(1) The general manager shall have the authority to appoint such officers, employees and agents as necessary to carry out the purposes of the authority under the general policy direction of the board. At such time as the authority operates transportation facilities, the general manager shall classify all the offices, positions and grades of regular employment required under a merit rating system; except that a maximum of 5% of the employees and officers shall be exempt from the provisions of the merit rating system. The authority shall have the right to bargain collectively and enter into agreements with labor organizations, and shall be bound by existing labor union agreements with public or privately owned entities that are acquired, purchased or condemned by the authority. Members and beneficiaries of any pension or retirement system or other benefits established by the acquired transportation system shall continue to have rights, privileges, benefits, obligations and status with respect to such established system. The board shall assume the obligation of any transportation system acquired by it with regard to wages, salaries, hours, working conditions, sick leave, health and welfare and pension or retirement provisions for employees.

    (2) No employee of any acquired transportation system who is transferred to a position with the authority shall by reason of such transfer be placed in any worse position with respect to workmen's compensation, pension, seniority, wages, sick leave, vacation, health and welfare insurance or any other benefits that he enjoyed as an employee of such acquired transportation system.

    (3) Employees who left the employ of such transportation system to enter the military service of the United States shall have the same rights as to the authority, under the provisions of the service men's employment tenure act approved July 17, 1941, as they would have had thereunder as to such transportation system.