Definitive Report - Report No 244, June 1986

Case No 1334 (New Zealand) - Complaint date: 03-MAY-85 - Closed

1. 78. In a communication dated 3 May 1985, the New Zealand Employers' Federation submitted a complaint against the Government of New Zealand in which it alleged the infringement of freedom of association through the Union Membership Bill, which was subsequently passed into law on 13 June 1985 as the Industrial Relations Amendment Act 1985. The complainant supplied additional information in a communication dated 22 May 1985, and the Government replied in a communication dated 12 September 1985.
2. 79. On 1 August 1985, the New Zealand Federation of Labour requested details of the complaint and expressed the wish that it would be afforded the opportunity to put forward its views on the questions raised. This matter was considered by the Committee at its meeting in November 1985 when it decided that, in accordance with its usual procedure, it could only take into account, in its consideration of the case, communications submitted by the complainant organisation and of those submitted by, or through, the government concerned. It accordingly decided that the New Zealand Federation of Labour should be informed that its comments could only be taken into account if they were transmitted by, or through, the Government. The comments of the New Zealand Federation of Labour were subsequently forwarded in a communication from the Government on 10 December 1985.
3. 80. New Zealand has not ratified either the Freedom of Association and Protection of the Right to Organise Convention (No.87) or the Right to Organise and Collective Bargaining Convention (No.98).

A. The complainant's allegations

1. 81. The complainant alleges that the legislation resulting from the Union Membership Bill reintroduced compulsory trade unionism with effect from 1 July 1985, through the statutory provision for union security clauses to replace the freedom of choice for trade union members which had existed under the previous legislation, which had been in force since 1 February 1984.
2. 82. Specifically, the complainant alleges, first, that the legislation provides for an initial 18-month period of statutory compulsion during which all workers covered by awards and collective agreements will have to join or remain members of a union; and that this period will be followed by balloting on union membership which must, in terms of the statutory provisions, take place on a national, industry-wide basis rather than at the workplace, according to voting procedures which the complainant considers to be inadequate for the purpose of ensuring that the workers have an effective say in whether they must belong to unions. Secondly, the complainant alleges that the legislation does not provide workers with any effective choice of union.
3. 83. In support of its allegations, the complainant points to the new provision whereby, during an initial period of 18 months, a union membership clause is deemed to be inserted into all awards and collective agreements which had previously contained an unqualified preference clause (this was a provision to the effect that any worker covered by an arbitration award or collective agreement must become a member of the union concerned within 14 days after his engagement.); and states that, although ballots may take place during this period, the absence of any obligation to conduct a ballot means that statutory compulsion will prevail for the full period unless a union chooses to hold a ballot.
4. 84. The complainant further states that the legislation requires an employer to dismiss any worker who fails, on request, to join a union unless the worker has been granted exemption on grounds of conscience. It is of the view that statutory compulsion which results in dismissal is unquestionably a violation of freedom of association, and in this regard cites a judgement of the European Court of Human Rights relating to Article 11 of the European Convention on Human Rights.
5. 85. On the balloting provisions, the complainant says that the designation of the union's membership nationwide as the electorate rather than those at the workplace means that a truly representative vote by workers affected is a remote possibility, and that it also opens the way for union membership to be compulsory among some workers but not others in the workplace (because of the multiplicity of craft- or occupation-based unions in New Zealand).
6. 86. The complainant goes on to state that in two out of the three types of ballot provided for (i.e. concerning a new award or agreement - known as an initial ballot - and as to whether a union membership clause should be restored to an award or collective agreement - known as a restoration ballot) all workers covered are entitled to vote, though the decision of a bare majority prevails. In the third situation covered by the legislation, where a union membership clause is already present in an award or collective agreement (as will be the case for all current awards and collective agreements which previously contained an unqualified preference clause), it is the majority vote of the union members covered by the award or agreement which will determine whether the union membership clause is maintained.
7. 87. Furthermore, according to the complainant, the decision in all cases rests primarily on the vote of persons present at meetings, since there are only very limited opportunities for special votes and no requirement or even provision concerning a postal ballot. In practice, says the complainant, a minority - often a small minority - will determine the outcome for the majority.
8. 88. The complainant states that, in addition, the conduct of the ballot is essentially in union hands and that there is inadequate provision for supervision by the Registrar of Industrial Unions or someone designated by him; and that the same is true as regards an application to the Registrar in connection with an irregularity in or in connection with the conduct of the ballot.
9. 89. The complainant finds this situation the more objectionable since, under the legislation, unions are free to set the level of subscriptions whereas, prior to the introduction of voluntary union membership in 1984, subscriptions were limited to 1 per cent of minimum wages.
10. 90. Finally, the complainant alleges that, in terms of New Zealand's industrial award system, a ballot in favour of a union membership clause will effectively compel all workers covered by the award or collective agreement to join a particular union - that with coverage of the job - on pain of dismissal. It points out that, in respect of each award or collective agreement, there is in New Zealand just one registered union with monopoly bargaining rights; that the new statutory provisions do nothing to enable workers to decide the union of their choice nor to set up another union and have it registered. It states that, once a union membership clause has been inserted into an award or collective agreement, a national closed shop is in being and all choice is effectively removed.
11. 91. The complainant is thus of the view that the legislation fails to satisfy the criterion of the Committee on Freedom of Association that individual freedom of association should be departed from only where the departure reflects the choice of those directly affected (as in the case of the enterprise closed shop). In this regard it cites the view of the Committee of Experts on the Application of Conventions and Recommendations concerning practice in New Zealand to the effect that "... the right of registered unions to obtain the insertion of union security clauses (in the form of unqualified preference clauses) in binding arbitration awards of general application raises barriers against the creation and existence of unregistered unions" (para. 77 of the 1973 General Survey on Freedom of Association and Collective Bargaining reproduced in footnote to para. 144 of the 1983 General Survey on Freedom of Association and Collective Bargaining). In this connection, the complainant states that an alternative procedure had previously existed (but had never been used) which provided for the insertion into an award or collective agreement of an unqualified preference clause where not less than 50 per cent of the adult workers who would be bound by it so desired; and that the new legislation was thus even more contrary to the views of that Committee.
12. 92. In conclusion, the complainant also draws attention to decisions of the Committee on Freedom of Association in Cases Nos. 266 (See 65th Report of the Committee, para. 60) and 283 (See 83rd Report, paras. 190 and 193) to the effect that "... when a worker can join a different union as a matter of law, but is still obliged to join a particular union - by law - if he wishes to retain his employment, such a requirement would seem to be incompatible with his right to join the organisation of his choosing."

