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New Zealand Dairy Workers Union Wins Long Struggle Against Freeloading

Posted to the IUF website 02-Mar-2005

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The following article was contributed by James Ritchie, National Secretary of the New Zealand Dairy Workers Union (NZDWU).

Towards the end of 2004, the New Zealand Labour-led government passed amendments to labour law which included the ability of unions and employers to negotiate a bargaining agent fee to prevent non-union workers freeloading on the terms and conditions of the collective agreement. This was the culmination of a long campaign by the Dairy Workers Union to negotiate a bargaining agent fee into its collective agreements.

New Zealand labour law had been deregulated in 1991 with the enactment of the widely despised Employment Contracts Act, which placed labour as a commodity to be contracted freely in the market place. The result reduced many workers' incomes and sent families into poverty. The conservative government promoted New Zealand as a low wage economy within the OECD, and union density dropped from over 50% to under 20% in less than a decade.

The election of a Labour-led Government in 1999 resulted in the repeal of the Employment Contracts Act and the enactment of the much fairer and more worker-friendly Employment Relations Act in 2000.

Despite the improved legislation and environment and slowly increasing union density, the problem remained of unions negotiating collective agreements and employers passing on those benefits to non-union workers. Our members, like many in other unions, were frustrated by this ability to "freeload" on the financial contributions and efforts of union members.

In 2001, the Dairy Workers Union negotiated into its major agreement with the dairy transnational Fonterra a bargaining agent fee, whereby those non-union workers who wanted to receive the pay increase and benefits of the collective agreement would have to pay a fee (set at a lesser sum than the union fee) to the DWU. The result was that most of the small number of freeloading workers in our industry quickly joined the union, reckoning they might as well pay the union fee and get full benefits rather than pay a bargaining agency fee.

Part of the agreement with Fonterra was to have the legality of the Bargaining Agent Fee tested in the Employment Court. The case was heard in 2002; the judge ruled that the fee contravened the law and ordered that all monies collected under the fee arrangement be paid back and the clause in the Collective Agreement declared null and void.

The National Executive of the NZDWU resolved on a 3-pronged campaign in response to this decision. First, we would continue the legal battle. Secondly, we resolved to engage in political lobbying to have the law amended. Thirdly, in the meantime we would seek other methods of preventing freeloading through collective bargaining.

The union was supported by the New Zealand Council of Trade Unions which provided evidence and legal argument that a bargaining agent fee was in accord with ILO conventions, particularly convention 87 on Freedom of Association.

The NZDWU took the case to the Court of Appeal and a full bench heard our appeal in March 2004. The Court of Appeal upheld the Employment Court decision by ruling that the bargaining agent fee contravened the law. Although this was a further setback it strengthened the union�s resolve to keep fighting the issue.

The NZDWU is affiliated to the New Zealand Labour Party and we took the issue up directly with Prime Minister Helen Clark in a series of Council of Trade Unions/ Government forums. The Prime Minister had been following developments in the Courts and our arguments against freeloading and our solution to the problem won her interest and support.

When amendments to the Employment Relations Act were passed in late 2004, they included an ability for unions and employers to negotiate a bargaining agent fee. An incentive for employers to do so is that it is a breach of good faith to �pass on� the terms and conditions of collective bargaining to non-union workers if it has the intent or effect of undermining collective bargaining.

The negotiation of a bargaining agent fee must be followed by a secret ballot of union members and non-union workers who would come under the coverage clause of the collective agreement and a majority must be in favour of giving effect to the bargaining agent fee clause. A worker may then seek exemption in writing from paying the fee within a specified period agreed by the parties. If a non-union worker seeks exemption, they remain on their previous terms and conditions of employment. If they do not seek exemption the fee is binding for the term of the Agreement.

The NZDWU is pleased with this successful industrial and political campaign which tackled one of the more difficult issues in the industrial landscape.