZ) Ltd [1994] 2 ERNZ 536 (E.C). Additionally, the ECA requires all contracts to contain procedures for resolving personal grievances and disputes of right, thus removing as a source of bargaining conflict the inclusion of such procedures in a contract. Yet, it is trite to say that these sections mean little without the fundamentals, namely a duty that requires parties to actually commence bargaining, explain proposals, respond to counter-proposals and persist until settlement or a genuine impasse is reached. 4 4 7  448  Adams, at 1019.  97  or likely t o destroy o r seriously damage the relationship o f confidence and trust between employer and e m p l o y e e .  449  G r a d u a l l y the E m p l o y m e n t C o u r t has begun to accept this argument. o f this acceptance emerged i n Unkovich v . Air New Zealand Ltd.  450  T h e first i n d i c a t i o n In this case A i r N e w  Z e a l a n d terminated negotiations f o r a n e w catering staff collective contract at A u c k l a n d airport, i n favour o f contracting out the services i n question. T h e u n i o n c o m m e n c e d a c l a i m i n the E m p l o y m e n t C o u r t alleging, inter alia, that the employer had effected this o u t s o u r c i n g i n breach o f an implied obligation t o bargain i n g o o d faith. I n respect o f this submission, Judge C o l g a n stated:  I t h i n k it can be safely said that the l a w o f employment i n this c o u n t r y recognises the existence o f mutual obligations o f trust and confidence between employers and employees. ... T h e scope and the content o f those obligations may be as variable as employment contracts are. ... E m p l o y m e n t contracts are significantly different f r o m other c o m m e r c i a l arrangements i n part because collective employment contracts ... periodically expire but i n circumstances i n w h i c h it is presumed that the parties w i l l seek to continue the relationship . . . .  A t such times the existing employment relationship continues as d o , I think, the parties' obligations o f trust and confidence.  T h e l a w allows for hard bargaining,  even the use o f coercive tactics w h i c h might appear t o be the very antithesis o f trust and confidence i n a subsisting relationship o f employment.  B u t even w i t h i n  that altered relationship d u r i n g the p e r i o d o f bargaining and negotiation, I w o u l d find that the underlying obligations o f trust and confidence w h i c h arise f r o m an existing and c o n t i n u i n g relationship survive, albeit perhaps m o d i f i e d i n some [1992] 1 ERNZ 711 (CA.) at 715. See also Auckland Electric Power Boardv: Auckland Local Authorities IUOW [1994] 2 NZLR 415 at 419. For Employment Court authority to the same effect, see e.g., U.F.C. W. v. Talley [1992] 1 ERNZ 756 at 770. The Court of Appeal in Brighouse Ltdv. Bilderbeck [1995] 1 NZLR 158 expressed with confidence the view that Parliament must not have not intended the ECA to over-ride this implied term (first developed in New Zealand by industrial relations courts in the 1970s) or the Act would have expressly said so. Interestingly, the Canadian Supreme Court recently adopted a similar implied obligation (although more limited in scope) by holding that employers owe an implied obligation of good faith and fair dealing when effecting dismissals. See Wallace v. United Grain Growers (1998), 152 D.L.R. (4th) 1 (S.C.C). For discussion in Canada of the development of a duty of broader application, see G. England, "Recent Developments in the Law of the Employment Contract: Continuing Tension Between the Rights Paradigm and the Efficiency Paradigm" (1995) 20:2 QLJ 557. An implied obligation of mutual trust and confidence between an employer and an employee has also recently been recognised for thefirsttime by the House of Lords. See Malik v. Bank of Credit and Commerce International SA (in liq), [1997] 3 WLR 95; 3 All ER 1 (H.L.). 4 4 9  4 5 0  [1993] 1 ERNZ 526 (E.C).  98  instances t o take account o f the parties' conduct t o w a r d s each other permitted b y the l a w at the time o f b a r g a i n i n g .  451  O n the facts before the C o u r t , Judge C o l g a n c o n c l u d e d that A i r N e w Z e a l a n d w a s i n breach o f this o b l i g a t i o n o f trust and confidence:  [I]n the course o f negotiations between the parties f o r a collective employment contract, the applicants' bargaining agents, the u n i o n officials, w e r e t o l d b y the respondent that i f talks f o r collective employment contracts b r o k e d o w n , i n d i v i d u a l employment contracts w o u l d be entered into either w i t h individual employees o r g r o u p s o f employees. In the event, however, the c o m p a n y either d i d not consider, o r m o r e probably belatedly considered and rejected, any prospect o f entering into such contracts. It d i d not, h o w e v e r , so i n f o r m the applicants o r their bargaining agents o f its change o f heart o r o f its w i t h d r a w a l f r o m the advice earlier given.  It w a s ... the prerogative o f the respondent to i n s i s t . . . u p o n collective contracts f o r all o f its employees . . . . B u t having held out the prospect o f such alternative arrangements t o the bargaining agents i n negotiations, I consider the respondents duty b o u n d i n fairness t o have notified this important change o f tack t o its employees t o have a l l o w e d them a proper opportunity o f k n o w i n g of, and considering, the prospect o f contracting out and therefore redundancy i f a simple majority o f employees collectively continued to reject the c o m p a n y ' s proposals. I w o u l d find the respondent's unannounced and belated retraction o f its offer to consider individual employment contracts t o have been a material unfairness i n all the circumstances o f the contract negotiations and the consequent and closely related d i s m i s s a l s .  452  O n the basis o f this finding, a m o n g others, the redundancy dismissals effected b y A i r N e w Z e a l a n d w e r e held t o be procedurally unjustified, and the plaintiffs w e r e a w a r d e d compensation.  Ibid, at 589. Interestingly, the New Zealand Government drew these comments to the attention of the ILO, in the course of responding to the CTU's compliant regarding the ECA. See supra note 160 at 66. 451  4 5 2  Ibid, at 589-590.  99  T h e i m p l i e d o b l i g a t i o n t o bargain i n g o o d faith was further developed b y the E m p l o y m e n t C o u r t inRasch v . Wellington City Council™  In this case the employer was held t o have  u n d u l y rushed negotiations thereby failing t o a l l o w its staff sufficient time t o consider whether they w i s h e d t o be represented i n negotiations, and i f so, b y w h o m . T h e C o u r t w a s also critical o f the e m p l o y e r ' s subsequent tactics i n " r u n n i n g d o w n " the employees' traditional u n i o n representative i n communications sent directly to its employees.  Chief  Judge G o d d a r d c o n c l u d e d that the employer had breached b o t h section 12 o f the E C A (by failing t o recognise the authority o f the representative) and the i m p l i e d duty o f fairness:  I doubt whether what was done is a legitimate tactic i n negotiations w i t h employees.  