B. The Government's reply

1. 93. In its reply of 12 September 1985, the Government states that the legislation repealed the voluntary unionism arrangements introduced in 1984 and returned to a system broadly based on the previous unqualified preference system, which now provides for union-based ballots to determine the insertion of a union membership clause making it obligatory for workers (aged 18 or over or receiving a wage equivalent to that of such a person) to be bound by awards or collective agreements negotiated by the union. These arrangements were standardised for all unions apart from those public sector unions which had voluntary membership before the 1984 legislation. If the workers decided against the insertion of the union membership clause, individual choice could be exercised on the question of union membership.
2. 94. The Government states further that the complaint should be assessed a)in the context of the previous unqualified preference system; and b)to the extent that the new arrangements facilitate union representation. In its view the latter was the primary purpose of the legislation, which also sought to recognise as far as possible within the New Zealand Industrial Relations setting the principles embodied in Articles 2 and 3 of Convention No. 87. The Government believes that New Zealand's system of union membership is not inconsistent either with its obligations under the ILO Constitution or with the spirit of the Convention.
3. 95. Specifically, the Government is of the view that the recognition in the legislation of the principles embodied in the articles of Convention No. 87 referred to above has been effected in the following ways:
   • a) union membership, in the period following the transitional phase, shall become a domestic union matter;
   • b) in so providing, the legislation requires that union membership shall be determined by a majority decision in a democratic ballot;
   • c) representational aspects are recognised in the structure of these (union-based) ballots, with voting rights being accorded to those persons who would be affected by documents negotiated by the union;
   • d) the legislation recognises the preference which might be expressed in a ballot of membership for being bound, or not being bound, by a union membership provision - and provides protection from discrimination in either circumstance;
   • e) within the framework of union rules, members covered by an instrument (whether or not it contains a union membership provision) can initiate proceedings for the holding of a ballot by the union on the matter of union membership;
   • f) the right of an individual to hold a genuine objection to joining a union is recognised by the legislation, which sets up a tribunal to determine an application to be so regarded;
   • g) the right of an individual to join a union is protected;
   • h) employers might use the issue of representativity (which could arise through the attrition of union membership as a result of the non-insertion of a union membership clause) to refuse access to arbitration, under the new wage-fixing legislation. There is, however, no legislative provision to prevent workers concerned from forming societies of workers and negotiating instruments in terms of the Industrial Relations Act.
4. 96. It is the Government's view that the transitional arrangements should be assessed in relation to the foregoing. Initially, these provisions restore to unions a membership base which recognises a collective responsibility of workers to their organisation, and provide for their participation in a democratic ballot to determine further the basis of union membership. The transitional exemption provision recognises individual rights and also provides protection in regard to rejoining for those who exercised a legal right to opt out of unionism during the period of voluntary unionism. The statutory insertion of the union membership clause into awards and agreements is for a period of 18 months after the enactment or until the union holds a ballot, whichever is sooner. These provisions do not impose any bar on balloting, and unions are free to ballot at any stage during the 18 months. An application for a ballot had been received on 9 September from a union federation which has seven affiliated unions, and most unions are expected to ballot before the end of the transitional period. A decision not to ballot would result in loss of the union membership clause.
5. 97. The Government states that the unqualified preference system allowed unions and employers to negotiate the insertion of a post-entry closed-shop clause into agreements, subject to an affirmative vote of union members, and that there was an exemption procedure for those with objections to union membership. It points out that these union membership arrangements applied only to unions registered under the 1973 Industrial Relations Act, but states that the majority of unions were registered in order to gain access to the advantages conferred by registration. To the extent that registration conferred recognition of exclusive bargaining rights, the Government states that the system raised matters of freedom of association in relation to the right of persons to establish organisations of their own choice. In its view, there has been no material change under the new union membership arrangement, and its position concerning compliance with Article 2 of Convention No. 87 has not changed.
6. 98. The Government states that under voluntary unionism the results of previously negotiated arrangements had been cancelled, with both parties being denied the right to negotiate further membership arrangements. There had been a considerable loss of membership by some unions as well as recruitment problems (details are provided concerning fluctuations in union membership during the period of voluntary unionism), and an opportunity was now provided for unions to re-establish themselves.
7. 99. The Government goes on to say that the insertion of union membership clauses is no longer a negotiable matter between employers and unions, but is one to be determined by ballot on a union by union basis: it is the more necessary as legislation passed in 1984 meant that the guarantee of compulsory arbitration had been lost, and referral of unsettled disputes to arbitration now requires the consent of both parties. The method now introduced in New Zealand for inserting the union membership might well be novel, but in the Government's view it is not inconsistent with freedom of association as it recognises the principle whereby unions should determine the basis of their own membership. Nor does it conflict with the views of the ILO Committee of Experts, which had found statutory compulsion to union membership unacceptable but viewed as acceptable legislative provisions which enabled parties bound by instruments regulating industrial relations to impose union security arrangements on members.
8. 100. Referring to the system of balloting, the Government describes the procedures concerning eligibility for voting and the measures designed to facilitate greater participation (including written notice to members and newspaper advertising); and it provides details concerning the role of the returning officers and of departmental officials in the supervision of elections. It indicates that similar provisions are in force concerning inquiries into ballots as those which existed under the unqualified preference system, though it points out that no requests for such inquiries had ever been received. It states that the decision to provide for meeting-type ballots (whereas there had been the option of postal-voting under previous legislation) had been developed so that voters could be more fully informed about the subject-matter of the vote; and that no provision had been made for voting on an enterprise or workplace basis as this does not reflect the current industrial relations organisational structures in New Zealand: most unions are district-based. Lastly as regards the balloting, the Government states that the majority required (not less than 50 per cent of the valid votes cast) is the same as that under the unqualified preference system.
9. 101. In dealing with the question of exemption from union membership on grounds of conscience or deeply held personal conviction, the Government indicates that provision is made for rehearing in cases involving fraud, error or new material evidence, and that an appeal is available on grounds of law only. It also points out that there is a statutory requirement that members of the Exemption Tribunal have experience in religious beliefs, human rights or industrial relations, but states that this body has only recently been established and its approach to interpreting legislation is not yet known.
10. 102. The Government's reply also refers to the question of discrimination, stating that the new provisions were designed to ensure neutrality in anticipation of decisions by unions for a voluntary basis for union membership, while other provisions are the same as those under the unqualified preference system; to the removal of powers of enforcement from the Department of Labour so that this is the function of the unions; and to the retention of the provisions regarding the setting of subscription levels as established in the period of voluntary unionism, rather their regulation at 1 per cent of minimum wages under the unqualified preference system.

