Cases of interest 2020

Employment Relations Authority — Personal grievance — Unjustified dismissal — Costs uplift due to conduct of employer

The employee sought to pursue a claim of unjustified dismissal against the employer. The employee made multiple attempts to resolve the matter via mediation. The employee agreed to attend mediation on eight separate occasions; on every occasion the mediation had to be cancelled either because the employer did not respond to communications about the mediation; or, the employer pulled out of the mediation on the day it was scheduled to occur. On three of the eight occasions, the employer did not attend mediation even after the Authority directed the employer to attend.

The employer also failed, twice, to comply with the Authority’s directions to provide employment records and relevant employment information.

The employee was successful in his claims. The Authority found that as the successful party he was entitled to an award of costs against the employer (see para 93).

The Authority increased the notional tariff from $3,000 to $5,000 to reflect that the employer’s conduct unnecessarily increased the employee’s legal costs (see para 97–98).

[PDF link] Pickering v Project Worx 2020 Ltd [2020] NZERA 41 [PDF 335KB]

Employment Relations Authority — Employee status — Whether applicant was an employee or a contractor

The applicant claimed she was employed by the respondent as a telemarketer. Her role was to arrange appointments for technicians to maintain heat pumps. The applicant sought to bring claims of constructive dismissal, wages arrears and breach of good faith against the respondent. The employer claimed the employee could not bring a case in the Authority because she was a contractor and not an employee. 

The Authority applied the test for determining whether someone is an employee or a contractor from the Supreme Court case Bryson v Three Foot Six Ltd [2005] ERNZ 372 (SC). The Authority found the applicant was a contractor. The Authority found:

• At the beginning of the relationship, the parties had a common intention the applicant was to be an independent contractor (see paras 20–33). The employee was able to increase her hourly rate by booking more appointments (see para 23). The original “Telemarketing services agreement” stated the role was commission only and no holiday or sick pay would apply (see para 24). The agreement required the parties to resolve disputes through an independent arbitrator (see para 26).
• The parties later changed to an arrangement where the applicant was paid per confirmed appointment (see para 27–28).
• The applicant had considerable flexibility in when she carried out her work (see paras 33–40).
• The respondent exercised minimal control over the way the applicant conducted her telemarketing work on a day-to-day basis (see para 44).
  The evidence on how integrated the applicant was with the company was indeterminate (see paras 45–52). On the one had the applicant conducted training for new telemarketers for no extra payment; on the other hand, the applicant worked from home and used her own computer and phone and phone account to make calls; and she was paid an extra commission for following up on invoices.
• The applicant claimed expenses such as her phone against her tax liabilities, indicating an independent contractor relationship (see 56–63).The Authority found that, standing back and considering the evidence as a whole, the applicant was engaged and worked as a contractor.
• The Authority found it had no jurisdiction to investigate the claim (see para 66).

[PDF link] Dean v Ravenwood t/a Steven Ravenwood Services [2020] NZERA 38 [PDF 52KB]

Employment Relations Authority – Unjustified Dismissal – Discrimination on the basis of age
The employee was a truck driver for the employer for a short time. He was referred to the transport company by Work and Income New Zealand. An interview was arranged, but later cancelled by the employer, who asked the employee to commence work the next day. The employee was required to undertake a drug test, which he passed, and attend a dangerous goods course. He was advised of the hourly rate and understood there would be at least 40 hours work per week.

Less than a fortnight after the employment commenced, the employer sent a text message to the employee indicating he was in hospital following a truck accident. The employer said he would telephone the employee, but failed to do so. A week later he texted the employee a message saying “9am work”. However, shortly thereafter he texted the following (see para 20):

Sorry wrong message due to work and personal matters with truck being off road and will be looking for a fit young person all the best.

The employer claimed the employee had been undertaking “training work” (see para 31). The Employment Relations Authority (Authority) found there had been an employment relationship and that the employer had dismissed the employee. It held the employer had not acted as a fair and reasonable employer would have done (see para 32). The employee had done nothing to justify a dismissal (see para 33). The Authority found the dismissal was unjustified.

The Human Rights Act 1993(external link) makes it unlawful for an employer to discriminate in employment against a person on the basis of age. Terminating an employee’s employment in circumstances in which other employees would not be terminated constitutes such discrimination (see para 36). The Authority found the employee was discriminated against in his employment on the grounds of his age (see para 38). The employee was awarded $5,000 compensation and two weeks’ wages for the notice period he did not receive when he was dismissed. He was not awarded lost wages as he had been employed elsewhere in the industry since the time of his dismissal.

