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Cases of Interest: October 2024
A summary of interesting or topical employment cases.
Fredricsen v Air New Zealand Ltd [2024] NZEmpC 198
Employment Court – Personal grievance – Disadvantage
At issue was whether the employer unjustifiably disadvantaged two employees when it refused to allow them to travel to the United States of America (USA) to receive a COVID-19 vaccination that was unavailable in New Zealand.
The employees were pilots with an airline. The government required all aircrew members to be vaccinated under the COVID-19 Public Health Response (Vaccinations) Order 2021(external link) (Order). The employer allowed some pilots to arrange their rosters so that they could receive a particular type of COVID-19 vaccine while they were in the USA. The two pilots asked the employer to allow them to travel especially to the USA so they could also receive that type of vaccine. The employer did not grant them permission to do so. When the Order came into force, one pilot took a mix of paid and unpaid leave until one of his preferred vaccines became available in New Zealand. The other pilot took sick leave and then paid leave until the Order was rescinded. The pilots raised personal grievances under section 103(1)(b)(external link) of the Employment Relations Act 2000 (Act), claiming the employer’s unjustifiable action had disadvantaged them in their employment.
The Employment Court (Court) held that the employer’s refusal to facilitate flights for the employees to receive a vaccination in the USA was justified in the circumstances (see paragraph 94). However, the employer breached its good faith obligations when it showed a disparity of treatment by allowing another pilot who would not usually have been travelling to the USA to do so in order to receive the vaccine before rejecting similar requests from the two pilots (see paragraphs 95 to 98). The Court found that the employer’s conduct was not the conduct of a fair and reasonable employer and it had disadvantaged the employees (see paragraph 99).
The Court ordered the employer to pay each employee $8,000 in compensation (see paragraph 102).
Fredricsen v Air New Zealand Ltd [2024] NZEmpC 198(external link)
Caleys Ltd v Deadman [2024] NZEmpC 200
Employment Court – Resignation – Forfeiture clause
At issue was whether a forfeiture clause in an employment agreement was enforceable.
The employee was a sales and business development representative for a window furnishings business. The employment agreement between the parties included a term that required the employee to give one month’s notice of termination or forfeit a month’s salary. When the employee resigned two months after commencing her employment, she gave one day’s notice. The employee had been diagnosed with a health condition and was struggling with aspects of the role. She felt exhausted and stressed. The employer told the employee it intended to enforce the forfeiture clause in the employment agreement. The employer withheld the employee’s final pay and demanded payment of a further $3,157.
The Court held that:
- Forfeiture clauses may be enforceable (see paragraph 24).
- Where an employment agreement contains a forfeiture clause the Court will “scrutinise any claims closely” due to the inherent inequality of power in employment relationships recognised in section 3(external link) of the Act (see paragraph 31).
- A forfeiture clause will be an unenforceable penalty if the consequence of a breach is “out of all proportion to the legitimate interests” of the party trying to enforce the clause (see paragraph 25).
The Court found that the employer did have legitimate interests in avoiding the losses that it would incur as a direct result of the required notice not being given. It also had a legitimate interest in having a reasonable opportunity to hire a replacement into the role before the employee left (see paragraphs 42 and 43). However, the Court noted that the employee did not yet work unsupervised, and the employer did not hire a replacement for over three months. Also, the business interests of the employer had to be balanced against the employee’s interest in receiving her salary (see paragraph 53).
The Court decided the sum of one month’s wages was exorbitant and not proportionate to the employer’s interests (see paragraph 55). It was therefore a penalty provision that was unenforceable (see paragraph 56).
Joyce v Ultimate Siteworks Ltd [2024] NZEmpC 204
Employment Court – Costs – Advocate conduct
At issue was:
- how much the employee should contribute towards the legal costs of the employer
- whether the conduct of the employee’s advocate should increase the costs payable.
