Cases of Interest: December 2024

Secretary for Education v Public Service Association – Te Pūkenga Here Tikanga Mahi Inc [2024] NZEmpC 248

Employment Court – Collective agreement interpretation – Change processes

At issue was the way in which the terms of a collective agreement applied to change processes.

The employer and union were parties to a collective agreement. The government directed the employer to save costs. The employer commenced several change processes in order to achieve the savings. The parties disputed how a clause of the collective agreement applied to the change processes. The term specified that if there was a surplus of employees, the union and employer would meet to discuss options, such as redeployment, retraining, severance, and voluntary redundancy, on a case-by-case basis.

The Employment Court (Court) was asked to decide if that clause meant:

1. The parties were required to agree on the appropriate available options.
2. The options would be negotiated on a change process or individual employee basis.

The union argued that it would have to agree that redundancy was an appropriate option before the employer could be made redundant. The employer said that redundancy was ultimately its own decision (see paragraph 5). In coming to its decision, the Court considered the remainder of the collective agreement and principles of contractual interpretation.

The Court decided the process according to the collective agreement. The Court found that (see paragraph 58):

• The employer was required to collaborate with the union with the aim of reaching agreement.
• Both parties could make recommendations to management, who would take them into account.
• The employer would make the final decisions.
• After voluntary redundancy and reassignment had taken place, the union and employer were required to meet to discuss the options available to surplus employees.
• The options could be negotiated on a change process basis, but the employer would still need to meet each affected employee individually to try to resolve their outcome (with union support if the employee wished).

Secretary for Education v Public Service Association – Te Pūkenga Here Tikanga Mahi Inc [2024] NZEmpC 248(external link)

High Performance Sport New Zealand Ltd v Athlete’s Cooperative Inc [2024] NZEmpC 250

Employment Court – Collective bargaining – Initiation

At issue was whether the union could initiate bargaining with the plaintiff when the plaintiff did not employ members of the union.

The union represented elite athletes. Its goal was to support the performance and wellbeing of the athletes. The plaintiff was a publicly funded organisation that worked with national sporting organisations and provided funding to them. The plaintiff employed staff of its own but did not employ any of the athletes. National sporting organisations engaged the athletes, either as employees, independent contractors or recipients of grants. The union initiated collective bargaining with the plaintiff.

Under section 40(external link) of the Employment Relations Act 2000 (Act), bargaining for a collective agreement may be initiated by “1 or more unions with 1 or more employers”. The section does not specify that the employer has to employ members of the union. The question for the Court was whether it was lawful for the union to initiate bargaining with the plaintiff.

The Court looked at the purpose of the Act and context of the section. It found that relevant sections of the Act assume an employment relationship between the employer and union members. That relationship was necessary for the provisions to be workable (see paragraph 73). The members of the union needed to be employees of the employer to access collective bargaining (see paragraph 75). While the plaintiff was referred to in several of the athletes’ agreements as a funder, it was not a party to the agreements (see paragraph 86).

The Court concluded the athletes and the plaintiff were not in an employment relationship. Therefore, the union could not initiate bargaining with the plaintiff (see paragraph 89).

High Performance Sport New Zealand Ltd v Athlete’s Cooperative Inc [2024] NZEmpC 250(external link)

Chief of New Zealand Defence Force v New Zealand Public Service Association Te Pūkenga Here Tikanga Mahi Inc [2024] NZEmpC 251

Employment Court – Unlawful preference – Passing on

At issue was whether the employer:

1. gave preference to non-union members in breach of section 9(external link) of the Act
2. passed on pay rates to non-union members undermining the collective agreement in breach of section 59B(2)(external link) of the Act.

Around one-fifth of the employer’s 3,000 employees were union members. The union and employer negotiated a collective agreement. During the negotiation period, the employer included backpay in its annual remuneration review with non-union members. The employer made an offer to the union that included backpay. The union did not accept the offer as it did not meet the mandate from its members. The employer then declined to include backpay in negotiations with the union, following advice from the State Services Commission. A collective agreement was later agreed without backpay. The union claimed the employer unlawfully gave preference to non-union members.

The next year, the employer offered the non-union employees salary rates that were substantially similar to the rates it had negotiated with the union. The union claimed the employer had breached good faith by passing on rates with undermining intention (even though in effect it had not undermined the collective agreement).

The Court found that in the circumstances the employer did not give preference to non-union members:

• The Court held the employer was entitled to take a hard line on backdating pay increases given the guidance it had received (see paragraph 44).
• The Court found that section 9 worked both ways, meaning the employer could not give preference to union or non-union members (see paragraph 42).
• The union negotiated priorities such as long-service leave in the collective negotiations, and it was “not for the Court to assess the value of the bargain struck” between the parties (see paragraph 45).
• The employer’s decision to backpay the non-union members was consistent with its obligation to conduct salary reviews every year (see paragraph 46).

The Court found the employer did pass on the union negotiated salary rates to non-union members. As the employer did so to deter employees from joining the union, it had the intention of undermining the collective agreement (see paragraph 51). However, under section 59B(2) there must be both intention and effect. As the union accepted, the passing on did not have the effect of undermining the collective agreement. Therefore, there was no breach (see paragraph 52).

Chief of New Zealand Defence Force v New Zealand Public Service Association Te Pūkenga Here Tikanga Mahi Inc [2024] NZEmpC 251(external link)

Karunarathne v Creating Real Value Ltd [2024] NZERA 729

Employment Relations Authority – Premium – Wages Protection Act 1983

At issue was whether an “investment” the employee paid to the employer was an unlawful premium under section 12A(external link) of the Wages Protection Act 1983.

The employee entered into an employment agreement with the employer. She received a work visa that only allowed her to work for that employer. The employer asked her to invest $3,000 in the business in return for her part-time position. The employee paid the money. The employer told the Employment Relations Authority (Authority) the business was newly established, and it used the money to pay her wages.

The Authority found that under section 12A no employer may seek a premium in respect of the employment of any person. It ordered the employer to repay the $3,000 to the employee. It also ordered the employer to pay the employee wage arrears of $1,630 plus interest. The employee did not seek penalties.

Karunarathne v Creating Real Value Ltd [2024] NZERA 729(external link)