2019 02 – News from New Zealand

A Letter From Our New Zealand Correspondent

Feargus O’Raghallaigh


Every now and again I feel myself to be living in a country benighted by the curse of that cannon of neo-liberal ideology, labour market flexibility. January 23 last was one such day. The local Wellington daily, the Dominion Post carried a story on one of its business pages, Court ruling on rat deflating for boss.

The story was about a labour dispute at the Invercargill branch of a large supermarket chain, Pak ‘n’ Save. The chain is actually one of a duopoly (Foodstuffs and Countdown) that dominates the supermarket business. The other chains of the Foodstuffs brand are New World and Four Square. The individual stores are independent owner-operated with these owners in turn cooperative owners of Foodstuffs, a central services supplier (branding, marketing, back office services and so on). Countdown is the New Zealand brand for the Woolworths chain, one of the big two grocers that control the Australian market, the other being Coles.

The key thing about the Foodstuffs outlets (whether operating as Pak ‘n’ Save, New World or Four Square) is that they are independently owned and so the local owners are the employers. Thus, Invercargill’s Pak ‘n’ Save is owned by a Bryan Dobson operating as Kaikorai Service Centre. The workers are unionised by First Union.

The principal legislative provision governing the labour market is the Employment Relations Act 2000. There are other sources of law, principally the Employment Court Regulations 2000, and practice directions issued by the judges. Institutionally there is an arbitration body, the Employment Relations Authority – and there is the court. There is also a right of appeal from the Court to the Appellate Courts. The system can trace its origins back to the 1890s but that’s simply history. The real origins of the current system lie in the economic, fiscal and financial upheavals of the 1980s and the adoption of a market-based economy, including in respect of employment and employment relations. The key philosophical-cum-legal point is that in the labour market, where workers are unionised the union must in its dealings with employers act always “in good faith”. In other words it is the law of contract, commercial contract, that applies.

The world of voluntarism and voluntary agreements outside the framework of contract, the world of the British Trade Disputes Act, 1906 is long gone. In effect Taff Vale rules. Central of course to the framework is that all bargaining is also local – unless it is conducted by a union nationally representing workers employed by a national body such as for example KiwiRail. However such a situation is exceptional, even the public health sector is decentralised into separate and independent District Health Boards (DHBs). There is also an issue as to whether under the law, a right to collective wage-bargaining is provided for under the Act.

Enter Mr Dobson and his Invercargill Pak ‘n’ Save franchise. Since about December 2015 the First Union has been trying “in good faith” to negotiate a collective pay deal for its members in Invercargill. Dobson’s company is also bound by the “good faith” provisions of the Act. However he has proposed that acting in good faith does not extend to agreeing a pay deal – that pay is beyond the scope of the legislation. He has lost his argument at various points but has also always delayed matters further through appeals. He has had an adverse ruling from the Employment Court that is now on appeal again.

The Dobson approach is to litigate on every aspect of union conduct in this dispute. The latest Dom Post story relates to the union’s picketing policy following a still unresolved breakdown in 2016. The union took to picketing aimed at attracting general publicity for its cause. To this end it invested in a very, very large inflatable rat, using it on the picket line with around its neck, a very large placard, “Don’t be a rat Mr Dobson”. In addition, the workers carried a very big banner in the style of the Pak ‘n’ Save trademarks but with the message, ‘Pak ‘n’ Slave’. Dobson sought an order against the Union from the Employment Court, which the court has very firmly rejected. His argument was that the actions and language of the picket line represented evidence of breach of the good faith provisions while bargaining. In its decision, just released, the judge ruled

‘‘While there is likely to be a point where what has been said or done is so offensive or undermining that good faith is breached, the duty does not require bargaining to be undertaken in a courteous way. It does not require using polite language, or to resist robust position-taking, or avoiding a combative style.’’

No more than common sense you, dear reader, might say? Well yes – but also no, if the point of it all is to grind unions and collective action down to functionally, nothing and at the same time cut pay and conditions to virtual slavery (in a ‘race to the bottom’).

On the issue of the slogan (‘Pak ‘n’ Slave’) the judge observed, ‘‘… while the company submitted the slogan breached the duty of good faith for likening the business to slavery, the union considered that statement to be part of attempts to use legitimate pressure and was no more than a commonly used corruption of a well-known trading name reflecting a reputation for paying low wages. I agree with the union that the slogan did not breach the duty of good faith. It was an attempt to publicise the industrial dispute to obtain some leverage and nothing more. It needs to be borne in mind that the union, and its members, enjoy a right of free speech which they were entitled to exercise.”

Again common sense but also again, the New Zealand system, which formally in law ‘recognises’ unions and the right to negotiate as a practical and political matter, a state-created legal straitjacket on behalf of employers to race each other to the bottom as regards pay and conditions. New Zealand employers are also where employers in the market economies of the rest of the world aspire and dream to be. It is also what governments and their institutions (particularly their central banks), for example in the UK and the eurozone especially, want to achieve for and on behalf of employers. If you want to see the future welcome to New Zealand.


Here is a link to the judgment which was reserved.