The Employment Relations Act overview

by | Mar 8, 2017 | Employment Agreements

The Employment Relations Act is the central piece of legislation governing employment relationships. It provides a structure for employers, employees and unions to negotiate employment agreements.

The Act also outlines the legal process for resolving employment problems including a free mediation service, and avenues for employee’s to take a case to both the Employment Relations Authority and the Employment Court.

The aim of the Act is to help build productive employment relationships, and ‘good faith’ is central to this process. It requires employers, employees and unions to deal with each other openly, honestly and constructively.

Good faith

The good faith provisions require both employers and employees to actively and constructively participate in establishing and maintaining a productive employment relationship.

Good faith provisions are also enacted in the process of negotiating contracts, dealing with such matters as  employee misconduct, or when an employer is proposing changes that may impact the employee’s role for example when there is a potential restructure.

In these situations The Act outlines the obligations of each party to act in good faith during these processes, The Act aims to clarify what information employees are entitled to during these processes.

Good faith includes the following three elements

  • Parties must not act in a misleading or deceptive way
  • Parties must be responsive and communicative
  • Before making a decision, which may result in employees losing their job, the employer must give the affected employees sufficient information to be able to understand the proposal and then give them a proper opportunity to comment

Good faith is also wider than this. It is more than just following the letter of the law. It involves treating others fairly using common sense. Broadly, good faith requires employers, employees and unions to:

  • Act honestly, openly, and without hidden motives
  • Raise issues in a fair and timely way
  • Work constructively and positively together
  • Give each other relevant information ahead of when it is needed and as soon as possible, all information given should be carefully considered
  • Be fully honest with each other
  • Raise concerns or issues as soon as possible and respond to these quickly
  • Keep an open mind, listen to each other and be prepared to change opinion about a particular situation or behaviour
  • Treat each other with respect

Flexible work

Flexible working arrangements aim to improve people’s participation in the labour market and to better reflect modern lifestyles. Flexible working arrangements have been broadened to include all workers, not just caregivers, in order to assist employees find the right work-life balance for them and their employer including:

  • Extending the statutory right to all employees to request flexible working arrangements
  • There is no limit on the number of requests an employee can make in a year
  • The employer must respond in writing to a request for flexible working within 1 month, with an explanation of any refusal

Rest and meal breaks

Rest and meal break rules are also flexible to balance the importance of these breaks with the needs of business continuity. The Bill says employees are entitled to reasonable rest and meal breaks to rest, eat, drink and take care of personal matters. The Bill enables employers and employees to negotiate, in good faith, rest and meal breaks that meet legal requirements and allow the business to work.

The Act allows reasonable limits to be agreed or imposed as to when rest breaks and meal breaks can be taken and it gives employers the ability to dictate when breaks will be taken, if they cannot agree with employees. It gives employees the right to be reasonably compensated where the employer cannot reasonably give the employee rest and meal breaks, however the Act still:

  • Requires employers to pay employees for rest breaks
  • Stops people contracting out of legal rest and meal breaks or the requirement to give compensation instead of breaks
  • Does not overrule any other law that makes an employee take rest and meal breaks in a certain way

Continuity of employment and protection of vulnerable workers

The Bill gives more certainty and clarity to employers while keeping key benefits for affected employees including:

  • Exemptions to SMEs employing 19 or fewer employees from having to take on employees affected by the work changing hands
  • Timeframes for employees to choose whether or not to move to a new employer (elect to transfer) during a restructure involving vulnerable workers
  • The current employer must provide the new employer with detailed information on each employee that is transferring. It also introduces a mechanism for apportioning liabilities for service-related entitlements between employers where the parties are unable to agree between themselves
  • Provides the new employer protection from unjustified increases in employee costs or changes to terms and conditions of employment

Collective bargaining

The structure for employers and unions to negotiate and enter into collective agreements is bound by the duty of good faith during collective bargaining but does not require parties to reach a collective agreement. The parties can ask the Authority to declare that bargaining has ended and negotiate individual agreements.

  • Employers are allowed to opt out of a multi-employer collective agreement (MECA) bargaining from the start if they have decided not to be a party to that MECA
  • Employers don’t have to offer new employees, who are not union members, the same terms and conditions of the collective agreement for their first 30 days of employment
  • Proportionate pay reductions are allowed as a response to partial strikes
  • Advanced written notice of any proposed strikes and lockouts must be given in all sectors


Mediation is a free service from the Ministry of Business, Innovation and Employment (MIBE), where an independent person sits down with both parties and tries to help them resolve employment issues. Mediations are held in a semi-formal, confidential environment. If employment relationship problems can’t be resolved by a mediator, an employee may take their case to the Employment Relations Authority.

Employment Relations Authority

The Employment Relations Authority helps resolve employment relationship problems. It does this by looking into the facts and making a decision based on the merits of the case, not on technicalities. At an investigation meeting’s conclusion, the Authority must (where practical):

  • Give an oral determination, and a written record of that determination within 1 month or give an oral indication of the Authority’s preliminary findings to the parties (unless extra evidence is provided) and deliver a written determination within 3 months of the investigation meeting or when extra evidence is provided, whichever is later
  • The Authority can only reserve its determination if there are good reasons why it is not practical to give either an oral determination or indication of preliminary findings. A reserved determination must be delivered within 3 months of either the investigation meeting or any extra evidence being provided, whichever is later.
  • The Authority can also decide matters without holding an investigation meeting. In these situations, the Authority must give a written determination within 3 months of receiving evidence from the parties.

 Employment Court

The Employment Court hears and determines cases relating to employment disputes. These include challenges to the determinations of the Employment Relations Authority, questions of interpretation of law, and disputes over strikes and lockouts. An employee may raise a personal grievance with an employer with the Employment Court.

Personal grievances – If you receive a personal grievance letter don’t ignore it

Begin the process by having a HR professional assist you in assessing the personal grievance against you. Questions asked may include:

  • Is the grievance raised within 90 days of when the employment issue arose, or if the employee has been dismissed, they have 90 days from the date of the end of the employment to raise their personal grievance?
  • Did you follow good legal process during your dispute and or upon termination?
  • Did you act in good faith during your process?
  • Were matters discussed and dealt with in a fair and reasonable manner?

Your HR advisor will assist you to weigh up the risk associated with the claim, and this will often determine whether an employer decides refute the claim, fight the claim or come to a settlement agreement – often referred to as a full and final settlement agreement between the two parties.

If an agreement cannot be reached a party may elect to use the MBIE free mediation service to help resolve the matter.

What happens at mediation?

  • A date will be agreed by the parties and you will be allocated a morning or afternoon session (allow at least 4 hours)
  • Both parties will arrive at the mediation department and will be put into separate rooms
  • The mediator will brief both parties on the process and then bring them into the room together
  • Without interruption both parties will state their case, the mediator will ask some questions, and questions can be asked across the table
  • Once discussions are no longer being productive the mediator will break you back into separate rooms and go over the strengths and weaknesses of your cases and the possible liabilities. Most do this by going through your worst case and best case scenario.
  • The mediator will attempt to negotiate a settlement between the parties. You don’t have to reach a settlement, but the reality is that in most cases you will end up paying over some money in order to make sure the personal grievance claim doesn’t go any further. The average award for an employee to win in court is three months pay plus $7,ooo for hurt and humiliation
  • If no settlement is agreed the employee then has two years to decide to take the matter further with the Employment Court.

Call us on 0800 HRtoolkit and we will talk you through the most cost effective ways to defend a personal grievance.

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