Employment Relations in Aotearoa New Zealand: An Introduction

By Erling Rasmussen, Felicity Lamm and Julienne Molineaux

A concise and timely book for employers, unions, academics and anyone with an interest in employment relations in Aotearoa New Zealand

Employment Relations in Aotearoa New Zealand: An Introduction covers history, approaches to the study of employment relations, key legislation and policies, and contemporary labour market issues.

In recent years, New Zealanders have witnessed major reforms that in turn have resulted in significant changes in employment relations. While the fundamental relationships between the government, employers and employees still remain, there have been changes in how these parties interact as well as changes in the associated employment outcomes. These changes will also affect how we work and will be working in the future.

Topics include:

• Introduction and overview of employment relations
• Theoretical frameworks and their application
• Turning Points in Employment Relations pre-2000
• Employment Relations in the new millennium
• The legislative support structure
• Changing work, employment and workplace practices

Technological innovations, globalisation and a different workforce composition have facilitated innovations in work practices and in employment patterns. This book tries to bring these influences to the fore of our discussion of employment relations.

• Language: English
• Publisher: ER Publishing
• Release date: Jun 30, 2022
• ISBN: 9780473632519

Book preview

Preface

Employment relations is part of our daily life and is often featured in political debates and media reports. It is not surprising therefore that many employers, unions, academics and ordinary people take a personal interest in employment relations and how their employment relationships develop over time.

The book is concise and concentrates on key areas, trends and themes. It is intended to be a practical introduction and guide to employment relations issues as well as an introduction to the principal legislative changes. It also provides the reader with recent sources of information for future reference.

In recent years, New Zealanders have witnessed major reforms that in turn have resulted in significant changes in employment relations. While the fundamental relationships between the government, employers and employees still remain, there have been changes in how these parties interact as well as changes in the associated employment outcomes. These changes will also affect how we work and will be working in the future. Technological innovations, globalisation and a different workforce composition have facilitated innovations in work practices and in employment patterns and this book tries to bring these influences to the fore of our discussion of employment relations.

Erling Rasmussen, Felicity Lamm and Julienne Molineaux

March 2022

1 Introduction and overview of employment relations

Erling Rasmussen; Felicity Lamm; and Julienne Molineaux

To define employment relations and describe how it operates across all levels of business and a range of disciplines

To identify the major participants in employment relations

To show how the balance between collective and individual employment agreements and rights has changed over time

To examine the core principle and content of employment agreements, including the distinction between employees and contractors

To highlight how the roles of the Employment Institutions and legal precedent have influenced the practical application of employment relations changes

Introduction

Most of us are either employed in paid or unpaid work, or employ people ourselves and, therefore, have some understanding of what employment means. Employment relations are often described as the interaction between three major groups: employers, employees, and the government. But it is more than this; employment relations are dynamic and complex and what occurs in the workplace is influenced by the wider society. Governments change employment laws from time to time, and courts interpret these laws when they rule on cases. This creates precedents – new understandings about the application of law, which essentially become new laws.

Rapid technological change has resulted in both a change in the type of jobs available, and the way that work is done. The ‘future of work’ has become a catch cry and is often associated with very positive or negative predictions about job opportunities or disappearance of jobs (see discussion in Chapter 6). Some of these changes are already detectable. Thus, the ‘standard employment relationship’ – an assumption that work is full time, stable, with set hours and unionised – is no longer the case for most New Zealanders. Many people work part time or long hours and job and income insecurity appear on the rise. Technology is disrupting boundaries between work and leisure, something that has become pronounced after the Covid-19 pandemic in 2020. Businesses often want the flexibility of longer operating hours and variable staff rosters and can use contracting models to better control wage and salary costs. Thus, many people work as contractors and contracting has become dominant in certain industries and occupations. Recently, contractors have started to provide services administered by various web-based platforms as part of the ‘gig economy’.

Overall, there are many influences beyond the local and national labour markets. Workers in New Zealand compete in globalised job markets as firms outsource production to countries with lower labour costs. Furthermore, government policies facilitate immigration and emigration, allowing the New Zealand workforce and its skill and education makeup to change faster than it would without international labour mobility.

This chapter defines ‘employment relations’, the different levels of employment relations and it examines the key ‘actors’ who influence employment relations. The chapter also overviews the basic elements of an employment agreement and will in subsequent chapters deal with historical and current changes to the employment agreement itself and to its key components such as pay, hours, leave and dispute resolution. The chapter will also highlight the distinction between employees and contractors and why this distinction came to be of great importance. Finally, we focus on employment institutions which deals with disagreements over employment agreements and disputes in workplaces. As there has been rapid change to employment relations – including an expansion of employee rights and less collective bargaining coverage – there has been considerable focus on court-based employment decisions.

