Cases of interest: January 2025

DQJ v Commissioner of Inland Revenue [2025] NZEmpC 10

Employment Court – Interim reinstatement – Reinstatement following dismissal for “frustration of contract”

Employment Court – Frustration of contract – Frustration caused by inability of employee to perform role

At issue was whether the Employment Court (the Court) should grant the employee interim reinstatement pending an investigation into her alleged unjustified dismissal.

The employee was employed in a “Workplace Support” role. The employee had a “traumatic personal life, including extensive and protracted physical, sexual and psychological abuse”. The employee confided the details of their personal life to their Team Lead. The Team Lead was aware of some of the impact of this on the employee’s work (see paragraph 13).

Within 3 months of the employee’s appointment problems arose with the employee’s conduct which sparked complaints from other staff. The problems continued periodically for more than a year. Issues included lateness, tiredness at work, the employee’s attire and an altercation with a co-worker. The employer dealt with the issues via meetings with the employee and by setting out expectations of the employee in writing.

After the employee advised the employer that they had been charged with wilful damage to their ex-partner’s property, the Domain Lead wrote to the employee advising that the employer was considering calling a halt to the employment relationship. The Domain Lead cited issues to do with “sleeping at work, leave records, the loss of 2 cell phones, behaving inappropriately at work and ongoing lateness” as well as the employee not making herself “ready, willing and available to attend work on a regular basis”. The Domain Lead claimed the employment relationship had become “frustrated” as a result of the employee’s conduct. They scheduled a meeting to discuss matters (see paragraph 22).

The employee’s advocate challenged terminating the employee’s employment based on frustration, saying it appeared to be a situation of medical incapacity. The advocate tried to get the meeting with the employer delayed so the employee could get medical advice on whether their issues arose from sleep apnoea.

The employer declined to reschedule the meeting. The advocate wrote again saying the employee had a specialist medical appointment in approximately 3 weeks’ time and said the process should be suspended so that the employer could take the medical information into account.

Two days later the Domain Lead wrote to the employee dismissing them with pay in lieu of notice. The Domain Lead said (at paragraph 28):

26. … we have now reached a point where the relationship is not sustainable. I cannot trust you to reliably attend work now or in the future. …

27. I consider that the employment relationship has become frustrated due to your ongoing history of high absences, your unwillingness to engage appropriately on matters which we continue to raise with you, and your ongoing issues related to not following our expectations. …
…
30. Ultimately, based on all the information available to me, I consider that calling a halt to the employment relationship, on a no faults basis, is appropriate given all the circumstances.

Subsequently the employee obtained a psychological assessment which confirmed a diagnosis of complex post-traumatic stress disorder. The psychologist’s report said that the employee should not be punished for the trauma they had been through and how it was affecting them. At the time of the Court hearing the employee was waiting for a specialist’s report into sleep apnoea.

The employee sought to bring a claim of unjustified dismissal to the Employment Relations Authority (the Authority). The employee sought to be reinstated on an interim basis while waiting for the Authority investigation. The Authority declined interim reinstatement. In this proceeding, the employee challenged the Authority determination in the Court.

The Court assessed the claim for interim reinstatement based on (see paragraphs 5–7):

• whether the employee had a serious question to be tried in relation to the claim of unjustified dismissal
• whether the employee had a serious question to be tried in relation to permanent reinstatement
• the balance of convenience, including the impact on the parties and third parties and the merits of the case
• overall justice, again taking into account the merits of the case.

The Court found there was an arguable case the employee was unjustifiably dismissed. It considered it only weakly arguable that the contractual relationship ended as a result of frustration (see paragraph 49), as:

• The threshold for frustration is high and the doctrine is not to be invoked lightly and “is to be kept within ‘very narrow’ limits” (see paragraph 36).
• There were questions as to whether the threshold for frustration was met (see paragraph 38).
• The employer’s view that the employee’s “fundamental makeup” made them unable to meet their contractual obligations, and that this amounted to frustration, appeared not to be shared by the clinical psychologist (see paragraph 43).
• The employer also did not articulate to the employee why the employment agreement was said to be frustrated (see paragraphs 41, 42).

