Submission. Howick and Eastern Buses Ltd Reesby Rotorua Ltd ManaBus.com Ltd. Education and Workforce Committee. Employment Relations Amendment Bill

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1 Submission By Howick and Eastern Buses Ltd Reesby Rotorua Ltd ManaBus.com Ltd To Education and Workforce Committee Employment Relations Amendment Bill 29 March 2018 Howick and Eastern Buses Ltd 380 Ti Rakau Drive PO Box 58330, Botany Auckland 2163 T: E: W:

2 Table of Contents Foreword... 3 Executive Summary... 4 Summary of Recommendations... 5 Introduction... 6 Minimum standards and protections for employees... 8 Collective bargaining and union rights

3 1. Foreword 1.1. Howick and Eastern, Reesby Rotorua and ManaBus.com are all part of the same group of companies made up of the InMotion Group and Souter Holdings Fullers Ltd (collectively referred to as the InMotion Group) The three businesses represent a cross section of the NZ passenger service industry as they operate in the large Auckland urban market, the provincial urban market and the NZ inter-regional long distance market. Our businesses are significant contributors to New Zealand s economy. We employ 300 staff, operate 190 NZ made vehicles and carry 7.0 million passengers. 2. Executive Summary The Bill proposes major changes to the requirements for rest and meal breaks. If these changes are implemented they will have far reaching cost implications for Local and Central Government (NZTA and MoE) as operational efficiency, service reliability and asset utilisation significantly decline. The existing management of rest and meal breaks according, to the Land Transport Rule: Work Time and Logbooks 2007, works efficiently for driver welfare, other road user s welfare and public money expenditure. We make 12 other recommendations including protecting drivers wages by setting, on a regional level, minimum wage conditions prior to tendering so that, on average, current employees that elect to work for any new operator are not worse off. 3

4 3. Summary of Recommendations Recommendation 1: Retain the current rest and meal break requirements, and in particular retain the current wording in section 69ZH. Recommendation 2: 90-day trial periods should be retained for small to medium sized enterprises, as is proposed in the Bill. Recommendation 3: We do not support reinstatement being the primary remedy for unfair dismissal. The current provisions allow reinstatement but provide greater flexibility so should be retained. Recommendation 4: Do not add bus drivers to Schedule 1A of the Employment Relations Act. Recommendation 5: We oppose the duty to conclude bargaining and believe the focus should remain on a duty of good faith. Recommendation 6: Retain the current timeframes for initiating bargaining and allow both employers and unions to initiate bargaining within 60 days of a collective agreement expiring. Recommendation 7: Retain the employer opt-out clause. Recommendation 8: Allow employees to choose whether to be covered by the collective agreement or an individual employment agreement for the first 30 days. Recommendation 9: Retain the current ability to deduct wages for partial strike action. Recommendation 10: Retain the current consent requirements. Recommendation 11: The InMotion Group opposes a requirement that reasonable paid time be provided to union delegates to represent workers. Recommendation 12: Employers should not be required to pass on information provided by unions. Recommendation 13: The current 12-month threshold for discrimination relating to union activities should be retained. 4

5 4. Introduction 4.1. The In Motion Group welcomes the opportunity to make a submission on the Employment Relations Amendment Bill (the Bill). The proposed amendments have significant implications for our company, particularly for our urban, inter-regional, and school operations Many of the changes proposed in the Bill are likely to increase costs and/or increase the complexity of operation. This is a particular challenge for our urban bus operations because our business is subject to fixed price contracts of 6-12 years. Our school transport operations are in a similar position albeit with less time left on their current contracts. These factors mean our industry has a limited ability to pass on any increases to wage costs and reduced flexibility will greatly hinder bus and coach operations If these changes are made in full we anticipate significant increases to the cost of delivering bus and coach services. As urban and school bus operators we will need to seek contract variations from regional authorities and central government to cover these costs, since we have no other option We are also concerned that the proposed Bill will create an environment where unions are more willing to take industrial action, and thereby impact public transport service delivery. If this comes to pass it could easily erode confidence in the public transport system and reduce patronage over time Our submission is split into the following sections and sub-sections: Minimum standards and protections for employees o Rest and meal breaks o Restriction of 90-day trial periods o Making reinstatement the primary remedy for unfair dismissal o Protections for employees in vulnerable industries Collective bargaining and unions o Duty to conclude bargaining 5