[PDF link] Morris v Sharda Transport Ltd [2020] NZERA 63 [PDF 91KB]

Employment Relations Authority – Interim Injunction – Restraint of trade

The employee worked for the employer in the food distribution industry for over 17 years. The original company had been acquired by another, who was later acquired by the employer. His most recent employment agreement contained a ‘restraint of trade’ clause. The employee had agreed not to:

… establish, purchase or obtain an interest in, including as an employee, either directly or indirectly any business in relation in any way to the employer within a radius of 100 kilometres, without the express written consent of the employer …

The employee resigned to work for one of the employer’s competitors at a higher rate of pay. The employer considered the employee had breached the non-compete restraint and was likely to share its confidential information. It applied to the Authority for an interim injunction preventing the employee from working for his new employer.

The Authority set out the steps in an interim injunction matter (at paras 21–22):

(1) Is there an arguable case that the employer will succeed in the substantive hearing in showing that the employee is breaching the terms of his employment agreement, and that the clauses are reasonable and enforceable against him?

(2) Where does the balance of convenience lie between the parties? Is there an adequate alternative remedy available to the employer?

(3) Does the overall justice of the case require that an interim injunction be granted?

The Authority found that the employer has an arguable case the employee entered into the employment agreement with knowledge of the restrictive terms. However, it found that when the employer bought the company and offered its existing employees the employment agreements with those terms, it did not provide the employees adequate consideration in exchange (see paras 34–36). The Authority also found that the restraint of trade claim was prohibitively wide and too large in geographical area. The effect was that the employee would be prevented from working in any business in the area and therefore was not reasonable or enforceable as being against public policy (see paras 41–43).

The employer claimed the employee may hold a more senior position in the company at a later date and his knowledge of their confidential information may damage their business (see para 50). The Authority found there was a greater risk of the employee suffering financially and being unable to find work in the area (see paras 52–56). The Authority declined to issue an interim injunction (see para 58).

[PDF Link] Davis Trading Company Ltd v Uelese [2020] NZERA 61 [PDF 273KB]

Employment Court - application to adjourn hearing – COVID-19 travel restrictions prevent defendants from attending hearing – interests of justice require adjournment – adjournment granted
The plaintiff applied for a declaration pursuant to s 6(external link) of the Employment Relations Act 2000(external link) as to whether he was an employee of the defendants. The defendants represent the Uber ridesharing service.

The defendants applied for an adjournment of a three day hearing set down for the week of 25 March 2020 (see para 3). Uber’s sole witness and its representative providing instructions to counsel are both based in Australia. Travel restrictions arising out of COVID-19 prevented both from being present for the hearing (see para 4).

The Court held that even though Audio-Visual Link could have been used to contact the Australian representative and witness, the fact that Uber has effectively no managerial presence in New Zealand meant that the hearing would have no appropriate representative for Uber present in Court (see para 14). The interests of justice therefore required an adjournment to a date as soon after 19 May 2020 as practicable (see para 18).

[PDF Link] Arachchige v Rasier New Zealand Ltd [2020] NZEmpC 35 [PDF 142]

Court of Appeal – application for leave to appeal – franchise arrangement – unjustifiable dismissal
The applicant owns the Denny’s restaurant business in New Zealand (Denny’s). The respondent had worked for Denny’s, and had been exploring with Denny’s ways to set up his own restaurant and leave his employment. United States representatives of Denny’s sent the employee a dismissal letter. The employee brought a personal grievance for unjustifiable dismissal. The Employment Court found in favour of the employee and rejected Denny’s counterclaim. The Court of Appeal declined leave to appeal (see para 20).

Importantly, this leave judgment of the Court of Appeal confirms the following points:

• The first three questions of law related to reimbursing the employee for costs incurred in defending criminal charges related to the employment relationship problem. The Court found that:
  • The need for an accounting exercise to trace events before the personal grievance does not mean that these benefits would be precluded by s 123(1)(c)(ii)(external link). If benefits lost are not continuations of existing benefits such as remuneration, they fall within the scope of the section (at para 16).
  • Awarding reimbursement of legal costs where they were not pleaded by the employee is not an issue because the issue was included in the employer’s counterclaim (at para 17).
• The other two points of appeal were factual points and not points of law (at paras 18 and 19).

[PDF Link] Rappongi Excursions Ltd v Fernandez [2020] NZCA 37 [PDF 142KB](external link)

Employment Court – jurisdiction – contractor or employee – abuse of process – claim in Disputes Tribunal already determined

The plaintiff was a contractor on a building site at Auckland Airport. The defendants were contractors on the site as well. The plaintiff invoiced his hours worked through a company E. Clean NZ Ltd, whose sole director and shareholder was the plaintiff. The first defendant paid the invoices prior to 1 April 2017, and then the second defendant paid the invoices thereafter.

The employment relationship problem arose when $18,783.76 (including GST) worth of invoices were unpaid. By 21 September 2017, $7,475 was outstanding. The plaintiff at this point claimed he was an employee of the defendants. Being unsuccessful in the Employment Relations Authority, the plaintiff made a claim in the Disputes Tribunal as E. Clean Ltd against the second defendant (PASMR (NZ) PTY Ltd). The Disputes Tribunal found in favour of E. Clean NZ Ltd (see para 15).

