BIBM682: Analysis of Employment Agreements in Industrial Relations

This report analyzes employment agreements within the context of industrial relations, focusing on the legal framework established by the Employment Relations Act 2000. It begins with an executive summary and table of contents, followed by a research question and scope that investigates diff...Read More

Employment agreements 1
INDUSTRIAL RELATIONS
Student’s name
Module: BIBM682 Industrial Relations
Waikato Institute of Technology
Hamilton
Due date

Employment agreements 2
Executive summary
It is a requirement by the ERA 2000 that every employer and employee or workers union
enter an agreement regarding terms and provisions of the working environment. This study
therefore aims at discussing different approaches to negotiating employment agreement within a
legal framework looking at various case studies. The research was based on secondary data
sources plus provided case studies which focused on comparing and contrasting CEA and IEA,
explaining the negotiation processes and comparing negotiations of the provided case studies as
to whether they complied with ERA 2000 provisions. From this study it’s evident that with a
well negotiated employment agreement, the working environment of any organization becomes
favorable to both the employer and employee resulting to improved performance

Employment agreements 3
Table of content
Executive summary.........................................................................................................................1
Table of content...............................................................................................................................1
Research question and scope...........................................................................................................2
Research methods............................................................................................................................2
BODY OF THE REPORT...............................................................................................................2
1. Compulsory clauses..................................................................................................................2
1.1 Compulsory clauses in Individual Employment Agreements................................................2
1.2 Compulsory clauses in Collective Employment Agreements................................................3
1.3 Compare and contrast compulsory clauses in IEAs and CEAs.............................................4
2.0 Process for negotiating CEAs....................................................................................................4
3.0 Process for negotiating IEA.......................................................................................................5
4.0 Collective contracts...................................................................................................................5
4.1 Collective contract between (POAL) and the members of the (MUNZ),..............................5
4.1.1 Claims of the employer...................................................................................................5
4.1.2 Position and claims of the workers, as represented by their unions................................6
4.1.3 Strategies used by the unions and employers to get the agreement settled-....................6
4.1.4 Evidence of good faith, or breach of good faith, in bargaining.......................................6
4.2 Fonterra Ingredients collective agreement 2018....................................................................7
4.2.1 Changes suggested by employer.....................................................................................7
4.2.2 Claims of the workers......................................................................................................7
4.2.3 Strategies used by the unions and employers-.................................................................7
4.2.4 Evidence of good faith....................................................................................................8
5.0 Case study..................................................................................................................................8
5.1 Does this process comply with the ERA 2000? Why or why not?........................................8
5.2 Does either party use any strategies to settle the IEA?..........................................................8
5.3 Has each party acted in good faith, as set out in the ERA 2000?..........................................8
5.4 Any other issues to be raised about this process....................................................................8
6.0 Conclusion.................................................................................................................................9
References........................................................................................................................................9

Employment agreements 4
Research question and scope
Are there different approaches to negotiating employment agreements, within a legal
framework?
Are there different strategies used?
Employment agreements from New Zealand companies/organizations, covered by the
Employment
Relations Act 2000 only is to be considered. In particular, this assignment focuses on the two
Negotiations provided.
Research methods
This study was based mainly on secondary sources most of which involved research websites
that were writing reports on the study cases in question. Academic journals and books were also
used to extensively discuss the idea behind CEA and IEA processes
BODY OF THE REPORT
1. Compulsory clauses
1.1 Compulsory clauses in Individual Employment Agreements
Part 6 of the Employment Relations Act 2000 specifically provides the rules which govern the
terms and the conditions of the employment. Subsection 60(b) of the ERA provides new
employees whose terms of the employment are not governed by the collective agreements
sufficient information and adequate opportunities about entering into individual employee
agreement (Employment Relations Act, 2018). The form and content of individual employment
agreement has been provided in section 65 of the ERA 2000. It has been provided in subsection
65(2) of the ERA that an individual employment contract must contain:
 the names of the employers and employees
 description of the nature of work to be performed
 the place where the employee is to perform his work
 the agreed hours of work as specified in section 67c
 salary and wages to be paid to the employee in consideration
 explanation in simple and lucid language of the services that are available to the
employees about the available services in relation to the resolution of the problems
related to employment problems. In this section there is a reference of section 114 of the
ERA 2000 which states that a personal grievance can be raised within a time period of
ninety days.
All individual agreements in any employment set up needs to cover certain things and most of
these clauses are a requirement by the employment relations act 2000 with one clause being a
requirement of the holiday’s act 2003 (Benson, 2000). These clauses include;
Names of employer and employee