The employee was unsuccessful with his challenge(external link) in the Court. The employer sought a contribution towards its legal costs. The employer asked the Court to take the conduct of the employee and his advocate representative into account when setting the costs award. Although the Court did not uplift the costs award on that basis, it commented on the behaviour of the advocate.
The Court noted that the advocate had abused the employer’s lawyer in unprofessional correspondence. The advocate also harassed the employer’s lawyer by calling and texting him late at night. The advocate argued he was entitled to opinions and to freedom of speech.
The Court discussed its limited ability to involve itself in the conduct of representatives. It noted there are currently no rules regulating advocate behaviour (see paragraph 25). Advocates are not held to account by professional bodies as lawyers are (see paragraph 26). However, the Court said it is “not obliged to sit still and see its own processes abused” (see paragraph 27). It proposed that although section 236(external link) of the Act stipulates that parties may choose a representative, that does not necessarily confer a right of appearance on the representative.
The Court ordered the employee to pay $12,614 towards the legal costs of the employer (see paragraph 41).
Joyce v Ultimate Siteworks Ltd [2024] NZEmpC 204(external link)
Labour Inspector v Dilkhush Pvt Ltd [2024] NZERA 597
Employment Relations Authority – Migrant exploitation – Minimum employment standards – Premiums – Penalties
At issue was the quantum of penalties the employer and its directors would be ordered to pay for admitted breaches of minimum employment standards.
The Labour Inspectorate investigated the employer after receiving a complaint. The Labour Inspector found that the employer, who operated a restaurant, had breached various minimum employment standards with respect to five employees. The employer’s breaches included (see paragraph 19):
- failing to pay the minimum wage
- failing to pay holiday pay
- failing to pay public holiday rates or provide alternative holidays
- failing to keep wage and time records
- failing to keep holiday and leave records
- charging two employees a premium, being an amount of money to secure employment
- requiring an employee to repay a portion of his wages because it was not prepared to pay him the wage required by Immigration New Zealand.
One employee paid $16,900 to secure their employment. Another employee paid $8,000. The employer admitted the breaches. The two directors of the employer admitted to being people involved in the breaches.
The Employment Relations Authority (Authority) noted the employees were vulnerable and two were visa dependent on the employer (see paragraph 23). It also noted that the Labour Inspector had a particular interest in deterring employers from seeking premiums from employees (see paragraph 25). On the other hand, the employer had taken responsibility for the breaches and assisted the investigation (see paragraph 26). The Authority ordered the employer to pay $26,407 in outstanding arrears and $40,000 in penalties. The directors were also ordered to pay $20,000 in penalties between them (see paragraphs 40 and 41).
Labour Inspector v Dilkhush Pvt Ltd [2024] NZERA 597(external link)
Veale v Jetstar Airways Ltd [2024] NZERA 629
Employment Relations Authority – Alternative holiday – Otherwise working day – Collective agreement – Interpretation
At issue was whether the employee was entitled to an alternative holiday for working on a public holiday.
The employee was a pilot for an airline. He was originally rostered to have a day of annual leave on 5 February and a rostered day off on 6 February, Waitangi Day. The employer asked him to work instead, which involved flying over both days. The employee opted to work. The employer did not provide the employee with an alternative holiday. The employee claimed he should have been provided with one.
Under section 56(external link) of the Holidays Act 2003 (Holidays Act), an employee must be provided with an alternative holiday (another day off) if they work on a public holiday that falls on a day that would otherwise be a working day for the employee. Clause 10.3.3 of the collective agreement between the parties said that an otherwise working day for a pilot meant a day they were rostered to work. The employer claimed that because the employee was not rostered to work on the public holiday, but did so voluntarily, he was not entitled to an alternative holiday.
The Authority found that section 12(external link) of the Holidays Act supported the interpretation that once the employee was rostered to work on the public holiday, and then worked that day, he was entitled to an alternative holiday (see paragraph 43). The Authority declared the employer breached the collective agreement and section 56 of the Holidays Act when it did not provide the employee with an alternative holiday. The Authority ordered the employer to do so (see paragraphs 54 to 56).