Recent submissions on two employment relations Bills

By Catherine Stewart (Committee Convenor) and Philip Skelton QC, on behalf of the ADLS Employment Law Committee

ADLS’ Employment Law Committee takes seriously its mandate of speaking up on important questions of law reform in the employment law context. This year has been an especially busy year for reform in the employment arena, with a number of legislative changes being proposed, and the Committee making written and oral submissions on two proposed Bills.

The Employment Relations Amendment Bill makes a number of significant changes to the rules around collective bargaining and the role of unions in the workplace and in collective bargaining. This Bill also proposes changes to the ways in which trial periods and rest breaks and meal breaks are governed, and restores reinstatement as the primary remedy in cases of unjustified dismissal.

Another piece of legislation currently before Parliament, the Employment Relations (Triangular Employment) Amendment Bill, aims to ensure that employees who are employed in a triangular arrangement (i.e. employed by one employer but working under the control of another) may still be covered by a collective agreement with the secondary employer and may allege a personal grievance against both the primary and secondary employers.

The Government has also signalled further employment law changes down the track, including the introduction of “Fair Pay Agreements” (similar to Australia’s National Awards) and revision of the so-called “Hobbit law”.

At the time of writing, the deadline for the Select Committee’s report on the Employment Relations Amendment Bill is 7 September 2018, and for the Employment Relations (Triangular Employment) Amendment Bill is 21 September 2018. The extended deadline from the standard six months for reporting on the Employment Relations Amendment Bill may suggest that significant changes to the Bill will come about as a result of the Select Committee process, and we will be watching this space with interest.

While neither Bill has yet passed, the Committee considers it worthwhile to draw practitioners’ attention to several aspects of each Bill and its recommendations as to how these could be amended and/or clarified to better achieve their underlying aims, and avoid possible unintended legal and practical consequences should they become law. A selection of the Committee’s comments are summarised below. .

Employment Relations Amendment Bill

Collective bargaining and unions

The Committee has concerns about various proposed amendments in relation to collective bargaining and unions. For example, the terms “reasonable” or “unreasonable” have been used in conjunction with phrases such as “reasonable paid time undertaking union activities” and “unreasonably disrupt the employer’s business”. The concern is the potential for litigation to arise out of what (in practical terms) is meant by these terms. Further clarification of what would be considered “reasonable” or “unreasonable” would be of assistance.

This might be simply an addition stating that what is reasonable will be assessed on an objective basis. Or, it might involve clarifying what activities are captured by the phrase “union activities” (for example, would this include attendance of union delegates as support persons/representatives at disciplinary meetings for other union member employees facing disciplinary processes?), or what types of things would be considered to “unreasonably disrupt the employer’s business” (for example, whether an employer is or is not required to bear additional costs to engage another employee during the time the union delegate is performing union activities).

The Committee also notes a new reference to the Defamation Act 1992. Of concern is that, if a matter comes before the Employment Relations Authority about whether information that has been provided or that an employer has refused to provide is “defamatory”, the Authority has no jurisdiction over the Defamation Act, nor does it have experience in defamation claims. If the intention of this clause is that information provided must be “truthful” or an “honest/genuine opinion”, the Committee considers that this could be better reflected in the clause by removing the reference to the Defamation Act and instead requiring the information provided being tied to the section 4 obligation of “good faith”, which is a concept well-known to and understood by employers, employees, unions and the Authority alike.

Trial periods

The Committee also submitted on a new subsection in relation to trial periods that defines “employer” as someone who employs fewer than 20 employees at the beginning of the day on which the employment agreement is entered into. The Committee has concerns that this may encourage small businesses to prefer full-time workers over part-time, to ensure their quota of 19 employees is not so readily met, thus disadvantaging female and vulnerable workers.

A further issue for consideration is whether casual employees should be included in the numerical calculation of employees. Again, the Bill would appear to favour businesses who engage a mixed workforce of contractors and employees (conceivably enabling some larger businesses with a substantial contractor base to obtain the benefit of 90-day trials). The Committee accordingly recommends that the definition of “employer” in that context be amended to “an employer who employs fewer than 20 full-time equivalent employees at the beginning of the employer’s working day, on which the employment agreement is entered into”.

The Committee also had some comments about the definition of “notice” in relation to trial periods, including the potential detrimental impact the 90-day trial period may have for persons whose profession requires a mandatory report to a regulatory body in dismissal situations (such as teachers or nurses and other health practitioners), and invited the legislator to consider whether safeguards should be implemented into the principal Act to protect those employees.

Employment Relations (Triangular Employment) Amendment Bill

Definition of “primary employer”

The Explanatory Note to the Bill indicates that its purposes are to ensure certain rights are available to “employees employed by one employer, but working under the control and direction of another business or organisation” (i.e. employees in a triangular employment arrangement). That being the case, the Committee considers that “primary employer” is defined too broadly and that the definition should be tightened to avoid any unintended consequences. It should be amended to include the additional words “and supplies that person to perform work for the benefit of another person”, to make clear that it refers to employers such as labour hire agencies who supply employees to perform work for a third party.

Collective agreements

As currently drafted, the Bill provides that where the qualifying conditions in section 56(1)(c) are met, the relevant collective agreement “binds and is enforceable by … the employees of any primary employer in respect of the primary employer” – effectively, the primary employer steps into the shoes of the secondary employer, and must carry out all the obligations in the collective agreement as if it were an employer party to that agreement. The Committee consider this could prove problematic in practice, and notes by way of comparison that the UK’s Agency Workers Regulations 2010 (SI 2010/93) guarantee agency workers the same access to workplace facilities (such as onsite cafeterias, childcare and transport services) enjoyed by the end user’s employees. However, the UK Regulations place the obligation to comply on the end user rather than the agency. Given that it is the end user who controls these workplace facilities, we consider this makes more sense than placing the obligation on the agency. The Committee accordingly included a suggested redraft of a number of the Bill’s provisions to better achieve what appear to be the Bill’s desired intentions.

Triangular employment arrangements and personal grievances

A proposed section provides for an employee in a triangular employment arrangement to join both their primary and their secondary employer to a personal grievance proceeding in the Employment Relations Authority or the Employment Court. As currently drafted, the Bill requires the employee to apply for leave to join the secondary employer. This “gatekeeping” provision is necessary because the consequences of granting leave are serious. Once leave is granted and the secondary employer is joined, all of the secondary employer’s actions are deemed to be the actions of the primary employer, and the secondary employer is jointly liable for any remedies awarded.

The Committee considers that this structure unnecessarily complicates the procedure for determination of personal grievances. The way the section is currently drafted, the employee can only join the end user to a personal grievance if the end user is a “secondary employer”. Thus before the Authority or the Court could even consider whether to join the end user to the personal grievance, it would first have to determine, at least to an arguable case standard, whether the level of control over the employee exercised by the intended party to be joined fulfilled the definition of “secondary employer” – effectively necessitating a “trial within a trial”.

The Committee accordingly suggested alternative wording doing away with the need, as a preliminary step, to seek leave to join the end user, but providing that the end user is only liable if the Authority or the Court determines that the end user is in fact a secondary employer and that its actions have resulted in or contributed to the grounds of a personal grievance – a lowering of both the threshold to commence a claim against an end user, and the stakes for joinder.