C. The views of the New Zealand Federation of Labour

1. 103. In the communication submitted by the New Zealand Federation of Labour through the Government, it emphasises that it does not accept the assertions concerning the incompatibility of the legislation with the concept of freedom of association and, while noting that there are aspects which it would have preferred to have dealt with differently, expresses its support for the underlying principle it contains, namely that of democratic decision-making.
2. 104. As regards the transitional provisions, the Federation of Labour is of the view that in essence these are designed merely to reinstate provisions in awards which were freely negotiated prior to 1983, and whose negation during the period of voluntary trade union membership was in itself in contravention of ILO principles on freedom of association.
3. 105. The Federation points out that ILO principles guarantee the right to join an organisation of a worker's own choosing, but that there is no such guarantee of the right not to join a union; and that the only relevant principle concerning union security clauses is that which seeks to prevent their imposition by law: a law may, however, facilitate the adoption of such a clause, and this is what the New Zealand law does.
4. 106. As regards any suggestion that the system may create a trade union monopoly as a result of the advantages conferred by registration under the law, the Federation draws attention to
   • a) the fact that unregistered unions may still be formed and workers are free to join them;
   • b) the removal of the right of registered unions to compel employers to arbitration, and its replacement by a consensual rule, which it claims makes their position and that of unregistered bodies similar in relation to collective bargaining; and
   • c) to the fact that a union membership clause can only exist if the majority of workers support it: if a majority does not support such a clause, this would have an impact on the ability of a union to maintain its monopoly. It furthermore sees no logic in the distinction which is made between workplace and industry-wide provisions, but points out that the organisation of workers (and awards) on occupation and industry lines is a reflection of the reality of industrial relations in New Zealand. It is also of the view that the thrust of the complaint is its aim to break down these traditional structures and move towards a plant-based system which, it claims, would be contrary to the interests of New Zealand workers.
5. 107. In the view of the Federation of Labour, the provisions of the law lay down democratic requirements for union constitutions, which are aimed at ensuring that they are properly representative. There are also other provisions which make it possible to challenge existing union coverage by existing worker organisations and by those that are established for the first time. Open-ended registration could in the Federation's view lead to fragmentation and extend the scope for "bosses' unions" which would be devastating for worker interests. The opportunity to challenge existing union coverage before an independent tribunal (the Arbitration Court) is, in its opinion, a rational and acceptable method of dealing with union bargaining rights.
6. 108. Attention is also drawn by the Federation of Labour to the fact that, in the period after 1977, ballots were held on the issue of unqualified preference in which 67 per cent of all unions and 81 per cent of total union membership was covered, and that these had shown overwhelming support for the retention of union membership clauses in awards.