The Court held that it would be an abuse of process to allow the plaintiff to pursue his claim against the second defendant, due to the doctrine of res judicata, preventing a party already subject to a final judgment from bringing subsequent proceedings about matters already determined (see para 18). The Court also emphasised that the doctrine applied to the plaintiff, because he has such a connection to E. Clean NZ Ltd (the party in the Disputes Tribunal) that the previous judgment should also bind him: the plaintiff has clear mutuality of interest and is the sole director and shareholder of E. Clean NZ Ltd (see para 19).

The Court however held that the claim against the first defendant was not barred and found against the plaintiff on the facts (see paras 37 and 38).

[PDF Link] Sexton v Lowe [2020] NZEmpC 25 [PDF 300KB]

Employment Court – Employment status – Family businesses – Whether family member helping with business is an employee

The plaintiff helped out in an agistment business operating out of a farm property owned by his son and daughter-in-law. The parties all lived together on the property from which the agistment business was run.  The son and daughter-in-law worked professionally elsewhere, outside of the business. The son and daughter-in-law provided the plaintiff and his wife with free accommodation and other support, including a car, power and internet. The plaintiff was not explicitly paid for his work in the business. The business generated minimal income and was not economically successful. 

After the relationship between the plaintiff and his son and daughter-in-law broke down, the plaintiff raised a personal grievance in the Authority, claiming he should have been paid for his work in the agistment business. The Employment Relations Authority (the Authority) found he was not an employee and so had no standing to bring a claim; the Authority found the relationship between the plaintiff and his son and daughter-in-law was more in the nature of a family partnership. 

The Employment Court (the Court) affirmed the determination of the Authority that the plaintiff was not in an employee/employer relationship. In coming to this decision, the Court took into account the following factors:

• the business arrangement was always based on their familial relationship (see para 39);
• the business arrangement was beneficial to the lifestyle of all family members (see para 40);
• the plaintiff’s son did not exercise control over the plaintiff in the way an employer would (see paras 44 and 45);
• for the first seven years the business was in operation there was never a suggestion that the arrangement was anything other than a family arrangement (see para 47).

[PDF link]Dillon v Tullycrine Ltd [2020] NZEmpC 52 [PDF 280KB]

Employment Court – Unjustified dismissal – Redundancy – Compensation under s 123(1)(c)(i) – Assessing quantum – Whether financial circumstances of company relevant 

The employee was dismissed for redundancy. The Authority found the dismissal was substantively justified, but the employer had used an unjustified process to carry out the redundancy. The Authority awarded the employee $15,000 under s 123(1)(c)(i)(external link) of the Employment Relations Act 2000 (the Act) for distress caused by the redundancy process. The employer challenged the award of $15,000 on the basis the Authority wrongly disregarded the financial circumstances of the employer. 

The Court found that the financial circumstances of the employer should not be taken into account when assessing the amount of compensation to award under s 123(1)(c)(i)(external link). In coming to that decision the Court took into account that s 123(external link) provides a mechanism for an employer to pay in instalments if the employer’s financial situation requires it. The Court held that given the provision of a mechanism for paying by instalments, “a broader, unspecified mechanism should not be read into [the section]” (see paras 26–28).

The Court found this was reinforced by s 124(external link) which expressly enables the Court to reduce an award where the employee has contributed to a personal grievance and s 133A(external link) which enables the Court to take an employer’s ability to pay into account in setting a penalty. The Court concluded if Parliament had intended the Court to take into account the financial circumstances of the employer in assessing the quantum of compensation “it likely would have said so” (see para 29). The Court also considered that allowing compensation to be reduced due to the financial circumstances of the employer would be contrary to the purpose of s 123(external link), which is to remedy a breach (see para 32). 

[PDF Link] Innovative Landscapes (2015) Ltd v Popkin [2020] NZEmpC 40 [PDF 400KB]

Employment Court – Failure to provide safe workplace – Remedies – Whether Authority should have awarded remedies for both breach of contract and unjustified disadvantage

The employee took medical retirement from his job as a corrections officer, after he was assaulted at work and became unable to work. After leaving work, the employee was diagnosed as suffering from PTSD and depression due to the assault.  The employee claimed in the Authority that he was unjustifiably disadvantaged when his employer failed to take all reasonable steps to provide a safe workplace; and that he was unjustifiably dismissed when he took medical retirement. The employee also sought damages for breach of contract in relation to the same facts. 

The Authority found the employee was unjustifiably disadvantaged by the failure to provide a safe workplace, but was not unjustifiably dismissed. The Authority awarded the employee $30,000 for humiliation, loss of dignity and injury to his feelings under the s 123(1)(c)(i)(external link) of the Act for the disadvantage claim, but did not make a separate assessment of damages for breach of contract. 

