Cases of interest: July 2023

Pilgrim v Attorney-General [2023] NZEmpC 105

Employment Court – Employment Status – Status of Gloriavale residents 

At issue was whether six former female residents of the Gloriavale Christian Community (the Community) had been employees.

(1) Were the plaintiffs volunteers?

The Employment Court (Court) began by considering whether the plaintiffs were, as the defendants submitted, volunteers. The Court noted that s 6(1)(c) of the Employment Relations Act 2000 creates an exclusion so that a volunteer will not be considered an employee for the purposes of the Act. The s 6(1)(c) exclusion contains a two-step test for determining whether a worker is a volunteer: they must have no expectation of a reward for their work and must not actually receive a reward for their work (see paragraph 48).

(a) Did the plaintiffs expect a reward?

For the expectation leg of the test, the Court considered whether the plaintiffs carried out the work for the benefit of the Community or for the expectation of reward (see paragraph 69). The Court found that the notion of working for the Community, and the consequences of not doing so, were engrained into the plaintiffs from birth (see paragraph 85). Well-known consequences included: “exclusion from the Community, from all that was familiar, from family and friends, and into a world they knew little about, were ill equipped to navigate and had been taught to fear” (see paragraph 99).

The Court compared the situation the plaintiffs were in, to that of migrants threatened with deportation from the country; in a literal sense they had the “choice” not to work, but this “choice” was not a realistic option (see paragraph 101). The “reward” which the plaintiffs expected was continued inclusion in the Community and protection from eternal damnation.

(b) Were the plaintiffs rewarded for their work?

The Court found the plaintiffs were rewarded for their work. The rewards included: being permitted to remain in the Community leading a life they were familiar with; food, shelter, clothing, religious support and guidance; and the promise of spiritual redemption rather than eternal damnation (see paragraph 122).

The Court accepted that not every reward, no matter how trivial, would suffice for the s 6 test. There needed to be a causal connection between the reward and the work done (see paragraph 120). The Court found this causal connection was satisfied by evidence of the high value both the Community and the plaintiffs put on the listed rewards (see paragraph 122).

The Court concluded the plaintiffs were not volunteers.

(2) Were the plaintiffs employees?

Having established the plaintiffs did not fall under the volunteer exception, the Court moved on to consider whether they were employees.

The Court began by considering whether the parties intended for the relationship to be one of employment (see paragraph 131). The Court set out that intention is to be assessed objectively (see paragraph 131). Subjectively, neither the Community nor the plaintiffs intended for there to be an employment relationship. However, this could have been because of a misunderstanding of legal status or entitlements (see paragraph 139). The Court held an objective observer would have very likely concluded the relationship was one of employment (see paragraph 131). The Court found a number of factors supported this view of the relationship:

• The leadership of the Community had a significant degree of control, direction and power over the plaintiffs’ work. They worked strictly as required, for long hours and for years on end (paragraphs 134, 140). Evidence that if any plaintiff had withheld work they would have been banished from the community showed the high level of control (see paragraph 137).
• The work was similar to what would be required in a large-scale hostel. It was essential to the Community’s operation and would need to be paid for if undertaken by people outside of the Community (see paragraph 138).
• The plaintiffs expected to be, and were rewarded for, the work (see paragraph 140).

The Community made submissions arguing there was no employment relationship, but these were dismissed by the Court. The Court found:

• The type of work being “domestic” in nature had no bearing on whether there was an employment relationship (see paragraph 58).
• Whether the work generated external income was not relevant (see paragraph 61).
• The work was not carried out for some “notional big family”. There were 82 separate families in the Community (see paragraph 68).

(3) Would employment status be incompatible with the Community’s chosen way of life and/or rights under NZBORA?

The Court did not accept the Community’s submission that employment status would be incompatible with the Community’s rights under the New Zealand Bill of Rights Act 1990 (NZBORA). It accepted that section 13(external link) of NZBORA protects freedom of religion, and section 15(external link) protects the right to manifest religion. However, the Court held these rights are subject to reasonable limitations, which includes employment laws (see paragraph 142).

