Let's fix the Employment Relations Bill

By Paul Karalus

There are two essential things that we all may or may not agree to. One thing is that the Ministry is determined to take the Bill to the House this session. The other thing is that the Bill is, in its current form, bad legislation. So, let’s fix the second thing, namely the Bill itself, so that the Ministry can take it to the House.

Why the Bill is so bad:

• The Bill, as written, is set in 19^th century Industrial Europe or 20^th century Plantation Africa. It needs to be written for 21^st century Tonga. It presupposes antagonistic and predatory behavior by employers over downtrodden and enslaved employees. Tonga abolished slavery in 1863 and it is this that is honoured today, though celebrated yesterday. The fact is that the greater number of businesses, including farmers and fishermen, are small family businesses who often do employ either casual or permanent workers. The current bill, as written, is a prescription for employers NOT TO EMPLOY when we all are fully aware of the need to create and expand employment opportunities to grow the economy and improve the life circumstances of the greater bulk of the people. Employment is about the relationship between employers and employees; it is a binary relationship of two elements in association but also in opposition; but not oppression . . . at least I have yet to see oppression in Tonga. Employment legislation needs to recognize this relationship; so too does the Ministry which is misnamed as a Ministry for Labour, but not Employment . . .we are in the 21^st century, or are we? So, the context for which the bill is framed is not a Tongan context but it needs to be to be meaningful and positive legislation which enhances employment.  

• The Bill, as written, contains some misplaced concepts while not containing other more important concepts.

• Firstly, too much emphasis is placed on employee rights without due consideration of the reciprocal rights of employers; the fundamental rights to work assume also that meaningful employment can be offered to those who meet employment requirements. These may be represented by collective associations of employers and employees as outlined below.

• Secondly the Ministry is the regulator and this role needs to be clearly defined and represented in the Bill. This changes the complexion of some of the concepts and content in the Bill as will be seen below when considering the Employment Relations Advisory Committee.

• Thirdly, whether written or unwritten, the relationship between the employer and employee is a contractual one with reciprocal rights and obligations which govern the capacity and conduct of the two sides. These need clarity to simplify the statement and position of the two sides in relation to the engagement and disengagement of each side.

• Fourthly, the reciprocal entitlements of each side need to be restated to ensure fair rewards for labour and service in return for positive and progressive productivity. Minimum standards can be awarded collectively in return for respective recognition of the reciprocal rights and expectations which govern the employment relationship. These especially include pay for service and leave for reward.

• Fifthly, the actual duration and nature of work needs simple definition and refinement and avoid needless strictures which complicate and/or denigrate productive effort. The occupational safety and health aspects of the workplace need mention but are best handled in legislation which broadens safety and health to include both home and work and also moves towards mitigation as much as response.

• Sixthly, while the right to form collective associations includes the formation and conduct of trade unions there are also the professional associations and employer associations whose structures and functions also need consideration. This is better handled in separate legislation, which for Trade Unions exists, or in simplified form in the overall employment relationship.

• Good legislation includes a simple framework for the Act without being overly detailed. The Act is a statement of general principles applicable to all situations for the particular area which the legislation covers. The details of actual circumstances are best left for the regulations which are appended to the Act and which are subject to change as situations and circumstances change. The current draft legislation is far too detailed and cluttered with what can be, what its, etc. will do little other than straightjacket the employment reality from which efforts will be made to avoid or vary the strictures written into the Bill. This is where the framework needs to spell out the role of the Minister, the role of the Ministry, the role of the Advisory Committee and then the role of two elements of the binary opposition of employers:employees. This framework offers then an opportunity for changes to be made through a set of regulations which are subject to change with the change in circumstances, etc. Changes of regulations should grow out of good consultation and should need Cabinet approval only. So the bill, as drafted, needs to get the key areas sorted out, frame up the general principles, and then append the regulations (though these are usually left for later; except that here the consultation process is well enough advanced to allow the regulations to be framed up now as the appendix to the Bill.

The idea has been advanced by some that it best to get the Bill into the House, pass it and then make amendments as the need arises……….this methodology is shoddy as the reality is that it subjects the House to endless perusal of legislation for amendment. Far better that we get it right in the first place and leave the changes be those of circumstance which can be handled by on-going consultation and subsequent changes to the regulations.   