Finally, there are major disagreements about core employment relations issues and how to interpret the above-mentioned changes and influences. How we view employment relations is contentious as we each have our own outlook (or perspective) based on our individual set of beliefs and values (as discussed in Chapter 2). Often, we tend to align ourselves with those who share our views and the various perspectives can be found in disagreements between the key parties in employment relations as well as political decisions on legislative frameworks and employee rights (see Chapters 3, 4 and 5).

What are employment relations?

The definition of employment relations has broadened over time and is still evolving. The subject of employment relations has developed an interdisciplinary approach using concepts and ideas derived from several disciplines, including sociology, economics, psychology, history and political science (see Chapter 2). Our current definition incorporates conceptual elements from both UK industrial relations and USA labour relations as well as from human resource management theory. The issue of collective disputes between workers and employers has dominated traditional definitions of employment relations, with a fixation on conflict between employers, unions and employees. As shown below, there have been considerable changes recently as employment relations has superseded the traditional concepts of industrial or labour relations and their pre-occupation with collective bargaining and industrial disputes.

Power

Power is an important aspect of employment relations. Power refers to the ability to influence the behaviour of others to get what you want. In an employment relations context, power is important within organisations as different actors have different levels of power in that organisation. Does a low-paid employee have the same level of power when discussing workplace issues as the manager or business owner? How do these power differentials impact on relationships and outcomes? Additionally, power in the wider society is also important because different groups and interests – including government, employer groups and unions – try to negotiate policy outcomes that favour their own group or interests and reflect their values and priorities.

Traditionally, industrial/labour relations were concerned with ‘macro’ questions, including how employers and businesses are a part of the wider community and how they play an important role in society. In particular, industrial/labour relations have focused on three aspects of the employment relationship, namely: the key parties (employees, employers, and government), the processes of collective bargaining (including conflict resolution), and the outcomes of these processes (Bamber et al., 2016). In particular, the way collective conflict was regulated has received plenty of attention. Regulating industrial conflict involves the development of formal rules – such as written employment contracts and policies – and of informal rules – such as custom and practice (see Chapters 13 and 14 in Rasmussen, 2022). Thus, the focus is on structures that regulate matters of conflict arising out of the employment relationships which includes the regulation of power relationships in the workplace. Additionally, industrial/labour relations have traditionally concentrated on unionised, male, manual workers employed in large factories and have tended to ignore workers in service industries, workers in small workplaces and non-unionised employees.

The rise of Human Resource Management (HRM) since the 1980s has also had a major influence on our understanding of employment relationships. HRM emphasises a strategic approach to achieving organisational goals and involves a series of management prescriptions designed to ensure the efficiency and commitment of employees (Boxall & Purcell, 2011). The focus of HRM is, therefore, on the individual organisation and the way the individual worker can be managed in order to enhance the achievement of broader organisational objectives. As a result, HRM has been linked closely with motivation in the form of psychological and economic dependency. The emphasis is on winning the ‘hearts and minds’ of the workforce in order to achieve the common goals of the organisation (Bratton & Gold, 2017; McAndrew et al., 2018).

The traditional views of both industrial/labour relations and HRM have been challenged while, at the same time, extracting the more useful aspects from the two disciplines. As a result, the distinctions between industrial/labour relations and HRM have become blurred, creating an over-arching discipline called ‘employment relations’ (Bamber et al., 2016; Kelly, 2012). This shift in definition has the advantage that it extends the boundaries of industrial/labour relations and HRM to include all aspects of the two approaches. Most important of all, it has incorporated both the ‘macro’ or broader approach adopted by industrial/labour relations and the ‘micro’ or organisational approach of HRM. It is recognised, therefore, that the employment relationship does not exist in isolation and can be found on many levels: international, national, industry, organisational and workplace levels.

Levels of employment relations

What occurs in New Zealand employment relations is often influenced by international trends and events. International trade agreements, the operations of multinationals and the pressure to conform to international labour conventions and treaties all have an impact on the way employment relations are conducted in this country. For example, multinational companies’ movement in and out of a country typically depend upon whether or not that country’s labour and compliance costs will benefit the multinational organisation financially. Concern has been expressed in New Zealand about the way multinationals influence our wages and conditions by choosing to set up their manufacturing operations in nearby poorer countries with weaker employment protection legislation, in direct competition with New Zealand manufacturers. Employment relations at a national level are also influenced by international institutions, such as the International Labour Organization (ILO), of which New Zealand was a founding member. Since its foundation in 1919, the ILO has been involved in the promotion of international labour standards (see https://www.ilo.org/global/lang–en/index.htm). In recent years, the ILO has become more important through promotion of Decent Work principles (see Ferraro et al., 2015) which have also influenced legislative changes and public policy discussions in New Zealand.

