Cases of interest: April 2023

New Zealand Steel Ltd v Haddad [2023] NZEmpC 57

Employment Court – Personal grievance – Unjustified dismissal – Redundancy – Reinstatement

At issue was whether:

• the employer unjustifiably dismissed the employee when he was dismissed on the grounds of redundancy
• the employee should be reinstated to his position.

The employee was a manager with the employer for seven and a half years. His position was disestablished when his department was restructured. The employee was not consulted until the end of the restructuring process. He made it clear that he wanted redeployment rather than redundancy. His employment agreement stipulated that in a redundancy the “first option is to consider redeployment” (see paragraph 46). Three new managerial roles were created. The employee believed the employer had predetermined that he would not be redeployed. He therefore refused to attend interviews for the new positions. The employer offered the employee a position that paid a lot less than his managerial position. The employee refused the offer. The employer made his role redundant.

The Employment Court (Court) found that employers did not have an absolute duty to redeploy employees when restructuring (see paragraph 73). In this case, however, the consultation with the employee was flawed and failed to meet the good faith requirements in section 4(external link) of the Employment Relations Act 2000 (see paragraphs 39, 144). The employer had predetermined the outcome of the employee’s role being disestablished (see paragraph 38).

The Court noted that the employee refusing to interview for the new positions was understandable in the circumstances, but unwise (see paragraph 139). The Court considered that approach to be a “high risk strategy”. It suggested, in the alternative, that employees could note their concerns and attend interviews on a without prejudice basis, thereby putting the employer to the test (see paragraph 145).

The Court confirmed the employee would be reinstated to a position with the employer (see paragraph 152). The Court ordered the employer pay the employee all of the wages he had lost since his dismissal (see paragraph 159). As the employee was not required to repay ACC payments he had received, the employer could subtract those from the lost wages in its calculations (see paragraphs 162–164). The Court also ordered the employer pay the employee $25,000 in compensation (see paragraph 177). In return, the employee was ordered to repay the employer the redundancy payment he had received, as the redundancy had been reversed (see paragraph 168).

New Zealand Steel Ltd v Haddad [2023] NZEmpC 57 [PDF 443KB](external link)

Association of Professionals and Executive Employees Inc v Secretary for Education [2023] NZERA 167

Employment Relations Authority – Employee status – Status of interns 

At issue was whether intern psychologists who undertook 40-week practicum placements with the Ministry of Education (Ministry) were employees. 

Students who wanted to become registered educational psychologists were required to complete a master’s degree in psychology, a postgraduate diploma and at least 1500 hours of supervised practice. The Ministry had an arrangement with three universities whereby students would undertake 40-week placements in return for a scholarship of $25,000 and access to supervised practice. The students also received the opportunity to complete their registration and to be considered for a permanent job with the Ministry. 

The union claimed the intern psychologists were employees. The Ministry denied they entered into employment relationships with the interns, arguing the programme was for training purposes.

The Employment Relations Authority (Authority) found the interns were employees (see para 65). In doing so, the Authority considered:

• The memorandum of understanding between the Ministry and the universities stated that “sole responsibility and authority for the programmes of work, the relationship and for the conduct of the interns while working with the Ministry’s clients lies with the Ministry” (see paragraph 28).
• An intern gave evidence that her experience of being an intern was exactly what she went on to do as an educational psychologist. She estimated that 75 to 80% of her time during placement was spent on Ministry cases (see paragraphs 45, 47).
• The interns worked business hours with any absences needing permission (see paragraph 42).
• What the interns did was work. The interns were doing what was required of an employee (see paragraph 94). The work was an important responsibility (see paragraph 73).
• The work was done for reward (see paragraph 79).
• A small number of existing Ministry staff completed the intern placement to move into educational psychology. They were salaried under the collective agreement. The purported distinction between employment and training was not being applied to them (see paragraph 93).

The Authority considered its determination to be part of a trend in recent cases:

[66] Concluding that intern psychologists are employees as well as students completing their studies may disrupt assumptions that have operated about those practicum arrangements for some time. It is, however, consistent with the direction of travel apparent in many employment law cases in recent years where assumptions about what is work, what is employment and what is worth have been unpicked and overturned …

The Authority found the interns should be paid the applicable salary in the collective agreement with the value of the scholarship subtracted (see paragraphs 65, 108).