B r o w n & M a r r i o t t i n ADR Principles  & Practise ... refer to the  E u r o p e a n doctrine o f c u l p a i n contrahendo [meaning , r o u g h l y translated, "reprehensible conduct i n negotiations"] w h i c h is apparently an extra-statutory concept o f g o o d faith and fair dealing developed b y the E u r o p e a n C o u r t s . W h i l e the boundaries o f the concept may be unclear, its application t o a state o f affairs as that disclosed b y this case w o u l d not be difficult t o imagine under any c i v i l i s e d legal system. It cannot lie t o o far away f r o m the duty i m p o s e d b y the F a i r T r a d i n g A c t 1986 t o desist f r o m misleading and deceptive conduct i n business. In the present case the evidence discloses a serious abuse o f p o w e r and p o s i t i o n b y the c o u n c i l , as w e l l as conduct that was decidedly tricky... ,  4 5 4  C h i e f Judge G o d d a r d next discussed this i m p l i e d t e r m i n Med Lab Workers. A s noted, the C h i e f Judge c o n c l u d e d that a number o f the communications sent b y C a p i t a l C o a s t H e a l t h to its employees w e r e i n breach o f section 1 2 .  455  H e also held that those c o m m u n i c a t i o n s  w e r e i n breach o f the i m p l i e d duty o f trust and confidence. I n terms o f the scope o f that duty, and its relationship t o g o o d faith, G o d d a r d C J stated:  A w i d e range o f activities b y b o t h employers and employees i n the course o f negotiations may also breach the mutual obligations t o maintain confidence and trust between employer and employee. ... [T]his i m p l i e d t e r m w i l l require an e m p l o y e r and employee t o negotiate i n such a w a y that they d o not contravene their m u t u a l obligations i n the continuing employment relationship. W e adopt, i n  [1994] 1 ERNZ 367 (E.C). Ibid, at 372. Supra note 372.  100  their entirety the sentiments expressed b y C o l g a n J i n his j u d g m e n t i n Unkovich In d e c i d i n g whether o r not o n the particular facts o f the case the c o n d u c t o f the party i n the negotiations has breached the mutual obligations, the question o f m o t i v e o r the presence o r absence o f g o o d faith may be decisive ... T h e m u t u a l obligations may also be enhanced i n situations, such as the present case, w h e r e the e m p l o y e r is b o u n d b y statutory requirements t o be a ' g o o d e m p l o y e r ' .  456  These v i e w s have been reiterated b y the E m p l o y m e n t C o u r t i n subsequent cases i n c l u d i n g  Ivamy  451  NZ Engineering  New Zealand Ltd,  459  Union Inc v. Shell Todd Oil Services (NZ) Ltd  45%  Caledonian Cleaners and Caterers (1992) Ltd v. Hetariki  460  New Zealand Medical Laboratory Workers Union Inc v. Hamilton Medical Ltd.  461  Julian v. Air  Perhaps the most definitive statement appeared i n New Zealand  Institute v . State Services Commission  4 6 2  and  Laboratory  Educational  where the E m p l o y m e n t C o u r t stated that:  T h e r e c a n be n o d o u b t i n g the existence o f a duty t o bargain i n g o o d faith as between parties to an existing contract o f e m p l o y m e n t .  463  Med Lab Workers, at 129-130. The 'good employer' requirement applies to state employers and is imposed by various statutes. Employers in the state education sector, for example, are required by section 77 A of the State Sector Act 1988 to "operate a personnel policy that complies with the principle of being a good employer'. Capital Coast Health (the defendant in Med Lab Workers) was bound by an equivalent duty applicable to state health care providers. (See section 11 of the Health and Disability Services Act 1993). 4 5 6  457  Supra note 371 at 767.  458  Supra note 447 at 548.  4 5 9  [1994] 2 ERNZ 612.  4 6 0  [1994] 2 ERNZ 400.  (Unreported, AEC 102/97). In this case the union discovered after the contract had been accepted by its members (at a meeting called for that purpose) that it had omitted to cover rostering issues in the contract. The union then sought to argue that a formal ratification vote had not been held, and that accordingly, the contract was not binding. The Employment Court refused to allow the union to resile from the settlement, holding that to do so would be to allow the union to act in a manner inconsistent with the duty to bargain in good faith. 4 6 1  4 6 2  [1995] 2 ERNZ 339.  Ibid, at 349. Chief Judge Goddard has also suggested that an action might successfully lie injudicial review, where an employer, having embarked on negotiation, fails to do so in good faith. T. Goddard, "The Employment Court: Structure and Directions" (1996) 21:1 N.Z.J.Ind.Rel. 5, at 10. 4 6 3  101  T h e existence o f this i m p l i e d duty t o bargain i n g o o d faith has also been accepted b y the E m p l o y m e n t C o u r t i n the context o f the re-negotiation o f an i n d i v i d u a l e m p l o y m e n t contract. I n Smith v. Radio i Ltd,  464  the plaintiff argued that her e m p l o y e r had a duty t o  re-negotiate her contract i n g o o d faith, and had breached that duty b y raising stale complaints and irrelevant matters and by exaggerating the c o m p a n y ' s financial difficulties. A l t h o u g h the C o u r t held that the plaintiff had failed to substantiate these allegations, it nevertheless entertained the argument as a viable o n e .  4 6 5  T a k i n g these cases as a w h o l e , f r o m Unkovich t o Radio i, o n e might argue that a fully operative duty t o bargain i n g o o d faith already exists i n the N e w Z e a l a n d e m p l o y m e n t and labour relations, and that accordingly, statutory amendment is u n n e c e s s a r y .  466  T h e r e are  h o w e v e r , a number o f reasons w h y such an assertion cannot be made w i t h confidence. I n the first place, the existence o f an implied duty t o bargain i n g o o d faith has never been u p h e l d b y the C o u r t o f A p p e a l .  4 6 7  T h e C o u r t o f A p p e a l had an excellent o p p o r t u n i t y t o  a p p r o v e o f this development i n the Med Lab Workers appeal, but chose not t o d o so. Instead the C o u r t o f A p p e a l stated:  T h e [ E C A ] must be seen as essentially practical legislation designed to deal w i t h everyday practical situations. It is not appropriate to subject it to esoteric analysis or t o d r a w fine distinctions i n its a p p l i c a t i o n s .  4 6 4  468  [1995] 1 ERNZ 281 (E.C).  See also Hearle v. Bay of Plenty Polytechnic Council (Unreported, AEC 62/96, 8 October 1996), where the Employment Court again accepted the existence of this implied term in the context of an individual employment contract, but dismissed the claim on its facts. 4 6 5  Rossiter, for example, suggests that there is little significant difference between the implied obligation to bargain in good faith which has been developed in New Zealand and the statutory duty which operates in Canada. See G. Rossiter, "Fairness in Employment Bargaining" (1998) NZLJ June, 224. 4 6 6  Whilst Justice Thomas appears to endorse the concept in New Zealand Fire Service Commission v. Ivamy [1996] 2 NZLR 587 (CA.) (at 619), he then goes on to state (at 619) that a lack of good faith is "a further relevant factor" in deciding whether section 12 has been breached. Thus, he does not go as far as endorsing an independent obligation to bargain in good faith. More importantly, however, Thomas J's decision was one of two minority judgments. Notably, the majority of the Court in the Ivamy appeal made no mention whatsoever of the implied obligation formulated by the Employment Court. 