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Cases of interest 2016
A summary of interesting or topical employment cases.
January 2016
Employment Court - Interpretation of cl 12A of Sch 2 of the Employment Relations Act - Meaning of frivolous
The Employment Relations Authority dismissed part of the employee’s claim on the basis it was frivolous per cl 12A of sch 2 of the Employment Relations Act 2000. The Authority found part of the claim referred to allegations already dealt with in a settlement agreement. The Employment Court held that the employee’s challenge raised issues about the scope and proper application of cl 12A. The Court held that only a whole matter rather than a part of a matter can be dismissed under cl 12A: paras [11]-[21]. The Court held there was a distinction between a case which lacked legal merit and one which is frivolous: paras [26] - [35]. A matter is frivolous where it lacks the degree of seriousness required to engage the attention of the Authority: para [37].
The fact the settlement agreement was executed under s 149 (signed by a mediator etc) did not mean it was immune from scrutiny for situations like duress, misrepresentation or inducement: para [44]. It was possible that the settlement agreement was only full and final to the extent of the claims that both parties were aware of at the time they entered into the agreement: para [45]. The employee’s argument that he was duped into signing through the settlement agreement raised issues about the interrelationship between s 238 (no contracting out) and s 149: para [46]. The challenge was allowed.
Lumsden v Skycity Management [2015] NZEmpC 225(external link)
Employment Court - Interpretation of s 33 of the Employment Relations Act 2000 - Whether genuine reason and reasonable grounds to conclude bargaining
The union claimed that the employer acted unlawfully in unilaterally declaring that collective bargaining had concluded. In a preliminary judgment, the Employment Court held that the old version of s 33 of the Employment Relations Act 2000 (before the 6 March 2015 amendments) applied. This section had received little judicial attention. It provided that good faith required a union and employer to conclude a collective agreement unless there was a “genuine reason” based on “reasonable grounds” not to. The employer had withdrawn from bargaining, since it refused on philosophical grounds to negotiate over its remuneration system. The Court examined the meaning of s 33: paras [83] - [97]. It held that the employer’s failure to properly administer its current remuneration system, and an offer it made during bargaining, cast doubt on the genuineness of the employer’s objection to changing its existing remuneration system: paras [135] - [143]. Further, considering that remuneration was fundamental to an employment relationship, refusing to negotiate over it was not a reasonable ground to cease bargaining: paras [147] - [149]. Accordingly, the parties remained in collective bargaining.
FIRST Union Inc v Jacks Hardware and Timber Ltd [2015] NZEmpC 23
Employment Relations Authority - Whether Teachers were appointed according to collective agreement and State Sector Act 1988
Teach First is a post-graduate diploma during which participants are employed in schools for fixed terms. This involves spending some time teaching classes unsupervised. The participants are proffered to the schools who have an opportunity to vet them, but the role is invariably filled by a Teach First participant.
The Employment Relations Authority found that the positons occupied by Teach First participants were ordinary full time teaching positions: para [35] - [43]. Consequently, the relevant collective agreement and the State Sector Act 1988 regulated the appointments to these positions. The positions needed to be advertised and the best person for the job must be appointed. The positions had not been advertised: para [48]. As the Teach First participants were not qualified teachers and other qualified teachers lacked the opportunity to apply for the roles, it was unlikely that the best person would be appointed: para [52]. The Authority rejected the respondent’s attempts to create a new class of employee: para [58]-[61]. The appointments made under the Teach First programme were found to be in breach of the collective agreement and the State Sector Act 1988.
New Zealand Post Primary Teachers' Association v Secretary for Education and Ors [2015] NZERA Wellington 116
Employment Relations Authority - Quantum of awards - Cultural mitigating factor
The employer was penalised for failing to keep proper records. The employer had disposed of records of Bangladeshi workers who were not legally entitled to work in New Zealand. The employer admitted to the breach and the Employment Relations Authority found that it was deliberate: para [32]. However, the employer claimed mitigating factors. The director of the employer company was a Bangladeshi who had been ostracised from the local Bangladeshi community. In order to regain standing, the director felt obliged to employ the Bangladeshi workers and had disposed of the records so that the workers would not get in trouble. The Authority accepted that this cultural imperative would have made it incredibly difficult to refuse the migrants work: para [33]. Although the workers were vulnerable migrants, it was difficult to accept that the workers were exploited: para [29]. The Authority prescribed a $4,000 penalty (cf. to a $10,000 penalty the Authority awarded in a similar case without the cultural factor).
Magill (Labour Inspector) v Rapport Enterprises Ltd [2015] NZERA Auckland 309
European Court of Human Rights - Balance between employee’s right to privacy and employer’s right to surveillance in a disciplinary context
The employee used a Yahoo Messenger (YM) work account for the purpose of responding to clients’ enquiries. The employer’s policy strictly prohibited personal use on company computers. During disciplinary proceedings, the employee maintained he only used YM for professional purposes. The employer produced evidence it gathered from monitoring the YM communications which showed personal use. The employee was dismissed and after unsuccessful claims in the Romanian courts, brought his complaint to the European Court of Human Rights under Article 8 of the European Convention of Human Rights which protects privacy.