• The Bill itself then, needs to be redesigned and rearranged with some of the major shifts and changes identified here section by section

Part I – Preliminary

While this will substantially remain unchanged there are some definitions etc. that may need to be deleted, rephrased or added on completion of the rewriting of the Bill.

Part II – Fundamental Rights and Principles at Work

This needs to open with a short statement of the reciprocal relationship between employers and employees and their respective rights to provide work and to present for work. There also needs to be a short statement that there can be acceptable expectations on performance by both parties to any employment agreement.

Employers have a right to choose their employees and to ensure that they meet the right qualifications, experience, aptitude and conduct and can demand evidence of these requirements.

Employers also have the right to structure the hours and places of work provided they are within the minimum standards defined by this Bill or other associated legislation or planned legislation.

Employers have the right to ensure positive and productive effort is made by employees and that these be paid for appropriately.

Employers have the right to terminate employment where work no longer exists or where the capacity and conduct of employees falls beneath acceptable and understood levels of performance.

 Employees have a right to offer their services and to provide evidence of their abilities and experience supported by appropriate documentation and referrals.

Employees have the right to conditions of work which are safe and not injurious to health, and to any instruments which may mitigate any risks associated with the work place. 

Employees have the right to just rewards to pay and work conditions based on capacity, conduct, productivity and to at least any minimum standards as determined by legislation or regulation.

Employees have the right to periods of paid breaks in work and leave in return for work satisfactorily performed.

Employees have the right to participate in gains in productivity which result in improved financial performance or returns for the employer.

Part III: The Ministry of Employment is the Mediator and Regulator and Regulator of Employment

It is wise to carefully consider the role of Government in the binary employer:employee. As stated above there is identification or association between the elements in the binary, but there is also opposition. There is order and there is conflict, both arise out of the binary opposition of employer and employee. It is in this fluidity that there needs to be mediation; and this is an essential role of good government. While the government is a mediator it is this very role that spawns and reviews regulations, and regulation is only as good as or bad as the mediation between the binary’s elements. Using this approach the Ministry of Employment employs employment officers to monitor, mediate, investigate, intervene and generally seek to ameliorate any employment frictions or conflicts that arise.

• The role of the Minister

The Minister is responsible for the administration of the Act, once legislated and promulgated as law. The Minister may, when necessary, intervene as a higher mediator than the CEO and Employment Officers but his main function is to ensure the Ministry efficiently and effectively carries out its functions of ensuring employment opportunities are maximized, further opportunities are afforded for both employers and employees to grow employment, that there is, in conjunction with other Ministers, adequate training for industry, agriculture, fisheries and tourism and that funding for the Ministry is adequately provided for in the Budget. The Minister is the Leader in the Employment sector to whom progress and regress is reported and from whom efforts are made to continue to support those in the employment binary to improve performance and compensation.    

• The role of the Ministry: Appointment, Powers and Duties of the Chief Executive Officer and Employment Officers

Generally the draft Bill covers this area but the labour officers be renamed as employment officers and work to really mediate between employers and employees. Working through the current draft it needs further balancing to include occasions where employees fail to perform or do not abide by regulations as well as those occasions of failure by employers.

Either single industry interventions or collective bargaining may be the mechanism for mediation, but it is the CEO who is the team leader in the employment mediator and regulator role.

• The role of the Binary Employer: Employeee. The employment Relations Advisory Committee

The structure and function of the committee may require review. One issue is the representatives of the employer and employee groups. While the representatives are to be freely nominated, the representative groups may not actually be representative of the whole body of the particular employers or employees. The Chamber of Commerce, for example, does not represent all employers just as the Public Service Association does not represent all Public Servants. It may be that consideration be given by the Ministry, in concert with all in the employment equation, demand that all those holding business licenses and employing people are made members of the Chamber and that part of the fee goes to that body. Whether the then members participate in the life and work of the Chamber is freely determined by the members. The same could be so for Public Servants in that all are made members and all pay fees to an Association, but that thereafter members are free to participate in the life and work of the Association. This should result in better representation of employer and employer groups.

Part IV – Contracts of Service

At the outset very few employees in Tonga are engaged on written contracts. There remains, however, a distinction between those who are casual workers and those who are permanent workers. Often casual workers may be paid on an hourly or daily rate while permanent staff are paid by weekly, fortnightly or monthly salary. The general principles of the work place for both casual and permanent staff should be the same as often the casuals, if found suitable and satisfactory, graduate to becoming permanent staff.