4 6 7  468  Capital Coast Health v. NZ Med Lab Workers Union [1996] 1 NZLR 7 (C.A.), at 18.  102  In relation t o section 12 i n particular, the C o u r t o f A p p e a l held that the section " s h o u l d be a l l o w e d t o speak f o r i t s e l f ' .  469  T h e C o u r t made n o m e n t i o n o f an i m p l i e d duty t o bargain  i n g o o d faith, n o r o f C a p i t a l C o a s t ' s statutory obligation t o act as a ' g o o d e m p l o y e r ' .  T h e failure o f the C o u r t o f A p p e a l to endorse this implied duty does not b o d e w e l l f o r the future o f the concept. N o r is the C o u r t o f A p p e a l ' s stance likely t o change, at least i n the foreseeable future. T h e current appellant bench is w i t h o u t doubt m o r e conservative and ' b l a c k letter' than the bench i n place in the early 1 9 9 0 s .  470  T h i s is due i n n o small part t o  recent changes i n personnel, particularly the retirement o f the President o f the C o u r t , L o r d C o o k e , and his replacement b y Justice R i c h a r d s o n .  4 7 1  Justice R i c h a r d s o n has traditionally  emphasised the importance o f contractual certainty, and appears to f a v o u r a unitarist v i e w of employment.  472  F o r example, i n a previous decision regarding implied obligations o f  fairness i n the context o f redundancy, he expressed the v i e w that:  In a contract o f employment w o r k e r s and employers have mutual obligations o f confidence, trust and fair dealing. ... B u t those mutual obligations d o not warrant the application o f any different principles t o the i m p l i c a t i o n o f terms i n collective or i n d i v i d u a l employment contracts than are applicable t o other contracts. ... I n short, it is not open t o the C o u r t s to construct an extra-statutory concept o f social  •  .•  473  justice... .  G. Anderson, "Interpretiting the Employment Contracts Act: Are the Courts Undermining the Act?" (1997) 28 Cal.West.Int.L.J. 117 at 139; Rasmussen & Deeks, supra note 61 at 294. The president occupies a position of significant influence by virtue of his or her ability to influence the tenor of the court's decisions, and also to determine which judges sit on which cases. 4 7 1  4 7 2  Anderson, supra note 470 at 140.  Brighouse Ltd v. Bilderbeck [1995] 1 NZLR 158 (CA.) at 169. While these views were expressed in a minority judgment, they now reflect the state of the law, following a change of direction by the Court of Appeal, which was lead by President Richardson. See M. Stevens, "Mixed Reaction to Redundancy Law Reversal" (1998) The Evening Post (N.Z.), 18 May, 15; "Unionists Attack Redundancy Ruling" (1998) The Dominion (N.Z.), 16 May, 7. President Richardson's views in Bilderbeck can be contrasted with previous comments of President Cooke to the effect that the present day judiciary has replaced strict application of formal legal logic with the "search ... for the solution that seems fair and just after balancing all the relevant considerations." (See R. Cooke, "Dynamics of the Common Law" (1990) Commonwealth Law Conference - Conference Papers, at 1). 473  103  G i v e n these sentiments, and the recent stance taken b y the C o u r t o f A p p e a l o n i m p l i e d terms,  474  it is u n l i k e l y that President R i c h a r d s o n w o u l d endorse the Unkovich line o f cases,  particularly i f this w e r e t o result i n the i m p o s i t i o n o f bargaining obligations b e y o n d those specified i n the E C A .  4 7 5  T h e second fundamental difficulty w i t h the i m p l i e d obligation as developed b y the E m p l o y m e n t C o u r t is its limited scope.  T h e o b l i g a t i o n has never been used t o force a  party to c o m m e n c e , o r persist w i t h , n e g o t i a t i o n s .  476  N o r is this likely t o o c c u r , g i v e n the  finding o f the C o u r t o f A p p e a l i n Eketone that an employer is under n o o b l i g a t i o n t o negotiate w i t h anyone. I n addition, the i m p l i e d obligation applies o n l y i n the context o f existing employment relationships where the parties are concerned w i t h the r e n e w a l o f their employment contract. T h e duty, as developed b y the E m p l o y m e n t C o u r t , has n o application whatsoever t o the f o r m a t i o n o f n e w employment relationships.  Indeed, it c a n be fairly asserted that the i m p l i e d obligation, as applied b y the E m p l o y m e n t C o u r t to date, has added little, i f anything, to the existing (and unsatisfactory) p r o v i s i o n s  o f the E C A . I n Unkovich, Med Lab Workers, Ivamy, and Shell Todd, the existence o f the i m p l i e d o b l i g a t i o n w a s referred to as a secondary g r o u n d for the C o u r t ' s decision. In each o f these cases, the e m p l o y e r w a s held t o have also breached a p r o v i s i o n o f the E C A . It cannot, then, be said that the i m p l i e d obligation has been used t o break any n e w g r o u n d . A s A n d e r s o n has noted:  It appears that once negotiations c o m m e n c e some g o o d faith obligations may arise . . . b u t that these obligations d o not extend t o receiving and considering proposals or t o remaining i n negotiations and m a k i n g a g o o d faith attempt to reach an agreement. ... W h a t can be suggested is that the courts have n o w laid the  For example, the right to strike and lockout is lawful, subject only to the limitations expressed in the ECA (see supra note 38), one of which is not that the strike or lockout is preceded by genuine negotiations. If the Employment Court utilised the implied duty to impose genuine negotiations as a prerequisite to a strike or lockout, the Court of Appeal might well hold this to be an inappropriate fetter on the freedom to effect economic sanctions, as guaranteed by the ECA. 4 7 5  4 7 6  Horn, at EC 12.08.  104  f o u n d a t i o n f r o m w h i c h they are free t o develop a b r o a d obligation o n employers, as w e l l as employees and their u n i o n , t o negotiate and t o d o so i n g o o d faith. ... T h e major missing element is n o w the starting mechanism and the fuel t o maintain i  477  the process. H o w e v e r , the reality is that the current E m p l o y m e n t C o u r t bench is u n l i k e l y t o attempt t o expand u p o n the foundation to w h i c h A n d e r s o n refers.  T h i s is p r i m a r i l y because i n recent  times the E m p l o y m e n t C o u r t has fielded severe criticism, particularly f r o m the N Z B R T and the N Z E F , f o r perceived judicial  activism™  A c c o r d i n g t o R o g e r K e r r , f o r example,  recent decisions o f the E m p l o y m e n t C o u r t have amounted t o " a deliberate and conscious snub t o parliament's intentions i n passing the E m p l o y m e n t C o n t r a c t s A c t " and have usurped " a p o l i c y m a k i n g role w h i c h should be the preserve o f democratically elected and accountable i n s t i t u t i o n s . "  479  C r i t i c s o f the C o u r t have persistently called f o r its abolishment and f o r the integration o f employment and labour l a w into the j u r i s d i c t i o n o f the ordinary courts, because, i n their v i e w , the courts o f general j u r i s d i c t i o n are less prone t o j u d i c i a l activism. T h i s attack o n the E m p l o y m e n t C o u r t has been further fuelled b y certain sectors o f the media. T h e f o l l o w i n g excerpt f r o m an editorial appearing i n The Independent newspaper provides a representative  4 7 7  example:  Anderson, supra note 141 at 124-128.  