BusinessNZ claims its input on risks of FPAs is ignored in Cabinet paper

BusinessNZ, the lobby group which is being lined up to take a structural role in New Zealand’s industrial relations landscape, say its views appear to have been ignored in a Cabinet Paper on fair pay agreements.

Last week Workplace Relations Minister Michael Wood released Cabinet’s decisions on fair pay agreement, a new type of nationwide agreement for sectors of occupations negotiated between unions and employer representatives, aimed at setting conditions and standards above legal minimums.

Wood hopes to have draft legislation before Parliament in November, which would open the possibility for negotiations towards fair pay agreements to begin late next year.

But the move is being opposed by the peak body for business despite the Government promising it cash and a structural role in the employment negotiations.

Wood’s paper describes BusinessNZ as a “social partner” and proposes providing it – along with the Council of Trade Unions – funding to help facilitate negotiations as the organisation is likely to lead negotiations where other business groups in the affected sectors do not exist.

BusinessNZ claims Wood’s paper overlooks the issues it raised in the last round of consultation, undertaken in 2019, and leaves key policy questions about the agreements unanswered.

The report of the working group on fair pay agreements was published in January 2019. Despite union calls for progress on what was a Labour Party manifesto promise, in October 2019 then workplace relations minister Iain Lees-Galloway released a discussion document on FPA’s.

The submissions have never been released publicly, although some submitters, including BusinessNZ, have published their own contributions.

BusinessNZ’s submission says the good faith obligations of bargaining will be “nearly impossible” for it to comply with, especially around communication, as there was no infrastructure to communicate with employers that were not members of official bodies.

“There are currently no available reliable means for contacting non-members … and there is no guarantee that they will respond.”

While the legislation will ban strikes during the FPA process, BusinessNZ claims the experience of national awards – which preceded the 1991 Employment Contracts Act – often led to secondary strikes as workers took action at enterprise level for extra benefits.

The right of unions to initiate the process would “almost certainly” create disputes between unions, as the threshold to initiate an FPA – 1000 workers or 10 per cent of a sector of occupation – could enable a union to effectively take over industrial relations in areas where they had no presence.

It has also claimed that the agreements breach International Labour Organisation principles of free association, by making the agreements compulsory.

While Wood’s Cabinet paper does set out some risks around FPAs, it gives no consideration to the risks of potential secondary action. While it acknowledged the agreements could engage international human rights obligations, such as ILO obligations, it simply says that draft legislation would aim to minimise inconsistencies.

“Ultimately, FPAs will represent a large shift for the employment regulatory landscape in New Zealand, and it is hard to predict their exact effect.”

Kirk Hope, BusinessNZ’s chief executive said he was disappointed the views of the organisation did not appear in the paper.

“The policy process should be filling in a lot of those gaps so it’s frustrating that the contribution we’re trying to make weren’t reflected. Even if it’s not agreed with, it still should be reflected in the Cabinet paper.”

Hope believed that given the role BusinessNZ was expected to play should mean its views would be carefully considered “particularly if we’re trying to make a contribution to assisting and enabling more businesses to engage in the process”.

Wood said in a statement that while he appreciated BusinessNZ’s input “Cabinet papers reflect ministers’ views and neither social partner’s full feedback was in the FPA Cabinet paper”.

BusinessNZ “has engaged in robust advocacy for its members and we’ll be seeking and considering their feedback on a range of issues throughout the legislation drafting process”.

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