Trade unions and industrial action

What a trade union is

• A trade union is an organisation of employees formed to represent their members' interests to employers, funded by members' subscriptions.
• Unions are an external factor because the business does not control whether its employees join one, or what the union does.
• In New Zealand, unions must be registered and are recognised under the Employment Relations Act 2000.

What unions do

• Negotiate a collective employment agreement covering pay and conditions for their members — collective bargaining.
• Represent individual members in disciplinary meetings, personal grievances and disputes.
• Advocate on health and safety, and act for members on workplace hazards.
• Provide advice to members on their legal entitlements.
• Campaign publicly on pay and conditions in their industry.

Industrial action

• Industrial action is action taken by employees, usually through their union, to put pressure on an employer during bargaining.

Form	What it is
Strike	Employees stop work entirely, for a set period or indefinitely
Rolling or partial strike	Different groups or sites stop at different times, spreading disruption at lower cost to members
Work-to-rule	Employees do exactly what their agreement requires and no more — no overtime, no goodwill tasks
Overtime ban	Members refuse overtime, which cripples businesses that rely on it to meet demand
Picketing	Members gather publicly at the workplace to publicise the dispute

• Employers have a corresponding action, a lockout: the employer refuses to let employees work, and does not pay them, to press its position in bargaining.
• Legal strikes and lockouts in New Zealand must relate to bargaining for a collective agreement or to health and safety, and require notice in essential services. Action outside those grounds is unlawful.

How the presence of a union affects a business

Benefits to the business	Costs to the business
One negotiation covers many employees, instead of hundreds of individual ones	Collective bargaining takes management time and can raise wage costs
A clear, agreed process for disputes reduces ad hoc conflict	The threat of industrial action gives employees leverage the business must respond to
The union gives management a reliable channel to communicate change	Disputes can become public, damaging brand reputation
Consistent terms across the workforce reduce claims of unfairness	Agreed conditions can limit how flexibly staff are deployed

How a business responds to industrial action

• Negotiate in good faith — a legal duty under the Employment Relations Act 2000, and usually the cheapest route out.
• Use mediation, which MBIE provides free, before positions harden.
• Continue essential operations — redeploy managers, use contractors where the law allows, prioritise the most valuable customers.
• Communicate with customers early, so they can plan around disruption rather than discovering it.
• Address the underlying issue. The 2025 exam context was instructive: unlawful deductions from wages for protective gear was a grievance the business could simply have fixed. Many disputes are cheaper to solve than to fight.
• Improve the relationship in advance. Businesses with regular consultation and fair treatment face fewer disputes in the first place — prevention is a response too.