See e.g., R. Epstein, "Employment Law: Courts and Contracts" (Wellington, The New Zealand Business Roundtable, 1996), also published at (1997) 28 Cal. West. Int.J.L. 13; C. Baird, The Employment Contracts Act and Unjustified Dismissal: The Economics of an Unjust Employment Tax (Wellington, NZEF & NZBRT, 1996); B. Robertson, "The Arguments for a Specialist Employment Court in New Zealand" (1997) 21:1 N.Z.J.Ind.Rel. 34; Kerr, supra note 66. For views to the contrary, see e.g., T. Goddard, "Curial Institutions Under the Employment Contracts Act: 1991 to 1997" (1997) 28 Cal. West. Int.L.J. 103; Hughes, supra note 168; Anderson, supra note 470; M. Wilson, "Policy, Law and the Courts: An Analysis of Recent Employment Law Cases in New Zealand" (1995) 8 A.J.L.L'. 203; L. Skiffington, "The Role of Specialist Legal Institutions in Bargaining Under the Employment Contracts Act 1991: Saboteurs or Saviours?" (1996) 21:1 N.Z.J.Ind.Rel. 49. 4 7 8  4 7 9  R. Kerr, "Appeals to the Privy Council" (1995) New Zealand Bar Association, 22 July.  105  How the Employment Court Fosters Unemployment ... T h u s the E m p l o y m e n t C o u r t can be seen as a major contributor t o unemployment. T h i s body, t o p p e d o f f b y c h i e f j u d g e T o m G o d d a r d , seems t o be out t o usurp the p o w e r o f Parliament. B y m a k i n g its o w n l a w rather than interpreting and enforcing that enacted by o u r elected representatives, the E m p l o y m e n t C o u r t seems hell-bent o n b e c o m i n g a l a w unto i t s e l f .  480  N o t unexpectedly, this attack has begun to p a y dividends f o r the N Z B R T and the N Z E F . T h e present M i n i s t e r o f L a b o u r , M a x B r a d f o r d ( h i m s e l f a former employee o f the N Z E F ) has c o m m e n c e d a r e v i e w o f the E m p l o y m e n t C o u r t ' s performance. A c c o r d i n g t o B r a d f o r d , the purpose o f the r e v i e w is t o determine:  [Wjhether P a r l i a m e n t ' s intentions have been clearly expressed i n the legislation. I f not, w e need t o clarify it i n order t o n a r r o w the opportunities f o r the j u d i c i a l a c t i v i s m w e seem t o be seeing i n the separate court j u r i s d i c t i o n f r a m e w o r k .  481  Y e t even before the r e v i e w is complete, B r a d f o r d h i m s e l f has p u b l i c l y criticised the E m p l o y m e n t C o u r t , stating; "[s]ome C o u r t decisions are clearly inconsistent w i t h the principles o f the [ E C A ] . "  4 8 2  T h e future o f the E m p l o y m e n t C o u r t has also been  questioned b y other leading G o v e r n m e n t M i n i s t e r s . R e c e n t l y the M i n i s t e r o f F i n a n c e ( w h o happened t o be the M i n i s t e r o f L a b o u r responsible for i n t r o d u c i n g the E C A into l a w ) stated that:  T h e time m a y have c o m e t o consider whether the industrial relations environment has changed since 1991, so that the E m p l o y m e n t C o u r t need n o longer be separate.  483  (1994) The Independent (N.Z.), 16 December, 14. See also, NZPA, "Kerr Calls Judiciary to Account" (1998) The Evening Post (N.Z.), 20 June, 28; "The Judges who Chip Away at the Freedom of Employment Contracts" (1996) The Press (N.Z.), 23 May, 11; "Employment Court Judges Need to Fall into Line with Free Market" (1996) National Business Review (N.Z.), 19 January, 18; "Employment Contracts Act Undermined by Judicial Activism" (1993) The Independent (N.Z.), 14 May, 6. 4 8 0  Max Bradford, "Kiwis Cannot Relax" (1997) Address to the 1997 Government to Business Summit, Plaza International Hotel, 3 April. 4 8 1  R. Macfie, "Spring Clean or Major Renovation for ECA? (1997) MGF Business, 18 August, 4. See also G. Campbell, "The Max Factor: The New Labour Minister Wants a Tougher Employment Contracts Act" (1997) The Listener (N.Z.), 3 May, 24. 4 8 2  4 8 3  Address by W. Birch, Minister of Finance, to the Wellington District Law Society (1997) 7 June.  106  T h e latest statements b y the N e w Z e a l a n d G o v e r n m e n t indicate that the future o f the C o u r t remains i n the balance. W i n s t o n Peters (then D e p u t y P r i m e M i n i s t e r a n d Treasurer), stated categorically i n the 1998 B u d g e t (delivered o n 14 M a y 1998) that the " G o v e r n m e n t . . . recognises the unique nature o f the employment relationship a n d is c o m m i t t e d t o maintaining a specialist E m p l o y m e n t C o u r t . "  4 8 4  Y e t , o n the v e r y next day  the P r i m e M i n i s t e r , Jenny Shipley, issued a press release t o the contrary, stating that the future o f the E m p l o y m e n t C o u r t is indeed under r e v i e w .  485  G i v e n this political uncertainty, it can be fairly suggested that the E m p l o y m e n t C o u r t is u n l i k e l y t o expand o n its conceptualisation o f the implied o b l i g a t i o n t o bargain i n g o o d faith, w h e n t o d o so w o u l d serve only t o intensify the freemarketers' attack o n the C o u r t ' s future. That expanding the duty w o u l d result i n further criticism is b e y o n d doubt, f o r as D a n n i n has noted:  T h e E C A is premised o n the v i e w that neither employer n o r employee needs protection. I n other w o r d s , creating implied covenants is at odds w i t h fundamental T-/-I  A  486  E C A purposes.  T h e third reservation that must be noted i n respect o f the E m p l o y m e n t C o u r t ' s i m p l i e d obligation, even i f it, and the C o u r t , w e r e t o survive, is its uncertainty. T h e C o u r t itself has been singularly unhelpful i n defining the scope o f the obligation. In Med Lab  Workers  the C h i e f Judge stated that " a w i d e range o f activities by both employers and employees i n the course o f negotiations m a y ... breach the mutual o b l i g a t i o n s " ,  487  yet failed to specify  what those activities might be. E q u a l l y unhelpful is Judge C o l g a n ' s statement i n Unkovich  "Working for a Better Future", Budget Speech delivered to Parliament by Hon. Winston Peters, 14 May 1998. See also "Peters Now Likely to Torpedo Court Move" (1998) The Dominion (N.Z.), 28 April, 1. C. Bell, "Peters Backs off Employment Court Stand" (1998) The Dominion (N.Z.), 29 April, at 1. According to the Government's Industrial Relations Package, released in late July 1998, the review of the Employment Court will be completed later this year. See Bradford, supra note 175. 4 8 5  E. Dannin, "Consumating Market-Based Labor Law Reform in New Zealand: Context and Reconfiguration" (1996) 14:2 B.U.Int.L.J. 267 at 296. 4 8 6  487  Supra note 456.  107  that "the scope and the content o f [these] obligations may be as variable as employment contracts".  488  N o r is there any clarity as to the remedies available in the event of breach.  It is unlikely,  for example, that the Employment Court would consider itself to have the jurisdiction to direct parties to attend mediation, or to impose terms on parties such as in the Royal Oak Mines case in Canada.  490  Uncertainty of this nature can only encourage costly and  acrimonious litigation, the very thing the duty should be minimising.  