DundasStreetLegal - Susan Hornby-Geluk - Employment law experts - Last week I provided some advice to a young employee seeking to negotiate a new employment agreement with his intended employer. The employer, a large company, presented a contract which in my view contained some fairly harsh terms.
I suggested that the employee pick his fights and just focus on the provisions that were really one-sided, rather than raising too many issues. So he did.
And the employer’s response? The company responded within the hour saying that the contract was a standard one that they offered to all new employees and was not negotiable. Basically if the employee did not like it, he could go somewhere else.
I was, momentarily, incensed. What sort of “negotiation” is that? This led me to the conclusion that a column on good faith bargaining was in order.
The Employment Relations Act provides that an employee and employer bargaining for an individual employment agreement must deal with each other in good faith. “Good faith” requires the parties to be “active and constructive in establishing and maintaining a productive employment relationship in which the parties are, among other things, responsive and communicative”. It also requires that the parties must not mislead or deceive each other.
The Act also provides that where an individual employment agreement is offered, the new employee must be given sufficient information and an adequate opportunity to seek advice in relation to that offer.
More importantly, section 63A(2) of the Act sets out that when bargaining for an individual employment agreement, the employer has an obligation to “consider any issues that the employee raises and respond to them”. Any employer who fails to do this is liable for a penalty to be imposed by the Employment Relations Authority.
In the case referred to above, it does not appear that the company gave any genuine consideration to the issues raised by the employee, and therefore did not act in good faith.
Let’s be real about this. It is not uncommon for an employer to present a proforma contract offer and to expect that the employee will simply sign it. But what was offensive in this case was that the employer was so blatant about not being willing to negotiate. They could have at least pretended to have considered the employee’s requests and provided a reason for not agreeing.
The reality is that, with the exception of senior and more skilled employees, most workers do not have a genuine opportunity to negotiate their terms of employment. Ultimately this comes down to bargaining leverage and for most employees in low-skilled, low-paid vocations, there isn’t any.
Failure to Negotiate in Good Faith
However, there are instances where the failure to negotiate in good faith and provide sufficient time for the employee to seek advice, can undermine the entire agreement.
For example when parties enter into a 90 day trial period, an employer is required to give the employee a reasonable opportunity to seek independent advice on the intended agreement. As a general rule of thumb, 3 – 5 days is a reasonable timeframe. The Courts have found that lesser periods are inadequate and that trial periods entered into in this way are invalid.
The legislation also provides for unfair bargaining and enables an employee to challenge an agreement on the grounds that it is unfair or unconscionable. However, the threshold for establishing unfair bargaining is high and requires that the person was unable to adequately understand the provisions or implications of the agreement by reason of diminished capacity. This might occur due to age, sickness, mental or educational disability, communication challenges or emotional distress.
Where a person is induced to enter into an agreement by oppressive means, undue influence or duress, the agreement may also be challenged on this basis. Further, where an employee is not given the required information or an opportunity to seek advice the bargaining may be deemed to be unfair. In such circumstances, the Employment Relations Authority can award compensation or make an order cancelling or varying the agreement.
So these protections do exist such that employers should not pay “lip service” to bargaining in good faith.
These issues will be further addressed in the upcoming changes to the employment law landscape under the Employment Standards Legislation Bill. The new law intended to come into force in April 2016 is designed to prohibit practices that lack “sufficient mutuality”.
The key changes will be to limit the effects of zero hour contracts, where an employer does not commit to providing a minimum number of work hours, but requires the employee to be available for work. The proposed changes refer to this as an “availability provision”, which will be unlawful unless the employer commits to pay compensation to the employee for their availability.
Going back to the original scenario, the first thing that I thought of when I saw the employer’s response to the employee’s counter proposal was no wonder employees join unions. In this regard, an employer may be able to avoid negotiating with individual employees, but any two employees can band together and join a union and then force the employer to bargain with them in good faith for a collective agreement.
Employers who behave in the manner described above may well push their employees into taking this approach.
First published on stuff.co.nz
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