The employment contract then is a body of principles agreed on by both parties and which embody rights and obligations for each of the parties. While the employer is bound to provide work the employee is bound to present for work.

Similarly whilst there is a right to terminate there is also a right to resign and this is usually presented in the so-called “out clauses” written into contracts. While employers give notice to allow for improvement and/or compliance by employees, employees give notice of concerns in their employment environment and their wish for betterment or of their intention to leave that employment.

Current Parts V and VI should be brought together as Part IV.

Part V: Employer and Employee Entitlements

This Part is to bring together the current Parts VII, VIII, IX, X. An opening statement here presents the intention of the law to provide a platform against which general principles of entitlement of both the employers and the employees in the employment binary can be judged for establishing workable entitlements. These entitlements include returns to employment, both to the employer as work carried out and to the employee as payment for that work. There is also the question of paid leave entitlements which must also be given in return for work actually carried out. These issues are treated in a little more detail below.

• Minimum Work Rates and Minimum Pay Rates

Employers can freely determine the minimum work hours, though these should not exceed a maximum of 40 hours before compensatory rates reward additional time worked.

Employees can expect a minimum wage rate for work actually carried out. There has yet to be a minimum wage order sought of approved by Government (mainly because there is no mechanism to approve such under legislation). This Bill should provide for a minimum wage order and it is of such importance that it, like the maximum hours worked, should be included in the general principles of the employment bill. Dare I suggest that the minimum wage initially set at TOP 3.00 per hour?The Bill also then needs to provide for a mechanism for subjecting this to periodic consideration for change, though this should only occur in something like five yearly reviews or some such. 

• Employer Expectations for Work to be Done

The current draft goes into too much detail on whom to pay, what to pay, how to pay, etc. etc. Much of this is in the realm of regulation rather than it being an overriding Act. 

• Leave Provisions

At the outset it must be stated that paid leave is a privilege offered in most countries as reward for work actually carried out. Sometimes casual labour is used by employers to avoid paying such privileges. In the Tongan context this is often the case as absentism is frequent and poor application and performance is also frequent. Briefly there are 250 days available for work (365 days minus weekends of 104 days and Public Holidays of 11 days). When sick leave (usually 10 days) and special leave (usually 5 days) is also taken out we are down to 235 days of work. If it thought that annual holidays be set at 20 days then for every 11-12 days worked the employee is being paid for a day’s paid leave, then there is only 215 days for actual work, but for which the employee may be paid while a total of 46 days can be paid for time when the employee does not work (Public Holidays, Sick leave, Special leave, Annual leave). For most employers this is considered excessive and really equates to almost one day off on paid leave for every five days worked. Most employers would consider that for every 15 days actually worked a day of paid leave (other than Public Holidays, sick and special leave) is in order; making for something like 15 days a year leave if no sick leave or special leave is taken. In any event, the leave is only granted on the number of days actually worked, and not on a pro-rata basis of length of service. Some will suggest that a day for every 10 days be in order but that this include any sick leave and/or special leave………this would make for a total of 22-23 days leave per annum including sick and special leave. In this way there is no need to provide for sick and special leave it is simply part of the day earned for every 10 days actually worked……..and this better suits the Tongan situation.    

• Employee Expectations for Rewards for Work Done. Hours of Work, Pay and Leave Entitlements

Much of what is to be covered here has been covered above as it covers both sides of the equation. Some care will be necessary to separate out what is for the legislation and what is left for regulation. 

Part VI: The Work Environment

• The Employer to Provide Safe, Clean etc.

• The Employee to respect the Work Environment, etc.

While some of this is for Occupational Safety and Health it is considered to be more for the Public Health Act in Tonga.

A Final Note is to be made on Trade Unions

It is considered that Trade Unions need to be considered together with Professional Associations and also Employer Chambers.

As there is an existing Trade Union Act it may be wiser to review that and in doing so include provisions for Professional Associations and Chambers of Employers.

Simply put it is considered best to delete the whole section on Trade Unions from the Employment Relations Bill because most of it relates to Trade Union Relations and not to the fundamental issue of Employment Relations

 I do hope this letter may be of some assistance in reconsidering the draft of the Employment Relations Bill being mooted for the Legislative Assembly in the 2013 session, and may it be that when the final draft is cut it is given full, fair and unbiased treatment by the House and not simply voted off in a single night with a bunch of other legislation.

Yours faithfully,
Paul Karalus
Tofoa, 4 June 2013.