6 o Earlier initiation timeframes for unions in collective bargaining o Remove the opt-out for multi-employer collective agreements (MECA) o First 30 days on collective agreement terms for new employees o Repeal of partial strike pay deductions o Union access without consent o Pay rates in collective agreements o Providing reasonable paid time for union delegates to represent workers o Requirement to pass on information provided by unions o Greater protections against discrimination for union members 6

7 5. Minimum standards and protections for employees 5.1. Rest and meal breaks Recommendation 1: Retain the current rest and meal break requirements, and in particular retain the current wording in section 69ZH The Bill proposes a major reduction in flexibility around rest and meal breaks. In particular, the Bill stipulates that over the course of a 6-hour shift employees are entitled to a paid 10-minute rest break, and a 30- minute meal break We manage rest and meal breaks according to the Land Transport Rule: Work Time and Logbooks 2007, which requires drivers to have a rest break after 5.5 hours of continuous work. Currently section 69ZH means that the requirements under the Work Time Rule take precedence over the Employment Relations Act. However, the proposed amendments to section 69ZH create significant ambiguity where this is concerned Given there are already statutory requirements for rest breaks for bus and coach drivers we oppose the establishment of a further set of requirements, especially if they add to the existing requirements. The application of these requirements, if they are in addition to the Work Time and Logbooks Rule, will have major impacts on bus and coach operators If the proposed changes are in addition to the existing requirements for driver rest breaks we anticipate the impact of the proposed changes would be different for each sector and will depend on how rigidly the changes are applied. The sections below outline the expected impact. Implications for Urban Services Urban bus services are typically scheduled around shifts of approximately 5 hours. While drivers may have an opportunity for rest between finishing one service and starting the return service, these are 7

8 inevitably subject to uncertainty. Congestion and/or heavy patronage can slow down services to the point that any expected lay-over time may be lost if the driver is to keep to the schedule. This makes it very difficult to schedule a 10-minute rest break during a 5-hour shift with any certainty particularly when service contracts often demand frequent, reliable, and punctual services. Urban operators suffer penalties from the Regional Councils if reliability and punctuality targets are not met Scheduling a 30-minute rest break during a ~5-hour shift (as would be required by the proposed Section 69ZE (4)(b)), rather than at the end of the shift, would disrupt services to the point that operators would need to either switch drivers or schedule a significant gap between services. This would add major costs - effectively increasing the number of drivers required to deliver the same service. Implications for Inter-Regional Services Inter-regional and coach services are typically scheduled around shifts of approximately 5 hours depending on the length of the journey. Flexibility around rest and meal breaks, while meeting work time requirements, is critical. For longer journeys, such as a service between Auckland and Wellington, there may be a driver switch half way, and one or two short (10-15 minute) rest stops. In other cases, operators incorporate a minute meal break during the service, scheduled to meet work time requirements Incorporating a 30-minute break during a 5-hour shift, rather than as a break between driving shifts, would significantly disrupt inter-regional services. Implications for School Transport Services Most school bus services require a shift of between 2 to 3 hours, so under the proposed changes the driver would be required to take a 10-8

9 minute break during this work time. In many cases school transport drivers might prefer to finish their shift sooner, rather than taking a 10- minute break during their work period. School transport drivers are often not required to work again until school finishes in the afternoon so a 10- minute break during a 2-3 hour period of work would simply mean they get home later For most school transport drivers, a 10-minute rest break is probably unnecessary and may be seen as an inconvenience by the driver Flexibility around rest and meal times is critical for all sectors of the bus and coach industry both for scheduling, driver convenience, and competitiveness in service delivery. The proposed changes remove this flexibility and will make life very difficult for our businesses. As a result, we oppose the changes Restriction of 90-day trial periods Recommendation 2: 90-day trial periods should be retained for small to medium sized enterprises, as is proposed in the Bill We understand the Government is concerned that 90-day trial periods create an opportunity for unfair treatment of new employees referred to by some as allowing employers to fire at will. The bus and coach industry is facing persistent driver shortages, and we do not always have the luxury of a large pool of recruits to choose from. 90-day trial periods give operators greater confidence in taking a punt on employing people including people that may have been previously unemployed or who have no experience of commercial driving However, on balance 90-day probationary periods written into contracts will help larger operators manage these risks. As a result, we are not opposed to the restriction of 90-day trial periods to small-to-medium 9