3.3 Developments in The Common Law Generally as Regards Good Faith Bargaining  There have been a number of recent developments in the common law which may conceivably provide impetus for courts in N e w Zealand implying into contracts generally a duty to bargain in good faith.  491  These are, respectively, the increasing number o f cases in  which courts have refused to condone bad faith conduct in negotiations; the possible reclassification o f existing doctrines; the growing overlap between civil and common law principles, particularly in Europe; and the existence of opposition to the traditional rule that express agreements to negotiate in good faith are unenforceable.  4 8 8  Supra note 451.  It may be, for example, that section 57(7) of the ECA prohibits the Employment Court from invoking the duty where the bargaining process under challenge has resulted in an employment contract (given that section 57(7) prohibits the setting aside of a contract on the ground of unfairness or unconscionability the very type of conduct the duty would normally ward against). 4 8 9  See, for example, the comments of Chief Judge Goddard to the effect that the Court does not have the jurisdiction to fix terms and conditions of employment. Goddard, supra note 478 at 105-106 (note 4). This accords with his finding in Adams that section 57 permits the Court to set aside a contract, but not to rewrite or modify it. See Adams, at 998. 4 9 0  Whilst it is not suggested that employment contracts ought necessarily to be treated in an identical manner to commercial contracts (see for example, NZEI\. Shell [1994] 2 ERNZ 536 and Telecom South [1992] 1 ERNZ 711, where the Employment Court held that employment contracts are, at least in some respects, different to commercial contracts), trends in the common law generally may, nevertheless, influence developments in the specific field of employment law. 4 9 1  108  Cases Decided on the Basis of an Implied Obligation to Bargain in Good Faith  T h e traditional p o s i t i o n at c o m m o n l a w has been that negotiating parties d o not o w e each other a duty to bargain i n g o o d f a i t h .  492  C o u r t s have applied this rule w h e n h o l d i n g that a  party is under no o b l i g a t i o n to disclose facts k n o w n only to them even although they are aware that disclosure w o u l d deter the other party f r o m c o n c l u d i n g the c o n t r a c t .  493  As  A t i y a h has noted:  E a c h party is entitled to m a k e use o f what i n f o r m a t i o n he has i n order to obtain the best bargain he can get; neither party is under any obligation to assist the o t h e r .  494  T h e pre-eminence afforded to self interest b y the c o m m o n l a w i n this context w a s affirmed by the H o u s e o f L o r d s i n Watford v. Miles  495  a case i n v o l v i n g failed negotiations f o r the  sale o f a business. T h e plaintiff i n this case (the p r o p o s e d purchaser) sought t o argue that the o w n e r w a s i n breach o f an implied obligation to negotiate i n g o o d faith. L o r d A c k n e r ( w i t h w h o m the remainder o f the court agreed) rejected the argument, stating:  [T]he concept o f a duty to carry o n negotiations i n g o o d faith is inherently repugnant to the adversarial p o s i t i o n o f the parties w h e n i n v o l v e d i n negotiations.  496  In recent times, however, there has been a perceptible movement a w a y f r o m this strict position. T h e r e appears to be an increasing willingness o n the part o f c o m m o n l a w courts to i m p l y an o b l i g a t i o n o f g o o d faith into b o t h the negotiation o f contracts and their  May & Butcher Ltd v. The King [1934] 2 K.B. 17 (H.L.); Interfoto Picture Library v. Stiletto Visual Programmes Ltd [1989] QB 433 (C.A.); J. O'Conner, Good Faith in English Law ( Aldershot, Dartmouth Pub., 1990) at 18. 4 9 2  See e.g., Smith v. Hughes (1871) L.R. 6 Q.B. 597. The exceptions to this general rule are limited in number and scope, and include contracts uberrimae fidei, contracts of guarantee and contracts of partnership. See P. Atiyah, An Introduction to the Law of Contract, 5th ed., (Oxford, Clarendon Press, 1995) at 255. 4 9 3  4 9 4  4 9 5  4 9 6  Ibid, at 247. [1992] 2 A.C. 128. Ibid, at 138.  109  performance.  F o r example, recent C a n a d i a n cases i n v o l v i n g tendering processes, real  estate transactions, and the f o r m a t i o n o f o n g o i n g c o m m e r c i a l relationships have been decided i n an manner consistent w i t h an expanding duty o f g o o d f a i t h . Supreme C o u r t i n Wallace v. United Grain Growers  492,  497  M o r e o v e r , the  has expanded this development  into labour and employment l a w , h o l d i n g that employers must effect dismissals i n accordance w i t h a c o m m o n l a w duty o f g o o d faith and fair dealing.  Similarly, courts i n N e w Z e a l a n d , States  502  499  Australia,  500  the U n i t e d K i n g d o m  5 0 1  and the U n i t e d  have s h o w n a willingness to i m p l y terms (or collateral agreements) r e q u i r i n g  g o o d faith i n the creation and performance o f c o n t r a c t s .  503  There has, i n a d d i t i o n , been  See e.g., Health Care Developers Inc v. Newfoundland (1996) 136 D.L.R. (4th) 609 (Nfld.C. A.); Opron Construction Co. v. Alberta (1994), 151 A.R. 241 (Q.B.); Mesa Operating Limited Partnership v'. Amoco Canada Resources Ltd (1994), 19 Alta.L.R. (3d) 38 (C. A.); Gateway Realty Ltd v. Arton Holdings Ltd (1991), 106 N.S.R. (2d) 180 (N.S.S.C.), affirmed (1992), 112 N.S.R. (2d) 180 (N.S.C.A.); Empress Towers Ltd\. Bank of Nova Scotia, [1991] 1 W.W.R. 537, 73 D.L.R. (4th) 400 (B.C.C.A.); Hirex Holdings Ltd v. Chrysler Canada Ltd (1991), 16 R.P.R. (2d) 154 (B.C.S.C.). Ward v. Cudmore (1986), 75 N.B.R. (2d) 112 (Q.B.); Greenbergv. Meffert (1985), 18 D.L.R. (4th) 548 (Ont.C.A.). See also S. O'Byrne, "Good Faith in Contractual Performance: Recent Developments" (1995) Can.Bar.Rev. 70. 4 9 7  4 9 8  See supra note 449.  See e.g., Gregory v. Rangitikei District Council [1995] 2 NZLR 208 (H.C) (a party considering tenders must do so in a genuine fashion); Artifakts Design Group Ltd v. N P Riggs Ltd [1993] 1 NZLR 196 (H.C.) (the defendant must use its best endeavours to promote the sale of the plaintiffs goods); Livingstone v. Roskilly [1992] 3 NZLR 230 (H.C.) (the parties to a contract must act in good faith in making and carrying out the contract); Devonport BC v. Robbins [1979] 1 NZLR 1 (CA.) (the parties to a contract are bound by an implied term requiring them to co-operate and not to hinder or impede the other party's performance). 4 9 9  Renand Construction Ply Ltd v. Minister for Public Works [1992] 26 NSWLR 234 (there exists in contracts a duty upon the parties requiring good faith performance); Hospital Products Ltd v. United States Surgical Corp (1984) 156 CLR 41 (Aus.H.C.) (the distributor is bound by an implied term requiring it to use its best endeavours to distribute the plaintiffs products); Secured Income Real Estate (Australia) Ltd v. St Martins's Investments Ply Ltd (1979) 144 CLR 596 (Aus.H.C.) (each party must do all such things as are necessary on its part to enable the other party to have the benefit of the contract). 