Comments on Act Party’s proposed employment relations changes

As we head towards the general election in October 2023, the ACT party has proposed a number of changes to the personal grievance process. Their proposed changes are to:

• Require ERA decisions to be delivered within a month of the investigation meeting concluding.
• Enable the appointment of an ERA member to be terminated if they do not meet this requirement (after a process of performance management).
• Remove the eligibility for an employee to be awarded remedies if their behaviour is at fault.
• Remove the ability for the ERA to unilaterally reinstate an employee.

While ACT’s policy appears to be heavy on rhetoric, it is short on details. It is a general signal of their political intentions, published with a view to attract like-minded voters. However, in our view the proposed changes do not appear to be an informed or well-thought out policy. You can view ACT’s policy here – www.act.org.nz/personal_grievance

Our commentary

Delivering decisions within one month

ACT has pointed out that the current process is slow and costly – they have stated that the length of time taken to deliver a determination has risen, and the proportion of determinations delivered outside the default timeframe of 3 months has increased. ACT is of the view that the slow moving process is damaging for all parties involved, and that there is no good reason for delays.

In our view, the ACT Party is correct that the length of time taken to progress a claim at the Employment Relations Authority has increased, and this has adversely affected the ability of the parties to resolve their dispute and move on. However, the solution put forward by ACT misses the point, and it does nothing to speed up the overall process, from the point when a claim is filed to the point when a determination is made.

While ACT seeks to speed up the issuing of decisions by ERA members (from a default of 3 months down to 1 month), our experience is that most of the delay occurs in the lead up to a hearing. At present, it takes many months for a case to progress to a hearing, and if the proposed change is enacted, it is likely to mean one thing – the Employment Relations Authority is likely to prioritise writing their determination after a hearing has concluded, and this would be done at the expense of everything else.

The proposed change does not seek to lessen the workload or the complexity of the Employment Relations Authority. The net effect is likely that parties would have to wait even longer for their cases to be heard – so that determinations can be written and made available sooner after a hearing has been concluded.

By way of example, in a case that we have been involved in, it has taken the Employment Relations Authority more than 12 months to consider procedural matters in a dispute. To date, the Authority has not responded substantively to the parties, and no dates have been scheduled for the next step. More than 15 months have already passed since the claim was filed, and the parties do not even know when a hearing of their dispute will take place. There is nothing to suggest that this would improve as a result of the proposed change by ACT. Rather, this could drag on for even longer as the Authority prioritises their focus on writing determinations.

Removing eligibility for remedies

ACT has pointed out that employees may pursue personal grievance claims and may receive compensation when the employer has failed to follow a fair process, even when the reason for the employee’s termination may be substantially due to their own actions. Further, ACT has noted that the threat of pursuing a personal grievance can be enough to compel some employers to offer the employee a pay-out.

As it stands, under the Employment Relations Act if the Authority decides that the employee has a personal grievance, it must consider the extent to which their actions have contributed to the situation that gave rise to the personal grievance, and the Authority must reduce the remedies that would have been awarded to the employee to reflect their own contribution.

As such, the Employment Relations Authority is already required to take into account behaviours and actions which have contributed to the situation that gave rise to the personal grievance. ACT’s policy appears to go even further, as it could have the effect of disqualifying the employee from being awarded any remedies at all, if the employee’s behaviour were found to be ‘at fault’.

Given the lack of details in ACT’s policy, it is not known how far this policy would go. At present, the Authority is directed to consider if an employer has acted justifiably, in the event of a personal grievance claim. In doing so, the Authority has to determine if the employer’s actions, and how it acted, were what a fair and reasonable employer could have done in all the circumstances at the applicable time. Under ACT’s policy, bad behaviour by the employee could disqualify them from receiving any remedies, even if the Authority finds that the employer has not acted justifiably in the circumstances.

We consider that the purpose of the proposed change is to discourage employees from pursuing a personal grievance, in circumstances where their actions could be seen as being ‘at fault’. Further, the Employment Relations Authority’s current discretion to determine the level of contribution by the employee is likely to be curtailed by ACT’s proposed change. In effect, if the employee’s bad behaviour has given rise to a personal grievance, it could be futile for the employee to pursue the personal grievance, irrespective of the employer’s own contribution to the personal grievance.

Removing the ability to reinstate an employee

At present, reinstatement is a primary remedy under the Employment Relations Act. That means, if an employee is found to have a personal grievance and if they seek to be reinstated, the Authority must order reinstatement wherever it is practicable and reasonable to do so.

However, by the time an employment dispute has reached the Employment Relations Authority, it is highly likely that the parties have fallen out, and it would be highly difficult to successfully mend their employment relationship. For that reason, many employees do not seek to be reinstated when they pursue a personal grievance claim against their former employer.

However, in some circumstances, some employees have developed highly specific or niche skills at a particular workplace over an extended period of time. If they are unfairly dismissed, they may have limited employment opportunities at an equivalent level within the general job market. Further, there are situations where employees have been enticed to work for a start-up business, with the expectation that they would be rewarded by equity and the potential for a lucrative stake in the business (if it succeeds). For these employees, the ability to be reinstated is an important right, and it would be unfair to remove the Authority’s power to provide for reinstatement.

It is noted that prior to a legislative amendment in December 2018, the remedy of reinstatement was only a discretionary remedy under the Employment Relations Act. That means, if an employee was found to have a personal grievance and if they seek to be reinstated, the Authority may at its discretion order reinstatement, if this was found to be practicable and reasonable. In our view, removing the ability for the Employment Relations Authority to reinstate an employee goes too far in undermining employees’ rights in New Zealand. We consider that retaining reinstatement as a discretionary remedy, but not as a primary remedy, would be a fairer position.