The Court found the if the contract was not frustrated, then it was very weakly arguable that a fair and reasonable employer could have terminated the employee’s employment (see paragraph 49). The Court took into account that:

• It was arguable the employee did not give the employee sufficient notice of its concerns to allow them to respond (see paragraphs 42, 45).
• It was also arguable that the employer ought to have explored if the employee was medically fit to work (see paragraph 44).
• The employer did not give a reason why the matter was considered urgent and no delay was manageable, to enable the employee to get medical information (see paragraph 46).

The Court considered it was arguable that permanent reinstatement could be practicable and reasonable (see paragraph 60), as:

• The employer was a “well-resourced employer, with specialist human resources capacity and (as a Public Service organisation) heightened employer obligations” and was in a better position than most employees to manage a return to work (see paragraph 55).
• Parliament could be taken as understanding that reinstatement can be challenging when it made reinstatement the primary remedy (see paragraphs 57, 58).
• The employer now had the benefit of additional information from a clinical psychologist about how a successful return to work could be achieved (see paragraph 59).
• It appeared the employee now had some insight into their challenges and an express commitment to their job and making it work (see paragraph 59).

The Court considered the balance of convenience favoured interim reinstatement (see paragraph 70), as:

• The merits of the claims for unjustified dismissal and permanent reinstatement favoured reinstatement (see paragraph 65).
• A well-resourced employer such as the one in this case had human resources capability to support smoothing the transition back to work (see paragraph 67).
• As a public sector organisation the employer had heightened good employer standards which were relevant to the assessment of what was reasonable and practicable (see paragraph 67).

However, the Court limited reinstatement to reinstatement to the payroll, taking into account:

• evidence that interim reinstatement could impact the health of the Team Lead (see paragraph 68).
• the psychological assessment of the employee and the fact she needed further assessment and counselling (see paragraph 69).

The Court found overall justice favoured interim reinstatement as:

• Money was a poor substitute for a job (see paragraph 71).
• The employee had an arguable case for unjustified dismissal and permanent reinstatement (see paragraph 72–74, 76).
• There was evidence from a clinical psychologist that the concerns which led to the dismissal stemmed from unresolved trauma (see paragraph 72).
• Damages were not an adequate remedy when the employee was financially stretched and their employment was important to them (see paragraph 75).

The Court granted interim reinstatement, but to payroll only (see paragraph 81). It considered that any reintegration into the workplace would need to be carefully managed. It said it would be just and fair to reinstate the employee to the payroll, while she was waiting for further medical reports and for access to counselling (see paragraph 77).

DQJ v Commissioner of Inland Revenue [2025] NZEmpC 10(external link)

Harte v Midwifery Employee Representation and Advisory Service Inc [2025] NZEmpC 5

Employment Court – Jurisdiction – Damages – Damages for breach of good faith by union – Claim for damages by union member

At issue was whether the Employment Court or Employment Relations Authority (the Authority) had jurisdiction to award damages to a union member to compensate them for a breach of good faith by their union.

A union member claimed the union breached its good faith obligations when it:

1. misled and deceived her by making misrepresentations about her
2. made statements about her that were false and to her discredit.

The union member sought a penalty for the first breach and a compensatory remedy for both breaches.

The member initiated a second proceeding in the District Court in which she sought damages for defamation against a union official and a midwife. The question in the Employment Court (Court) was:

• whether the union member could pursue damages in the Court for breaches of the duty of good faith against the union; and, if not,
• whether the damages claim was excluded under section 161(1)(r)(external link) of the Employment Relations Act 2000 (the Act) meaning the union member could continue with her defamation action in the District Court.

It was common ground that the relationship between a union and a union member was covered by the good faith obligations in section 4(external link) of the Act. The union claimed that the only remedy for a breach of section 4 was a penalty.

The Court examined relevant case law, including Wiles v Vice-Chancellor of the University of Auckland [2024] NZEmpC 123(external link) (Wiles), paragraph 140, in which Judge Perkins said damages for breach of the statutory duty of good faith were not contemplated by the Act (see paragraph 22). The Court distinguished earlier case law on the basis it was either decided before the Supreme Court considered the jurisdiction of the Authority in FMV v TZB [2021] NZSC 102, [2021] 1 NZLR 466(external link) (FMV v TZB); or, as in Wiles, did not involve the relationship between a union and a union member. The Court said it was necessary to consider the issues afresh (see paragraph 23).