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Description of work that has to be done by employee
Indication of the place where the employee is supposed to work
Indications of any arrangements relating to employment times at work
Salaries to be paid to employee
A statement covering an employee being paid half of their salary in case they work on a public
holiday (Müller and Rüb, 2005)
Protection provisions for the employee in case of any restructuring situations and this covers
issues like;
Matters to be negotiated by the new employer, process to be followed by the new
employer while discussing matters affecting the employee and the kind of process that needs to
be followed at the restructuring time in determination of any entitlements to the employee.
Explanation of the services available in a plain language in case of employment resolution
relationships problems (Descolonges, 2006)
For a fixed term agreement the individual agreement clauses should include a statement
indicating how the employment will end and the reason for ending such an employment. In a
situation where one is working under probation/trail period a statement of fact about the trial
period needs to be included.
1.2 Compulsory clauses in Collective Employment Agreements
As provided in section 52 of the Employment Relations Act that collective employment
agreement comes into effect on the date specified in the agreement. However, if no date is
specified in the employment contract, the contract comes into effect on the date on which such
agreement had been signed by the last party or the person authorized to sign on behalf of the last
party. In section 54 of the Employment Relations Act 2000, the form and the content of the
employment collective agreement has been provided. It has been specifically provided in
subsection 54(3) of the Employment Relations Act 2000 that the collective agreement must
contain a coverage clause, must be written in simple and lucid language and must be available
for the resolution of disputes Employment Relations Act, 2018). Such collective agreement must
contain a reference of the time period of ninety days within which a personal grievance can be
raised. Every employment collective agreement must contain a clause which states how the
collective agreement can be varied. It has been further provided in subsection 3(b) that any
clause in the agreement must not be contrary to the provisions of law.
These clauses are often negotiated and agreed upon between a registered union and an
employer and its only binding to members of the union whose positions are covered by the
coverage clauses in the agreement (Brewster et al., 2007).
The main clauses include;

Employment agreements 6
Recognition clause: gives details on the kind of employees accepted by the employer as
part of the bargaining unit ad are represented by the union. These employees are the only ones
covered by the collective bargaining agreement. The recognition can be granted voluntarily by
the employer or involuntarily after much pressure from the employee
Management rights clause: this clause specifies what is not subject to negotiation but
only gives details of areas of operations in which the company is left to the discretion of the
employer. In this clause the rights to promote, hire, fire, discharge employees, suspend, direct
employees and establish policies for operation are solely given to the management team.
However they are not absolute rights (Spooner, 2003). For instance if the union disagrees with
the firing of an employee then there is room for negotiation
Dues check off- this clause deals with the idea of an employer deducting union dues from
its members paychecks and remits the money to the union. This clause is enjoyed by unions
because they don’t have to collect dues from their members on an individual level (IOE, 2007a).
This prepares the employees mentally and they simply consider such deductions as part of the
payroll taxes.
No strike/no lock out clause-this clause ensures that during the agreement time, the union
will not hold any strikes and the employer will not lock the union members out of their work
places. Its intention is to avoid work place shut downs (IOE, 2007b). This helps to eliminate
mid-contract strikes while providing room for unions to air their grievances. If the contract
expires without an amicable solution to the raised issues, union members are allowed to call for a
strike.
Subcontracting clause: it offers room to discuss when it’s appropriate for an employer to
hire a different company to do work on its behalf. Unionized employers in most cases prefer
having work done in a less expensive and more efficient manner by using the subcontracting
technique. However most unions seek to have this clause out of their CEA because they know it
comes with job losses and other inconveniences (Gibb, 2005).
Union security clause: this clause secures the existence of a union at an employment
place. It requires all members working at a certain work station to pay some dues and commit to
remain members to the union for the period they are with the company.
1.3 Compare and contrast compulsory clauses in IEAs and CEAs
Thus, after discussing and analyzing both the types of employment agreements, it can be stated
that collective agreements contain a coverage clause which is binding upon all the members of
the union and the employer, it also contains a clause which provides how a collective agreement
can be varied which are not provided in individual employment contract. A collective
employment agreement contains the date on which the agreement gets expired. However, an
individual employee contains the name of the employer and employees, the description of the
work, hours of work and salary or wages to be paid to the employees which are not provided in
collective employment agreements.
In IEA the agreement is between an individual and the employer while in CEA the agreement is
between a union representing an employee and the employer

