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Collective Bargaining

Employment Contracts

23 June 2025 (Last updated 3 Dec 2025)

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Collective bargaining is done by one or more employers and a union to set up or renew a collective employment agreement. Issues discussed in the negotiating stage include wages, working conditions, salaries, benefits and other employment rights.

By having a platform to exchange ideas, promote common interests, and manage areas of concern – bargaining can alleviate issues or misunderstandings which might impact the employment relationship.

What Are the Rules and Regulations of Collective Bargaining?

The Employment Relations Act 2000 has rules that ensure collective bargaining is fair, easy for all parties to understand, and gives parties the flexibility to achieve their own specific goals.

What is The Code of Good Faith In Collective Bargaining?

The Code of Good Faith In Collective Bargaining is included in the Employment Relations Act and sets guidelines for both parties negotiating a collective agreement. While there is always an obligation for employers to act in Good Faith toward employees, the Code formalises these rules specifically for those undergoing the negotiation process. These rules are designed to give certainty to all party members, acknowledge every bargaining situation is different and parties will have their own views on how matters should be resolved and ensure the bargaining process is agreed upon by all parties before proceeding.

What is outlined in the Code of Good Faith in Collective Bargaining?

How to follow the duty of good faith and ensure that all party members:

  • Are active in maintaining a productive employment relationship
  • Are responsive and communicate throughout the bargaining process
  • Take into consideration new ideas and proposals to reach a mutually satisfactory agreement

Allowances for parties to discontinue the bargaining process if:

  • They cannot reach a collective agreement
  • Bargaining is taking up too much time or money
  • Either party breaches the duty of good faith by refusing a collective agreement they do not agree with

Initiating Collective Bargaining

Either an employer or union member can send a notice to initiate bargaining. This is a signed letter that:

  • Clearly states the intention to bargain for a collective agreement
  • The names of the intended parties
  • The kind of topics the employment agreement (coverage clause) will cover

The coverage clause is proposed by the party who starts the bargaining. This describes either the work or the employees, or both, that they wish to cover. The coverage clause is negotiable in the bargaining, for instance, a union may seek to cover managers and an employer may oppose this.

Unless these conditions are met, the notice to initiate bargaining will not be considered valid. In regards to who can initiate bargaining, there are certain requirements that need to be met:

  • Single-Parties: May be initiated by a union member or employer within 60 days of the current collective agreement expiring. May be initiated by the union at any time if there is no existing collective agreement.
  • Multi-Parties: May be initiated by a union if there is no collective agreement or the current agreement will expire within 60 or 120 days. May be initiated by an employer if a current collective agreement will expire within 60 or 120 days.

Employers can opt out of multi-employer collective agreements (MECAs)

An employer may opt out of bargaining for a MECA under any of the below conditions:.

  • A new MECA is being proposed
  • A current MECA is being renegotiated
  • Where employers are named to join an existing MECA

However, this can only be done at the time bargaining is initiated.

The employer must give notice, in writing, that they are opting out to all other parties within 10 days of receiving notice of initiation.

Where an employer opts out, bargaining can then commence for a single employer collective agreement, which may be initiated by either the employer or the union. Despite the fact that an employer may opt out of bargaining, they may still be named as a party to future multi-party bargaining.

Preparing for Bargaining

Collective bargaining is a complicated process that should be planned well in advance to ensure the process goes smoothly.

Good planning means putting careful thought into the different expectations and desired outcomes of each party. By setting up a bargaining process agreement to manage each state of the process, it will help avoid distractions and keeps the communication going forward.

An effective bargaining process agreement includes:

  • Who the representatives will be
  • Who and how many people will make up the bargaining team
  • How many meetings there will need to be
  • The venue and who will cover the costs
  • How to effectively manage disagreements
  • Communication between parties and other parties outside of the collective bargaining process
  • Associated costs

Negotiating the Collective Employment

Negotiations are a major part of the bargaining process and can be formal or informal to reach a collective agreement.

Topics that are discussed in these negotiations include working conditions, wages, health & safety, and other aspects of the workplace. While the negotiating process will be different for everyone, some useful tips for effective negotiating include:

  • Focus on the key issues and collective interests at hand
  • Avoid being swept up by emotions and individual personalities
  • Focus on steps to move forward, and not dwell on the past
  • Assess your options and compare them to the objectives already agreed upon.

Once an agreement has been reached, it must be ratified and signed by all relevant parties to become a collective employment agreement.

Information agreements

You don't have to have an information agreement, but it can be useful. If employers and unions can agree on information to be provided on a regular basis, they don't have to argue relevance on a case-by-case basis. An information agreement may need to be reviewed from time-to-time.

The following things can be included:

  • the stages in the bargaining process when information is likely to be required
  • the information likely to be 'reasonably necessary' for bargaining
  • a list of items that could be provided and a timeframe for disclosure
  • costs associated with providing information and who will pay them
  • what information may be 'reasonably considered' confidential
  • restrictions on the use of information (for example, confidentiality agreements)
  • costs associated with an independent reviewer, should the need arise
  • procedures for resolving disputes

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