Employment Arbitrations: Mapping a Course in Uncharted Waters

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This presentation by Graeme Colgan discusses the landscape of employment arbitrations, highlighting the evolution since 1990 and examining the limitations of existing dispute resolution frameworks. With a focus on statutory schemes, the presentation further explores the benefits and drawbacks of private arbitration as an alternative to public litigation. Key aspects include confidentiality, finality, costs, and the necessity of all-party agreement in arbitration processes.

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EMPLOYMENT ARBITRATIONS: MAPPING A COURSE IN ABANDONED AND UNCHARTED WATERS A PRESENTATION BY GRAEME COLGAN (AAMINZ)

ABANDONED WATERS? Little if any employment dispute arbitration since 1990 Employment Contracts Act allowed one law for all Statutory emphasis on state-provided free mediation services A relatively prompt and (again relatively) inexpensive investigative state arbitration system (the Employment Relations Authority and the Employment Court)

UNCHARTERED WATERS? A strong statutory dispute resolution scheme A specialist employment bar familiar with mediation but not arbitration An obscure, unknown and unclear statutory scheme

WHY ARBITRATE PRIVATELY INSTEAD OF LITIGATING? Minimal delay Choice of arbitrator Minimal interlocutory cost/delay Privacy of hearing Confidentiality of outcome Greater degree of finality In short the advantages of private arbitration of any dispute

WHAT IF CONFIDENTIAL MEDIATION FAILS OR IS FRUSTRATED? Absent the availability of private arbitration, the sole alternative (and default position) is public litigation As to confidentiality of this process, see the recent judgment of the Employment Court in XYZ v ABC [2017] NZEmpCt 40 making non-publication orders more difficult to obtain following Erceg v Erceg in the Supreme Court Private arbitration is that confidential, effectively final, and binding alternative

DISADVANTAGES TO PRIVATE ARBITRATION? Unsubsidised cost and need to resolve who is to meet this Need to construct a bespoke arbitration process (although this may be alleviated by use of variable templates) Practitioner inexperience with arbitration Need for all-party agreement to arbitrate, either at agreement formation stage or dispute eruption time Limited award enforcement mechanisms that are not well-known

SO, WHICH SYSTEM WINS ON BALANCE? Private arbitration trumps public litigation on privacy/confidentiality grounds alone, at least for most employment disputes Think, also brand , the reach and power of social media and the internet, the diversion of resources and energy for the life of a court case.

THE STATUTORY PROVISIONS GOVERNING ARBITRATION OF EMPLOYMENT DISPUTES (ERPS) s65(2)(a)(vi) Employment Relations Act (ERA) s143 ERA s155 ERA See also, for completeness, s238 ERA

SO WHAT IS AN EMPLOYMENT DISPUTE? s155 ERA uses the phrase : employment relationship problem (an erp ) s5 defines an erp as including a personal grievance, a dispute, and any other problem relating to or arising out of an employment relationship, but does not include any problem with the fixing of new terms and conditions of employment. S4(2) defines very broadly the applicable employment relationships in which an erp may arise

WHAT ABOUT ARBITRATION OF COLLECTIVE BARGAINING FOR A COLLECTIVE AGREEMENT? If this constitutes a problem with the fixing of new terms and conditions of employment, s 5 may exclude arbitration of collective bargaining. There is a statutory exception to this exclusion in the Policing Act 2008: see s67 Interesting legal argument about whether reference to fixing in s5 is limited to the (even now rarely used) fixing process for resolving stalled collective bargaining under s50J of the ER Act: see the recent Authority determination in First Union Inc v Jack s Hardware and Timber Ltd [2019] NZERA 374 I will assume that collective bargaining is probably excluded from settlement by arbitration, but that still leaves a very wide range and number of amenable erps

CAN PRIVATE ARBITRATION BE INCLUDED IN AN EMPLOYMENT AGREEMENT AS THE SOLE DISPUTE RESOLUTION MECHANISM? Unlike mediation, there is no express provision for this in an otherwise very prescriptive statute But neither is it prohibited as are some other dispute resolution practices Mediation is expressly promoted as the primary problem-solving mechanism Judicial intervention is conversely demoted and discouraged: unclear whether this includes arbitration but this is not a prohibition of arbitration S143 (objects of Pt 10) emphasises problem-solving promptness, expertise, flexibility; private arbitration can tick these boxes at least as well as litigation, if not better

DOES S65(2)(VI) ALLOW, OR AT LEAST NOT PROHIBIT, PRIVATE ARBITRATION? S65 sets out minimum requirements for an individual employment agreement ( iea ). A mechanism for the resolution of employment relationship problems Time limits for accessing such mechanisms Not inconsistent with the Act All of the above requirements can be met by private arbitration as an agreed dispute resolution mechanism and so included in an employment agreement

AFFIRMATIVE STATUTORY PROVISIONS AFFECTING ARBITRATION s155 confirms no prohibition upon submission of an employment relationship problem to arbitration This covers both its inclusion under s65(2), and its ad hoc adoption ex post facto The provisions of the Arbitration Act (including its recent amendments) do not apply and parties must determine their own procedure Submission to arbitration does not prevent reference to mediation

(EFFECTIVELY) COMPULSORY MEDIATION AS A PRELUDE TO PRIVATE ARBITRATION? Certainly if sought by at least one party, mediation must be attempted before private arbitration is resorted to This is, in most instances, no bad thing An agreement to undertake a med-arb will probably both fulfill any requirement for mediation and allow prompt arbitration if the dispute is not settled in mediation It is important that a med-arb is structured and executed carefully and deliberately Submit med-arb is not negated by the EC judgment in Johnston v Fletcher Construction Ltd [2018] NZEmpCt 40

ARBITRATION OF COLLECTIVE DISPUTES? Excluding collective disputes about the fixing of terms and conditions (ie the content of prospective collective agreements), other collective disputes are amenable to resolution by private arbitration. These may include disputes about the interpretation, application or operation of terms and conditions of employment affecting multiple employees, what are called disputes in s5 of the ERA So while collective bargaining for a collective agreement is not arbitrable, resolution of collective disputes (including about rights and obligations under collective agreements), is amenable to resolution by arbitration.

DOES LAISSEZ FAIRE (DIY PROCEDURE CREATION) CREATE PROBLEMS ONCE YOU HAVE AGREED TO ARBITRATE? Drafting a Submission to Arbitration: bespoke or off-the-shelf? What procedure? Document disclosure, interrogatories, interim orders etc? Evidence admissibility or weight alone? Appeals or other reviews? Enforcement mechanisms.

SO TO SUMMARISE Private arbitration is available for the resolution individual and collective employment disputes, but not for the creation of collective agreements It can be provided for either in an employment agreement or agreed to after a dispute has arisen Mediation cannot be leapfrogged but finality may be streamlined by using a med- arb procedure There are numerous good reasons for considering seriously private arbitration of employment disputes.

FURTHER READING This presentation draws on my more extensive and analytical article Yeah Na Yeah: Arbitration of Employment Disputes in Employment Law Bulletin (Lexis Nexis), December 2018, 136.