Employment agreements 7
In IEA there is no union involved as it is the case with CEA. Dues check off does not apply in
the IEA as it is in the CEA. Since in the IEA it’s a sole agreement between a worker and
employer, there is no room for strikes of any manner as it is with CEA. The CEA does not cover
the benefits that come with working on a public holiday as it is the case with IEA which offers
the employee half their salary incase they report to work on such days (Ng, 2001)
2.0 Process for negotiating CEAs
Strategy, preparation, research, development of an employer bargaining agenda/claims
This is the first step to establishing a CEA and takes the longest period of time (at least 3
weeks to even one year) depending on corporation among the negotiating parties. At this stage
the employer gets armed with the kind of bargaining that best suits its needs. It’s at this stage that
bargaining options that are legal and practical to organization are established (UNI, 2005).
Background information has to be gathered in advance and be fed into the strategic consideration
for effective participation in the bargaining exercise
Negotiation
After the strategy has been laid down and the employer is in agreement with setting up a
CEA the next step is negotiation (Alexander and Lewer, 1998). This phase may take close to 10
days because everyone on the negotiation table needs to be satisfied with the terms of the
agreement. It’s at this stage that every doubts and issues that are unclear are sorted out to arrive
at satisfying points. This negotiation may bring on board experts in the area of employment
agreements ad organizations already embracing such an agreement so as to shed light on the
relevance of it and how it can be implemented for the benefit of both employer and union
members.
Written agreement
After the negotiations a written agreement has to be done so that none of the parties falls
short of the agreement in future (Christopherson and Lillie, 2005). It’s gone for future references
in case of disputes. This is written with the guidance of various employment clauses in the
presence of lawyers for both parties to ensure only what was agreed upon is what is put down in
writing. This may take 3 days as well to ensure no mistakes are done and proper editing and
correction has been done.
Implementation
Once the agreement has been written, it then goes through the implementation process
which delivers the end results of the negotiations (Hammer, 2005). Implementation is a process
with a time limit of 5 days as changes and discussion may keep coming up which need
adjustments. However with clear agreements implementation is a process that should be very
smooth with fewer hurdles.
Monitoring

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This ensures that the agreement is functional by effectively monitoring its operations. It
offers one a chance to make amendments to nay part of the agreement that is not working well.
In the monitoring phase one needs to note;
What is working well, what is not working well, opportunities for change and what the
employees in the union thinks can work well in the agreement (Abbott, 2007)
Renegotiation
This is important since the law states that an agreement needs to have an expiry date with
stated duration and so renegotiation is not avoidable in any manner. A fresh step of negotiation
for its replacement needs to be in place. This should be approached in the same way the first one
was. It makes use of the same lessons and strategic considerations that worked for the first
agreement.
Visual timeline for CEA
3.0 Process for negotiating IEA
This process is less hectic and does not involve a lot of steps. It’s quite simple and may
take a period of between minutes and utmost one week. For the one week period an employer
may give a prospective employee time to go read the terms, reflect on them and if agreeable the
worker can sign the document (Charlwood and Terry, 2007). It all works under the duty of good
faith between the agreeing parties. The process involves;
Giving the employee a copy of the proposed agreement
Tell the employee that they have the right to seek any independent advice about the agreement
giving a reasonable opportunity to get it and finally
Considering any issues raised by the employee and responding to them before having both of
them sign the agreement (Bourque, 2005)

Employment agreements 9
Visual timeline
4.0 Collective contracts
4.1 Collective contract between (POAL) and the members of the (MUNZ),
4.1.1 Claims of the employer
Ports of Auckland Ltd. (POAL) entered in to a collective bargaining agreement with Maritime
Union of New Zealand (MUNZ).
The Ports in consideration have linked a two part strategy which involved:
 Signing a collective agreement with the Union
 Laying off the members of the Union and replacing them with them with the
contractors.
POAL made an offer to the MUNZ members to ensure the collective agreement was settled and
this was based on four key points (NZCTU and MUNZ, 2012);
Retention of the current collective agreement document and only making minimal changes to the
existing terms and conditions of employment and add a few provisions
Consolidation and amendment of the existing work arrangements in two schedules that
are appended i.e. engineering schedule and terminal operations schedule
Introduction of a code of practice meant for work allocation so as to manage the daily operations
of the company
Re-tabling and reviewing the proposal on operations redundancy which was dated 20 December
2011 and this was meant to serve as a basis for consideration of agreed number of redundancy
that is voluntary.
Some of the key aspects proposed by POAL in the provisions of the CA presented in its
12 April 2012 report included; 10% straddle performance bonus, increased pay rate of up to 10%
when one is straddle driving, new role of container lasher which should be permanent and
carryover of the shift leave, grandfathered entitlement and superannuation .
In the claims POAL seeks to combine schedules for employees in the rail and shuttle, road
office, casuals, stevedoring and single terminal operations schedule.
However, the collective bargaining agreement between POAL and MUNZ raised many disputes.
Such disputes had originated due to the difference in the objectives of POAL and MUNZ. The
objective of POAL was to increase the margin of profit by reducing salary or wages to be paid to
the workers. The POAL justified their view by stating that employees need to be more flexible.
However, on the other hand MUNZ aimed to protect the rights of the workers under the
Employment Relations Act 2000. The POAL initially tried breaking down of the workers’ unions
by offering them monetary benefits and with retirement plans. The ulterior motive of POAL was
to tear down some of the conditions and terms of employment. The MUNZ initially was in great
Issuing agreement to the
employee ( 5 minutes) Allowing employee time to
read and understand the
terms (hours -1 week)
Negotiation and
discussion of
agreement (1 day)
Signing the
agreement