The ECHR held that there was nothing to indicate the Romanian courts failed to strike a fair balance between the applicant’s right to privacy and his employer’s interest. The employer acted within its disciplinary powers and only accessed YM in the belief that it contained professional messages: para [57]. The content of the personal messages was used only to the extent that it proved the applicant’s breach and the monitoring was proportionate: paras [58] and [60]. Article 8 was not breached.
Bărbulescu v Romania [2016] ECHR 61(external link)
Supreme Court - Interpretation of s 69ZH(2) of the Employment Relations Act 2000
The Supreme Court rejected leave to appeal the Court of Appeal’s interpretation of s 69ZH(2) of the Employment Relations Act 2000. This provided entitlements to rest breaks. The Supreme Court held that Jetstar’s interpretation of s 69ZH(2) was strained: para [7].
Jetstar Airways Limited v Richard Greenslade[2015] NZSC 187
February 2016
Employment Court – Application for compliance orders regarding re-engagement of employees
Following on from the Employment Court’s earlier decision(external link), which held that the defendant had unlawfully locked out workers and breached its good faith obligations in bargaining, the plaintiff and affected workers sought compliance orders requiring the defendant to re-engage the workers on day shifts in order of seniority. The defendant had placed them on night shifts only until further consideration of the situation. The Employment Court held at [110] that the expired collective agreement required the defendant to re-engage employees on day shifts in order of seniority. The Court at [131]-[132] declined to award compliance orders, preferring to give the defendant a chance to comply with the judgment before making such orders.
Employment Relations Authority – $144,000 in penalties awarded for respondent’s breaches of union access rights
The applicant asserted that the respondent had unreasonably tried to limit its access to the respondent’s work sites. The Employment Relations Authority found that the respondent had required union officials to be accompanied by a manager while on visits, which amounted to unlawful interferences with the applicant’s rights of access. Further, the respondent had acted unlawfully by demanding evidence of union membership before commencing collective bargaining. The Authority awarded a total of $144,000 in penalties to the applicant and made a compliance order requiring the respondent not to unlawfully restrict union access.
Court of Appeal – Appeal dismissed on question of interpretation of s 7A of the Holidays Act 1981
The Court of Appeal held that the Employment Court had correctly interpreted section 7A of the Holidays Act 1981 regarding accrual of days in lieu, although the Employment Court’s decision had been based more on the relevant contract than the section, so it was not a matter for appeal.
New Zealand Aluminium Smelters Ltd v Weller [2016] NZCA 19(external link)
March 2016
Employment court – Religious freedom and atheism
The employee, an atheistic secondary school teacher, refused to participate in school powhiri and assemblies on the ground that they contained religious elements. This resulted in tension between him and the school. After resigning, the teacher claimed constructive dismissal. The Employment Court held that the teacher had entered into a legitimate settlement agreement with the school when resigning and that he had not been dismissed unjustifiably. However, the judgment offered interesting obiter comments on the requirements to participate in religious ceremonies in state schools. The Court noted that, although schools are encouraged to reflect the communities from which their pupils came, this is subject to universal standards including human rights: para [219]. The Court noted that freedom of religion includes a freedom not to practice any religion: para [211]. The Court observed that the teacher’s absence from powhiris and selective absences from aspects of assemblies would not have unreasonably disrupted the school’s activities: para [239]. The school was not justified in requiring the teacher to seek separate permission to be absent from each assembly: para [240].
Roy v Board of Trustees of Tamaki College [2016] NZEmpC 20(external link)
Employment Relations Authority – Racial harassment – Making a connection between employee’s ability with English language and employee’s ethnicity
The employee, a law clerk, claimed that he was racially harassed by the director of the respondent law firm. The director had drawn a link between the employer’s bilingualism and a perceived lack of proficiency in English. The Employment Relations Authority found that there was no evidential foundation for these comments: paras [30]. The comments ignored the fact that the employee had attained a high level of academic literacy and that any grammatical errors were limited and could be attributed to inattention and inexperience: [33] and [34]. The legal test for racial harassment was met: para [37].
Bashir v Ladbrook Law Ltd [2016] NZERA Auckland 73(external link)
Employment Relations Authority – Duty to provide a safe workplace – Employee allegations against colleagues
The employee reported to his manager that two employees were potentially taking drugs during work hours. It was disputed whether it was agreed that the employee’s complaint was to remain confidential. At a meeting, the manager advised all staff that the employee was the source of the allegation. The employee’s fear of retaliatory action was heightened by the fact that a number of his colleagues had a history of violence and imprisonment. The employee resigned and claimed that he had been constructively dismissed. The Employment Relations Authority found that the employer had failed to provide the employee with a safe workplace by placing him in a potentially unsafe situation and then refusing to rectify the situation: para [41]. The employee was constructively dismissed.
