Under the Employment Relations Act 2007, a ‘collective agreement’ is an agreement made between a registered trade union of workers and an employer which:- (a) Prescribes (wholly or in part) the terms and conditions of employment of workers; or (b) Regulates the procedures to follow in negotiating terms and conditions of employment; or (c) Combines both (a) and (b)
An “employment contract” as per the ERP includes a collective agreement.
A collective agreement is brought into legal effect after a collective bargaining process whereby the workers union and employer company accept, sign and register a collective agreement and furthermore agree to be mutually bound by it.
Certain terms contained in the collective agreement govern the relationship between the workers union and the employer. Other terms are designed to benefit individual employees and thus become part of their employment contract for instance; management staff may have individual employment contracts hence their employments are not governed by the collective agreement.
Once a collective agreement is executed between the Union and company, the employment of all workers (who are members of the Union) are then governed by the collective agreement and not individual contract of employment, unless this arrangement is specifically agreed upon that certain terms will be incorporated by a separate individual contract for certain workers.
In addition, Section 164 of the Act states that a collective agreement binds and is enforceable by the Union and the employer who are parties to the agreement and also by a member of the union who is party to the agreement.
The existing contract of employment is not invalidated as the terms and conditions such as term of employment, nature of employment (such as position, job description) will remain. However, terms and conditions that are in the collective agreement (not the contract of employment) and govern terms and conditions of all Union members, such as benefits, entitlements, disciplinary procedures, etc. will now also apply to the employee who has joined the Union.