What are they and what aren't they?

One of the notable features of the Employment Relationship Act 2000 ('the ERA') is the centrality of 'employment relationships'.

Knowing whether you are in an 'employment relationship' or whether you have an 'employment relationship problem' is important under the ERA for two reasons. First, good faith obligations only apply between parties to an employment relationship. Second, the jurisdiction of the Employment Relations Authority ('the Authority') is limited to determinations about 'employment relationship problems'. Accordingly, if there is no employment relationship or employment relationship problem in existence, the Authority does not have any jurisdiction to make a determination (although mediation assistance may still be available).

Corrections Association of New Zealand Inc v Attorney-General in respect of the Department of Corrections

This issue of what exactly 'employment relationships and 'employment relationship problems' are, and are not, was considered for the first time recently by a full bench of the Employment Court in a case between the Corrections Association of New Zealand Incorporated ('CANZ') and the Department of Corrections ('Corrections').

Background Facts 
Corrections was party to 3 collective employment contracts (CECs) with its prison officers. The first CEC was between Corrections and CANZ (the vast majority of Prison Officers are CANZ members), the second CEC was between Corrections and the Public Service Association ('the PSA'), and the third CEC was between Corrections and unrepresented Prison Officers. The 3 CECs were almost identical.

Early this year, the PSA approached Corrections seeking to expire the CEC early and to enter into negotiations for a new Collective Agreement ('CA') under the ERA. Corrections agreed and the CEC was voluntarily varied to expire on 10 March 2001 instead of 31 December 2001. Once it expired in accordance with the new expiry date, Corrections and the PSA started bargaining for a new CA, which was duly settled and ratified.

Because it had a policy of treating all the prison officers equally, regardless of their representation, Corrections approached CANZ and offered to expire the CANZ CEC early so that CANZ could have the opportunity to enter into early negotiations for a new CA in the same way as the PSA had done.

CANZ refused and filed a statement of problem in the Authority stating that the manner in which Corrections and the PSA had varied the expiry date of their CEC was not permitted under the ERA, and accordingly, the new PSA CA was not valid.

The Employment Relations Authority's Determination 
CANZ was unsuccessful in the Authority, which determined that the ERA permitted voluntary variation of the CANZ CEC's expiry date, a finding that was later upheld by the full bench of the Employment Court.

Of more general interest, Corrections claimed that the Authority did not have jurisdiction to make a determination on the issue because CANZ's statement of problem did not disclose a relevant employment relationship or employment relationship problem. Corrections claimed that that the process of voluntarily settling the new CA was entirely consistent with both the text and the scheme of the ERA and that CANZ was in fact using the legal process to attempt to interfere with a voluntarily settled agreement between Corrections and the PSA.

The Authority rejected this argument and stated that it 'had no hesitation' in determining that it had jurisdiction to make a determination on CANZ's statement of problem. It held that it had jurisdiction on the basis that there was an employment relationship problem between Corrections and CANZ according to s4 (2)(b) of the Act (a union and an employer have an employment relationship), and s161 (1)(r) (that the issue at stake related to the operation and application of the Act). Corrections challenged that part of the Authority's determination by means of a de novo challenge.

Decision of the Employment Court 
A full bench of the Employment Court upheld Corrections' challenge to the Authority's determination, finding that the Authority did not have jurisdiction to make the declarations CANZ sought. The Employment Court also made some general comments about the scope of an 'employment relationship' and of an 'employment relationship problem'.

Although the ERA represents a paradigm shift from a strict 'employer/employee' focus to the broader 'employment relationship', the Court held that an 'employment relationship' comprises an exclusive set of relationships set out in s4 (2) of the Act, and cannot be more widely construed to encompass other relationships.

The Employment Court said that its conclusion was 'consistent with the general law that a stranger to the contractual relationship should not be entitled to intervene and challenge the mutual variation of a collective employment contract and the subsequent bargaining, ratification and conclusion of a collective agreement between other parties.'

Because the problem in question was the CEC and the CA between Corrections and the PSA, it could not 'arise from' the employment relationship between Corrections and CANZ. Accordingly, an 'employment relationship problem' does not mean any problem raised by a party to the relationship that may concern the other party to that relationship, but must be a problem that 'arises from' the particular employment relationship.

This decision helps provide some certainty for employers and for unions that a non-party to an agreement cannot interfere with a voluntary agreement between the employer and the union. It also helps provide some guidance to the Authority about the limits of its jurisdiction.

This article is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances and no liability will be accepted for any losses incurred by those relying solely on this article.

Copyright Phillips Fox, 2001

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