NZALPA Solicitor, Joy Walpole Leva’a.

In the past year we have seen significant case law investigating the emergency powers exercised by the Government in response to the COVID-19 pandemic. The Idea Services Ltd v Attorney General case relates to the 12-month extension of the life of a collective agreement1 (“CA”) and whether the government’s Epidemic Notice modifying this timeframe was lawful.

In March 2020, an epidemic notice was issued by the Prime Minister under s5 of the Epidemic Preparedness Act 2006. Section 15(1) of the Epidemic Preparedness Act allows “immediate modification of statutory requirements and restrictions to enable compliance during [an] epidemic”2 and a notice made under this section is called an “Immediate Modification Order” (“IMO”).

On 16 April 2020, an IMO came into effect which amended aspects of the collective bargaining provisions of the Employment Relations Act 2000 (“ER Act”), such as the ratification procedure, the requirement for employers to draw employees’ attention to initiation of bargaining, and, in particular, the extension of a CA for a maximum of 12 months after expiry.

Under section 53 of the ER Act, as long as a party has initiated bargaining within the requisite timeframe, the parties have 12 months after the expiry of the CA in which to conclude negotiations. If agreement cannot be reached, all employees covered by the collective would become employed on an individual employment agreement (“IEA”) based on the collective.

On a strict reading of the IMO, if a party initiated bargaining within 12 months before 16 April 2020 and until 6 March 2022 (the length of time the Epidemic Notice was in force), the 12-month timeframe relating to the extension of the CA was effectively ‘frozen’ until three months after the notice was withdrawn, at which point, the 12-month period would begin.

Idea Services, on appeal, challenged the legality of the IMO on the basis that s53(3) of the ER Act contains no relevant “requirement” or “restriction” which s15 of the Epidemic Preparedness Act can modify. The High Court decision3 had concluded that the IMO was flawed because it lacked a review provision in itself to review its ongoing necessity.4 Idea Services also argued that the lack of a review provision rendered the IMO invalid from the outset since it was open-ended and did not require anyone to reconsider it.5

Idea Services’ evidence focused on the nature of the power being exercised, secondary legislation taking effect subject to all primary legislation and the Court has found such legislation should be given a  very narrowly.6 The Respondents (the Attorney-General in respect of the Minister for Workplace Relations and Safety, the Chief Executive of the Ministry for Business, Innovation and Employment and E Tu Incorporated) provided evidence relating to the pandemic and the different Alert Level changes showing that periods of lower restrictions have not been lengthy.

The Court of Appeal found that on a strict interpretation of the ER Act wording, the timeframe for extension of bargaining was not a “requirement or restriction”7 which could be modified by the IMO. In order words, the IMO was invalid because there was no statutory power to make it.8

This is a significant finding: first, due to the declaration that the IMO was made ultra vires and the precedent it sets for further secondary legislation; and secondly, as it meant the outcome for the workers in question was that they moved onto IEAs.

We also do not know how many other unions were relying on this legislation and how many other potentially impacted workers there are.

NZALPA has settled all of its bargains which expired during the period the Epidemic Notice was in force. However, it certainly provided a sense of security knowing that the 12-month countdown had not yet begun, at a time when international travel was just beginning to revive.

In coming to this decision, Simon J refers to the overriding duty of good  faith in section 4 of the ER Act and highlights that there is no time limit on the duty of good faith in bargaining9 and this “obligation to negotiate in good faith continues regardless of whether the previous agreement is at an end.”10 In bargaining, historically we have had cause for concern regarding the potential impact of a CA expiring and workers moving onto IEAs. This judgment by the Court of Appeal considering the duty of good faith, the expiry of a CA and its impact on workers may prove a useful precedent for the future.

1 Employment Relations Act 2004, s 53.
2 Epidemic Preparedness Act 2006, s 15.
3 Idea Services Ltd v Attorney General [2022] NZHC 308.
4 Idea Services Ltd v Attorney General [2022] NZCA 470 at [16].
5 Above n 3, at [17].
6 Above n 3, at [21] – [23].
7 Above n 3, at [35].
8 Above n 3, at [59].
9 Above n 3, at [31].
10 Above n 3, at [60].