Crichton v TD Drilling 2014 Ltd and Anor [2016] NZERA Wellington 28(external link)
April 2016
Supreme court – Leave to appeal denied
The Supreme Court denied leave to appeal the Court of Appeal’s judgment that had dismissed an appeal on whether the Employment Court erred in its interpretation of section 7A of the Holidays Act 1981. The Supreme Court at [10] denied leave to appeal as the Employment Court’s judgment was largely based on interpretation of the relevant contract, rather than the section of the Act. Further, neither the relevant provision of the Act, nor the disputed contract are still in force.
New Zealand Aluminium Smelters Ltd v Weller [2016] NZSC 44(external link)
Court of Appeal – Leave to appeal granted
The Court of Appeal granted leave to appeal against the judgment of the Employment Court on the questions of whether the second respondents were employed on employment agreements of indefinite duration, whether s 82(1)(a)(iv) of the Employment Relations Act 2000 applied even if the second respondents were not employed by the appellant in the off-season, and whether the appellant’s new individual employment agreements failed to comply with s 61(2)(b) of the Employment Relations Act 2000.
May 2016
Court of Appeal – Suppression order – Appeal denied
The employee, a security guard, pleaded guilty to criminal charges of a violent nature. He was discharged without conviction and granted a suppression order on the ground that he was likely to lose his job if publicly convicted. A staff member who attended the trial reported the charges to management. The Court of Appeal upheld the Employment Court’s finding that this was not a breach of the suppression order as the employer had a genuine interest in the information. The duty of good faith obliged the employee to inform his employer about the charges: para [32]. Suppression orders were not intended to prevent employers from being notified of employees’ conduct which raised obvious concerns about their ability to perform their job: para [45]. The Court criticised the grounds under which the suppression order was granted: para [47] - [51]. The employer was legally obliged to ensure the employee could safely carry out his role. It should be for an employer to decide how a prosecution, with or without conviction, might affect the employee’s employment.
ASG v Hayne, Vice-Chancellor of the University of Otago [2016] NZCA 203(external link)
Court of Appeal – Unpaid suspension - Leave to appeal denied
The employee, a bus driver, was twice accused of indecent assault while on the job. Neither allegation resulted in a conviction. The Employment Court had held the employer’s disciplinary process was fundamentally flawed and that the employer was not entitled to suspend the employer without pay in the absence of an applicable provision in the employment agreement or workplace policy. The employer applied for leave to appeal to the Court of Appeal, arguing in part that it should not have to pay reimbursement for lost wages during the period of the unpaid suspension. The employer’s reasoning was that since the employee’s passenger licence had been cancelled he was unable to perform his job during the suspension period. The Court distinguished Miles v Wakefield Metropolitan District Council [1987] UKHL 15; [1987] AC 539 (HL) on the grounds that the employee had not refused to work and the employee was suspended before his licence was cancelled: para [11]. Leave to appeal was denied.
Ritchies Transport Holdings Ltd v Merrennage [2016] NZCA 191(external link)
Employment Relations Authority - Interpretation of collective agreement - Annualisation of pay
The parties’ collective agreement provided for the annualisation of income to accommodate school support staff who would otherwise go unwaged during school closedown periods. Due to a calendar quirk, the year at issue had 27 pay periods rather than the ordinary 26. To adjust for this, the employer proposed to reduce the school support staff’s annualised pay by 3.7 percent for each pay period. The Employment Relations Authority found that the collective agreement required that pay was annualised over a period of 12 months and that annualisation over a longer period (i.e. 27 pay periods) could not be imposed unilaterally: para [30]-[31]. The parties were directed to mediation in order to attempt to reach an agreement as to how to resolve the issues raised by the calendar quirk.
Te Riu Roa v Secretary for Education [2016] NZERA Wellington 50(external link)
Employment Relations Authority – Unjustified dismissal – Discrimination on grounds of age and disability
The employer admitted that it had dismissed the employee in part because of the employee’s reaction when the employee lost personal property at work. The employee had told the employer that he suffered from Asperger Syndrome, which may have influenced his reaction to the lost property. The employer also told the employee that his employment was terminated because it required someone in their 40s who would be more stable. The Employment Relations Authority found that in dismissing the employee the employer had relied on reasons based on the discriminatory grounds of age and disability: para [96] and [100].
