Unions & Collective Bargaining – A Quick Guide for N.Z Employers
Unions and collective bargaining are a significant feature of New Zealand’s employment relations framework. While union density varies across sectors, employers can still face legal and operational risk if union-related obligations are misunderstood or mishandled.
The Employment Relations Act 2000 (‘the Act’) establishes a framework that protects employee freedom of association, provides for union rights, and prescribes how collective bargaining must be conducted, among other matters. Employers who fail to comply risk legal challenges, penalties, compliance orders and reputational damage, among other problems.
This article provides an employer-focused overview of union membership, union rights, union access and representation, collective bargaining obligations and key risk areas for New Zealand employers in terms of this area of employment relations.
Freedom of Association and Union Membership
Employee Rights
Under the Act, employees have the right to:
Join a union.
Not join a union.
Participate in lawful union activities.
Union membership is voluntary. Employers must not influence or interfere with an employee’s decision to join a union.
Prohibition on Preference
Employers must not:
Give preference to union members.
Disadvantage non-union employees due to union status.
Treat employees differently because of union involvement, or membership.
This applies to:
Recruitment and promotion.
Pay and conditions.
Performance management.
Termination decisions.
Even indirect or unintended conduct (such as comments discouraging union membership) can be unlawful.
Union Rights and Employer Obligations
Union Access to the Workplace
Registered unions are entitled to enter an employer’s workplace for purposes including:
Representing union members.
Recruiting members, including communicating with non-unionised employees.
Bargaining for a collective agreement, including a new collective employment, or existing one.
Dealing with health and safety matters.
Employers may impose reasonable conditions relating to union access:
Health and safety.
Security.
Reasonable notice requirements.
However, employers cannot unreasonably deny access. Blanket refusals, excessive restrictions, or delaying tactics are likely to breach the Act.
Representation of Employees
Unions may represent:
Union members.
Employees covered by a collective agreement.
Employers must:
Recognise union authority to represent members.
Communicate with the union where representation applies.
Avoid by passing the union in bargaining situations or undermining collective bargaining processes.
Direct communication with employees is permitted but must not undermine or circumvent union representation, or collective bargaining.
Collective Bargaining: A High-Level Overview
When Collective Bargaining Applies
Collective bargaining occurs when:
A union initiates bargaining for a collective employment agreement.
Employees are union members.
The union seeks a collective employment agreement covering those employees.
Participation in collective bargaining is compulsory once bargaining is lawfully initiated.
Good Faith Obligations
Employers must:
Bargain in good faith.
Be active and constructive.
Respond to proposals.
Provide relevant information.
Prohibited conduct includes:
Undermining the bargaining process.
Failing to meet or engage meaningfully.
Breaches of good faith can result in penalties and bargaining orders.
Multi-Employer Bargaining
Multi-employer collective bargaining occurs where a union initiates bargaining with two or more employers to negotiate a single collective agreement – a Multi-Employer Collective Employment Agreement (a ‘MECEA’) covering employees across multiple businesses, typically within the same industry or occupational group.
Employers cannot opt-out of multi-employer collective bargaining, which was previously an option until the law was repealed by the Labour Government.
A MECA is expressly provided for under the Employment Relations Act 2000 and remains open to unions to initiate with employers, despite the repeal of the Fair Pay Agreement legislation.
Key Areas of Risk for Employers
Anti-Union Conduct
Actions or statements perceived as discouraging union involvement can result in:
Penalties.
Personal grievances, e.g. unlawful discrimination.
Compliance orders.
Mishandling Union Access
Unreasonably restricting access or failing to engage appropriately with union officials is a common compliance failure.
Bargaining in Bad Faith
Failing to engage genuinely, withholding information, or bypassing the union can undermine bargaining legitimacy.
Direct Dealing During Bargaining
Communicating directly with unionised employees in a way that undermines the union’s role creates legal exposure – particularly if a Bargaining Process Agreement prevents communication with unionised employees during collective bargaining.
Employers should always pay close attention to what obligations are specified in a Bargaining Process Agreement and should check these documents carefully before collective bargaining is initiated.
Case Law Snapshot – What Recent Cases Tell Employers?
High Performance Sport New Zealand Ltd v The Athletes’ Cooperative Inc [2024] NZEmpC 250
The Athletes’ Cooperative Inc (TAC), a registered union representing elite athletes, gave notice to High Performance Sport New Zealand Ltd (HPSNZ) to initiate collective bargaining. TAC sought a collective agreement covering elite rowers and cyclists. HPSNZ declined to engage on the basis that it did not employ any of TAC’s members, who were instead engaged through national sporting organisations. TAC argued that HPSNZ was nevertheless required to bargain.