5 0 0  GolbelfretNVy. Cyclades Shipping Co Ltd (The Linardos) [1994] 1 Lloyds Rep. 28 (notice to be given under a loading contract regarding the readiness of the receiving ship must be given in good faith); Downsview Ltdv. First City Corp. Ltd [1993] AC 295 (P.C.) (a mortgagee of property must exercise the power of sale in good faith); Blackpool and Flyde Aero Club v. Blackpool Borough Council [1990] 1 WLR 1195 at 1204 (the decision to reject a timely tender must be made in good faith). 501  Fortune v. National Cash Register, 373 Mass. 96, 364 N.E. 2d 1251 (1977); Kern v. Levolor Lorentzen, 899 F. 2d 772 (9th Cir. 1990) (dismissal at will must be effected in good faith). 5 0 2  For academic endorsement of this development, see e.g. R. Brownsword, "Good Faith in Contracts Revisited" (1996) 49 Cur.Leg.Probs. I l l ; T. Mills, "Letters of Intent and the Canadian Approach to Good Faith Bargaining Obligations: So Close, So Far" (1996) 11 B.F.L.R. 356; J. Cassels, "Good Faith 5 0 3  110  some d i s c u s s i o n a m o n g commentators and courts about the development o f a duty t o bargain i n g o o d faith i n tort and/or e q u i t y ,  504  although most o f the recent c o m m o n l a w  developments have o c c u r r e d i n the context o f contractual doctrines.  W h i l e the existence o f these decisions is undeniable, it is difficult t o d r a w f r o m them a precise p r i n c i p l e as t o w h e n a duty o f g o o d faith w i l l apply. O ' B y r n e , f o r e x a m p l e ,  505  suggests that a duty o f g o o d faith i m p o r t i n g an obligation t o "speak u p " m a y arise i n cases i n v o l v i n g three factors: first, a p r o n o u n c e d i n f o r m a t i o n asymmetry between the parties; second, p r o f o u n d l y misleading silence because the existence o f the u n d i s c l o s e d i n f o r m a t i o n is consequential a n d unexpected; and third, a j u d i c i a l focus o n equitable values.  506  B e a t s o n , o n the other hand, suggests that judges w i l l be critical o f n o n -  disclosure i n cases where:  It is either impossible for the other party to acquire the relevant i n f o r m a t i o n f r o m any source other than the counterparty t o the contract either at all o r w i t h o u t i n c u r r i n g considerable expense.  Alternatively, the relationship between the  in Contract Bargaining: General Principles and Recent Developments" (1993) 15 A.Q. 56; Lord Steyn, "The Role of Good Faith and Fair Dealing in Contract Law: A Hair Shirt Philosophy?" (1991) Denning L.J. 131; G. Shell, "Opportunism and Trust in the Negotiation of Commercial Contracts: Toward a New Cause of Action" (1991) 44:2 Vand.L.Rev. 221; P. Finn, "Commerce, the Common Law and Morality" (1989) 17 MULR 87; B. Reiter, "Good Faith in Contracts" (1983) 17 Val.U.L.Rev. 705. For views to the contrary, see e.g., D. Goddard, "Long Term Contracts: A Law and Economics Perspective" [1997] N.Z.L.Rev. 423; S. Waddams, "Good Faith, Unconscionability and Reasonable Expectations" (1995) 9 JCL 55; P. Atiyah, An Introduction to the Law of Contract, 5th ed. (Oxford, Clarendon Press, 1995) at 255; E. Farnsworth, "Pre-contractual Liability and Preliminary Agreements: Fair Dealing and Failed Negotiations" (1987) 87 Columbia L.Rev. 217; M. Bridge, "Does Anglo-Canadian Contract Law Need a Doctrine of Good Faith" (1984) 9 Can.Bus.L.J. 385; P. Girard, "'Good Faith' in Contract Performance: Principle or Placebo" (1983) 5 Sup.C.L.Rev. 309. See e.g., W. Powers, "Border Wars" (1994) 72:6 T.L.Rev. 1209; J. Flemming, "Insurer's Breach of Good Faith - A New Tort?" (1992) 108 L.Q.Rev. 357; R. Hawkins, "Lac and the Emerging Obligation to Bargain in Good Faith" (1990) 15 QLJ 65; J. Vickery, "A Special Relationship: The Use of the Duty of Good Faith and Fair Dealing to Impose Tort Damages in Contracts Between Lender and Borrower" (1990) 9 Rev. of L. 93; C. Lycoyannis, "Business Tort Remedies For Breach of the Implied Covenant of Good Faith and Fair Dealing" (1987) An.Suv. Am.L. 549; N. Cohen, "Pre-contractual Duties: Two Freedoms and the Contract to Negotiate" in J. Beatson & D. Friedmann, eds., Good Faith and Fault in Contract Law (Oxford, Clarendon Press, 1995) at 25. 5 0 4  S. O'Byrne, "Culpable Silence: Liability For Non-Disclosure In the Contractual Arena" (1998) 30 C.Bus.L.J. 239.  5 0 5  5 0 6  Ibid, at 241.  Ill  contracting parties is not a pure a r m ' s length c o m m e r c i a l relationship but one o f trust and confidence o r one o f d e p e n d e n c e .  507  H a w k i n s proffers yet another four stage test f o r w h e n standards o f g o o d faith conduct w i l l be a p p l i e d .  A g a i n s t these formulations, other commentators suggest that categorising  508  recent cases o f this nature a c c o r d i n g t o only one principle o r set o f principles m a y be impossible.  509  Y e t , despite these classification difficulties, these cases illustrate a trend i n  favour o f i m p o s i n g an obligation o f g o o d faith i n the f o r m a t i o n and performance o f contracts (particularly i n l o n g term relationship contracts, w h i c h many employment contracts are). G i v e n the repositioning o f N e w Z e a l a n d employment l a w squarely w i t h i n the realm o f contract, the E m p l o y m e n t C o u r t c o u l d l o o k t o i n v o k e this trend i n support o f the i m p l i e d o b l i g a t i o n t o bargain i n g o o d faith w h i c h it has developed.  The Re-Classification  Debate  T h e r e is also an emerging debate a m o n g commentators that existing contractual doctrines c o u l d be classified as falling w i t h i n one b r o a d obligation; specifically an obligation t o negotiate i n g o o d faith. C a r t e r and F u r m s t o n , f o r e x a m p l e ,  510  argue that concepts such as  certainty o f agreement, i m p l i e d terms, p r o m i s s o r y estoppel, restitution, and collateral contracts have all been used t o p r o m o t e standards o f g o o d faith i n contract negotiations.  5 0 7  511  I n their v i e w , an argument can, accordingly, be made f o r the classification  J. Beatson, "Has the Common Law a Future" (1997) CLJ 291 at 305.  Hawkins suggests that courts will be prepared to invoke a duty to bargain in good faith where there is a serious relationship between the parties; the breakdown in bargaining was occasioned by the fault of one of the parties; the aggrieved party suffered damage as a result, and from which it could not protect itself; and the wronged party cannot reasonably be expected to bear the costs associated with the breakdown in the negotiations. See Hawkins, supra note 504 at 79-80. 5 0 8  See e.g., J. Carter & M. Furmston, "Good Faith and Fairness in the Negotiation of Contracts" (1995) 8:1 JCL 1; 8:2 JCL93 at 118.  5 0 9  5 1 0  Ibid, at 8.  Ibid, at 100-109. See also Hawkins, supra note 504 at 78; A. Guest, Chitty on Contracts, 27th ed. (London, Sweet & Maxwell, 1994) Vol. 1, at 13.  511  112  o f these doctrines under a general umbrella o f " g o o d faith".  M o r e o v e r , whilst E n g l i s h  l a w has resisted the development o f an overall doctrine o f g o o d faith, as W a d d e m s points out, even i n E n g l a n d g o o d faith has been an important factor i n contract interpretation a n d in the development and application o f the doctrine o f u n c o n s c i o n a b i l i t y .  513  A l t h o u g h the creation o f one g l o b a l doctrine o f g o o d faith is far f r o m universally supported,  514  what is significant for present purposes is that this development m a y gain  m o m e n t u m i f c o m m o n l a w courts continue t o decide negotiation disputes o n the basis o f g o o d faith obligations. S h o u l d this occur, the E m p l o y m e n t C o u r t c o u l d l o o k t o the c o m m o n l a w generally as authority f o r its o w n implied term.  