10 enterprises. This will mean small operators, with less resources at their disposal, will not risk an unfair dismissal claim if the employee is ultimately unsuited to the work place or position Making reinstatement the primary remedy for unfair dismissal Recommendation 3: We do not support reinstatement being the primary remedy for unfair dismissal. The current provisions allow reinstatement but provide greater flexibility so should be retained Reinstatement is not always the best outcome for the employee, other employees at the workplace, and the employer. We are concerned that the relationship between the employer and impacted employee may be negatively impacted as a result of any unfair dismissal claim, and hence reinstatement could be a poor outcome for both parties. Reinstatement can cause tension in the work place and some reinstated employees may feel immune to any further disciplinary action We strongly favour the current provisions, which allow reinstatement if it is practical and reasonable, rather than requiring it if this is the case Protections for employees in vulnerable industries Recommendation 4: Do not add bus drivers to Schedule 1A of the Employment Relations Act There is currently a Private Members Bill in the ballot to add bus drivers to Schedule 1A of the Employment Relations Act We understand the Government may consider making this change as part of the passage of the Bill We understand the desire to protect employee wages and conditions when they transfer between employers. However, we do not support this mechanism to achieve it. This change would require operators to take on existing staff at their existing terms regardless of their credentials. 10

11 Prospective employees should be subject to the usual recruitment process along with all other new recruits, rather than operators being forced to take on staff At present there is also no mechanism for operators to recoup any additional wage costs that could result from such a change, which would make tendering for public transport contracts extremely difficult and risky A more appropriate mechanism to achieve this outcome would be to set minimum wage conditions prior to tendering such that, on average, current employees that elect to work for any new operator are not worse off. This mechanism could be done at a regional level, ensuring regional differences in wages would be reflected in the tendering process Another alternative would be to go down the path of a fair pay agreement, involving a tripartite negotiation between operators, unions, and the funders of public transport services. While this might be a more palatable option for urban operators, it would have wide implications for other sectors. If, as a result of a fair pay agreement, the average wage for urban drivers increases we would expect the wage for all equivalent jobs to go up proportionately. Regional wage differences would also make a fair pay agreement very difficult to achieve in practice. 6. Collective bargaining and union rights 6.1. Duty to conclude bargaining Recommendation 5: We oppose the duty to conclude bargaining and believe the focus should remain on a duty of good faith The InMotion Group provide services that are entirely dependent on the availability of drivers. It is in our interest to conclude bargaining sooner rather than later and thus avoid any strike action. We use mediation to bring the process to a close if agreement cannot be reached on particular issues. However, we are concerned that a duty to conclude bargaining will mean we are forced to accept unworkable terms in order to comply with the Employment Relations Act. If a union is making 11

12 unreasonable demands operators want to have the ability to walk away from bargaining Earlier initiation timeframes for unions in collective bargaining Recommendation 6: Retain the current timeframes for initiating bargaining and allow both employers and unions to initiate bargaining within 60 days of a collective agreement expiring This proposed change is of relatively minor significance to bus and coach operators. However, we oppose the change on principle since we do not see any value in having different initiation timeframes for unions and employers. If collective bargaining is in good faith then there should be no need to give one party an earlier opportunity to initiate bargaining Remove the opt-out for multi-employer collective agreements (MECA) Recommendation 7: Retain the employer opt-out clause A MECA would be a significant business risk to any operator with unionised staff. Our urban and school bus operations which are locked into long-term contracts, on the basis of certain wage costs, would be the most impacted. Wages and conditions vary between employers, and this will be reflected in their operating costs and contract prices. As a result, a MECA in the urban bus and/or school bus sector could easily result in a stalemate. Employees from higher paying operators would be unwilling to accept a lower wage and lower paying operators would be unable to provide sufficient wage increases because they have limited margin under public transport contracts An MECA would also create major issues if it covered multiple regions, given the significant wage differences between employers in major urban areas compared to regional towns. This could create a very complex situation for our businesses that cover multiple regions. For example, if we were required to pay Auckland wage rates to staff based in Rotorua 12