Wang v New World Market Ltd [2016] NZERA Auckland 124(external link)
June 2016
Employment Court – 90 day trial periods
The plaintiff sought to invoke a 90 day trial period clause to prevent the defendant from bringing a personal grievance, but could not produce a signed copy of the employment agreement. The Employment Court held at [15] that it was satisfied that the defendant had been given an employment agreement containing a 90 day trial period, even if a signed copy had not been produced in evidence. The Court stated at [22] “the mere fact that a written agreement cannot be produced is not the start and finish of the inquiry”.
Modern Transport Engineers (2002) Ltd [2016] NZEmpC 68(external link)
Employment Relations Authority – Removal to Employment Court granted
The parties had entered into a deed of settlement, not made under s 149 of the Employment Relations Act 2000, under which they agreed that the respondent’s employment would terminate. The applicant then sought to bring claims against the respondent, arising out of the respondent’s employment. The applicant claimed that since it was not aware of the breaches at the time of signing the deed of settlement, the deed did not prevent it from bringing the claims. The respondent also sought to bring a counterclaim, alleging breaches of the deed of settlement by the applicant. The applicant argued that the respondent was barred from making this claim in the employment jurisdiction, since it related to post-employment obligations. The Employment Relations Authority found that there were important questions of law to be heard regarding the enforceability of the deed of settlement, and whether the respondent could raise his claims in the Authority. There was also a public interest in having the case heard by the Employment Court, as there was intense media scrutiny surrounding the dispute. The case was removed to the Employment Court.
Kaipara District Council v McKerchar [2016] NZERA Auckland 203(external link)
Court of Appeal – Leave to appeal granted
The Court of Appeal granted leave to appeal on what a Labour Inspector must prove to establish that any officer, director, or agent of a company has directed or authorised a default in payment of minimum wages and/or holiday pay, under s 234(2) of the Employment Relations Act 2000.
Brill v Labour Inspector (Macrury) [2016] NZCA 262(external link)
July 2016
Leave to Appeal - s 214 of the Employment Relations Act 2000
The appellant union’s collective agreement with the employer provided that if the employer entered into a collective agreement with any other union which had more favourable terms, then that agreement would pass on to appellant union members. The parties disputed the application of this clause. The Court of Appeal held that it had the jurisdiction to hear an appeal on the matter under s 214 of the Employment Relations Act 2000 because it determined that the Employment Court had misapplied the principles of contractual interpretation. The Supreme Court granted leave to appeal on the question of whether the Court of Appeal should have dismissed the appeal for lack of jurisdiction.
Employment Court - Interparty disclosure - Reg 39(2) of the Employment Court Regulations 2000
The employer claimed that its employees engaged in unlawful strike action. An issue arose over the application of reg 39(2) of the Employment Court Regulations 2000. This provides penalty proceedings are excluded from the disclosure regime provided by regs 40-52. The employer had claimed various remedies including that a penalty be imposed. The Employment Court held that reg 39(2) does not prohibit document disclosure per se in cases where the proceedings include a penalty claim. It will be for the Court to determine whether the disclosure of documents will infringe the common law privilege against self-incrimination. The Court confirmed that there was such a privilege in the context of proceedings for civil penalties (see paras 28-32). Relying on its powers under ss 189 and 221(d) of the Employment Relations Act 2000, the Court directed the defendants to disclose the general nature of the relevant documents and confirm whether they asserted privilege against self-incrimination or any other recognised classes of privilege.
Employment Relations Authority - Constructive dismissal - Transgender employee’s decision to transition
The employee, a transgender woman, worked as a hairdresser. The Employment Relations Authority found that the employee was constructively dismissed after she told her employer that she decided to transition to a woman. The Authority found that the employer had told the employee that the transition would make clients uncomfortable, that it would raise ‘safety concerns’ in the workplace because of likely adverse comments from clients, and that her transition was not on brand or inconsistent with the brand message of the business (see para 29). The way in which the employer dealt with the employee’s disclosure of her transition amounted to a fundamental breach of trust and confidence (see paras 30-31). The employer approached the situation with a pre-determined view that the employee’s decision to transition did not suit the business and the employee did not have a fair or reasonable opportunity to talk through the issues. When the employee told her employer that she was unable to continue acting as a man to attend work, the employer asked her if she wanted to resign. This effectively gave the employee no choice but to leave work immediately (see para 36). The employee was awarded $11,000 compensation under s 123(1)(c)(i).
Hemmingson v Swan t/a Barker’s Groom Room [2016] NZERA Auckland(external link)
Removal to Employment Court - Interrelationship between ss 149 and 238 of the Employment Relations Act 2000
The employee claimed that the employer had breached its obligation of good faith by inducing him to sign a settlement agreement, which it then breached. The employer argued that s 149 applied which restricted a party’s ability to revisit a settlement agreement. The employee argued that s 149 must be read subject to s 238 which prohibits contracting out of the Employment Relations Act 2000. The Employment Relations Authority found that this was a matter which involved an important question of law in respect of the relationship between ss 149 and 238 (see para 19). The matter was removed to the Employment Court.