The Influence of the Civil Law  A s Judge G o d d a r d noted i n Rasch v. Wellington City Council, a number o f c i v i l l a w jurisdictions utilise the concept o f culpa i n contrahendo, w h i c h , i n effect, requires parties to negotiate i n g o o d f a i t h .  5 1 5  Similar obligations have been expressly i n c o r p o r a t e d into  c i v i l codes and legislation i n countries such as Italy, Israeli, France, G e r m a n y and A r g e n t i n a and i n the C a n a d i a n p r o v i n c e o f Q u e b e c .  516  Some support for this view can be derived from the series Laws ofAustralia, which now includes a volume (35) combining common law, equity and statutory provisions under the heading "Unfair Dealing". 5 1 2  S. Waddams, The Law of Contracts, 3rd ed., (Toronto, Canada Law Book Inc, 1993) at 339. See also Lord Steyn, supra note 503. 5 1 3  5 1 4  See supra note 503.  Such as Germany, Austria and Switzerland. See G. Kuhne, "Reliance, Promissory Estoppel and Culpa in Contrahendo: A Comparative Analysis" (1990) 10 Tel-Aviv. U.Stud.L. 279; F. Kessler & E. Fine, "Culpa in Contrahendo, Bargaining in Good Faith, and Freedom of Contract: A Comparative Study" (1964) 77 Harvard. L. Rev. 401. 5 1 5  Italian Civil Code, para. 1337; Argentine Civil Code, para. 1198; Code Civil (Fr.), art. 1134(3); Israeli Contracts (General Part) Law 1973, s. 12(a); German Civil Code (BGB), s. 242 & 157; Civil Code of Quebec, art. 1375. These provisions can be contrasted with instruments such as the Uniform Commercial Code and the Restatement (Second) Contracts in the United States, both of which require good faith performance of contracts but make no mention of good faith in negotiations. See, Uniform Commercial Code (US, 1990 Official Text), s. 1-203; Restatement (Second) Contracts (1981) s. 205 (although note the more limited duty of disclosure provided for in s. 161). For discussion on these later provisions, see E. Farnsworth, "Good Faith in Contract Performance" in J. Beatson & D. Friedmann, eds.,, Good Faith and 5 1 6  113  T h e c i v i l l a w concept o f g o o d faith i n negotiations has permeated into v a r i o u s international instruments. F o r example, the U N I D R O I T P r i n c i p l e s F o r International C o m m e r c i a l C o n t r a c t s (1994) provides i n A r t i c l e 1.7(1) that "[e]ach party must act i n accordance w i t h g o o d faith and fair dealing i n international trade." A r t i c l e 2.15 further provides:  (1) A party is free t o negotiate and is not liable f o r failure t o reach an agreement. (2) H o w e v e r , a party w h o negotiates o r breaks o f f negotiations i n bad faith is liable f o r the losses caused t o the other party. (3) It is bad faith, i n particular, f o r a party t o enter into o r continue negotiations w h e n intending not t o reach agreement w i t h the other p a r t y .  517  Similarly, article 7(1) o f the U n i t e d N a t i o n s C o n v e n t i o n o n C o n t r a c t s f o r the International Sale o f G o o d s  5 1 8  provides that " i n the interpretation o f the c o n v e n t i o n , regard is t o b e had  to ... the observance o f g o o d faith i n international t r a d e . "  5 1 9  T h i s c o n v e n t i o n has been  adopted i n n u m e r o u s jurisdictions, i n c l u d i n g B r i t i s h C o l u m b i a  5 2 0  and N e w Z e a l a n d .  5 2 1  A s parties increasingly structure their dealings i n accordance w i t h principles o f this nature, standards o f g o o d faith may become an expected component o f a b r o a d range o f negotiations.  522  S h o u l d this o c c u r , courts w i l l no doubt be asked t o give legal effect t o  those e x p e c t a t i o n s .  523  Fault in Contract Law (Oxford, Clarendon Press, 1995) 153; R. Summers, "The General Duty of Good Faith - Its Recognition and Conceptualisation" (1982) 67:4 Cornell.L.Rev. 810. For discussion on these principles, see P. Crepeau, The UNIDROIT Principles and the Civil Code of Quebec: Shared Values? (Scarborough, Carswell, 1998); J. Perillo, "Unidroit Principles of International Commercial Contracts: The Black Letter Text and a Review" (1994) 63:2 Ford.L.Rev. 281.  5 1 7  5 1 8  U.N. Doc. A/Conf. 97/18, Annex 1 (1980).  For discussion on this article, and its relevance to a duty to bargain in good faith, see J. Klein & C. Bachechi, "Precontractual Liability and the Duty of Good Faith Negotiations in International Transactions" (1994) 17:1 Hous.J.Int.L.l. 5 1 9  5 2 0  International Sale of Goods Act (R.S.B.C. 1996, c.236).  5 2 1  Sale of Goods (United Nations Convention) Act 1994.  Principles of good faith have also been incorporated into various consumer statutes such as those in a number of jurisdictions which regulate financial transaction between institutions and individual 5 2 2  114  T h e c i v i l l a w influence is also apparent i n the E C D i r e c t i v e o n U n f a i r T e r m s i n C o n s u m e r Contracts,  524  w h i c h expressly incorporates notions o f g o o d faith. Significantly, f o r present  purposes, this D i r e c t i v e has n o w been adopted by the U n i t e d K i n g d o m .  5 2 5  W h i l s t one  c o u l d argue that the a d o p t i o n i n c o m m o n l a w countries o f these c i v i l l a w concepts w i l l be restricted t o the specific context i n w h i c h they arise (in this case consumer contracts), the m o r e l i k e l y v i e w is that expressed b y B e a t s o n :  T h e l o n g t e r m result is likely t o be that the influence o f the c i v i l l a w concepts ( g o o d faith, significant imbalance) are likely t o extend b e y o n d the consumer transactions c o v e r e d b y the D i r e c t i v e and regulations and t o percolate t h r o u g h o u t our law o f contract.  526  A s s u m i n g B e a t s o n is correct, the ' m e r g i n g ' o f civil and c o m m o n l a w principles c o u l d p r o v i d e further support f o r the development o f an obligation to bargain i n g o o d faith i n the N e w Z e a l a n d labour market.  consumers (see e.g., J. Beatson, "Public Law Influences in Contract Law", in J. Beatson & D. Friedmann eds., Good Faith and Fault in Contract Law (Oxford, Clarendon Press, 1995) 264). The enactment of provisions of this nature can further influence the development of analogous common law concepts. See Beatson, supra note 507. See for example Lord Steyn, "Contract Law: Fulfilling the Reasonable Expectations of Honest Men" (1997) 113 LQR 433 at 439.  5 2 3  5 2 4  5 2 5  93/13/EEC (Council Directive of 5 April 1993) O.J. 21 April 1993 L 95/29. 1994 S.I. No. 3159.  Beatson, supra note 507 at 292. See also H. Beale, "Legislative Control of Fairness: The Directive on Unfair Terms in Consumer Contracts" in J. Beatson & D. Friedmann eds., Good Faith and Fault in Contract Law (Oxford, Clarendon Press, 1995) at 231; H. Collins, "Good Faith in European Contract Law" (1994) 14 Ox.J.L.S. 229. For discussion on the interaction between the civil law in Quebec and the common law in the remainder of Canada, see e.g., P. Crepeau, The UNIDROIT Principles and the Civil Code of Quebec: Shared Values? (Scarborough, Carswell, 1998); A. Flemming, "Canadian Common Law and Civil Law: A Study in Convergence" (1997) 25:1 IntT Bus.L. 13; C. Gonthier, "Some Comments on the Common Law and the Civil Law in Canada: Influences, Parallel Developments and Borrowings" (1992) 21 Can.Bus.L.J. 323. 