The Court said the heart of the matter was whether the Court had jurisdiction to award damages for breach of good faith when there was no provision in the Act that explicitly provided for that remedy (see paragraph 36). The Court found that it had such jurisdiction under section 189 of the Act(external link). It said that in this case, where it was not possible for a union member to get a compensatory remedy for breach of good faith by a union by another route, such as a personal grievance, the Court could exercise its equity and good conscience jurisdiction under section 189 to grant a remedy in damages (see paragraphs 79, 86, 87).

In coming to a decision that it could grant damages using its jurisdiction under section 189, the Court took into account that:

• It did not find anything in the statutory history of section 4A of the Act(external link) to the effect that the introduction of a penalty regime was intended to rule out the possibility of damages for breach of good faith (see paragraph 62).
• There was a presumption, referred to by the majority in FMV v TZB, that “Parliament did not intend to abrogate common law rights” (see paragraph 65).
• An “interpretation of section 4A should be adopted that permits damages to be awarded … so as not to abrogate a right which would … be available at common law” (see paragraph 77; also paragraph 81).
• The interpretation put forward by the union would mean that in the current case “well-established common law rights would be abrogated” (see paragraph 81).
• “Under the Act, a limitation as to jurisdiction or outcome is generally the subject of an express statement” (see paragraph 72).
• The “absence of any express provision as to damages for breach of the duty of good faith should be regarded as deliberate”, especially where “remedial options do exist for some types of claim” (see paragraph 76).
• William Young J’s reasoning in FMV v TZB supported the idea that section 189(1) conferred a general power on the Court to grant such a remedy (see paragraphs 82–84).

The Court concluded that (see paragraph 88):

• The Court does have power to order compensatory relief under section 189(1) of the Act because there is a right to a remedy for breach of good faith founded on section 161(1)(f)(external link).
• The issue between the parties was not excluded under section 161(1)(r).

Harte v Midwifery Employee Representation and Advisory Service Inc [2025] NZEmpC 5(external link)

Singh v McKee [2025] NZEmpC 3

Employment Court – Disclosure – Requirement to disclose employment records of other employees

At issue was whether the employer could be required to disclose information about the wage and time records of employees who were not parties to the proceeding.

The employee challenged 3 findings in an earlier Employment Relations Authority (Authority) determination:

• the length of time the defendant employed the employee
• whether the defendant overpaid the employee his annual leave entitlement
• whether the defendant owed the employee arrears of wages and holiday pay.

To support his claim, the employee issued disclosure notices to the employer seeking among other things:

• time, wage and public holidays records for other employees for the period 1 January 2016 to 31 December 2020
• emails between the defendant and an accountancy firm about time and wage records for the period March 2019 to December 2020.

The defendant objected to the disclosure on the basis:

• Some of the documents were not in his possession.
• He was not the employer for the duration of the time specified.
• Other employees’ records were not relevant.

The employee said that he worked similar hours to another employee and that disclosure of the employment records of the other employees would allow him to compare his time, wage and leave records and help prove or disprove his claims about the accuracy of the defendant’s records.

The Court accepted that documents that showed the hours of work, payment and leave accrual arrangements of similar employees during the period of the employee’s claim were relevant as they would tend to prove or disprove the employee’s claims. The Court made orders that the defendant should disclose the requested documents (see paragraphs 17, 20 and 22).

The Court noted that:

• Where the defendant considered documents did not exist, the defendant could make a statement addressing that under regulation 42(3)(c) of the Employment Court Regulations 2000(external link) (see paragraph 21).
• The Court could address concerns about the sensitivity of documents or individual privacy by (see paragraph 18):
  • requiring the recipient to make undertakings as to confidentiality
  • permitting the redaction of irrelevant or sensitive information.
• Any remaining concerns about sensitivity and privacy could be addressed through the disclosure conditions in regulation 51 of the Employment Court Regulations 2000(external link) (see paragraph 18).

Singh v McKee [2025] NZEmpC 3(external link)

Young v Port of Tauranga Ltd [2025] NZEmpC 2

Employment Court – Unjustified dismissal – Failure to comply with COVID-19 vaccine mandate – Validity of vaccination exemption

The employee was dismissed for failing to comply with a vaccination mandate. A key issue was whether the employee had a valid exemption from vaccination.

The employee was employed as a tug engineer in a port. The employer considered the employee’s work was covered by a COVID-19 vaccination mandate under the COVID-19 Public Health Response (Vaccinations) Order 2021(external link) (the Order), as amended by the COVID-19 Public Health Response (Vaccinations) Amendment Order 2021(external link). The Amendment required certain port workers to be vaccinated to carry out their work unless they had a qualifying vaccine exemption. When the employee failed to comply with the vaccine mandate, the employee sent him a letter giving him approximately 6 weeks’ notice of termination. The employer offered redeployment to a lower-ranked role as an alternative.