The Court found the Authority erred at law “by not separately calculating and quantifying the amount of damages for breach of contract and the personal grievance claim” (see paras 63 and 89). The Court found the Authority could have followed the approach in Davis v Portage Licensing Trust(external link) [2006] ERNZ 268 (EmpC) (Davis), in which the Court assessed damages for breach of contract; then assessed compensation for a personal grievance in relation to the same facts; and then finally made an overall judgment as to the amount of compensation warranted (see para 63).

Applying the approach in Davis, the Court assessed damages for breach of contract at $65,000. It then considered an award of $30,000 would be justified for the personal grievance arising from the same conduct. The Court held that, making an overall judgment, an award for the personal grievance was not required, “because [the $30,000] is effectively subsumed into the contractual damages” (see paras 68 and 90). The Court ordered the employer to pay the employee $65,000 damages for breach of contract (see para 90).  

[PDF link] JCE v Department of Corrections [2020] NZEmpC 46 [PDF 320KB]

Employment Court – courier driver – employee or contractor – English as a second language – declaration – jurisdiction
The Employment Court declared that Mr Leota, who worked for the courier company Parcel Express Ltd, was an employee throughout his time working there, and not an independent contractor. The judgment only decided what Mr Leota’s employment status was, and does not find that all courier drivers in New Zealand are employees (see paragraph 4).

Mr Leota had connected with the company through his church. The company told him that he would need to buy his own van, pay $2000 to get company signwriting on the van, and pay a $2,000 bond. He was told he would be his own boss and would need to sign a contract. Mr Leota spoke English as a second language and the Court found that it was likely that he was neither provided a copy of the contract, nor a chance to read and seek advice on it, before being asked to sign, and had no real understanding of what his status was when working for the company (see paras 16–18).

The Court found that despite being described as being his own boss, he exercised no real autonomy over his work with the company (see para 50). The company provided evidence that he had opportunity to learn about managing taxes and take time off as he pleased, but the Court found this was factually not the case since the company restricted his days off to 20 days per year and required him to find replacement workers (see para 52). It also found that the fact that independent contracting is an industry standard practice in the courier industry was not conclusive.  Additionally, Mr Leota, being a vulnerable worker with English as a second language, would probably not have known about this industry standard practice (see para 59).

The evidence suggested to the Court that Mr Leota had not been running his own business and was solely in the business of Parcel Express (see para 71). Factors pointing towards this finding included the following:

• Mr Leota was not free to grow his supposed business, because his working hours were all spent doing work Parcel Express provided. The company retained customer lists and goodwill when he left. Mr Leota was required to refer any potential customers to the company’s sales manager (see para 61).
• Mr Leota never earned more than his guaranteed daily rate. The way that the relationship operated, it was unrealistic for him to be able to increase his earnings (see paras 63–66).
  The fact that Mr Leota owned his own van was found to be at best a factor pointing neither towards him being an employee or a contractor (see para 69).
• Mr Leota was required to provide personal service. He was required to find substitute drivers when he took leave and the company had to approve the substitute, which the Court found was for the purposes of protecting its own business (see para 70).

The Court concluded that Mr Leota was an employee of the company and not a contractor, finding the documentation stating that he was a contractor to be less relevant than evidence about the actual work relationship (see para 72).

Leota v Parcel Express Ltd [2020] NZEmpC 61 [PDF 464KB]

Employment Court – Employee status – Whether taxi drivers were employees or contractors - Director’s liability to pay employees outstanding entitlements

Southern Taxis Ltd operated a taxi business.  It ceased operating in 2016.   The company employed dispatchers as employees.  It engaged owner-drivers as contractors.  The workers who drove taxis belonging to the company in exchange for 40% of the fares were considered “commission drivers”.  The three questions before the Employment Court (Court) were:

• Were the commission drivers employees?
• If so, what arrears were owed by the company to those persons?
• Should the directors be personally liable for those payments, given the financial circumstances of the company?

The Court found that the commission drivers were employees and not contractors (see para 124).  The employers had deducted PAYE from their wages in response to communication from Inland Revenue and there was no evidence the employees were in business on their own account (see paras 105–106); the employees maintained logbooks showing their hours of work, they were required to wear stipulated clothing and their working arrangements were proscribed (see paras 91–93).

The Court accepted the Labour Inspector’s calculation of the outstanding monies.  The drivers were owed $79,867.78 in minimum wage arrears, holiday pay, rest break entitlements and unlawful deductions (see para 145).

The Court found that the directors of the company could not be held personally liable for the arrears due to their genuine, though mistaken, belief the commission drivers were not employees.  There was no evidence that they knew the commission drivers were employees and knowingly breached their employment standards (see paras 171–172).  The evidence before the Court was that the company would be unable to pay the arrears (see para 150).