5 2 6  115  Express Agreements  R e c e n t developments i n relation t o express agreements t o negotiate i n g o o d faith also warrant mention. T h e traditional v i e w has been that such agreements are unenforceable.  527  T h i s v i e w w a s recently confirmed i n Waif ord v. Miles, * 52  where L o r d  A c k n e r held that notwithstanding the existence o f a bare agreement t o negotiate, a party c o u l d w i t h d r a w f r o m negotiations f o r any reason at any t i m e .  5 2 9  I n his v i e w , any  agreement w h i c h sought t o restrict this freedom w o u l d be t o o uncertain t o e n f o r c e .  W h a t is interesting is the academic criticism that Walford has a t t r a c t e d ,  531  530  and the  existence o f cases a n d commentaries advocating a m o v e away f r o m this strict v i e w .  5 3 2  As  C a r t e r and F u r m s t o n argue:  It is hard t o feel that the H o u s e o f L o r d s p r o d u c e d really c o n c l u s i v e reasons w h y parties w h o w i s h t o assume mutual obligations t o negotiate i n g o o d faith should be denied the c o u r t ' s support i n such a perfectly reasonable endeavour. It is suggested that there is n o sufficient reason f o r the courts t o refuse enforceability t o  Courtney andFairbairn Ltdv. Tolaini Brothers (Hotels) Ltd [1975] 1 WLR 297 (C.A.); Mallozzi v. Carapelli SpA [1976] 1 Lloyds Rep. 407 (C.A.); Voest Alpine Intertrading GmbH v. Chevron Oil Co Ltd [1987] 2 Lloyd's Rep 547 (C.A.). 527  5 2 8  Supra note 495.  5 2 9  Supra note 495 at 138.  5 3 0  Supra note 495 at 138. Cf., Hillas & Co Ltdv. ArcosLtd (1932) 147 LT 503; 38 Com. Cas. 23 (H.L.).  See e.g., Lord Steyn, supra note 523; J. Paterson, "The Contract to Negotiate in Good Faith: Recognition and Enforcement" (1996) 10 JCL 120; H. Beale, "Commentary on 'Good Faith and Fairness in Failed Contract Negotiations'" (1995) 8:2 CLJ 120; E. McKendrick, "The Regulation of Long Term Contracts" in J. Beatson & D. Friedmann eds., Good Faith and Fault in Contract Law (Oxford, Clarendon Press, 1995) 305; R. Buckley, "Walford v. Miles: False Certainty About Uncertainty - An Australian Perspective" (1993) 6 JCL 58; I. Brown, "The Contract to Negotiate : A Thing Writ in Water?" [1992] JBL 211; J. Cumberbatch, "In Freedom's Cause: The Contract to Negotiate" (1992) 12 OJLS 587. 5 3 1  D. McLauchlan, "Rethinking Agreements to Agree" (1998) 18:1 N.Z.U.L.R. 77; V. Taylor, "Contracts with the Lot: Franchises, Good Faith and Contract Regulation" [1997] N.Z.L.Rev. 459; Goddard, supra note 503; E. Farnsworth, "Developments in Contract Law During the 1980's: The Top Ten" (1991) 41:1 C.West.L.Rev. 203; E. Farnsworth, "Pre-contractual Liability and Preliminary Agreements: Fair Dealing and Failed Negotiations" (1987) 87 Columbia L.Rev. 217 at 268. See also Coal Cliff Collierire PtyLtdv. Sijehama Pty Ltd (1991) 24 NSWLR 1; Hughes Bros Pty Ltd v. Trustees of the Romian Catholic Church for the Archdiocese of Sydney (1993) 31 NSWLR 91. 5 3 2  116  agreements t o negotiate i n g o o d faith. There m a y be specific cases i n w h i c h a court cannot give effect t o such a commitment, o r where the damages are o n l y n o m i n a l , but it is over simplistic to assume all cases are o f this k i n d .  5 3 3  G i v e n the reaction to Miles, it is at least conceivable that express agreements c o u l d g r o u n d a duty to bargain i n g o o d faith i n the N e w Z e a l a n d labour market.  3.4 Conclusion - The Existing Law  It w o u l d be untrue t o say that notions o f g o o d faith bargaining are entirely absent f r o m the l a w that presently governs employment and labour relations i n N e w Z e a l a n d .  Clearly,  there are existing provisions i n the E C A w h i c h deal w i t h some o f the issues that fall w i t h i n the scope o f this duty as it applies i n B r i t i s h C o l u m b i a . M o r e o v e r , the E m p l o y m e n t C o u r t has itself begun to develop an i m p l i e d obligation t o bargain i n g o o d faith, w h i c h c o u l d gain m o m e n t u m f r o m recent developments at c o m m o n law.  H o w e v e r , despite what B i l l B i r c h , M a x B r a d f o r d and the P u b l i c Service might believe, the existing p r o v i s i o n s i n the E C A barely scratch the surface.  T h e E C A does n o t require  bargaining, let alone i n g o o d faith. There is no obligation to c o m m e n c e bargaining; n o o b l i g a t i o n t o justify one's p o s i t i o n o r consider alternatives; no obligation t o genuinely seek agreement; and n o obligation t o persist w i t h bargaining until a settlement o r a genuine impasse is reached. T h i s v o i d is rendered all the m o r e significant g i v e n the recent stance o f the C o u r t o f A p p e a l . R a t h e r than g i v i n g substance to sections 8, 12 and 57 o f the E C A , the C o u r t has p r o v i d e d ample scope f o r employers t o exercise p o w e r s o f v e t o and to engage i n dictatorial and unilateral conduct; conduct w h i c h is clearly foreign t o the n o t i o n o f g o o d faith.  N o r are the statutory " g o o d e m p l o y e r " obligations applicable t o public sector employers resulting i n g o o d faith bargaining practices. P u b l i c sector employers are n o w under  Carter & Furmston, supra note 509 at 115.  117  pressure ( a k i n t o their private sector counterparts) t o p r o d u c e profitable operations. T h i s pressure is inevitably resulting i n employers dictating t o their staff, and effecting bargaining practices w h i c h are inconsistent w i t h notions o f g o o d f a i t h .  5 3 4  T o the extent that employees and their representatives can sue under section 57 o f the E C A , and f o r misrepresentation, misleading conduct and the like, such actions are retrospective, and costly i n every sense o f the w o r d . A s R a s m u s s e n argues, litigation " i s a cumbersome, d r a w n - o u t process w h i c h adds t o the insecurity o f employers and employees and has significant costs f o r the parties i n v o l v e d and f o r ... society as a w h o l e . "  5 3 5  L i t i g a t i o n is n o w a y to foster industrial harmony, c o - o p e r a t i o n and g o o d faith. N o r , f o r that matter, does dictation.  In short, the existing statutory l a w i n N e w Z e a l a n d is manifestly inadequate as regards fostering g o o d faith bargaining. N o r is the present c o m m o n l a w p o s i t i o n any better. T h e i m p l i e d o b l i g a t i o n developed b y the E m p l o y m e n t C o u r t has yet t o b e extended b e y o n d the scope o f the E C A , unsatisfactory as it is, n o r is this likely to change i n the foreseeable future.  In terms o f the recent developments at c o m m o n l a w generally, it is important t o note that those w h o support the i n t r o d u c t i o n o f a duty to negotiate i n g o o d faith are i n the m i n o r i t y . It remains t o b e seen whether their v i e w s w i l l ever obtain prominence. Similarly, the m e r g i n g o f c i v i l l a w concepts w i t h the c o m m o n l a w in the U n i t e d K i n g d o m is still at its formative stages, and c o u l d , i n any event, be distinguished as unique t o E u r o p e . A n d i n terms o f the enforcement o f express agreements t o negotiate, such advances are u n l i k e l y to