Most decisions regarding New Zealand employment standards are taken at a national level. Employment standards are contained in national statutes that govern how people are employed, their minimum level of pay, and their conditions of work. For example, the Human Rights Act 1993 establishes anti-discrimination standards; the Minimum Wages Protection Act 1983 sets standards for minimum wages, and the Health and Safety at Work Act 2015 provides guidelines for health and safety in the workplace (see Chapter 5). Economic, social and welfare policies constructed by government also have major consequences for both employers and employees throughout New Zealand. For example, the government policy decision to deregulate the automotive industry in the late 1980s and to reduce tariffs resulted in the closure of car manufacturing plants and other related businesses. Likewise, the changes to immigration rules during the Covid-19 pandemic had major labour market repercussions and created recruitment problems in several industries.

Although there is a national framework of employment relations standards (see Chapters 4 and 5), general parameters for wages and conditions are, more often than not, set at the industry level. For example, a qualified motor mechanic with three years’ experience will have a good idea of how much they should be paid by making relative comparisons with other mechanics who have the same level of qualification and experience. Wages and conditions within industries can be set either directly or more indirectly through flow-on effects. Wage rates and specific conditions can also be negotiated directly between the representatives of employers and employees at an industry level (see the discussion of Fair Pay Agreements in Chapter 4). In the last three decades, there has been a shift from collective, industry-based wages and conditions to workplace-based, individual employment agreements (see Chapters 3 and 4). This has created a much wider divergence in pay and conditions; not only between industries but also between occupations, workplaces and individual jobs within particular organisations.

Corporate decisions can have either positive or detrimental effects on an organisation’s employment relations. Strategic decisions, such as the introduction of new technology, the way the company is structured, the opening or closing of new plants and offices, or the introduction of new management practices, will affect the lives of the organisation’s employees. Decisions taken at the corporate level about redundancies, less job security, etc., are also likely to have a detrimental effect on the workforce. However, some employers have purposely adopted human resource policies and implemented corporate strategies that will enhance their employment relations as well as their public image. But as organisations change over time, so do their strategies. For example, in the past New Zealand-owned companies have had strategies that fostered harmonious employment relations and longer term commitment to their company (see Chapter 6). But as the companies changed ownership and senior managers left, new managerial strategies were implemented to reflect the new ethos of the organisation. It is at this level, too, that HRM strategies – such as good communication and innovative reward systems – are most effective in motivating the workforce and improving employee morale and satisfaction.

However, it is at the workplace level that the employment relationship is most keenly felt. The day-to-day activities and how they are managed will often determine the quality of the relationship between supervisors and staff. For example, as a result of the replacement of complex organisational hierarchies with team-based organisational structures, some employees can have a large degree of autonomy over how they work. This influences aspects, such as the allocation of tasks, the design of the job, the allocation of overtime, and so on. The move toward team-based structures has also produced a change in titles – the terms ‘supervisor’ and ‘staff’ have been replaced with ‘team leader’ and ‘team members’ – but the question is: has it changed hierarchical divisions? The devolvement of responsibilities to the workplace level in the last decades has had a significant impact not only on how we work but also on our employment relationships in general. Likewise, greater employment flexibility and atypical employment arrangements have also impacted on employment relationships and this is, in part, why there is such a debate about the potential influences from various ‘future of work’ scenarios.

Employment relations can be studied, therefore, at the international, national, industry, corporate and workplace levels, and can be affected by external factors, such as technological change, market conditions, societal and political power shifts. It is clear, therefore, that the nature of employment relations can only be fully understood in the context of, and in relation to, wider socio-economic, political and legal structures.

Interest groups

The subject of employment relations is also concerned with the study of how individuals, groups or organisations desire their interests to be represented (collectively or individually), and what these interests are; for example, the amount of pay, hours worked, or production output. Interest groups are organised groups of people – who are not political parties – who come together to influence laws and policies.

As mentioned above, employment relations laws and policies are not created in a vacuum. There are many competing interest groups who aim to influence how employment regulations are enacted and implemented. Indeed, some argue that national decisions concerning the creation of employment regulations are essentially a compromise between the wishes of powerful interest groups and those of the government (see CIPD, 2017). According to this view, the government is to be regarded as serving primarily the interests of those whom it regulates, namely the employers and employees. At the corporate level, employers and employees are in competition with one another for power and control over the decision-making process, knowledge, information and technology, though more power and control normally rest with management.

The government

Historically, the government has played a central role in New Zealand’s employment relations, although the nature of its activity has varied from direct, centralised government control to a more hands-off approach whereby markets are left to organise employment relations with less state intervention. Irrespective of the extent of government involvement in employment relations, it is a critical player, creating the framework within which employers and employees interact. This framework influences the balance of power between employer and employee interest groups and provides structures for conflict resolution. This relationship is bound by