Government Expectations on Employment Relations in the State Sector
On 5 March 2018 Cabinet agreed to set as a matter of policy Government Expectations on Employment Relations in the State Sector. The new Expectations replace in their entirety the Government Expectations for Pay and Employment Conditions set by the previous Government in May 2012. The Expectations form the basis of the State Services Commission’s advice, approval and reporting regarding employment relations in the State sector.
The State Services Commissioner’s delegation to Public Service chief executives of the power to negotiate collective agreements has been updated in line with these Expectations. The standard letter and delegation is here.
This statement of Government policy sets out the Government’s expectations of State sector employers in relation to employment and workplace relations generally, and the negotiation of individual employment agreements, collective agreements and agency policies on pay and conditions.
The Government has an ambitious workplace relations agenda and has signalled its intention to introduce legislative change. These Expectations guide State sector employers on how to apply Government policy under current legislative settings.
These Expectations may be reviewed in light of any legislative change or developments from possible tripartite discussions between Government, State sector employers and unions.
These expectations are designed to ensure that State sector employers have high standards in workplace relations, create safe and healthy places of work, and to foster consistency on employment matters in the State sector. Improved consistency in pay and conditions supports employment security through greater workforce mobility across the system and provides the opportunity to manage common pressures.
It is important that parties to employment negotiations recognise the Government’s objective for fiscal sustainability. It is expected that employment relations outcomes uphold the Government’s objective to maintain government expenditure according to agencies’ strategic plans, within existing baselines and indicated operating allowances.
Government Policy for Employment and Workplace Relations
Government’s overarching policy for employment and workplace relations is that:
- State sector employers recognise and give effect to the Object of the Employment Relations Act (see footnote below) in their employment relations practice and policies; and
- all parties are treated fairly and with respect; and
- workplace relations are based on good faith, natural justice, human rights, good employer practice and requirements; and
- employees have a voice in their workplace, particularly through effective and productive relationships with unions; and
- where a collective agreement exists employees will have a clear choice to join the relevant union when being employed; and
- employers will address any pay equity claims through the process established by the Joint Working Group on Pay Equity Principles.
The Government’s priorities particular to core Public Service departments are that:
- employers will work to close gender pay gaps and apply the Gender Pay Principles
- employers will work to narrow the gap between the highest and lowest earners in the organisation
- employers will work toward best practice worker engagement and worker representation in health and safety
- negotiations for collective agreements must include the rates of salary or wages payable to employees or transitional arrangements to reach this point
- employers will work toward removing at-risk pay and performance bonuses from pay policies and employment agreements.
Other State sector agencies may consider what opportunities exist to make progress on any of these issues when setting organisational strategies and priorities.
Pay and Employment Conditions
State sector agencies are expected to meet the following criteria when adjusting pay and employment conditions, whether through collective bargaining or individual negotiation processes:
- Negotiations should be conducted in a manner consistent with the policies above.
- Adjustments to pay and conditions should support agencies’ organisational strategies and their contribution to wider system goals and delivery of results.
- Adjustments must be fair, affordable within baselines and sustainable as signalled within agency and sector four-year plans or their equivalent.
- Agencies must consider the potential cross-agency impacts from changes to employment agreements including opportunities to build greater consistency across agencies.
- Adjustments should recognise imperatives such as improved organisational performance, and recruitment and retention difficulties.
- The financial parameters for both bargaining and remuneration strategies must take into account the total cost of all adjustments to pay and conditions. This includes the cost of progression through pay scales and any performance-based pay increases.
- The parties to negotiations should ensure they have the capability to bargain efficiently and effectively and avoid backdating any or all components of settlements.
In the context of a restrained fiscal environment and the commitments above to Pay Equity and closing Gender Pay Gaps, State sector agencies are encouraged to consider opportunities for broadly based benefits to employees. Agencies should consider the relevance to the agency and its workforce, the agency’s current offerings and how any changes could support greater consistency and management of common pressures across the State sector. Illustrative examples of the sort of broadly based benefits that may be relevant include:
- Enhanced family friendly policies in areas such as domestic leave for carers and parental leave.
- Improved availability of flexitime, wellness incentives, unpaid special leave, professional development, capability building and portability for future workplaces.
- Support to employees affected by family violence (including special leave).
- Recognition of service to support mobility across the system.
- Providing minimum redundancy protections.
- Recognition of employees’ cultural contribution in recruitment and job descriptions and associated pay.
- Clarified provisions covering leave at times of civil emergencies.
- Consistent application of changes as a result of the Government’s legislative programme in workplace relations.
In order to support greater consistency in pay and conditions, approaches to some of these areas will need to be developed collaboratively across agencies.
These Expectations apply to all State sector agencies except State Owned Enterprises and Mixed Ownership Model companies.
These Expectations replace the document Government’s Expectations for Pay and Employment Conditions agreed by Cabinet in 2012.
Public Service departments must have a bargaining strategy that meets these Expectations approved by the Commissioner, and must not commence bargaining or commit to an outcome (including final Terms of Settlement) without this approval.
All State sector organisations except State Owned Enterprises and Mixed Ownership Model companies must have regard to these Expectations when setting bargaining and remuneration strategies, and determining other employment relations policies.
Outcomes of Remuneration Forums or other mechanisms that review pay rates should reflect these Expectations. Public Service departments must consult with the SSC before committing to an outcome.
Other agencies with a statutory requirement to consult with either the Commissioner or a monitoring department, must have bargaining and remuneration strategies that meet these Expectations as the basis for that consultation.
Where an agency wishes to pursue a course of action that the Commissioner or monitoring department considers is at odds with these Expectations, approval of the agency’s responsible Minister, the Minister of State Services, the Minister of Finance and the Minister of Workplace Relations and Safety is required.
 3 Object of this Act
The object of this Act is—
(a) to build productive employment relationships through the promotion of good faith in all aspects of the employment environment and of the employment relationship—
- by recognising that employment relationships must be built not only on the implied mutual obligations of trust and confidence, but also on a legislative requirement for good faith behaviour; and
- by acknowledging and addressing the inherent inequality of power in employment relationships; and
- by promoting collective bargaining; and
- by protecting the integrity of individual choice; and
- by promoting mediation as the primary problem-solving mechanism other than for enforcing employment standards; and
- by reducing the need for judicial intervention; and
(ab) to promote the effective enforcement of employment standards, in particular by conferring enforcement powers on Labour Inspectors, the Authority, and the court; and
(b) to promote observance in New Zealand of the principles underlying International Labour Organisation Convention 87 on Freedom of Association, and Convention 98 on the Right to Organise and Bargain Collectively.