The bargaining power between employers and employees is not equal in many employment relationships. Employees may decide that their interests are represented more effectively through unions and collective bargaining. If a union represents employees in a workplace a collective agreement can be negotiated.
A collective employment agreement is the formal employment agreement ratified and signed after collective bargaining. The agreement sets the terms and conditions of employment of union members whose work comes within the coverage clause of the agreement.
Collective employment agreements:
- cover at least two employees and are between at least one employer and at least one registered union
- can cover permanent, full-time, part-time, fixed-term and casual employees and may cover all or some of the employees in a workplace
- have a coverage clause saying exactly what type of employees and types of jobs are covered
- can be joined by extra unions and employers if the collective agreement specifically lets this happen.
Non-union members may bargain collectively with an employer or employers, but their negotiations can’t end in a collective employment agreement, only identical or very similar individual employment agreements.
Collective employment agreements must:
- be in writing
- be signed by employers and unions that are parties to the agreement
- have a coverage clause stating the work that the agreement covers
- include a plain language explanation of how to sort out any employment relationship problems, including the 90-day period for bringing a personal grievance
- include a clause stating how the agreement can be changed
- include an expiry date or state an event that will mean the agreement expires
- include a provision that complies with the Holidays Act 2003 requirement for employees to be paid at least time and a half for work on public holidays
- in most cases, include a provision stating how employees will be protected if the business is sold, transferred or contracted out
- include the rates of wages or salary payable to employees by including either:
- the rates of wages or salary payable for certain work or types of work (i.e. policy advisors) or to certain employees or types of employees (i.e. could be by years of performance, a nurse with 3 years’ experience); or
- the minimum rates of wages or salary payable for certain work or types of work or to certain employees or types of employees; or
- one or more methods of calculating the rates or minimum rates of wages or salary payable for certain work or types of work or to certain employees or types of employees.
- include an indication of how the rate of wages or salary payable to an employee may increase during the term of the agreement.
Other than the above requirements, the parties decide what’s in the collective employment agreement (unless the Employment Relations Authority is asked and agrees to fix the terms of agreement).
The employer and the union need to keep a signed copy of the collective employment agreement and provide a copy to employees when they request it. The employer must give it to new employees who are not union members and whose work is covered by the coverage clause.
Collective employment agreements may include:
- a term or condition of employment that is intended to recognise the benefits of a collective agreement, or the benefits of a relationship created through a collective agreement
- a subsequent parties clause, allowing other unions and/or employers to join the collective agreement after it has come into force
- a bargaining fee clause. This means that employees who aren’t union members but do work covered by the collective agreement coverage clause can be on an individual employment agreement identical to the collective employment agreement if they pay the stated bargaining fee to the union
- any other clause, provided it’s not contrary to law or inconsistent with the Employment Relations Act 2000.
Collective employment agreements state the date that they come into effect. They may state that different parts of the agreement come into effect on different dates. If there is no date stated, it comes into effect on the date the last party signs it.
A collective employment agreement expires on the earlier of its stated expiry date or 3 years after it takes effect, with some exceptions.
A collective agreement continues until the earlier of 12 months, or until it is replaced, if the union or the employer starts bargaining before its expiry date.
When a collective employment agreement expires
- Each existing employee who was covered by the expired collective employment agreement automatically has an individual employment agreement based on the expired collective agreement (plus any additional terms and conditions agreed previously). The employer and employee can agree to change this individual employment agreement or negotiate a brand new individual employment agreement. If a collective agreement later comes into effect, then union members will automatically move off any individual employment agreement onto the collective agreement.
- If there is no current collective employment agreement that covers them, new employees will be employed on an individual employment agreement negotiated with the employer even if they are members of the union.
Employment agreements has more information about individual employment agreements.
An individual bound by a collective employment agreement may also agree with their employer to have additional individual terms and conditions. Any additional terms and conditions:
- must be agreed by the employer and employee
- can be agreed before, or after the date the employee becomes bound by the collective agreement
- can’t be inconsistent with the terms and conditions in the collective agreement.
If the employer is offering individual terms to the employee, the employer must negotiate in good faith and the employee must be given time and opportunity to seek independent advice in the same way as when an employer is offering an employee an individual employment agreement.
If the collective agreement that the employee is bound by expires or the employee resigns from the union:
- the employee will be employed on an individual employment agreement based on the collective agreement and their individual terms, and
- the employee and employer can agree to vary that individual employment agreement.
Tools and Resources
Collective Employment Agreement Template - DOCX 105KB
A framework for a collective agreement, plus a range of draft clauses.
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