Lumsden v Skycity Management Ltd [2016] NZERA Auckland 242(external link)
Removal to Employment Court - Duty of good faith in relation to online publications outside context of collective bargaining
The employer claimed that the union breached the duty of good faith through a series of postings on a union website and on Twitter. The Employment Relations Authority found that there were two important questions of law giving rise to grounds for removal to the Employment Court (see para 49). First, whether the duty of good faith applied to publications made by unions which were not connected any of the matters listed in s 4(4) of the Employment Relations Act 2000. Second, whether the union owed a duty of good faith under s 32 of the Employment Relations Act in respect of publications that are not directly connected to bargaining but are made while bargaining is still being undertaken. The matter was removed to the Employment Court.
August 2016
Court of Appeal – Whether respondent a “homeworker” – Appeal granted
The respondent, a relief carer for a government Carer Support Scheme, argued that she was a homeworker within the meaning of s 5(external link) of the Employment Relations Act 2000. A Full Court of the Employment Court(external link) had previously held that she was a “homeworker”.
The Court of Appeal held that the respondent was not “engaged” by the appellants for the purposes of s 5 (see para 37). The appellants had no role in selecting relief carers for the scheme, nor did they make any arrangements for the care to take place. That was the role of the full time carer. The relief carer did not have a relationship with the appellants prior to or while undertaking the care work (see para 26). The appellants simply provided funding and “to hold that third party funding amounts to engagement would be to stray so far from the natural and ordinary meaning of the word “engage” as to ignore it” (para 31). The Court held that if the respondent were engaged by anyone, it would be the full time carer, but then she would not fall under the definition of a “homeworker” (para 28).
The Court allowed the appeal and overturned the Employment Court’s decision that the respondent was a “homeworker”.
Employment Court – Contractual interpretation – Annualisation of pay
The parties were involved in a dispute over the interpretation of clauses in their collective agreement concerning “annualisation” of pay, and whether it should be paid over 27 pay periods rather than 26.
The Employment Court held that the collective agreement required the plaintiff to pay employees annualised pay over 26 pay periods instead of 27 (see para 72). The parties were directed to discuss further how to implement annualisation agreements, with leave reserved to seek further directions if necessary.
Employment Relations Authority – Removal to Employment Court
Two of the applicants sought to have their claims removed to the Employment Court. They claimed that there was an important question of law to be heard on:
whether an employer can rely on the words “unless the context otherwise requires” in the definition of “gross earnings” in s 14(external link) of the Holidays Act 2003 to exclude commission payments (or other contractual payments) when calculating employees’ gross earnings for the purpose of annual holiday pay [see para 15]
The Employment Relations Authority considered that there was an important question of law to be heard, as the phrase had not yet been the subject of judicial scrutiny in the context of that section. Further the problem had a potentially wider application than just to the specific factual situation of the applicants. The claims were removed.
Weir v Corporate Consumables Ltd [2016] NZERA Wellington 88(external link)
Employment Relations Authority – 90 day trial
This is one of four virtually identical determinations concerning the same employer and the same issues. The others are Du Plooy v Lighthouse ECE Ltd [2016] NZERA Auckland 282(external link), Baxter v Lighthouse ECE Ltd [2016] NZERA Auckland 283(external link) and Honey v Lighthouse ECE Ltd [2016] NZERA Auckland 284(external link).
The relevant employment agreements contained a 90 day trial period, where the commencement date of employment was set out in a schedule to the employment agreement. The trial period clause itself did not state when the trial period would begin. The parties disputed whether the trial period clause met the requirements of section 67A(2)(a)(external link) of the Employment Relations Act 2000. The respondent argued that it was clear that the parties intended for the trial period to begin at the commencement of employment.
The Employment Relations Authority found that it was not reasonably implied that the trial period would start on the first day of employment (see para 17). The trial period clause did not refer to the date of commencement of the trial period, nor did it cross reference to the date set out in the schedule to the employment agreement. The Authority applied a strict interpretation of section 67A, in accordance with the Employment Court’s decision in Smith v Stokes Valley Pharmacy [2010] NZEmpC 111(external link). It found that the trial period clause did not meet the requirements of the section (see para 25-26) because the applicant was not advised of the start date of the trial period. The respondent could not rely on the trial period clause.
Clark v Lighthouse ECE Ltd [2016] NZERA Auckland 281(external link)
Supreme Court – Suppression order – Leave to appeal granted
The Supreme Court granted leave to appeal the Court of Appeal’s decision in ASG v Hayne [2016] NZCA 203(external link) on the questions of:
Whether the disclosure of information to the respondent regarding the criminal proceedings faced by the applicant breached s 200(external link) of the Criminal Procedure Act 2011; and
If so, whether the respondent could rely on and use the information in relation to the applicant
ASG v Hayne, Vice-Chancellor of the University of Otago [2016] NZSC 108(external link)
September 2016
Court of Appeal - Procedural fairness - Appeal granted
The employee, a pilot, was dismissed following allegations that he sexually harassed a flight attendant. The Employment Court held that the employer’s investigation was procedurally flawed because the employer had scrutinised the employee’s account of the incident more vigorously than that of the flight attendant and other witnesses.