Employment agreements 10
favor of the increased efficiency that had been achieved by the workers in relation to unloading
and loading cargo. However, later MUNZ sought the inclusion of new collective agreement of
‘protection of the rights of the employees against the POAL.
Some of the key prospects of the provisions of the collective agreement which was presented as a
revised collective agreement proposal on 12th April 2012 are enumerated as follows:
 Hike of pay rates by 10%. $30 per hour to be for straddle driving
 Hike of 10% Straddle performance bonus
 A new role which is permanent for container lasher
 An updated agreement of ‘safe and fair’ terms and conditions of employment
 Guaranteed 160 hour work shift for full time workers and 96 hours work shift for part
time workers as per four week roster cycle.
 Minimum of ten hour breaks between shifts
 Transfers between shifts
 Removal of clause of consecutive shifts
 Removal of union agreement of compensation for redundancy particularly for employees
who resign
 Amending the clause of Right of Access as updated to the provisions of the ERA 2000
However, POAL does not make any offer to MUNZ on the claims of MUNZ which seek to:
 Extension of coverage of collective agreement
 Making the day of Christmas a non working day
 Give priority to part time employees to do extra shifts before considering to engage
casuals
 Make subject to mutual agreement the right to contract out
4.1.2 Position and claims of the workers, as represented by their unions
In their struggle to settle the CA, MUNZ made several efforts to renegotiate for a fair
deal which aims at balancing flexibility, employment security and improved productivity in a
manner that does not impact negatively on the health and safety of the union members (NZCTU
and MUNZ, 2012). The union rejected the attempt of Port to dismiss their workforce and make a
contract to outside people. The employer refused to agree to a CEA which protects permanent
employment of staff which the union strongly rejects. The position and claims of the union are as
listed
Hours of work-the union needs a balance between predictability and flexibility regarding
the shift hours, overtime working which they need penalties to be removed, roster restrictions
removed, breaks and briefing times reduced.
Duties and utilization-the union needs the employer to increase the use of part time permanent
workers, retaining the restrictions on the employment of all casuals and provision for full time
work of the part timers that are permanent before the employer makes use of casual workers
Time off-the union needed one weekend off and one day off per week for its members
Regarding health and safety-the union wants the matter to do with fatigue to be sorted by use of
regular duty roster which clearly states when to start work and close with enough breaks in
between.

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MUNZ also wanted the CA to have a provision which prevents contracting out and retention of
Christmas day as a no working day for the members
4.1.3 Strategies used by the unions and employers to get the agreement settled-
They made use of a facilitator from employment relations authority to settle their arguments plus
lawyers of either party
4.1.4 Evidence of good faith, or breach of good faith, in bargaining
There was breach of good faith by POAL as claimed by MUNZ in situations where the
employer engaged fixed term employees. MUNZ had previously been requested by POAL to
make changes to terms and conditions of employment so as to increase flexibility of labor in
addressing unpredictability of the working hours and the container vessel requirements. Despite
all these changes, the employer never made references to fixed term agreements and it later
sought to obtain in the 2012 CA using means that were not agreed upon in the bargaining. This
therefore undermines the benefits of the CA to the union members. The good faith obligations
were thus breached by POAL by failing to consult the union before engaging the fixed term
employees (NZCTU and MUNZ, 2012)
4.2 Fonterra Ingredients collective agreement 2018
This is an agreement that was critically negotiated and took quite a long time for it to be
implemented. The CA was however agreed upon and implemented by all the involved parties
who found satisfaction in the provisions there in (DW, 2018). Some of the claims of the Fonterra
Ingredients collective agreement included the following:
 Fonterra offered a 5% hike in addition to a 2.55 of lump-sum payment
 There was no fixed work for the employees. If there was no work, the workers were sent
back home.
 The ability of freely use the man power and the resources at different places
4.2.1 Changes suggested by employer
Ability to use staff in different places to maximize on resource utilization in the company
Adoption of multi-site operator instead of moving people around as it was previously. This will
involve use of volunteer workers to ‘rove’ and be recognized financially
Establishment of joint DWU/Fonterra equal roster committee to sought out roster issues.
Changes to be made on paid not worked (PNW) where all the three PNW are given 126 hours
per salary year and cannot be used on public holidays.
Proposed changes to the temp clause for sites that are small and flush periods used by contractor
Better recording of truck numbers was also noted
4.2.2 Claims of the workers
With this case the workers union was in agreement with most of the suggestions by its
employer but had a few claims that needed to be sorted out which included;

