Summary
This decision of the Employment Relations Authority declined an application to fix a Fair Pay Agreement following the repeal of the Fair Pay Agreements Act. The Legislation Act allows initiated processes to continue despite a repeal of its underlying Act, but legislative context allowed the Authority to determine that Parliament intended all bargaining processes to cease.
Background
In 2022, Parliament passed the Fair Pay Agreements Act (“FPAA”). The FPAA was designed to bring employee and employer associations to the table to bargain for minimum employment terms and conditions that would apply to a whole industry or occupation. These bargaining processes could be brought by a relatively small proportion of an industry sector.
In 2023, Unite Union applied for a fair pay agreement for the hospitality industry. The preliminary requirements to initiate bargaining were met and on 29 May 2023 public notice of approval of the application was given. Employee and employer bargaining sides were formed and notified, with additional unions and employer organisations joining the respective sides. The employer bargaining side did not produce an inter-party side agreement or appoint a lead advocate within the FPAA prescribed timeline.
National and ACT campaigned to repeal the FPAA during the 2023 election, and subsequently repealed the FPAA under urgency in late 2023.The Repeal Bill contained no transitional provisions and made no mention of ongoing bargaining processes.
On the same day as the Repeal Bill was introduced, Unite lodged an application in the Employment Relations Authority (“ERA”) to fix (unilaterally determine) a fair pay agreement for the hospitality industry. It claimed that the failure of the employer associations to come to an inter-party side agreement was a breach of the FPAA’s requirements for good faith, and it had no reasonable alternative to reach a fair pay agreement without the ERA fixing one.
The Case
As the FPAA was repealed shortly after Unite’s application for a fixed agreement, the issue before the ERA was jurisdictional: could it still fix a fair pay agreement even after the legislation empowering it to do so had been repealed?
In its application for the fair pay agreement process to continue, Unite relied upon section 33(1)(c) of the Legislation Act 2019, which provided that certain processes commenced under the authority of an act may continue until their completion even if the underlying act was repealed. Unite argued that proceedings were to be determined under the law at the time they were filed, relying on the principle against the retroactive application of legislation as a lens to view section 33(1)(c).
The employer associations argued that section 33(1)(c) was limited to processes and did not resurrect substantive remedies (such as the fixing of an agreement), and relied upon the Minister’s speeches to the House to show Parliament’s intention that the ongoing bargaining processes would cease upon repeal. Further, the presumption against retroactive enforcement of legislation was not to be used to undermine government policy. They also argued the application was moot: the repeal of the FPAA meant there was no underlying structure for any award to have effect.
Section 33(1)(c) of the Legislation Act is subject to section 9 of that Act. Section 9 excludes the provisions in Part 2 of the Act (which includes section 33) if the provisions of the legislation in question, or the legislative context, require otherwise. The Government had the chance (and declined) to amend the repeal Bill to either explicitly allow ongoing processes to continue or to state that they were to end. Each party argued that this was beneficial to their own side.
The ERA determined that without the empowering legislation the ERA had no resources to draw on to make the necessary investigations for fixing an FPA, and in any case there would have been no legislative mechanism to enforce an FPA going forward. Parliament must therefore have intended that the repeal of the FPAA was to put a stop to ongoing bargaining processes, and so the legislative context of the case required that section 33(1)(c) not apply.
Result
The ERA determined they did not have jurisdiction and declined to proceed with Unite’s application to fix a fair pay agreement.
This decision highlights the importance of thorough statutory drafting. The Repeal Bill was very barebones, and despite the Minister’s speeches in Parliament about her clear intention to end the bargaining processes it still took the issue going through the ERA and the use of the peripheral legislative context, not a clear intention within the Bill itself, to settle the issue.
For further information on this case or similar issues, please contact Director Rob Ogilvie.
Note: Hospitality NZ, one of the employer associations involved in this case, was represented by their General Counsel Tim Blake. Tim also works as a Consultant for Franks Ogilvie. Franks Ogilvie was not itself involved in this case.
