Employment Relations

Lecture 12: Bargaining

References / reading
Employment Relations Act 2000 Haynes ,Oldfield, and Fryer (2006). New Zealand Employment Relations Rasmussen, E. (2009) Employment Relations in New Zealand, Chapter 14 (overview) Rudman, R. (2009) New Zealand Employment Law Guide, Chapters 5&6 www.dol.govt.nz

Topic Outline
Describe the legal framework and processes relating to employment agreement bargaining and apply to factual situations. Apply 'integrative' and 'distributive' negotiation strategies, and apply skills in the practical processes of bargaining, including setting objectives, case preparation, negotiation, conclusion and tactical considerations. Negotiate an employment agreement.

Defining bargaining
Bargaining and negotiation are often seen as similar terms Bargaining is more akin to competitive haggling over the price of labour but also terms and conditions. P407 mutual dependence Negotiation is a more formal process that occurs when parties are trying to arrive at a mutually acceptable solution (Rasmussen) Bargaining can be viewed as a group of strategies within a negotiation process (Carrell and Heavrin)

Wage bargaining in Nz
1894-1991: Most of this period wages were regulated
Awards set terms and conditions

1991-2000: Wage bargaining was largely unrestricted

1991 - 50% workers covered by multi-emp. awards 1999 - only 3%

>2000: ERA promotes collective bargaining and good faith behaviour

However most workers continue to be covered by IEA
(Rasmussen)

Theories of Collective Bargaining

Market theory
Collective bargaining is a means to fix price of labour a/c to supply & demand

Governmental theory
Collective bargaining is a rule-making process

Managerial theory
Views collective bargaining as a method of management that includes unions

Theories of collective bargaining

Rasmussen pp400-405

Interest-based bargaining (Fisher & Ury) Opposite view of bargaining as a competitive process Principles
Separate the people from the problem Focus on interests not positions Invent options for mutual gain Use objective criteria

Types of bargaining
(after Walton & McKersie)
Integrative or indirect bargaining

Distributive or direct bargaining

Behavioural theory of bargaining 1

(after Walton & McKersie)

Integrative or Co-operative bargaining

Mutual-gains or win-win approach Assumes parties have common goals
Integrative bargaining process; Lewicki (2003)
1. Identify /define the problem
Parties exchange info. about the problem

2. Understand the problem

Identify common interests

3. Invent options/solutions 4. Evaluate and narrow solutions

Agree on a balanced solution

Behavioural theory of bargaining 2

(after Walton & McKersie)

distributive or pressure or competitive bargaining Where direct conflicts of interest occur, win-lose approach Gains by one made at the expense of the other distributive bargaining process: 1. Prepare for bargaining 2. Bargain at the table i. Preliminaries ii. Discussion iii. Proposal and packaging iv. Settling 3. Post-settlement

The practice of bargaining

Issue Strategy Direct bargaining Indirect bargaining

Tactics

Examples

What factors influence choice of bargaining strategy ?

Negotiation strategies
The settlement range = the range of acceptable outcomes for each party
Employer range.... $...12.0012.5013.0013.5014.0014.5015.00 Employee range....

Types of bargaining
Individual bargaining
An employee negotiates their own EA with a prospective employer

Collective bargaining
The practice of determining wages and salaries by negotiation between 2+ employees, 1+ employees and 1 or more unions

Bargaining provisions under the ERA

Part 5 of ERA covers collective bargaining Sets out
core requirements of good faith in collective bargaining (s 32) Rules governing how it is initiated, conducted and facilitated

Part 6 covers bargaining rules for individual not covered by CEAs

Employment Relations

GOOD FAITH BARGAINING

Code of Good faith

Rasmussen pp409-411

Is a generic code that provides employers and unions with guidance to good faith in collective bargaining Covers every stage of collective bargaining Includes a list of matters that parties are expected to address (section 2.2)

Code of Good faith

It requires that parties to bargaining are:
active and constructive in establishing and maintaining a productive employment relationship that they are responsive and communicative and use their best endeavours to agree on an effective and efficient bargaining process meet together and to consider and respond to proposals to conclude a collective agreement unless there is a genuine reason not to, based on reasonable grounds You will need to print a copy out to study for assignment 2. See Course site: Topic 4- Bargaining - student handout or
http://www.dol.govt.nz/infozone/collectivebargaining/1-introduction/codeof-good-faith.asp

When may bargaining be initiated ?

No CA anytime CA in place (s41)
Union within 60 days of expiry of agreement Employer within 40 days

How is bargaining initiated ?

Who may initiate ? (s40) Union Employer By giving notice
In writing Signed Identifying intended parties Identifying intended coverage

Ratification of CA (s51)
Must follow procedure Procedure notified to other parties Unions can sign only after ratification

Start / expiry (s52)

Starts
As agreed or on last signature

Expires earliest of
Date specified Specified event Third anniversary

Mandatory requirements of agreements

s54 (CA) s65 (IEA)

Individual bargaining
Part 6 of ERA covers good faith in bargaining for individual employment agreement Under the ERA bargaining for individual agreements must be conducted in good faith

Unfair individual bargaining (s68)

s 68 defines unfair individual bargaining when a person
is induced to enter into the agreement by oppressive means, undue influence, or duress; or lack of understanding of the agreement provisions due to age, sickness; mental or educational disability, a disability relating to communication, emotional distress, or similar; or no opportunity of seeking advice relies o the skill, care or advice of the other party; AND Other party knew or ought to have known and still went ahead.

REMEDY Compensation, variation, as ERA thinks fit

Options for new employees

The bargaining process for individual agreements will vary depending on:
1. CA exists but new employee not a union member 2. CA exists new employee is a union member 3. No CA exists regardless if union member or not

1. CA exists new Employee not a union member

Employer must inform Employee that
CA exists, covers work performed by Employee Employee may join the union How to contact the union Employee will be bound by CEA if join Provide copy of CEA If Employee agrees, inform union Ee has entered IEA

(s62) For first 30 days all Employees have terms of CEA and additional benefits (s 63)

2. CA exists Employee is union member

Automatically covered by CA (s56) Can negotiate additional terms (s61)

3. No CA union member or not

Before finalising, Employer must give Ee Copy of intended agreement Advice that employee may seek independent advice A reasonable opportunity to seek that advice

Employment Relations

BARGAINING IN PRACTICE

Preparing for bargaining

Use Code of good faith to ensure all matters covered
Decide claims to pursue Research arguments in support of own and likely opposition arguments Determine strategy
Establish objectives Determine priorities Establish settlement range Determine and rehearse tactics

Allocate roles to neg. team Softening up the opposition

e.g. Public statements

At the table
1. Preliminaries
Introduce team Agree of agenda Outline claims and broad arguments in support

2. Discussion 3. Proposing and packaging

Propose solutions to issues in conflict Seek possible areas of compromise and conflict Packaging proposals

4. Settling

Post settlement
Ratify procedures Draw up and sign new document

Passing on

ERA amended 2004 to make it a breach of good faith if emp. pass-on terms agreed in CEA to other Employee or unions Bargaining fee clause can be added to CEA Non union members can get same terms and conditions as those in the CEA if they pay a bargaining fee to the union