Restructuring and Union Consultation – What Are Your Obligations?

Carolina Muthyala • 27 August 2025

A recent Employment Court decision Lyttelton Port Company Ltd v Maritime Union of New Zealand has clarified a key issue for employers: Do unions have a right to be involved in drafting restructure proposals? The answer: Not unless your collective agreement says so.

 

What Happened?

Lyttelton Port Company (LPC) proposed a major restructure, disestablishing 35 roles and creating 21 new “team leader” positions—deliberately outside union coverage. Unions were informed only after the proposal was developed and claimed LPC had breached:

  • Collective agreement clauses on cooperation and contracting out,
  • The High Performance High Engagement (HPHE) Charter,
  • And good faith obligations under the Employment Relations Act 2000 (ERA).


The Employment Relations Authority initially found LPC had breached its obligations. But the Employment Court disagreed.

 

The Court’s Key Findings

  • Good Faith (ERA s 4): Employers must consult with an open mind, but don’t need to involve unions in drafting proposals.
  • Collective Agreement Clauses: Required consultation, not co-design. The “contracting out” clause didn’t apply to this restructure.
  • HPHE Charter: No longer in use—irrelevant.
  • Case Law: Previous cases requiring early union input were based on specific, uncommon clauses not present here.

 

The Outcome

✅ LPC did not breach the ERA or the collective agreements
✅ The compliance order and injunction were lifted
✅ LPC was allowed to proceed with the restructure

 

What This Means for Employers

This case reinforces that:

  • Consultation ≠ Negotiation
  • Good faith ≠ Joint decision-making
  • Unions don’t have a general right to co-design restructure proposals


Unless your collective agreement explicitly requires early-stage union involvement, your obligation is to:

  • Provide relevant information,
  • Allow a genuine opportunity for feedback,
  • Keep an open mind before making final decisions


Message for Employers

Our team of specialists is ready to help with bespoke and practical advice and solutions on navigating the employment law landscape. Please do not hesitate to contact us if you need help.


Disclaimer: We remind you that while this article provides commentary on employment law, health and safety and immigration topics, it should not be used as a substitute for legal or professional advice for specific situations. Please seek legal advice from your lawyer for any questions specific to your workplace.





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