Union free-riding: Union perceptions and strategies under the Employment Relations Act and the expected effects of the Employment Relations Law Reform Bill

Abstract

Under the Employment Relations Act 2000, employers are compelled to not directly discriminate against individuals on the basis of union or non-union membership status. Accordingly, the entitlement of employers to 'mirror', and 'pass on' collectively settled agreements within individual agreements, is an established and widely-used practice under the Act. Employers have frequently expressed the concern that any advantage given to union members would invariably create division and inequity within the workplace. Seldom has the disharmony created by passing on, and the subsequent disadvantage to union members, been of concern at all. This research examines aspects of free-rider, collective action, and public goods theory toward presenting an analysis relating to the status and effect of free-riding upon New Zealand labour unions, under the Employment Relations Act 2000. The study presents a summary of the issues and concerns raised by union officials with regard to union free-riding, and introduces the strategies employed by unions to address free-riding under the Act. In the absence of submissions made by local labour unions at the Transport and Industrial Relations Committee' hearing on the Employment Relations Law Reform Bill 2004, this research also seeks to explore the expected outcomes of proposed amendments to the Act relating to free-riding, from the perspective of local union officials, organisers and secretaries. Conclusions drawn from the analysis and interview responses determined that, in the absence of meaningful legislative support that effectively limits free-riding, the prognosis for organised labour in New Zealand is not good. Despite the measures proposed within the Bill to address union concerns and the issues associated with free-riding, the maintenance of freedom of association and preference provisions remain largely preserved. Therefore, workers will remain without rational incentive to join a union in order to receive the benefits, nor will they have any incentive to collectivise, leaving union members with a limited ability to organise and bargain effectively.