Some days after giving the employee notice of termination, the employer held a meeting with the employee. The employee brought 2 documents to the meeting, to show that he was exempt from having a vaccine. The documents were:

• a letter from a doctor saying simply “I have personally consulted with Stuart and in my professional opinion he meets grounds for exemption from COVID-19 vaccination” (see paragraph 26)
• a form from Professionals for Medical Informed Consent and Non-Discrimination, containing a series of reasons for vaccination not being appropriate, with tick boxes next to each reason.

The doctor who wrote the letter was not the employee’s usual general practitioner. The “tick box” form began by saying “following consultation with [the employee], the signatory recommended that COVID-19 vaccination be avoided for the following reasons”. Three reasons for a vaccine being unsuitable were ticked. The form was allegedly filled in by another named doctor, however the signature space was marked only with a line.

The employer advised the employee it did not consider the documents were sufficient for it to confirm to the Ministry of Health that the employee had been examined by a suitably qualified health practitioner who had determined that vaccinating him would be inappropriate. It requested the employee’s consent to contact one of the doctors for further information. The employee did not consent.

The employee continued to maintain that the exemptions were valid. However, he agreed to see his own general practitioner. He then advised the employer the general practitioner would not provide a further exemption “as there were already 2 in place” (see paragraph 33). When the employee failed to provide a new medical certificate by the termination date the employer terminated his employment.

The Employment Relations Authority found the employee was justifiably dismissed. The employee challenged the determination in the Employment Court (Court).

The Court found that, under a “broad precautionary approach” to the interpretation of the Order, the employee was covered by the Order and so was required to be vaccinated (see paragraphs 37–40).

The Court accepted that the employer was justified in not accepting the employee’s vaccination exemption (see paragraphs 44, 48). The Court took into account that:

• Neither of the doctors who provided documents for the exemption were the employee’s general practitioner and neither saw him in person (see paragraph 43).
• The employer did not have confirmation that the tick box form was signed by the doctor in question (see paragraph 43).
• The employer had legitimate questions as to whether one of the doctors had examined the employee and genuinely assessed him as meeting the requirement for an exemption under clause 7A of the Order(external link) (see paragraph 47).
• The employer “could have been subject to legitimate criticism if it had simply registered employees who produced a document that was of doubtful veracity” (see paragraph 48).
• The employer was open to registering an exemption but sought clarification (see paragraph 48).

The Court found the employee’s dismissal overall was justified as the employer had followed a fair process (see paragraphs 51–60).

Young v Port of Tauranga Ltd [2025] NZEmpC 2(external link)

Chen v Construst Ltd [2025] NZERA 20

Employment Relations Authority – Employment status – Employee or contractor

Employment Relations Authority – Breach of minimum employment standards – Failure to provide employment agreement – Failure to keep time and wage records – Penalties

Key issues were:

• whether the applicant was an employee or contractor
• whether the alleged employer breach minimum employment standards by not giving the applicant an employment agreement and by not keeping time, wage, holiday and leave records
• whether the employer should be penalised for minimum employment standard breaches
• whether the applicant was unjustifiably dismissed.

The second respondent, the director of a construction company, met with the applicant in a café and offered him a full-time position as “Carpentry Team Leader”. The parties agreed the applicant would be paid $40 an hour, with a petrol allowance and tools provided by the company, starting the next day. The applicant did not enter into any written agreement with the company.

The director had a practice of employing migrants on work visas as employees and taking on people who did not require a work visa as independent contractors. The parties did not discuss whether the applicant was to be an employee or a contractor, but the applicant understood he was to be an employee.

Shortly after the applicant started work, he became concerned about when he would be paid. In a series of WeChat messages to the director, the applicant requested fortnightly payments, provided his IRD number and requested an employment agreement. The director responded with messages saying the applicant was a contractor. The director said he could only offer a self-employed contract as “there are too many work visas right now, I need to lay off some first” (see paragraph 30).

When the applicant had been working for a month, the company paid him a sum of money and said there would be no work the next week. When the applicant asked when he could return to work the director told him there was no more work and did not provide any thereafter. The applicant claimed he was unjustifiably dismissed. The director maintained that the applicant was a contractor.