The Employment Court (‘the Court’) held that for a union to validly initiate collective bargaining under section 40 of the Act, there must be a sufficient employment relationship between the union’s members and the employer. Because HPSNZ did not employ TAC members and there was no contractual nexus, the court found that the union’s notice was invalid and did not trigger a bargaining obligation on HPSNZ. This reversed the earlier Authority determination.
Important points:
Collective bargaining rights under section 40 require an employment relationship between the union’s members and the employer.
An employer cannot be compelled to bargain where its workforce does not include the union’s members.
Employment relationships, in this context, hinge on contractual connections, not merely organisational or funding relationships.
Employer Takeaway: Employers are not obligated to enter collective bargaining unless a union’s members are employed by the employer in roles covered by the proposed collective agreement. Notices to bargain that lack this foundational employment relationship can be challenged successfully.
Chief of New Zealand Defence Force v New Zealand Public Service Association Te Pūkenga Here Tikanga Mahi Inc [2024] NZEmpC 251
The Public Service Association (PSA) and the Chief of the New Zealand Defence Force (CDF) were parties to collective bargaining for a collective agreement covering civilian staff. During negotiations, the employer included backdated pay increases for non-union members in its annual remuneration review. The employer told the union it could not backdate pay to union members due to advice from the Public Service Commission, but records later showed that advice had not actually been given. Subsequently, a collective agreement was concluded without backpay for union members. The PSA claimed the employer had unlawfully given preference to non-union members and undermined collective bargaining under the Act.
The Court ruled CDF had acted in a way that engaged the statutory prohibition on preference but concluded the employer did not necessarily breach good faith duties where the conditions did not have the effect of undermining the collective agreement. The Court emphasised that when assessing preference issues, employers must consider pay rates and terms as a package, and that intention alone (without undermining effect) may not be sufficient to constitute a breach requiring a penalty. Nonetheless, the Employment Relations Authority’s compliance order -requiring backdated adjustments for union members was upheld.
Important points:
Employers must not give preference to non-union members in a way that either breaches section 9 (prohibition on preference) or undermines collective bargaining under section 59B of the Act.
Intention to undermine is relevant but must be paired with actual effect on collective bargaining integrity.
Remedies may include backdating entitlements and compliance orders rather than penalties in every case.
Employer Takeaway: When translating collective agreement terms into broader workforce pay decisions, be cautious about disparate treatment of union and non-union employees. Employers should assess the overall effect of differential terms and ensure any pay changes are negotiated through bargaining processes to avoid preference claims and compliance orders. Early consultation with unions can prevent disputes escalating to costly legal proceedings.
Industrial Action: Strikes and Lockouts
Industrial action in New Zealand is tightly regulated under the Act. Lawful industrial action is generally limited to circumstances involving collective bargaining or health and safety issues.
Strikes
A strike occurs where employees act collectively to:
Stop or reduce work, or
Disrupt normal work processes.
Strikes are lawful only if:
They relate to bargaining for a collective agreement.
They concern health and safety matters.
Statutory notice requirements are met (where applicable).
Employees are protected from dismissal for participating in lawful industrial action, but not unlawful action.
Lockouts
A lockout is industrial action initiated by an employer, typically involving:
Excluding employees from the workplace, or
Withholding work or pay.
Lockouts are lawful only where they are:
Related to collective bargaining, and
A response to a strike or threatened strike.
Key Risks for Employers
Participating in or responding to unlawful industrial action such as an unlawful lockout can result in penalties and compliance orders.
Pay deductions during industrial action must be handled carefully and lawfully.
Employers should avoid conduct that escalates disputes or undermines good faith obligations.
Employer Takeaways
Unions and collective bargaining form a structured and regulated part of New Zealand’s employment landscape. It is an area of employment relations that can involve complex issues and considerations for employers to manage.
Employers who understand their legal obligations, adopt a measured approach to union engagement, and comply with good-faith requirements are best placed to minimise risk and maintain constructive employment relationships.
Compliance Warning
Union and collective bargaining obligations under the Act are strict and actively enforced by unions. Employers who mismanage union engagement or bargaining processes risk penalties, compliance orders and successful personal grievance claims.
Common risk areas include:
Influencing or discouraging union membership.
Unreasonably restricting union access.
Undermining union representation and collective bargaining.
Failing to bargain in good faith or provide relevant information.
Breaches may result in financial penalties, compulsory bargaining orders, escalation of industrial action and reputational damage. Importantly, employers can be found in breach of the law regardless of intent.
Union matters should be treated as a high-risk compliance area by employer requiring informed, disciplined management and careful decision-making. Seek professional assistance or support for matters involving union related compliance, including managing collective bargaining.
This article is provided for general information only and does not replace professional advice. Employers should seek advice specific to their circumstances from Employer Pro if in doubt on their matters involving unions and collective bargaining, including collective employment agreements. Employer Pro has a range of employer focused resources and services available through our competitive Employer Protection Packages.
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