The Court of Appeal held that the Employment Court had erred in its application of the law. The employer did not need to question each witness in the same way and to the same level of detail. This approach would be inconsistent with the s 103A(2)(external link) test which asks what a fair and reasonable employer could have done in the circumstances (see para 37). Instead, the degree of scrutiny which should be levelled at each witness depended on the circumstances of the case.
In this case there were clear doubts about the employee’s explanation of events and so the employer was entitled to structure its investigation around these doubts (see para 38). On the other hand, there was no reason to doubt the reliability of the flight attendant’s and other witnesses’ account of the events and so a different approach was warranted (see para 48 and 51).
The appeal was allowed.
Employment Court - Meaning of ‘union meeting’ - Standard of proof in respect of penalty claims made alongside damages claim
The union notified the employer that its members would be attending union meetings. The union members then gathered at the appointed time and picketed and protested outside the employer’s head office and places of work.
The parties disputed whether this action amounted to an unlawful strike. The Employment Court set out a definition of ‘union meeting’ for the purpose of s 26(external link) of the Employment Relations Act 2000 and found that the union members’ activity did not fit this definition (see para 54-56). Instead, the union members’ activity was held to be an unlawful strike (see para 57-59).
The employer sought both penalties for the unlawful strike and damages for the wages it paid employees during the strike. The Court considered what standard of proof should apply in respect of penalty claims when made alongside a damages claim. The Court held that a heightened civil standard of proof should apply to penalties in this situation. In practice, this required “convincing evidence of the probability of a defendant’s breach” (see para 98). As an ordinary balance of probabilities standard applied to the claim for damages, the Court acknowledged that different standards of proof might apply to the same conduct where both damages and penalties are sought for the same breach (see para 99).
Radius Residential Care Ltd v The NZ Nurses Organisation Inc [2016] NZEmpC 112(external link)
Employment Court - Whether remuneration lost during lockout period claim for unlawful deduction or claim for damages
The employer had previously been found to have illegally locked out a number of union members. This case addressed preliminary issues including whether a claim for lost remuneration during the lockout periods should be framed as a claim for ‘wages’ under the Wages Protection Act 1983 or as a claim for damages. The lockout period occurred during the off-season and continued into the on-season when the union members had a right to be re-engaged.
The Employment Court held that the loss suffered was not a ‘failure to re-engage’ nor could it be classified as a loss of opportunity (see para 24-25). The Court held that the union members would have been paid for the performance of work but for the illegal lockout (see para 28). Consequently, the failure to pay these wages was an unlawful deduction recoverable under the Wages Protection Act (see para 28).
New Zealand Meat Workers & Related Trades Union Inc v AFFCO New Zealand Limited [2016] NZEmpC 117(external link)
Employment Court - Application of s 40 of Holidays Act 2003
The employees were previously employed by the second defendant. The second defendant sold the business to the first defendant. The employees’ employment ended and they were subsequently employed by the first defendant under the same terms.
An issue arose over whether s 40(external link) of the Holidays Act 2003 applied in this context. It provides that an employee is entitled to payment for any public holiday which would have occurred during any annual leave owing at the end of employment.
The Employment Court held that the purpose of s 40 is to ensure the integrity of an employee’s annual leave entitlement without compromising any other leave entitlements (see para 51). Consequently, if the elements of s 40(external link) were made out, the employees were entitled to payment for any public holiday even though the new employer was also required to pay the employees for the same public holiday (see para 51).
It was held that s 40 applied in this context.
The Pulp & Paper Industry Council v Oji Fibre Solutions Ltd [2016] NZEmpC 113(external link)
Employment Relations Authority – Removal to Employment Court
The employer was contracted by the Department of Corrections to manage a prison. The employee worked as the prison director. His employment was terminated following the intervention of the Department into the employer’s management of the prison. The employee argued that the respondent failed to disclose relevant information prior to removing him from his positon.
The Employment Relations Authority removed the matter to the Employment Court. There was an important question of law regarding the scope of s 4(1B)(c)(external link) which provides exceptions to when an employer needs to disclose information to an employee (see para 34). Further, an important question of law arose around whether this was a public/private partnership and, if so, what the impact of the Department’s actions were (see para 39). Finally, an important question could arise as to the relationship between s 199(2)(external link) of the Corrections Act 2004 and s 238(external link) of the Employment Relations Act 2000 (see para 42).