Employment agreements 12
Transport issues-reported fatigue by drivers which represent serious health and safety issues to
both the drivers and public
Retention of aged drivers by the company which was causing the company to face an ageing
workforce that looks for alternative favorable roster options
Extension of paid parental leave from 12 weeks to 16 weeks
Allocating long service holidays 42 hours just like other holiday weeks
Increase of secondary caregiver leave from 5 working days to 14 calendar days
Proposed increased allowance to those working in the freezer with an addition of $ 276
per hour Payment of night shift allowances once a worker swaps to day time shift was an issue
raised by the union where some of its members miss out on this payment once they swap.
Workers brought in by labor hire companies were missing out on being given the hours they had
been called for and a minimum number of hours for such workers was missing
Increased notice for stat holiday hours which was granted (DW, 2018).
4.2.3 Strategies used by the unions and employers-
All the negotiations were done in the presence of an advocate who facilitated proper discussions
between the union representatives and the employer
4.2.4 Evidence of good faith
This CA was discussed under good faith grounds and nothing was breached. The workers
were in agreement with the suggestions of the employer which most focused on improved dairy
productions and service delivery. The employer also considered all the suggestions by the
workers union and made them available in the CEA with an aim of safeguarding the welfare of
the staff for good service delivery. This explains why the CEA was voted in for implementation
by 100% of the stakeholders (DW, 2018)
5.0 Case study
5.1 Does this process comply with the ERA 2000? Why or why not?
To a larger extent, the process does not comply with the ERA 2000 because Sharon was
not flexible enough to allow Judy some more time to consult with her lawyer, however she
accepted to have a meeting with Judy to discuss the agreement. Considering the fact that Judy
was not satisfied with the provisions of the agreement and Sharon forcing her into signing the
agreement or offer the job to someone else the whole process did not comply with ERA 2000
5.2 Does either party use any strategies to settle the IEA?
Yes they did use some strategies to settle the IEA and this was meeting and negotiating
the terms provided in the agreement. Despite Judy being unsatisfied at least there was room for
negotiation where they came halfway to the agreement of some of the issues. Judy however was
not given time to consult and involve her lawyer which could be another good strategy in solving
the matter

Employment agreements 13
5.3 Has each party acted in good faith, as set out in the ERA 2000?
None of the party acted in good faith because on the part of Judy, she is forgetting that
organizations are different and operate with different provisions and so she wants to force her
previous provisions into this new employer’s provision. Judy also failed to act in good faith by
editing and adding false information to the article she downloaded. The article states that ‘the
average leave for sales staff was four weeks annual leave and one week’s long service leave after
five year’s service….’ Instead she edited it to read ‘….after two years of service…’
On the part of Sharon she failed to act in good faith by not allowing more time for negotiations
instead forced Judy to sign the agreement or she gives the job to someone else. She was also not
comfortable with Judy consulting her lawyer in any way
5.4 Any other issues to be raised about this process
Such processes need willingness before one embarks on them, none of the party should
come to the negotiating table with their own rules and stick by them without being ready to think
about what the other party has to say
The process was done without any mediator or facilitator and this explains why the two could not
come up with satisfying conclusions for the both of them. In such situations the employee often
ends up being exploited by the employer as it was the case with Judy
6.0 Conclusion
Negotiation of an employment agreement is one thing that should not be taken slightly by
all the involved parties. This is because it forms the basis on which an institution operates. It also
sets good working relationships between the employer and employee. It’s always advised that
every involved party works in good faith so as to develop a good and functional agreement. To
avoid any exploitation especially in the IEA it’s good to have a facilitator or mediator in the
meeting. From the three cases in this study it’s evident that working in good faith as it was the
case with Fonterra ingredients shortens the process and satisfies all those involved. Thus, it can
be stated that there are different approaches to negotiate employment agreements. However, such
negotiation of the employment agreement must be done in accordance with the provisions of the
Employment Relations Act 2000. The above examples of POAL, MUNZ and Fonterra
Ingredients have exhibited the different strategies used in negotiating and employment
agreement.
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