Good faith bargaining in New Zealand: A study of its development and likely practical application

Abstract

When the Labour Party industrial relations policy was released before the 1993 general election it promoted a new Act, which among other things planned to require parties conducting employment contract negotiations, to bargain in good faith. Commentators at the time were concerned that this concept would be difficult to put into practice without clear and enforceable rights being established to prevent employers ignoring good faith requirements. The Employment Contracts Act 1991 (E.C.A.) introduced by the present incumbent National Party at the beginning of its first term, has no specific requirements for parties to bargain in good faith and even specifically excludes the law relating to equitable actions for unfair or unconscionable bargains. Furthermore a recent House of Lords decision in a contract case held that the duty to bargain in good faith was unworkable in practice and inherently inconsistent with the position of a negotiating party.

Despite this, the Employment Court has in the last eighteen months begun a move towards creating an implied common law duty to bargain in good faith. This duty is still in its formative stage, and it is one of the aims of this research paper to attempt to formulate some of the possible limits and applications of this duty, based on examples of the Canadian and American experiences in this area. The paper will also examine the changing viewpoint of the Employment Court over the past four year on this issue and will propose a number of possible reasons for this unexpected and radical change in thinking. --[Introduction]