D. The Committee's conclusions

1. 109. The Committee takes note of the information supplied by the complainant and of the reply by the Government, as well as of the views communicated to it through the Government by the New Zealand Federation of Labour.
2. 110. The complaint relates to changes brought about in the Industrial Relations Act of New Zealand by amending legislation (known as the Union Membership Bill) which became law on 1 July 1985. It would appear that the legislation was designed inter alia to restore union security arrangements of a kind similar to the unqualified preference system which had existed in New Zealand prior to the enactment in 1984 of a system of voluntary trade union membership.
3. 111. In the view of the Committee, the principal issues raised by the complaint concern
   • a) the statutory insertion for an interim period of 18 months of a union membership clause (requiring all workers in the industry covered by an agreement or award to become members of a union) into all awards and collective agreements which previously contained an unqualified preference clause;
   • b) the system instituted by the legislation whereby decisions in the period thereafter are to be taken by workers as to whether to have a union membership clause, including the provisions for balloting thereon; and
   • c) the alleged absence of any effective choice under the system introduced as to the union to be joined by workers.
4. 112. In addressing itself to these matters, the Committee has taken note of the views expressed by the Committee of Experts on the Application of Conventions and Recommendations concerning union security clauses in general (See the General Survey of the Committee of Experts on the Application of Conventions and Recommendations on Freedom of Association and Collective Bargaining, 1983, pp. 47-48, paras. 144-145) and in particular in relation to the union security arrangements prevailing at the time of the Survey in New Zealand, i.e. the unqualified preference clause (General Survey, 1983, para. 144, ibid., para. 144, Note 6). It has also had the opportunity to consult the report submitted by the Government of New Zealand for consideration by the Committee of Experts in terms of article 19 of the ILO Constitution in relation to that Survey.
5. 113. In this regard, the Committee has noted in the first place that the Committee of Experts stated that the principle established by Article 2 of Convention No. 87 leaves it to "the practice and regulations of each State to decide whether it is appropriate to guarantee the right of workers not to join an occupational organisation or ... to authorise and, where necessary, regulate the use of union security clauses in practice" (See General Survey, 1983, p. 47, para. 142). Secondly, the Committee of Experts has set out information concerning several different kinds of union security clauses (including the variety which existed in New Zealand as the unqualified preference clause) and the manner in which they operate. Thirdly, the Committee would draw attention to the emphasis placed by the Committee of Experts on the distinction between union security clauses allowed by law (including the particular variety operating in New Zealand as the unqualified preference clause) and those which are imposed by legislation. It is the latter - those which are imposed by the law - which the Committee viewed as similar in their results to those establishing a trade union monopoly and as not being compatible with the right of workers to establish and join organisations of their own choosing.
6. 114. It would accordingly appear necessary to consider whether (and, if so, to what extent) the changes brought about by the 1985 legislation in New Zealand regarding union membership clauses have involved statutory imposition of a system in a manner which would, in effect, amount to the institution of something akin to a trade union monopoly.
7. 115. The Committee observes that one of the changes introduced by the 1985 legislation is the insertion by statute for an initial period of 18 months after 1 July 1985 of union membership clauses in those awards and collective agreements which previously had contained unqualified preference clauses (whose removal, in 1984, had also been effected statutorily).
8. 116. In this connection, the Committee has taken note of the information provided by the Government concerning the opportunity which exists in terms of the legislation for affected unions to ballot their members on the union membership clauses even during the initial period of statutory imposition, and of the fact that one union federation comprising seven unions has in fact sought to hold such a ballot. At the same time, the Committee notes that it is no longer possible in New Zealand for a binding award to be made on such clauses through compulsory arbitration in the absence of an agreement between the parties, and that the principal source of authority for the implementation of such clauses in the interim period under consideration is therefore their statutory imposition.
9. 117. It would accordingly appear to the Committee that, as regards this interim period, this measure conflicts with the principle enunciated by the Committee of Experts in that it effectively obliges all workers in an industry to belong to the union which, up to 1984, enjoyed unqualified preference, but in respect of which no such arrangement was in force in the period immediately prior to the enactment of the legislation. This measure was taken in the absence of any negotiation between or agreement by the parties concerned and to that extent involves a measure of legislative intervention in imposing the system of unqualified preference which is contrary to the principles of freedom of association.