Southern taxis Ltd v Labour Inspector [2020] NZEmpC 63 [PDF 520KB]

Employment Court – Calculation of remuneration for Public Holidays – Holidays Act 2003 – Relevant Daily Pay – Average Daily Pay
The salespeople employees received a base salary as well as a monthly commission based on the number of vehicles they sold.  The workplace did not open on public holidays.  The employer calculated the employees’ public holiday (not worked) pay on their Relevant Daily Pay (RDP).  However, it calculated the employees’ pay on alternative holidays, sick leave and bereavement leave based on their Average Daily Pay (ADP) instead.  The Labour Inspector argued that the company must also pay the employees public holidays based on their ADP.

The Holidays Act 2003 stipulates in s 49 that when an employee does not work on a public holiday the employer must pay the employee the employee’s RDP (see s 9(1)) or ADP (see s 9A) for that day.  The ADP would have resulted in greater pay as the average would be based on their income including all of the commission earned.

The Court found that, if accepted, the Labour Inspector’s argument would lead to a perverse result contrary to the express intention of the legislation (see para 23).  The purpose was to make RDP the primary method of calculation, but to give the option of ADP when RDP was too difficult to calculate (see para 22).  The employer had discretion whether to pay RDP or ADP (see para 27).    

The Court noted that cases will need to be considered on their facts (see para 24).  However, in this case the employer was able to pay its employees according to their RDP on public holidays, irrespective of the calculation it used for other types of leave.

Max Pennington Motors Ltd v Labour Inspector, MBIE [PDF 253KB]

Employment Court – Directors’ liability to pay employees interest on outstanding entitlements

Two employees were owed outstanding wages and holiday pay by their previous employer.  The employer company had been placed into liquidation and was unable to pay.  The directors accepted they were ‘persons involved’ in the minimum standards breaches under s 142W of the Employment Relations Act 2000 (Act).  Therefore, they were personally liable to pay the employees.  The Labour Inspector applied to the Court for an order that she could recover interest on the arrears from the directors.

The Employment Relations Authority has jurisdiction to order a party to pay interest on matters involving the recovery of money in accordance with cl 11 of sch 2 of the Act.  Interest is intended to compensate the other party for the delay in payment.  The parties to this matter disagreed as to whether the directors were liable to pay interest when the company was unable to.

The Court found that the cause of action against Mr and Mrs Fernando arose when they breached the employee’s minimum entitlements, as opposed to when the company went into liquidation (see para 41).  At the time of the breaches, the company had liabilities as the employer, and the directors had “at least contingent liabilities” due to their involvement in the breaches (see para 38).  The Court found this interpretation to be consistent with the purpose of pt 9A of the Act being to promote effective enforcement of employment standards (see para 41).

The Court ordered the directors to pay the employees interest on the outstanding wages and holiday pay (see para 44).

Labour Inspector v Fernando [2020] NZEmpC 66 [PDF 236KB]

Employment Court – Penalties – Employment Relations Act 2000 s 134A – Holidays Act 2003 s 76 – Jurisdiction for Authority to order penalties on its own motion

At issue was whether the Employment Relations Authority (Authority) could impose a penalty for a breach of the Holidays Act 2003 on its own motion.

The Authority imposed a penalty on the employer for a breach of the Holidays Act 2003 (HA). At the time of the investigation meeting, the employee had withdrawn its claim for a penalty for a breach of the HA.

The Court found that, given the Authority is a creature of statute, Parliament likely intended that the jurisdiction to act on its own motion is limited to s 134A of the Act. Section 134A expressly provides for the Authority to award penalties on its own motion in particular circumstances (see para 13). Additionally, the well-established principle that penal provisions should be given a restrictive reading supports the conclusion that there is no jurisdiction for the Authority to order penalties on its own motion (see para 14).

To reinforce its conclusion, the Court ruled out s 160(3) of the Act and the Authority’s equity and good conscience jurisdiction as sources of power to order own-motion penalties (see paras 17 and 18). Section 160(3) is a general provision that the Authority is not bound to treat a matter as being the type described by the parties, and may concentrate on resolving the employment relationship problem however described. However, s 76 of the HA is more specific and recent, and therefore overrides the general provision of s 160 (see para 17). In regard to the Authority’s equity and good conscience jurisdiction, the Court held that the Authority cannot do something in equity and good conscience that would be inconsistent with the Act (see para 18). Finally, s 173(1)(a) of the Act imposes a requirement to comply with the principles of natural justice, and imposing a penalty without a hearing was an error of law (see para 19).

The Authority has no jurisdiction to order penalties on its own motion unless provided for in s 134A of the Act. It may not order a penalty for a breach of the HA on its own motion (see para 5).

Dollar King Ltd v Jun [2020] NZEmpC 91 [PDF 230KB]

Employment Relations Authority – Employee status – Family relationships

At issue was whether the applicant was an employee when she was in a relationship and then marriage with the sole director of companies she was working for.

The applicant (Ms McKay) was in a relationship with the director and shareholder of the respondent companies (Mr Heath). In 2005 Ms McKay began working at one of Mr Heath’s companies. In 2007 she married the director. Over the course of the marriage she worked at another of her husband’s companies as well. She was paid a salary and had a company car and fuel card.

