A noticeable phenomenon over the course of the last few years has been the rise in popularity of so-called "reality" television shows. Series such as "Survivor" and "Big Brother" have captured the national imagination on the basis of a very simple premise: put a number of ordinary people together with a common interest in winning a large amount of money, and allow them to decide who wins by voting each other out of the game.
Under the Employment Relations Act, a similar game is being played out - although, regrettably for the voyeurs amongst us, not as a television spectacular.

One of the fundamental tenets of our employment legislation is that in order to gain appropriate recognition a union must be registered. One of the requirements for registration is that the society attempting to be registered as a union must demonstrate that it is independent of, and operates at arm's length from, an employer.

Through the history of the legislation some controversy has raged concerning an employer's ability to provide funding to its own employees to establish an "independent" union. The Registrar of Unions has, by and large, indicated that such funding will not be regarded as detracting from the "arm's length" requirement of the legislation - thereby allowing employer funded unions to be registered.

There are, however, a number of people who remain to be convinced that such a process results in independent unions - and a level playing field between employer and union. The first case involving such an objection - the equivalent to the dramatic showdown of the "Tribal Council" - has now been argued.

In Meat & Related Trade Workers Union of Aotearoa Inc. v Te Kuiti Beef Workers Union Inc. (Unreported, Employment Court, Auckland, 8 November 2001) the Full Court of the Employment Court was asked to consider an application brought by one union to cancel the registration of another. The union which was the subject of this application had been created by the owner of a beef killing and processing plant in Te Kuiti. Having discussed the matter with some of its employees, the owner paid the legal costs associated with creating and registering the union, and also arranged for its employees to receive advice from solicitors about the effects of joining this union. The owner also supported the new union by allowing certain employees to have time off for purposes of administration. Finally, the employer entered into collective bargaining with the union, and a collective agreement resulted which was registered in due course.

Interestingly, objection to this arrangement was not brought by an aggrieved employee of the workplace suggesting that his or her rights had been compromised by this arrangement : the objection was brought by what might be described as a "rival union" which had a number of members in the workplace - but which, through its apparent inactivity, had been perceived by employees as less effective than the newly created entity. It sought to have the new union's registration cancelled on the basis that it did not operate at "arm's length" from the employer - and in doing so, sought to protect its "patch" by ensuring that only it could negotiate collective agreements with the employer from then on.

The union sought to demonstrate that the newly created entity had not operated independently by contrasting one of its collective agreements (negotiated in another workplace) with the collective agreement negotiated by the new union. It said that its agreements in other workplaces were vastly superior to those negotiated by the new union.

The Court made a number of significant findings which many employers will find of interest.

The Court found that a presumption arises that, upon registration by the Registrar of Unions, a union has satisfied all of the legislative requirements of independence. A rival union may, however, raise a challenge about the way in which a union operates following registration.
The Court said that in order to demonstrate independence a union should be able to show that it is not "beholden" to an employer. It also has to show that it operates at "arm's length" by demonstrating that it functions without "undue familiarity with the employer's organisation".

Finally, the Court rejected the comparative exercise put forward by the applicant union. It noted that the pay rates negotiated by the new union were amongst the highest for employees in the relevant industry. It observed that, through experience, the union might be capable of achieving better conditions in the future - but also noted that the legislative intent was that there would be new unions, not merely well-established and therefore experienced unions in the new employment environment.

In this way, the Court found that the employer-created union functioned independently, and rejected the application for its cancellation.

Two lessons can be taken from this recent decision of the Employment Court.
First, employers may take some comfort that they may encourage in-house unions - and even assist in the establishment and operation of those unions, provided that they observe the key requirements to allow the unions to function independently from their own organisation.

Secondly, well-established unions may not attempt to protect traditional areas of business simply by attempting to snuff out the tribal torches of newly-established rivals. If unions truly wish to gain new business (or new business from pre-existing members) they must do so by demonstrating to employees that they can offer a better outcome for their members than a competitor - effectively demonstrating that in this new environment, they are true "survivors".

This is a general summary only and should not be taken as a substitute for specific advice.

This article was previously published in the Independent, 5 December 2001
Contact: andrew.scott-howman@bellgully.com
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