The Pulp & Paper Industry Council v Oji Fibre Solutions Ltd [2016] NZEmpC 113(external link)
Employment Relations Authority – Removal to Employment Court
The applicants claimed to be employees of the Salvation Army while undertaking training in order to become Officers of the Army. The Salvation Army claimed that no contractual relationship existed between the parties.
The Employment Relations Authority removed the matter to the Employment Court. There was an important question of law regarding whether or not the parties were in an employment relationship during the training (see para 16).
Below v The Salvation Army New Zealand Trust [2016] NZERA Wellington 111
Employment Relations Authority – Removal to Employment Court
The applicant alleged that the respondent, an ex-employee, breached a s 149(3)(external link) settlement agreement by using the applicant’s confidential information in his new business venture. The settlement agreement provided that in the event of a material breach the respondent would have to transfer his remaining stock to the applicant for one dollar.
The Employment Relations Authority removed the matter to the Employment Court. There was an important question of law regarding whether s 149(3)(external link) of the Employment Relations Act 2000 prevented the respondent from claiming that the clause in the mediated settlement was a penalty clause and therefore unenforceable (see para 34).
8i Corporation v Marino [2016] NZERA Auckland 312(external link)
October 2016
Court of Appeal - Continuity of seasonal employment - Lockout of seasonal employees
The union members were seasonal workers employed under a collective agreement. During the off-season the workers were not paid and were free to work elsewhere, although the employer was obliged to re-engage workers according to seniority at the start of the new season. The union alleged an unlawful lockout took place when the employer refused to re-engage workers unless they signed individual employment agreements.
The Employment Court had held that there was a continuous employment relationship which endured through the off-season and consequently the seasonal workers had been locked out. The Court of Appeal held this approach erred in its interpretation of the applicable collective agreement. There was an established line of case law which held that seasonal employment in the meat industry does not continue throughout the off-season. The parties should have been assumed to have bargained for the collective agreement on this understanding of the law (see para 38). There would need to be clear evidence of the parties’ intention to depart from this industry standard (see para 49). On the facts, no such intention could be ascertained. The employment was not continuous throughout the off-season (see para 54).
However, the Court of Appeal held the employer unlawfully locked out the workers despite the lack of an employment relationship during the off-season. Although s 82(external link) applies only to ‘employees’, the context required that the default definition of ‘employee’ in s 6(external link) was departed from (see para 58-67). The seasonal workers were owed ongoing and enforceable contractual rights which endured through the off-season. The employer’s conduct effectively defeated these rights and took advantage of the inherent inequality of the employer’s relationship with seasonal workers. The meaning of lockout in s 82(external link) was held to extend to where an employer refuses or fails to engage seasonal workers for any work for which it would usually engage them, where it is done with the purpose of compelling them to accept its terms of employment (see para 71).
Link to case(external link)
Court of Appeal - Fine for non-compliance of monetary compliance order
The employer had failed to comply with a compliance order issued by the Employment Relations Authority requiring the payment of outstanding holiday pay. The Employment Court had issued a fine under s 140(6)(external link) of the Employment Relations Act 2000 in response to this failure to comply. By the time of the hearing the employer had complied and paid the sum to the employee.
The Employment Court confirmed that there was jurisdiction under s 140(6)(external link) to impose a fine for non-compliance where the underlying order was for a monetary payment (see para 50-55). However, this power was to be exercised sparingly. The Court of Appeal set out some relevant factors when measuring the amount of the fine (see para 76). The wording of s 140(6)(external link) did not prevent a fine from being imposed even where compliance had been achieved, although it was a factor in measuring the amount (see para 77).
The Court of Appeal reduced the amount of the fine awarded by the Employment Court on the grounds that the compliance had been achieved, the sum involved was modest and the employer was financially unsound (see para 78).
Court of Appeal - Rate of pay for paid rest breaks
The parties disputed the meaning of the phrase ‘paid rest breaks’ in s 69ZD(external link) of the Employment Relations Act 2000. The employer claimed that it was not bound to pay rest breaks at the ordinary work rate; rather it was open to the parties to agree a special rate.
The Court of Appeal upheld the Employment Court’s decision that paid rest breaks must be paid at the same rate for which the employee would be paid for work. The parties were not permitted to contract out of this entitlement (see para 16).
Link to case(external link)
November 2016
Court of Appeal – Age discrimination – Whether Employment Relations Act 2000 applied
The respondents were two pilots whose employment agreements required them to retire from service at 55 years old. They argued that the laws of New Zealand prevented this, although the employment agreements were stated to be subject to the law of Hong Kong. The Court of Appeal considered whether the Employment Relations Act 2000 applied to override the parties’ agreement that Hong Kong law applied to the employment agreements, and if not, whether the application of Hong Kong law would be contrary to public policy.