In 2018 Ms McKay separated from Mr Heath.  Shortly after the separation she went to work at one of her Mr Heath’s companies and was advised that someone else had taken over the role. The next day she received communication from a law firm telling her she was no longer working for either of the two companies.

The issue was whether the applicant was an employee within the definition of employee under s 6 of the Employment Relations Act 2000. The Authority re-iterated Employment Court authority in Dillon v Tullycrine Ltd [2020] NZEmpC 52 [PDF 220KB] which stated that a family context does not preclude a finding of employment, and that there are circumstances where one member of a family is vulnerable to exploitation by others by virtue of the family relationship (see para 21).

The Authority considered the intention of the parties (see paras 22–37). The applicant had been paid an allowance from Mr Heath’s shareholder account for a few months before being put on the payroll. Mr Heath claimed that salary was paid for the purpose of income splitting, for more effective tax management (see para 23). The respondent which paid Ms McKay’s salary was also named as her employer in a paid parental leave application (see para 28). The Authority did not find any of these factors determinative of intention to create legal relations, especially as care needs to be taken when finding employment in familial contexts (see paras 36–37).

The Authority considered the practical nature of the work, and concluded that this was not a case of income splitting for reduction of tax liabilities with no or minimal work undertaken in exchange (see para 56). Under the control test, the Authority considered evidence that Ms McKay “answered to no one”, and had significant autonomy and flexibility aside from certain tasks that required precise timing (uploading newspapers on the website on a particular day and time) (see paras 61–66).

The Authority considered how integral to the business Ms McKay’s work was. The Authority concluded that Ms McKay’s work for Wanaka Pharmacy and the Wanaka Sun was integral to their businesses — preparing work rosters, processing paying staff and applications for leave, and recruitment, putting the newspaper online, social media and photography (see paras 69–70). Other factors also pointed away from a contractor relationship, including a steady salary and the fact that Mr Heath could recall the reason for a pay rise (see para 71).

The Authority considered that the fundamental test of whether or not Ms McKay was in business on her own account would clearly point to an employment relationship because there was no indication of her being in business on her own account, but in this context the familial relationship needed to be considered (see para 76). Finally, the Authority considered that if Mr Heath claimed salary was paid to lower tax liability, the companies should bear the consequences in employment law. It also took into account the fact that the parties had a history of considering Ms McKay’s employment status (during the paid parental leave application) (see paras 78–79). The Authority found that an employment relationship indeed existed, despite the familial context (see para 81).

Having determined that Ms McKay was an employee, the Authority found unjustified dismissal and awarded remedies accordingly. For holiday pay arrears, the Authority had to approximate the entitlement due to the nature of the relationship (see para 100).

McKay v Wanaka Pharmacy Ltd [2020] NZERA 230 [PDF 250KB]

Employment Relations Authority – COVID-19 lockdown – Essential service – Government wage subsidy – Contract law – Ready and willing – Minimum Wage Act 1983

At issue was whether there is an obligation to pay wages to non-working employees where an essential service employer partially shuts down operations in response to the COVID-19 pandemic, and whether reducing non-working employees’ pay to 80 per cent where they are on the minimum wage breaches the Minimum Wage Act 1983 (MWA).

The employer was a business providing inflight catering services to passenger aircraft. It was an “essential service” for the purposes of the COVID-19 lockdown that commenced on 26 March 2020. This case involved a number of employees who were not part of either of the two collective agreements that covered the worksite, but were part of a union — the Aviation Workers United Incorporated Union (AWU) which was involved in collective bargaining at the time of the determination (see para 3).

The parties had an agreed statement of relevant facts. As an essential service, the employer remained open for business during the COVID-19 lockdown. The employer advised that as a result of having very little work to offer employees, it proposed a partial shutdown of operations, and three options for pay (see para 4):

1. using annual leave until exhausted and then moving to option (2);
2. being paid 80 per cent of normal pay, conditional on the employer receiving the government wage subsidy; or
3. using annual leave to top up the 80 per cent of normal pay by using one day a week.

The AWU agreed to options (2) and (3). The applicant employees were on the minimum wage which increased to $18.90 per hour on 1 April 2020. The employer, however, believed that only employees who were working would be paid at the new minimum wage, and that those employees who were not rostered would continue to be paid at 80 per cent of normal pay calculated at the date of the commencement of the partial closedown (i.e. 80 per cent of the old minimum wage of $17.70 per hour). The employer applied the new minimum wage after objection from AWU but still only paid 80 per cent of the new minimum wage for the employees who were not working.

The employees claimed that the employer took unilateral action threatening to cease paying the employees without proper consultation, and that the employer failed to pay the employees a minimum wage (see paras 6 and 7). The employer defended its position in reliance on the slogans “no work, no pay” and “partial performance, partial remuneration” (see para 14).

