Show us the money


Here’s the thing about employment law: sometimes the most innocuous-sounding cases can have far-reaching implications, well beyond anyone’s expectations.

vectorstock 7486759Late last year, an Employment Court decision concerning two Mitre 10 stores in Dunedin and Mosgiel entered the realm of cases that’ll be known by a single word alone. We’ve had Oram, we’ve had Terranova and now we have Jacks.

For years, some employers have resisted bargaining on pay. This is particularly true in the public service. Some agencies want to reserve the right to set pay unilaterally, or after consultation with a remuneration forum. 

The Jacks case changes all of that. The Employment Court’s chief judge has made it clear that under the Employment Relations Act, wages should be bargained in good faith and agreed through collective bargaining. Indeed, he goes further – he says it’s an underlying assumption of employment relations that employers don’t impose pay on workers. It should be negotiated. 

So why did this particular case make a breakthrough? Jacks Hardware and Timber runs two Mitre 10 stores in Otago and they were negotiating with FIRST Union for a collective agreement. They were a family business which had never seen the point of unions – but they’d expanded and become more successful. Most of the staff were paid little more than the minimum wage. They wanted a collective agreement.

Jacks flatly refused to include pay in the negotiations – and rejected many other basic clauses that would cost the business money. Even a 77-cents-a-week funeral insurance allowance was disputed.  Jacks and First Union members were at a stalemate.

The case went to court after Jacks declared negotiations were at an end. Jacks claimed genuine reasons, First Union disagreed. And so did the Chief Employment Court Judge Graeme Colgan. He believed Jacks’ behaviour was a breach of good faith, because remuneration was fundamental to an employment relationship:

“It is so obvious that collective agreements will deal with remuneration, or at least minimum remuneration, that it has always been assumed that a collective agreement will contain such a term or condition. So, too, is it a fundamental underlying assumption of employment relations that remuneration will be the subject of agreement between the parties and not by unilateral imposition by the employer based on its own assessment of the employee’s performance of his or her job.”

That’s pretty clear. And Judge Colgan went on to set out why the Jacks case was a particularly clear example of an employer who wanted to take away that fundamental right:

“The employees in this case were, at the relevant times and in many cases, paid only marginally above the statutory minimum wage. That makes it particularly appropriate (not to mention usual) that the matter of their wages is to be the subject of negotiation.”

So what’s next? This clearly has a huge impact for the PSA’s membership, and over the coming months the Jacks decision will be at the forefront of our minds – and employers’. We have already written to the State Services Commission and employers who’ve been reluctant to negotiate pay, letting them know about how we interpret Jacks and what we’ll be doing about it.

Because when you get down to it, collective bargaining is a fundamental human right. It’s one of the central pillars of the union movement and internationally accepted by the United Nations and International Labour Organisation. Employers have tried to make inroads into it – but with this case, the Employment Court has reminded them that actually, that’s not what employment relations should be about. And we agree.

Employers will be on notice – and we’re ready to remind them what being part of a union stands for. 

By Jessica Williams and Fleur Fitzsimons