Association of Professionals and Executive Employees Inc v Secretary for Education [2023] NZERA 167(external link)

Gang v KNCC Ltd [2023] NZERA 182

Employment Relations Authority – Personal grievance – Constructive dismissal – Unjustified disadvantage – Sexual harassment

At issue was whether the employee was unjustifiably disadvantaged by an action of the employer and constructively dismissed from her employment.

The employee was an assistant and office manager at a construction company. She reported to both the director of the company and the technical director. The employee said the technical director was inappropriate from the start of her employment. The employee said he told her she “would be more sexually appealing if she wore more sexy outfits” and could then attract customers by being a “honeytrap” (see paragraph 13). The employee found many of the technical director’s words and actions to be intimidating (see paragraphs 14–19). The employee initially complained verbally to management. When the employer did not address her concerns, she resigned. The following day the director suggested she sue the technical director personally, but that she should forgive the technical director and continue to work at the company (see paragraphs 24–25). The employee then formally raised a written complaint. The director told the employee the technical director “probably acted as he did because she was pretty and he liked her” (see paragraph 31). The employee again resigned and left her employment.

The Authority noted that a constructive dismissal occurs when an employee feels forced to resign by an action of the employer (see paragraph 43). It found that the employer had not taken any actions to address the employee’s concerns, which was a breach of its contractual duty to provide her with a healthy and safe workplace. The Authority held the employee’s resignation was “a foreseeable consequence of its total failure to act” (see paragraph 54). It found the employee was both unjustifiably disadvantaged and constructively dismissed (see paragraphs 56 and 60).

The Authority awarded the employee $28,000 compensation and $15,153 lost wages (see paragraphs 66, 69). It also ordered the employer company pay $16,000 in penalties and the director $4,000 in penalties for aiding and abetting the breach of the employee’s employment agreement (see paragraphs 83, 97, 105).

Gang v KNCC Ltd [2023] NZERA 182(external link)

Fonterra Brands (New Zealand) Ltd v Lanigan [2023] NZERA 197

Employment Relations Authority – Dispute – Fingerprint scanning technology 

At issue was whether the employer could require its employees to clock in and clock out using fingerprint scanning technology.

The employer bought and introduced a time keeping and attendance system that used fingerprint scanning technology. In doing so, the employer said it sought to collect accurate data to inform payment of wages and entitlements. The employee was one of about 30 maintenance workers at one of the employer’s workplaces who refused to use the technology. The employee considered the employer was intruding upon his privacy by requiring his biometric information. The employee argued the employer would have to vary the collective agreement before it could do so. 

The employer asked the Authority to resolve the dispute. The Authority declared that the employer could lawfully and reasonably instruct the employees to use the fingerprint scanning technology for the purposes of recording time and attendance at work (see paragraph 92).  

The Authority noted that:

• Employees were required to follow lawful and reasonable instructions of their employers. This was an implied term of every employment agreement (see paragraph 24).
• Approximately 8000 employees of the employer were already using the technology. Only these 30 employees were not (see paragraph 8).
• The fingerprint scanning technology system used offered the protection of encryption. The risk of the security measures being defeated seemed “very slight” (see paragraphs 49–50).
• The collection of the data complied with information privacy principle 1(external link) in the Privacy Act 2020, because the personal information was being collected for a lawful purpose, and was necessary for that purpose (see paragraphs 52–56).
• The collective agreement did not mention timekeeping or attendance technology or any limitations on the use of it. The Authority found that a variation was not necessary when the employer was giving lawful and reasonable instructions because “consent was not a precondition for giving an instruction” (see paragraphs 68, 70).
• The ability of employers to give lawful and reasonable instructions was limited by the need for consultation and good faith behaviour. In this case, the employer had allowed the employees express their views on the fingerprint scanning technology and had adequately considered those views (see paragraphs 75, 79, 83).
• The employer had good business reasons to use the fingerprint scanning technology (see paragraph 86).

Fonterra Brands (New Zealand) Ltd v Lanigan [2023] NZERA 197(external link)