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Cases of interest: January 2023
A summary of interesting or topical employment cases.
New Zealand Tertiary Education Union Te Hautū Kahurangi o Aotearoa Inc v Vice Chancellor of the Auckland University of Technology [2023] NZEmpC 2
Employment Court – Breach of compliance order – Penalty
At issue was whether the Employment Court (Court) would penalise the employer for its continued breach of a compliance order issued by the Employment Relations Authority (Authority).
The employer was restructuring in order to make substantial financial savings. It proposed to significantly reduce its number of employees by redundancy. The union did not believe the proposed selection criteria complied with the terms of the collective agreement. The Authority agreed and made compliance orders compelling the employer to satisfy the collective agreement. In Tertiary Education Union v Vice Chancellor Auckland University of Technology [2022] NZERA 690, the Authority ordered the employer to:
- desist from:
- terminating the employment of union members
- giving notice of termination to union members
- where notice had already been given, allowing the period of that notice to elapse
- give notice to union members who had already been given notice that it was complying with order A
- not terminate the employment of any union members who gave notice until the employer complied with the collective agreement
- identify specific positions as surplus before offering voluntary severance to potentially affected employees in line with the collective agreement.
The employer then wrote to employees whose positions were identified as surplus, and employees whose positions were not identified as surplus, but equivalent positions, on the same day. Both groups of employees were advised they were entitled to request voluntary severance (see paras 22–28). The union claimed the employer had not complied with orders B and D.
The Court found the employer had breached the Authority’s compliance order. By inviting employees in equivalent roles to seek voluntary severance the employer had gone outside of the scope of both the compliance order and the collective agreement (see para 52). The Court ordered the employer to pay a penalty of $3,000 under section 140(6)(external link) of the Employment Relations Act 2000 (see para 69).
Rail and Maritime Transport Union Inc v KiwiRail Ltd [2023] NZERA 17
Employment Relations Authority – Sick leave – Relevant daily pay – Average daily pay – Transport allowance
At issue was whether the employer, when calculating sick leave, should have included payment of the employees’ daily transport allowance.
The collective agreement between the employer and the union provided for a transport allowance for those that worked at night and/or were called back to work between work periods. The daily allowance was $6.38 in the first year and $6.64 in the second year of the collective agreement. It was payable to employees who lived more than 2 kilometres from the workplace and did not have a vehicle provided by the employer.
The union argued the allowance should have been included in sick leave payments as, if the employee had worked on that day, they would have been paid the allowance. The employer disagreed, claiming that section 9(external link) and section 9A(external link) of the Holidays Act 2003 did not require allowances to be included in calculations of relevant daily pay and average daily pay. As the employee would not be travelling on the day they took sick leave, the employer considered it should not have to pay the travel allowance.
The Authority found that the employer was required to include the transport allowance when calculating sick leave. In making this determination, the Authority considered:
- The collective agreement stipulated that relevant daily pay had “the meaning given to it by the Holidays Act 2003” and included allowances “paid in accordance with the provisions of this collective agreement with the exception of strict reimbursing allowances” (see para 27).
- The travel allowance was not a strict reimbursing allowance. The employees were paid the travel allowance whether or not they incurred any expense (see para 36).
- The travel allowance was instead a conditional payment, which must be included in the calculation of relevant daily pay (see paras 41, 50).
- As the allowance was not a reimbursement, it did not come within the exceptions to gross earnings in section 14(external link) of the Holidays Act 2003. Therefore, it must also be included in the calculation of average daily pay (see para 55).
Rail and Maritime Transport Union Inc v KiwiRail Ltd [2023] NZERA 17(external link)
Labour Inspector v Happytime BBQ Restaurant Ltd [2023] NZERA 20
Employment Relations Authority – Migrant exploitation – Arrears – Premium – Penalties
At issue was whether the Authority would order the employer to pay arrears to a migrant worker as well as penalties for breaches of minimum standards.
The employee was chef at a restaurant. He travelled from China to Auckland to take up the position. The employer charged the employee a premium of $16,563 in exchange for the role. The employee usually worked 60 hours a week. However, he was underpaid or not paid at all. After nineteen months the employee resigned due to the impact of being underpaid.
The Labour Inspector investigated and found the employee had been underpaid $37,600 in wages (see para 25). The Labour Inspector also found the employer had failed to keep proper records or pay annual leave or public holiday entitlements (see para 5). The Authority ordered the employer to pay the employee $65,503 in arrears including a refund of the illegal premium (see para 33).
The Authority found the employer had “over a significant period deliberately and seriously exploited” the migrant employee (see para 41). The Authority noted that the procurement of a job “is not a commodity or product to be bought and sold on the market” (see para 55). The Authority ordered the employer company to pay $102,000 in penalties. It also ordered the sole director of the company to pay $51,000 in penalties as a person involved in the breaches (see para 66).
Labour Inspector v Happytime BBQ Restaurant Ltd [2023] NZERA 20(external link)
Price v Pinevale Farms Ltd [2023] NZERA 45
Employment Relations Authority – Personal grievance – Constructive dismissal – Breach of minimum standards
At issue was whether the employer constructively dismissed the employee by breaching the terms of her employment to such an extent that it was reasonably foreseeable she would resign.
The employee worked on a dairy farm performing milking and general farm work. The employee began as a relief milker with an agreed amount of pay per milking. She quickly began milking ten times a week. After a couple of months, the employee moved into accommodation on the farm and worked additional hours on general farm tasks. The parties never signed an employment agreement. The parties had different expectations of the role and conditions of employment. Without an agreement to refer to, the relationship between the employee and employer became fraught over time. The employee was not always paid enough or on time.
The employee resigned, stating in her resignation letter that she was resigning because (see para 32):
- Despite several requests, the employer had failed to provide an employment agreement.
- The employee was not provided with regular days off.
- The roster was changed without her agreement.
- The employer did not increase her pay in line with extra hours worked.
- The employer did not pay the minimum standards for public holidays or provide holidays.
- The employer’s recent treatment of the employee, including avoidance of communication.
The employee left the resignation letter for the employer to find, but the parties did not discuss her resignation during her notice period.
The Authority found the employer had constructively dismissed the employee by serious breaches of the terms of her employment (see para 51). The Authority noted the employer had disregarded its legal obligations and there was a bargaining imbalance between the parties (see para 50). The Authority ordered the employer pay the employee $20,000 in compensation and more than $36,000 in unpaid wages and entitlements (see para 73).