Employment Court rules on communications during bargaining

Anthony Drake, Senior Associate | Monday 17 October 2005

To talk or not to talk

An Employment Court decision over communications during the bargaining process has been labelled in some quarters as a gag on employers.

That could well be the end result in some cases. What it does flag to both employers and staff representatives is that they will need to think even more carefully before they speak when it comes to "talk" around the bargaining process.

The full bench of the Employment Court's recent decision has clarified the approach to communications during bargaining following the December 2004 amendments to the Employment Relations Act (ERA).

In Christchurch City Council v Southern Local Government Officers Union, the Court was asked to decide two key issues:

• how the requirement of good faith related to communication during bargaining; and
  
  
• the extent to which an employer is entitled to communicate during bargaining on matters relating to the bargaining with employees who are members of a union engaged in bargaining with the employer.

The case involves two sets of bargaining in 2003 and 2004 and an Employment Relations Authority (the Authority) determination during the second round of bargaining.

Bargaining in 2003

The council and the union were parties to a collective employment agreement which expired in June 2003.  The union initiated bargaining and the parties agreed and signed up to a bargaining process arrangement as outlined  in the ERA.  This bargaining process arrangement expressly mentioned the obligation to act in good faith.  In particular, it stated that either party was not prevented from making comment to interested parties or public comment, provided such communication did not breach the ERA's requirements. If it did, the offending party was obliged to "take on board" any subsequent comments by the other.

In September 2003, the council sent a communication to union members about superannuation. The union objected on the grounds that it believed it contained inaccurate information and false representations about the council's proposal.  The council maintained the information was factual only and did not undermine the union's bargaining position in any way. 

The council went to the Authority seeking a decision on whether it was entitled to communicate with employees during the bargaining process on matters relating to the negotiations, under the terms of the Bargaining Process Arrangement.  The council also asked the Authority to decide whether an employer is entitled to communicate with employees during bargaining on matters relating to the negotiations, pursuant to the ERA, and if so, whether there would be any restrictions.

The Authority's ruling, issued in September 2004 during bargaining for the 2004 collective agreement, found that the council should have ensured that the union had received and had proper opportunity to suggest changes to the draft communication, during the 2003 negotiations.  It also found that the communication contained false and misleading representations.  Despite these findings, the Authority held that the council had not acted in bad faith in issuing the communication.

And on to 2004 bargaining...

During the first part of this round of bargaining, there was no bargaining process agreement in force.  The council was seeking a multi-union collective agreement (MUCA). Although the union was opposed to this, it agreed to facilitate meetings of its members to allow the council to present its case. 

There was a low turnout at these meetings and the council decided to place information on the council's intranet.  It gave a copy of the material to the union but the union did not approve of the information going out in any form and warned the council that it would be in breach of good faith should it publish it.

The council put an amended statement on its intranet after consultation with the union. The union had not agreed to the content and as the Authority had not yet issued its decision, the union filed a counter claim to the council's claim.

Shortly afterwards bargaining for the MUCA lapsed. The parties began negotiations for a single union collective agreement and also finalised a bargaining agreement for these negotiations. But the negotiations broke down. It was around this time the Authority released its ruling.

After the breakdown, the union reported back to its members. But what it said upset the council who sent out a media release and email to employees. The Union responded with its own media release.  The council, without telling the Union, sent further emails to employees, and also filed a challenge against the Authority's ruling in the Employment Court. 

What both sides had to say in Court

The council argued that employers are free to communicate with their employees about daily operational matters during collective bargaining.  They also contended that this right enables an employer to communicate on matters relating to the bargaining such as the content and value of the employer proposals, or employer "updates" as to progress or lack of progress, provided that such communications do not undermine the role or authority of the Union.  As the ERA expressly permits communications to employees provided they are statements of fact or opinion which are reasonably held, the council argued that this must include matters relating to collective bargaining. 

The council relied on the Employment Contracts Act 1991 and related case law to argue that persuasive communications during bargaining are lawful. 

The Union accepted that the ERA did not stop the employer from communicating directly with employees on matters unrelated to the bargaining, but claimed any communication about the bargaining would infringe on good faith provisions, especially if it undermined the bargaining process or the role or authority of the representative of the other party.

The Court weighs in

Good faith in communications

The Court noted that the ERA requires parties to collective bargaining to use their best endeavours soon after bargaining is initiated, to enter into a bargaining process arrangement that will set up an effective and efficient process.  Where there is an agreement, as in this case, then the behaviour of the parties must be judged in the light of it. 

Referring to the 2003 bargaining process arrangement, the Court noted that it made express reference to the obligation to act in good faith.  ERA outlines the obligations of bargaining parties in what amounts to a mandatory minimum code.  The only exception to the prohibition on bargaining except with representatives, is where the parties agree otherwise.

While the ERA lists matters relevant to the bargaining parties in dealing with each other in good faith, the Court said that there is no rigid formula for determining whether these have been adhered to. Instead, the factors listed must be waived and good faith assessed in the light of any particular set of circumstances.

The Court rejected the council's argument around the 1991 Act, saying the ERA added to the responsibilities of the parties to ensure that they did not bargain with persons for whom a representative or advocate is acting unless the union and the employer agree otherwise.  Parliament intended that whether or not attempting to persuade employees is held to be undermining of a union's authority, any attempt at bargaining directly or indirectly with employees is prohibited, it said.

The Court held that on matters relating to bargaining, the union and the employer must neither engage in negotiations that relate to the bargaining nor communicate or correspond with persons for whom a representative is acting. 

Communications – how much?

The Court considered the extent of permissible communications by parties to bargaining for collective agreements and found that the ERA requires that parties must not (directly or indirectly) bargain about terms and conditions of employment with other than representatives unless there is agreement allowing this.  The Court held that this amounts to a legislative ban on collective bargaining by either party with anyone other than the employees' union or the employer's representative. 

The Court also held that communications and correspondence need only concern the bargaining which has been or will be initiated, to be regarded as relating to bargaining for a collective agreement.  It concluded that neither party may, without agreement otherwise, correspond or communicate about the bargaining with persons for whom an authorised representative is acting.

What does it mean for future bargaining?

While the Court was reluctant to issue general future guidance, it did say that it is only in the absence of bargaining process arrangements, that the statutory default position comes into play. This may be more restrictive than arrangements the parties make themselves.

There has been employer comment, including from Christchurch City Council itself, that this will make future negotiations more difficult and protracted in situations where they are "gagged" from countering union information.

The council has now made application for  leave to appeal.

Regardless of any further outcomes in this case, we can almost certainly expect to see other cases requiring court clarification.

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