Good faith in collective bargaining

Unions and employers who are collective bargaining must deal with each other in good faith.

What good faith means

Good faith means dealing with each other honestly, openly, and without misleading each other. It requires parties to be active and constructive in establishing and maintaining a productive relationship in which they are responsive and communicative. The duty of good faith applies in all of the various employment relationships, including:

  • between an employer and an employee
  • between an employer and a union
  • in multi-party bargaining, each employer owes good faith obligations to each other employer, and each union; and each union owes good faith obligations to each other union and each union’s members and each employer
  • between a union and its members
  • between a union and members of other unions in a workplace
  • between an employer and different groups of employees in a workplace.

Good faith in collective bargaining is an extension of the general good faith obligations in relationships between employers, employees and unions.

Duty of good faith in collective bargaining

Having to bargain in good faith provides employers and unions with the best opportunity to reach a successful collective agreement (or variation). Approaching bargaining in a way that identifies issues and requires genuine consideration and response to those issues (with access to supporting information) promotes the prospects of an agreed outcome.

The duty of good faith is a tool to promote rational, informed discussion and minimise the parties resorting to actions such as strikes or lockouts. Employers can’t stop bargaining or refuse to enter into a collective agreement just because they object in principle to collective bargaining. The good faith provisions likewise allow parties to use information to persuade, not to mislead or deceive.

All parties who are collective bargaining have to act in good faith under the law. Good faith provides a basis for productive and ongoing relationships between employers, employees and unions. Good faith applies throughout collective bargaining:

  • from the start until the end of the bargaining process, and
  • in correspondence and communications after the completion of bargaining.

Good faith obligations recognise that:

  • employers and employees share many common interests, but they also have separate interests. For example, they may have a common interest to work together to increase productivity, but may disagree about what should be done with any increased profit.
  • productive employment relationships depend on people working together. This means focusing on common interests and managing competing interests in a way that maintains and builds relationships.
  • managing separate interests can mean all parties have to compromise.

When relationships are based on good faith, it’s easier to deal with the added pressures and issues that come up during collective bargaining.

What good faith means in collective bargaining

The duty of good faith underpins collective bargaining. At a minimum, unions and employers:

  • are active and constructive in establishing and maintaining a productive employment relationship
  • are responsive and communicative and use their best endeavours to agree on an effective and efficient bargaining process
  • meet together to consider and respond to proposals
  • if parties come to a standstill or reached a deadlock on a matter, they must continue to bargain about any other matters on which they have not reached an agreement
  • don’t mislead or deceive each other
  • recognise the role and authority of bargaining representatives
  • don’t bargain, directly or indirectly, with persons other than bargaining representatives
  • don’t undermine the bargaining process
  • provide, on request, information that is reasonably necessary to support or substantiate claims or responses.

In addition, the duty of good faith means that employers:

  • are required to provide information to employees about any proposal that will or is likely to have an adverse impact on the continuation of their employment. Employers must also provide an employee with an opportunity to comment on that information, unless good reasons exist for maintaining confidentiality
  • must not advise or do anything with the intention of inducing an employee not to be involved in collective bargaining, or not to be covered by a collective agreement
  • must not pass on to employees not covered by a collective agreement, a term or condition agreed to in that agreement, where this is done with the intention of undermining the agreement and which has that effect.

Limitations under good faith

The duty of good faith places limits on the tactics each side may use to further their objectives. These limits include:

  • not allowing strikes and lockouts during the first 40 days after bargaining starts, to encourage the parties to seek agreement at the table
  • allowing parties to use information to persuade, but not to mislead or deceive.

Employers can communicate to employees a statement of fact or an opinion reasonably held about their business or a union’s affairs. This includes statements about the employer’s proposals for settling the agreement. However, any such statement or opinion must not be made with the intention of persuading the employees not to be involved in collective bargaining, or not to be covered by a collective agreement.

The employer must also continue to bargain with the employees’ representative and not with the union members directly. Some similar restrictions apply to unions when they’re bargaining with an employer or its representative.

Good faith doesn’t:

  • mean the parties have to put their own interests aside when they are negotiating. It allows vigorous bargaining, including economic pressure in the form of strikes and lockouts.
  • restrict the subject matter of negotiations. It’s up to the parties to decide on the terms they wish to include in their collective agreement.
  • assume that collective bargaining involves only calm, reasoned argument - bargaining often involves emotion, tension, grandstanding, and the use of pressure tactics. These are normal aspects of the process and good faith bargaining allows for this.

Code of Good Faith

The Code of Good Faith in Collective Bargaining gives employers and unions guidance on good faith when bargaining for a collective agreement or variation.

There are specific codes of good faith for employment relationships for the New Zealand Police, and the public health sector which cover (but are broader than) collective bargaining.

Code of good faith in collective bargaining

Disclosure of information

Disclosing information to the other parties is a basic aspect of the duty of good faith. It promotes informed bargaining and good faith relationships, and is a way of understanding the parties’ separate interests. Find out more about disclosure of information.

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