What you really need to know about the recent Mitre 10 ‘living wage’ decision

The recent Employment Relations Authority (ERA) decision and subsequent upholding of this decision by the Employment Court (Court) has gained a significant amount of media attention – with headlines such as “Mitre 10 Workers Win Living Wage Case”. However, these articles have misreported the case. It should be noted:

• The main issue of this case is around good faith in bargaining for collective agreements and the application of section 50J of the Employment Relations Act 2000 (Act), not an order by the Courts to pay all employees the living wage.

• The case does not apply to all Mitre 10 Workers, only those who are a member of First Union who meet the requirements of the ‘tier’ remuneration provisions in the new collective agreement, and those who work at either Mitre 10 Dunedin or Mosgiel (both of which are owned by the defendant – Jacks Hardware and Timber Ltd).

• The decision to pay employees the living wage is completely voluntary and at a businesses discretion.

Jacks Hardware and Timber Ltd v FIRST Union Inc [2019]

This case is a good reminder for organisations as to the consequences of not genuinely engaging in good faith bargaining.
First Union initiated bargaining with Jacks in October 2013 and requested that a provision outlining a new pay scale, based on the roles held by Jack’s employees and how long they had held them for, be included in the collective agreement. A fundamental disagreement emerged over the Union’s proposed pay scale but, despite this, bargaining continued. Mediation took place in 2014 but no settlement was reached. Jacks made a commitment to resume bargaining in 2015 but shortly afterwards advised the Union that they had decided that bargaining had gone as far as it could (Jacks refused the inclusion of the pay scale in the collective agreement).

In 2015 the Court made a declaration that Jacks had acted unlawfully and in breach of good faith, had “mislead and deceived” the Union over its intentions to resume bargaining, and had failed to comply with the bargaining process agreement.

In 2017 the ERA made recommendations to the parties to assist the bargaining. This included a draft wage clause that would distinguish between employees who were new to the industry and unskilled, and those who had some industry experience and skill – creating a tier one and tier two distinction. Jacks rejected this recommendation, stating a preference to return to the bargaining table. The Union did not wish to continue this process on the basis that it was unlikely to be productive.

On June 2 2017, the Union applied to the ERA (under section 50J of the Employment Relations Act 2000 (Act)) for an order fixing the wage provisions of the collective agreement that could not be agreed on. The ERA granted this application which was upheld by the Court.

Good faith in collective bargaining

Section 50J of the Act sets out the remedy for serious and sustained breaches of the duty of good faith in relation to bargaining. The ERA used this section to fix the wage provisions of the collective agreement between Jacks and the Union.

The Court held that the test for applying s50J is “whether a breach has occurred that is … more than trivial, negligible or a transient breach … that … has carried on for enough time to undermine the bargaining”. The Court also commented that “tough bargaining is not the same as futile bargaining”.

The Court held that Jacks breached the duty of good faith in 2015 and continued to do so by delaying and attempting to frustrate bargaining. The Court held that Jacks was “doing more than taking a hard line with the union”, and that Jacks’ behaviour illustrated that it was delaying and going through the motions of bargaining, a practice commonly known as ‘surface bargaining’, which the Court held “significantly undermined the bargaining process”.

Workplace Law team

If you have any queries in respect of the above, or any other Workplace Law issues, please contact a member of Lane Neave’s Workplace Law team:

Employment: Andrew Shaw, Fiona McMillan, Gwen DrewittMaria Green,  Hannah Martin, Joseph HarropHolly StruckmanAlex Beal, Giuliana Petronelli, Abby Shieh
Immigration: Mark Williams, Rachael Mason, Daniel Kruger, Nicky Robertson, Julia StrickettKen Huang, Mary Zhou, Shi Sheng Cai (Shoosh)Sarah Kirkwood, Janeske SchutteLingbo Yu
ACC: Andrew Shaw
Health and Safety: Andrew ShawFiona McMillan

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