The Court found employment status would not undermine the Community’s chosen way of life. It noted that the Community did not hold the same objections to employment status when it came to Community teachers or midwives, who were paid via government funding (see paragraph 144). The Court concluded the Community’s concern over employment status did not come from incompatibility with religious belief, but from concerns about its ability to pay the women for their work (see paragraph 147).

(4) Result

The Court found each of the six plaintiffs were employees while working at the Gloriavale Christian Community (see paragraph 185).

Pilgrim & Ors v Attorney-General & Ors [2023] NZEmpC 105(external link)

Ling v Super Cuisine Group Ltd [2023] NZEmpC 106

Employment Court – Constructive dismissal – Non-de novo challenge – Breach of duty – Migrant worker

This was a non-de novo challenge by an employee to a determination of the Employment Relations Authority (Authority). The challenge was solely on the basis of whether the employee had been constructively dismissed, following breach of a contractual duty by the employer. Whether there had been a breach was not disputed (see paragraph 31).

The Court began by setting out the relevant question: did the breach cause the resignation, and was the resignation foreseeable (see paragraph 16)?

The employer previously submitted that the employee finding new employment was the cause of the resignation (Ling v Super Cuisine Group Ltd [2021] NZERA 145, at [28]). However, the Court held the breach was the cause. The Court held the context in which the employee operated was crucial to its finding – he was in New Zealand on a working visa which specifically named the employer. He could not lawfully work elsewhere until the visa was varied, and he needed to work to support himself. The Court held the new employment did not cause the employee to resign; it merely enabled him to resign (see paragraph 45).

The next step of the Court’s analysis was considering whether resignation was reasonably foreseeable given the seriousness of the breach. The employee was underpaid by $160 per week for 22 weeks. The Court found this breach was sufficiently serious that were it knowingly carried out, resignation would clearly be a reasonably foreseeable consequence (see paragraph 48). However, reasonable foreseeability was complicated because at the time, neither the employee nor employer were aware the pay rate amounted to breach of a contractual duty.

The Court held the employee’s lack of awareness of the breach could not be relevant to whether resignation was foreseeable. He could not be expected to have a full grasp of his rights considering he was an immigrant with little to no English (see paragraph 50). Turning to the employer’s knowledge: the Court held it is not about what they subjectively knew, but what was objectively reasonably foreseeable (see paragraph 51). The employer was required to comply with employment law and had a duty to inform themselves of their contractual obligations – the Court held this was enough that they reasonably ought to have known about the breach.

The Court held the employee was constructively dismissed (see paragraph 55). The Court ordered the employer to pay the employee $8,000 in compensation (see paragraph 63).

Ling v Super Cuisine Group Ltd [2023] NZEmpC 106(external link)

Bullen v Fliway Transport Limited [2023] NZERA 406

Employment Relations Authority – Personal grievance – Unjustified dismissal – Procedural fairness – COVID-19 vaccination policy

At issue was whether the employer unjustifiably dismissed the employee for failing to comply with a workplace policy that required disclosing vaccination status.

The employer proposed a policy under which full vaccination against COVID-19 would be a mandatory requirement for employees in certain positions. The proposal further provided that employees who refused to disclose their vaccination status would be deemed as unvaccinated. The employee – who refused to disclose her vaccination status – offered feedback that she could continue to perform her role with zero risk, were she permitted to work from home. The employer’s email in response to this feedback was lost in a chain of communications between various managers, and the employee never received the message. The vaccination policy was introduced, the employee was advised via Teams she could not work from home, and she was given notice of her dismissal.

The Authority’s investigation centred on whether the dismissal had complied with the statutory duty of good faith. The Authority was particularly concerned with the employer’s failure to communicate a detailed response to the employee’s work from home proposal. The employer accepted the email – which was lost in a chain of communications – should have been provided to the employee (see paragraph 73). However, the employer argued this was a minor defect, and that it was remedied by two Teams calls in which the employee’s proposal was rejected (see paragraphs 73, 75). The Authority disagreed. It determined the employer’s summary responses given in the Teams meetings were not sufficiently specific (see paragraph 74). It further determined the defect was not minor: the employee was entitled to respond task by task to the employer’s view their role could not be performed from home (see paragraph 76). The Authority found the employer did not properly raise its view that the role could not be performed on a working from home basis (see paragraph 77).