10. 118. As regards the periods which do not involve statutory insertion of the union membership clauses, the Committee has noted the Government's statements relating to the approval by union members after 1977 of the union security clauses under the unqualified preference system, and also of information in the report submitted by the Government to the Committee of Experts in connection with the 1983 General Survey on Freedom of Association and Collective Bargaining to the effect that up to the end of 1981 195 ballots (of which 37 were postal ballots) had taken place involving 1,199 awards and some 400,000 workers (80 per cent of all union members) and that 84 per cent of those voting (approximately 33 per cent) had favoured the unqualified preference. It observes that provision is made for voting to take place at intervals of not more than three years on the union security clauses which are the subject of the 1985 amending legislation.
11. 119. On these matters of voting procedure, the Committee can only note that there has been a diminution in voting opportunities through the removal of the provision regarding postal ballots. Though it takes note of the Government's statements in the 1983 Report referred to above and in its communication to the Committee concerning the preference of workers for meeting-type ballots, the Committee recalls and draws the attention of the Government to its view that questions of this nature should only be the subject of Government intervention where this is aimed at ensuring respect for democratic rules within the trade union movement (See Digest of Decisions and Principles of the Freedom of Association Committee, 1985, 3rd Edition, para 453; 197th Report, Case No. 917 (Costa Rica), para 195; Case No. 927 (Brazil), para 359; 201st Report, Case No. 842 (Argentina), para 47; 202nd Report, Case No. 947 (Greece), para 240.)
12. 120. The Committee is of the view that a similar approach should be adopted in relation to the level at which decisions are to be made but notes in this regard the view of the Government and the Federation of Labour that the choice of industry-wide ballots is consonant with the system of industrial relations in New Zealand. The Committee does not regard that choice as one which will impede the process whereby a decision on union membership clauses will be arrived at. It is also satisfied, on the basis of information available concerning eligibility to vote, exemption rules and electoral supervision machinery, that other matters relating to balloting procedure under the provisions in force do not involve questions relating to freedom of association of a kind which would require further examination.
13. 121. Turning to the matter of the right of workers to join organisations of their choice, the Committee notes that the right of registered unions to obtain the insertion of union security clauses in binding arbitration awards, which was the subject of the remarks of the Committee of Experts on the Application of Conventions and Recommendations cited by the complainant, no longer exists and has been replaced by the provisions under the 1985 Act concerning the determination of such matters by ballot. The Committee further notes the explanation given by the Government and also the opinion of the New Zealand Federation of Labour that the right to join a union is guaranteed in the legislation and there is nothing to prevent workers forming unregistered associations even where a union membership clause has been accepted by the majority of workers.
14. 122. In addressing this entire question, the Committee has given careful consideration to the principle cited by the complainant, namely that "... when a worker can legally join another union, but is still obliged by law to join a particular union if he wishes to retain his employment, such a requirement would seem to be incompatible with his right to join an organisation of his own choosing" (ibid., p. 53, para. 248; 65th Report of the Committee, Case No. 266, para. 60; 83rd Report of the Committee, Case No. 303, paras. 190 and 193), and takes this opportunity to draw attention once again to the importance which it attaches to it. In relation to the present case, the question which arises is whether the union membership preference clause, as operated in New Zealand, infringes this principle. As already indicated, the Committee is not required to consider the situation (which existed up to 1984) where such clauses were inserted through binding arbitration awards, but that which will operate under the 1985 Act. In this regard, it is of the view that the requirement that a worker join a particular union will, after the expiry of the initial period during which union security clauses have been compulsorily inserted, arise as the result of a decision taken by workers themselves in a ballot conducted in terms of the legislation and not through any obligation imposed by the law itself. In other words, after the expiry of the 18-month interim period, the 1985 Act does no more than create the framework within which such decisions may be taken, i.e. by ballot. Both the facultative nature of this provision and the opportunity it creates for the participation of workers in the decision, lead the Committee to the conclusion that the ballotting system thus created by the Act for the period after expiry of the interim period does not therefore conflict with the principles of freedom of association.

