Enacted by the Liberal Government of New Zealand, it was the world's first compulsory system of state arbitration.

[1] It gave legal recognition to unions and enabled them to take disputes to a Conciliation Board, consisting of members elected by employers and workers.

The process by which the Act came into being needs study in its own right and was based on a scheme devised by a South Australian politician, Charles Kingston.

If a union registered, it was bound to comply with the rulings of the Arbitration Court and could not, for example, strike against terms laid down by it.

The amendment also made it illegal to employ a worker who was not a member of a union bound by the relevant award or agreement for that industry.