The employees claimed that they were entitled to their normal wage since the employer was an essential service, and its partial closedown was a unilateral decision made without any final arrangement with employees regarding pay (see paras 15 and 16). The employees argued that the common law proposition of “no work, no pay” applies only when an employee refuses or fails to perform their part of the contract, and not in this case as the employees were ready and willing to work (see para 18). The issue was also raised as to whether the employer had to pay at least the minimum wage whether or not employees were working, and whether paying the employees 80 per cent of their normal wage where this would reduce their pay to 80 per cent of the minimum wage is a breach of the MWA.

The Authority found that the nature of the payments made were not a gratuitous payment but a payment made on the basis of the employment agreement. This meant that if the employees were ready, willing and able to work in an essential service, the employer was required to pay them at least the minimum wage (see paras 35 and 36). This was reinforced by the fact that the government wage subsidy was meant to “support workers to stay connected to their employer, even if they [were] unable to work” (see para 37).

The Authority found that the workers were ready, willing and able to work, and that employees are entitled to be paid both for work performed, contracted for, and work for which the employee is ready and willing to perform (see para 40). In this case, the employer was an essential service and directed employees not to work. The employees’ lack of work was not due to the COVID-19 lockdown (see para 41). The Authority found that the employer breached the MWA by paying 80 per cent of wages and ordered the employer to pay the employees at least the minimum wage for 40 hours of work (see para 43).

Sandhu v Gate Gourmet New Zealand Ltd [2020] NZERA 259 [PDF 230KB]

Employment Relations Authority – COVID-19 lockdown – Contract law – Ready and willing – Government wage subsidy – Wages Protection Act 1983

At issue was whether government wage subsidy introduced in response to the COVID-19 lockdown releases an employer from the obligation to pay wages under the Wages Protection Act 1983 (WPA) and the definition of “wages” under s 2 of the WPA.

The employer provided hospice services, and the applicant employees worked in retail shops that were closed by the COVID-19 lockdown. The employer applied for the government wage subsidy. The employer, on 30 and 31 March and 17 April sent letters proposing restructuring of the employees’ positions, and invited feedback on the proposal, which the employees gave. The employer then sent letters to the employees individually on 7, 9, 14, 15 April and 1 May saying (see para 9):

• their positions would be disestablished effective at date of letter;
• eight weeks’ notice of termination of employment would be given;
  • the first four weeks of notice would be paid at 80 per cent of their salary or wages;
  • the second four weeks of notice would be paid at the government wage subsidy rate of $585.80;
• the employees were not required to undertake any work during the notice period;
• their final pay would be calculated on the last day of the notice period, and stated how it would be calculated.

The employees said they did not agree to be paid anything short of their normal wages and salary and therefore the employer breached the WPA. The employer said that due to the COVID-19 lockdown, the employees were not ready, willing and able to work, therefore the WPA did not apply (see paras 11 and 12).

The Authority determined that the employment agreements did not contain a deduction clause which provided for deductions to be made in the circumstances faced by the employer during the COVID-19 lockdown (see para 18). Additionally, although the employer extended the notice period by four weeks (paying just the amount of the government wage subsidy), it did so unilaterally, and therefore had no right to vary the remuneration rate provided for in the agreed instrument for redundancy notice contained in the employment agreement (see para 27). The employer could have consulted the workers about the proposal to extend the notice period and to pay that extended notice at a different rate to contractual wages or salary and then sought agreement to that effect (see para 29).

The employer said that what they have paid is not “wages” under s 2 (Interpretation) of the WPA, since the payments were not “for the performance of services or work” (see para 31). The Authority rejected this reading of the WPA, saying that it would create the result that any non-performance of service or work would release the employer from contractual obligation to pay wages. This was because the employer could not isolate the words “for the performance of services or work” from the “wages” definition as a whole in s 2 of the WPA. Finally, the workers were at all times, ready and willing to work, and were able to fulfil their obligations under the employment agreements, but for the COVID-19 lockdown and/or the employer’s decision to not require them to attend work during the notice period (see para 32).

The Authority adjourned the issue of penalties for breaches of the WPA (see para 35).

Raggett v Eastern Bays Hospice Trust t/a Dove Hospice [2020] NZERA 266 [PDF 270KB]

Employment Court – Employee status – Personal grievance – Unjustified dismissal – Penalty – Minimum standards – Arrears

At issue was whether a man’s friend had been his employee; and, if so, whether the Court would order remedies in the circumstances.

Mr Cowan and Mr Kidd were friends for almost fifty years.  Mr Kidd operated several businesses in partnership with his son (Kidd Partnership).  Mr Cowan received superannuation.  When Mr Cowan’s matrimonial home was sold after the breakdown of his marriage, Mr Kidd provided him with somewhere to live free of charge.  Mr Cowan started driving trucks for the Kidd Partnership, and in time also assisted with construction, maintenance and farm work.  After a year, the Kidd Partnership transferred a section of land with an agreed value of $80,000 to Mr Cowan at no cost (see para 16).  The intention of both parties was that Mr Cowan would purchase a pre-fabricated house and the Kidd Partnership would assist him with constructing it on the section (see para 17).  Mr Cowan would then have a home of his own.  The Court found Mr Kidd had mixed motives with this provision, both concern for his friend and recognition of his assistance (see para 18).