The Committee's recommendations

1. 123. In these circumstances, the Committee recommends the Governing Body to approve the present report and, in particular, the following conclusions concerning the matters raised in the complaint:
   • a) The Committee takes note of the views expressed by the Committee of Experts on the Application of Conventions and Recommendations concerning union security clauses as set out in para. 113 above.
   • b) That the manner in which compulsory union membership clauses are imposed during the period of 18 months from 1 July 1985 through the Industrial Relations Amendment Act 1985 is not in conformity with the principle that workers should be able to form and join organisations of their own choosing;
   • c) With regard to the procedure prescribed for balloting on the adoption of union security clauses under the legislation following the interim period, the Committee recalls and draws the attention of the Government to its view that questions of this kind should only be the subject of government intervention where this is aimed at ensuring respect for democratic rules within the trade union movement and, in this connection, i) takes note of the diminution of voting opportunities through the removal of provision for postal balloting; and (ii) does not regard the choice of a system of industry-wide balloting as impeding the process by which a decision on union membership clauses will be arrived at, which accordingly does not conflict with the principles of freedom of association;
   • d) As regards the system of ballotting on union security arrangements which will be created by the legislation in the period following the expiry of the 18-month interim period, the Act creates a framework whereby the decision on union security clauses may be taken through the participation of workers in ballots. The ballotting system thus created by the Act is therefore not in conflict with the principles of freedom of association.