The Employment Relations Authority (the Authority) found the real nature of the relationship between the parties was one of employee and employer (see paragraphs 86–88), and that the director was the applicant’s employer, not his company (see paragraph 94).

In coming to the determination that the applicant was an employee, the Authority took into account that:

• The Authority accepted the applicant had raised the issue of PAYE at the initial interview (see paragraphs 52, 53).
• The applicant worked full-time, as directed by the director, with tools provided by the director. The director exercised a high degree of control over what the applicant did (see paragraphs 54, 62, 63, 67–72, 75).
• The director presented the applicant to other workers as the “Carpentry Team Leader”, as an employee and not an independent business owner (see paragraph 74).
• The applicant provided the director with his hours of work but did not provide any invoices (see paragraphs 54, 56). The applicant was paid by the hour, not for specific tasks he completed (see paragraph 58).
• The applicant did not bear any risk of loss nor was he able to profit from his work other than by working more hours, allocated to him by the director (see paragraphs 58, 77–80, 87).
• The applicant did not work for anyone else, nor did he subcontract anyone to work on his behalf (see paragraphs 59, 63).

The Authority accepted that the director failed to provide the applicant with an employment agreement and failed to keep time and wage and holiday and leave records, contrary to sections 65 and 130 of the Employment Relations Act 2000(external link) and section 81 of the Holidays Act 2003(external link). It ordered the director to pay penalties of $2,750 (see paragraph 140).

The Authority also (see paragraph 162):

• found the director unjustifiably dismissed the applicant
• ordered the director to pay the applicant $20,000 compensation for distress and $5,236.53 lost remuneration
• ordered the director to pay wage, holiday pay and petrol allowance arrears of $840, with interest.

Chen v Construst Ltd [2025] NZERA 20(external link)

Zhou v 6 Meter Homes Ltd [2025] NZERA 22

Employment Relations Authority – Breach of minimum employment standards – Payment of a premium for employment – Penalties

Employment Relations Authority – Unjustified dismissal – Migrant on accredited employer work visa

At issue was:

• Whether the employee paid the employer an unlawful premium.
• Whether the employee was unjustifiably dismissed.

The employee was a Chinese national with about 10 years’ experience installing outdoor electronic advertising billboards. While the employee was working in Singapore, the director of the employer met him and offered a construction job in New Zealand.

The director introduced the employee to a Singaporean agent to whom the employee paid the equivalent of over NZ $11,000. The payments to the agent were for “pre-trip evaluation”, “visa processing” and a “business consulting fee”. The business consultancy agreement for the payments did not mention the employer or director (see paragraph 36).

The employee was granted a New Zealand accredited employer work visa, tied to the employer. He arrived in New Zealand and had no work for several weeks. He then worked for about a week before a team leader approached him at the work site and told him he was not needed.

The employee claimed that the employer sought an unlawful premium and that he was unjustifiably dismissed. The director denied that it sought or received a premium and denied dismissing the employee. The employer and director claimed the employee was given work as soon as the next project was available and that the employee abandoned the job because he was inadequate. The employee claimed he was working on house framing, which was not that similar to his previous work, but no concerns were raised about his work.

The Employment Relations Authority (Authority) concluded that the director and employer sought a premium for employment, contrary to section 12A(1) of the Wages Protection Act 1983(external link). It said on the evidence the business consultancy agreement disguised the real nature of the arrangements (see paragraphs 92–94). It said that while the arrangement and payments took place in Singapore there was enough of a connection with New Zealand for the arrangement to be covered by the Wages Protection Act (see paragraphs 95, 96).

The Authority found the employee was unjustifiably dismissed (see paragraph 120). It said that if the employer had performance concerns it was obliged to put those to the employee and to assist him and give him a chance to improve, rather than immediately dismissing him (see paragraph 119).
The Authority ordered the employer to pay (see paragraph 137):

• a $10,000 penalty for unlawfully seeking a premium
• 13 weeks’ lost wages ($13,035.20 gross)
• $17,000 compensation for the distress caused by the unjustified dismissal
• $123.25 gross in holiday pay.

The Authority ordered the director to pay a $6,000 penalty for his involvement in unlawfully seeking a premium (see paragraphs 80 and 138).

Zhou v 6 Meter Homes Ltd [2025] NZERA 22(external link)