13 because employees in both regions are covered by a MECA we could easily be priced out of the market. This would fail to achieve the Government s objective Multi-employer collective agreements in the absence of a mechanism to recoup any increase in wage costs are unlikely to work. As discussed above, a more appropriate mechanism to establish wages for bus drivers would be through the tendering process First 30 days on collective agreement terms for new employees Recommendation 8: Allow employees to choose whether to be covered by the collective agreement or an individual employment agreement for the first 30 days The InMotion Group opposes this change. We only have 16% of our employees in a collective agreement. To require that all new employees be placed on the same collective agreements is unnecessary and creates an administrative burden. If unions want all new employees to be placed under collective agreements this can be negotiated as part of bargaining, rather than being a legislative requirement. In general, we believe employees should have the choice of being placed on an individual employment agreement or a collective agreement for the first 30 days Repeal of partial strike pay deductions Recommendation 9: Retain the current ability to deduct wages for partial strike action We understand the Government is concerned that Section 95B of the Act allows employers to deduct wages for low level industrial action that has limited impact on the operation of a business. The example provided by the Government is that pay has been deducted where employees were wearing t-shirts instead of uniforms. 13

14 However, under the proposed changes employers will have very limited options to manage lost revenue except for a full strike. In fact, the Bill proposes to remove all mentions of partial strike, including the definition. This effectively means the only industrial action that would result in a pay deduction for employees would be a full strike, even though a partial strike could still be costly to employers. In the bus and coach industry such action could include refusing to collect fares, refusing to drive certain bus services, or refusing to carry passengers all of which may have direct costs to operators in terms of either loss of fares or penalties from contracting agencies Given we can easily suffer losses as a result of a partial strike it is essential that unions and employees who decide to take this action do so with the expectation that they will lose pay as a result We oppose the wholesale removal of the ability to deduct wages for partial strike action where that action results in direct financial costs to our businesses. The margins in the urban and inter regional bus services are low and the penalties high for non-performance. Removal of partial pay deductions would pave the way for frivolous strike action, which could easily impact on public transport services that are critical to the wider community and economy Union access without consent Recommendation 9: Retain the current consent requirements Our depots involve the regular movement of heavy vehicles, often include bulk fuel storage, and typically include a vehicle maintenance workshop. Furthermore, we are nearly a 24-hour a day operation, meaning depots may be staffed both late at night and early in the morning with vehicle movements continuing throughout. In such an environment the management of health and safety is critical, not just for employees but also any visitors. 14

15 Communication between unions and union members operates perfectly well with the present provisions and therefore for sensible organisation of our businesses we strongly recommend retaining the current consent requirements It is critical that we are able to manage the health and safety of their work sites and the continuity of our businesses by having some say over when union representatives access their depots Pay rates in collective agreements We have no objection to a requirement that pay rates be included in collective agreements Providing reasonable paid time for union delegates to represent workers Recommendation 10: The InMotion Group opposes a requirement that reasonable paid time be provided to union delegates to represent workers As with other proposed changes in the Bill, this change will increase costs for any employers with unionised staff. Unions charge members for their services and representation, so should be in a position to cover the costs of anything delegates need to attend to. Employers are not expected to pay for any representation for employees on individual employment agreements, so should not be expected to do so for employees on collective agreements We strongly oppose a requirement that we pay for union representation. As we have previously pointed out, we have a very limited ability to recoup additional costs such as the cost of union delegates representing other employees Requirement to pass on information provided by unions 15

16 Recommendation 11: Employers should not be required to pass on information provided by unions It is not the role of employers to advocate or promote unions to new employees. There is already a requirement that employers inform new employees about any collective agreement and that they have the option of joining the relevant union. To go further than this is requiring employers to do the union s job for them. Unions have access to staff, so can provide the information to new employees themselves Greater protections against discrimination for union members Recommendation 12: The current 12-month threshold for discrimination relating to union activities should be retained The InMotion Group opposes the increase of the discrimination threshold to 18 months. We are not opposed to the proposal to explicitly protect employees from discrimination on the basis of union membership. 16