The Authority also determined the employer had failed to comply with clause 3(4) of Schedule 3A(external link) of the Act, which applies to employees who are required to be vaccinated against COVID-19 (see paragraphs 56, 78). The clause obliged the employer to ensure they had exhausted all other reasonable alternatives before giving the employee notice of dismissal (see paragraph 78). The Authority found there was evidence of reasonable alternatives being available: the employer had intended to allow the employee to temporarily work from home while it implemented the policy. The Authority considered this trial period should have gone ahead to determine whether a permanent work from home arrangement was a reasonable alternative to dismissal (see paragraph 78).

The Authority determined the employer’s decision to dismiss the employee was not what a fair and reasonable employer could have done in the circumstances (see paragraph 79). The employee was unjustifiably dismissed and had a personal grievance against the employer.

Bullen v Fliway Transport Ltd [2023] NZERA 406(external link)

LNF v The Department of Corrections [2023] NZERA 399

Employment Relations Authority – Personal grievance – Unjustified dismissal – Redundancy

At issue was whether the employee was unjustifiably dismissed on the grounds of redundancy.

The employer advertised a position using an 11-year-old job description which did not accurately reflect the relevant tasks and duties. It believed full disclosure to the successful candidate would address any concerns about the position not being as advertised. Nevertheless, the successful employee quickly became confused as to her place within the organisation; she reported to a number of different managers, and her tasks lacked any clarity.

Lack of clarity in reporting lines and task allocation became a source of conflict between the employee and a co-worker. The employer treated this as an employment relationship problem; it responded by removing the employee from the team she shared with the co-worker. This effectively stripped the employee of 80% of her daily tasks.

The employee continued to seek clarification of her role. The employer responded with an offer to vary the terms of the employment agreement, with a new list “confirming” the employees’ duties. The employee rejected this offer as the listed tasks were mainly administrative, while she had been employed as – and had the skillset for – an advisory role. Eventually, the employer sought to replace the employee’s position with a more administrative position, and the employee was made redundant.

The Authority determined the dismissal was not a genuine redundancy and therefore was not substantively justifiable (see paragraph 108). The Authority accepted the employer had some business reasons to disestablish the role: its needs were administrative rather than advisory, so the employee’s work could be covered by an Administration Officer on a much lower salary. However, the Authority did not believe this amounted to substantive justification (see paragraph 106). Instead, it determined the genuineness of the redundancy was “tainted” from the start of the employment (see paragraph 108).

The Authority found the employer knew before hiring the employee that the job description did not match the role (see paragraph 95). She was hired to fill a salary vacancy rather than a role vacancy (see paragraph 96).  A role which aligned with the job description never existed; essentially it was a redundant role before the employee was even hired. The Authority could not see why the employer made the role redundant three years into the employment relationship, when it should have done so before anyone was hired in the first place (see paragraph 104). The Authority determined this suggested the redundancy was of the person, not the role (see paragraph 108).

The Authority determined the employer’s failure to take steps to address the lack of role clarity further suggested the redundancy was not genuine. The Authority began by setting out that an absence of steps to avoid redundancy may indicate an absence of genuineness in the decision to dismiss (see paragraph 91). The Authority noted the lack of role clarity was the cause of the conflict between the employee and her co-worker; it made them each feel their tasks were being encroached on (see paragraph 99). The employer chose to resolve this by removing 80% of the employee’s tasks, which exacerbated the employment relationship problem when it could have been resolved (paragraph 99).                                                   

The Authority also determined the redundancy was procedurally unfair (see paragraph 110). It determined the employer failed to meet the necessary notice and consultation requirements in a number of ways (see paragraphs 110, 111, 112, 113, 114).

The Authority awarded substantial remedies having found the employee to have a successful personal grievance (see paragraph 147):

• $36,500 in reimbursed wages under section 128(2)(external link) of the Act. This was equal to a 6-month period of unemployment the employee went through after the dismissal.
• $23,000 in compensation under section 123(1)(c)(i)(external link) of the Act. The employee had also raised a grievance for unjustified disadvantage caused by the lack of role clarity. Although the Authority found this grievance was raised out of time, it considered the negative effects could contribute to compensation for the dismissal grievance.

LNF v Department of Corrections [2023] NZERA 399(external link)