The Court of Appeal held that the parties’ choice of law clause was of “decisive significance” (see para 58) and that s 238 could not operate to override this agreement. The Court stated that “[s]ection 238 does not of itself justify the wholesale replacement of carefully drafted transnational bargains with New Zealand’s employment regime, even if a court considers the domestic protections more advanced or attractive than those under the foreign law of contract” (see para 57). The law of Hong Kong was the proper law of the contract.
The public policy exception also did not apply, since the Court did not consider the prohibition on forced retirement under 65 to be an “absolute value that must trump transnational contracting” (see para 74). Further, the absence of such a protection would not “shock the conscience of a reasonable New Zealander” (see para 83). The Court also took into account the advantages that the pilots received from having the law of Hong Kong apply to their employment, such as favourable tax rates (see para 77), and held that there was no reason to use the exception to defeat the parties’ private bargaining intentions.
The appeal was allowed.
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Employment Court – Approach to imposition of penalties for minimum standards
A Full Court of the Employment Court set out guidance about how the Employment Relations Authority should approach penalties, especially where multiple breaches of minimum employment standards are involved.
The Court examined the legislative history of penalties in employment law, the objectives of such penalties, and how comparable jurisdictions treat penalties. The Court adopted a “framework which will be transparent and predictable but still also allow to be taken into account relevant case-specific factors” (see para 137). The steps to be followed when fixing penalty amounts are as set out below in paragraph 151 of the judgment:
Step 1: Identify the nature and number of statutory breaches. Identify each one separately. Identify the maximum penalty available for each penalisable breach. Consider whether global penalties should apply, whether at all or at some stages of this stepped approach.
Step 2: Assess the severity of the breach in each case to establish a provisional penalties starting point. Consider both aggravating and mitigating features.
Step 3: Consider the means and ability of the person in breach to pay the provisional penalty arrived at in Step 2.
Step 4: Apply the proportionality or totality test to ensure that the amount of each final penalty is just in all the circumstances.
Link to case(external link)
Employment Court – Extent of obligations to mitigate loss – Whether 100% reduction in remedies allowed
A Full Court of the Employment Court considered to what extent a dismissed employee is required to mitigate their loss, and whether section 124(external link) of the Employment Relations Act 2000 allows a 100% reduction in remedies.
The plaintiff argued that the defendant had not provided sufficient evidence to show that he had tried to find another job after his dismissal. The Court held that, where an employer argues that an employee has not sufficiently mitigated their loss, the employer must prove that the employee acted unreasonably (see para 103). The employee does not have to prove that they acted reasonably, although they must provide evidence of the steps they took to mitigate their loss (see para 104).
The Court also held that s 124 “does not permit complete removal of a previously established remedy”, but the “absence of a remedy in rare cases, notwithstanding the establishing of a personal grievance may be appropriate” (see para 216). In this case, it was not appropriate to have a “nil award of remedies” (see para 228).
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Supreme Court – Leave to appeal granted
The Supreme Court granted leave to appeal the Court of Appeal’s decision(external link) on whether the appellant was a “homeworker” for the purposes of section 5(external link) of the Employment Relations Act 2000 and therefore an employee of the respondents.
Link to case(external link)
Employment Relations Authority – Matter removed to Employment Court
The Employment Relations Authority removed the matter to the Employment Court as it raised important questions of law concerning interpretation of the recently enacted s 67D(external link) of the Employment Relations Act 2000 on availability provisions.
Doran v Carrick Holdings Ltd [2016] NZERA Auckland 371(external link) was removed at the same time as it concerned a similar problem.
Link to case(external link)
December 2016
Employment Court – Meaning of “premium”
A Full Court of the Employment Court discussed the meaning of “premium” as in s 12A of the Wages Protection Act 1983. The employment agreements in question contained a clause allowing the employer to recover the cost of trade testing. This money was deducted from each employee’s wages.
The Court held that a premium involves a situation where “a price is paid either by an employee, or potential employee, or is paid on that person’s behalf to secure employment” (see para 54). However, it could also include situations where an employer recouped, or attempted to recoup “recruitment-related costs or other expenses that would ordinarily be borne by an employer” (see para 54). The Court did note that there would be situations where employers and employees could arrange for the employee to reimburse the employer for “appropriate costs incurred” without it constituting a premium (see para 57).
Link to case(external link)
Employment Relations Authority – Matter removed to Employment Court
The Employment Relations Authority removed the matter to the Employment Court as it raised two important questions of law:
whether provisions of the Minimum Wage Act 1983 apply to fishers at sea for extended periods when not working actively on board; and
whether the Authority and Court have jurisdiction over claims for personal grievances and holiday pay when the workers have been deemed to be employees for the purpose of the Minimum Wage Act 1983 and the Wages Protection Act 1983 under the Fisheries Act 1996.
The Authority also considered that it was likely to be a matter of significant public interest due to the potential to affect other employers in the fishing industry.
Link to case(external link)