The parties never had a conversation regarding the arrangement and did not make any sort of written agreement.  The house intended for the section did not eventuate.  After seven years, Mr Cowan made a wage claim and raised a personal grievance (see para 25). 

In deciding whether Mr Cowan had been an employee, the Court considered that the parties did not have a written agreement and that Mr Cowan could decline work at any time (see para 38).  The other employees of the Kidd Partnership understood that Mr Cowan was not an employee and did not expect him to work at the level or consistency of an employee (see para 27).  On the other hand, Mr Cowan did perform work the Kidd Partnership would otherwise have had to pay someone else to do (see para 34).  Also, Mr Cowan expected reward for undertaking the work (see para 33).

The Court found that Mr Cowan was a casual employee of the Kidd Partnership.  It used available evidence such as log books to ascertain the hours worked (see para 42) and awarded the minimum wage for those hours (see para 52).  It found Mr Cowan was owed $104,600.85 in wage, public holiday and holiday pay arrears, as well as interest on that sum (see para 66).  The Court also found that Mr Kidd must pay a penalty of $18,000, and his less-culpable son a penalty of $2,000, for breaching minimum employment standards.  Of those penalties, $10,000 was to be paid to Mr Cowan and the other $10,000 to the Crown (see para 68).  As Mr Cowan was a casual employee, he was unsuccessful with his personal grievance for unjustified dismissal (see para 56).

Cowan v Kidd [2020] NZEmpC 110 [PDF 330KB]

Employment Relations Authority – Personal grievance – Unjustified dismissal – COVID-19-related redundancy

At issue was whether the employer had unjustifiably dismissed two employees when it terminated their employment during lockdown on the grounds of redundancy.

The employer was a trucking and general contracting business.  When the government announced the upcoming COVID-19 related Level-4 lockdown on Monday 23 March, the employees were advised the employer was applying for the wage subsidy and an essential goods freight exemption.  In a letter to staff the employer said “If the subsidy is received well and good, if not changes to our operations will become absolutely necessary” (see para 12).  Before the subsidy was confirmed, however, the employer decided to make several employees redundant. 

The employer argued before the Authority that it had kept its staff informed of its business decisions where “the standard expected of a fair and reasonable employer was significantly altered by the context of the global pandemic and economic turmoil” (see para 42).  The Authority found that the employer could not have reasonably decided at that early stage that the employees were surplus to requirements when it received the wage subsidy (see para 41).  When deciding which employees would be made redundant, the employer formulated selection criteria but did not advise the employees of those criteria or give them the opportunity to comment (see para 56).

The Authority determined the two employees had been unjustifiably dismissed.  The employer was ordered to pay Mr de Wys $10,000 in compensation and $18,907 lost wages (see para 73) and Mr Jenney $15,000 in compensation and $14,132 in lost wages (see para 79).

De Wys v Solly’s Freight (1987) Ltd [2020] NZERA 285 [PDF 110KB]

Employment Court – Contempt of court – Obstruction of justice – Obstructing disclosure of documents

At issue was whether the employee was liable for criminal contempt of court for failing to comply with disclosure orders.

The employer sought to challenge the Employment Relations Authority (the Authority) finding that the employee was constructively dismissed. The employer alleged the employee was not constructively dismissed; rather, she resigned voluntarily to take up another position in order to improve her immigration status. To support that allegation, the employer sought information from the employee’s immigration consultant and from prospective employers the employee applied to for jobs. 

The Employment Court (the Court) on two occasions made orders directing the employee to carry out actions aimed at securing the relevant documents. In response to the first order, the employee produced incomplete documents, several weeks after the deadline. In response to the second order, the employee secured the full file from the immigration consultant. The file showed the employee had initially told the immigration advisor not to disclose certain documents.

The Court found the evidence of the immigration consultant was “overwhelming” as to the steps the employee took to obstruct the immigration consultant from complying with the earlier disclosure orders (see para 23). The Court found the employer failed to meet the criminal standard for proving the employee failed to comply with orders to contact the prospective employers she had applied to (see para 24).

The Court found no fine was warranted in the circumstances (see para 29). The Court held that while an attempt to obstruct or interfere with the course of justice was a very serious matter, there were mitigating circumstances. The Court had regard to the fact the employee was not well advised by her advocate; the consequences of a fine on a young person trying to immigrate; and the fact the employee was partially motivated by trying to protect her personal information (see paras 26–29).

ANZ Sky Tours Ltd t/a ANZ Sky Tours v Wei [2020] NZEmpC 129 [PDF]

Employment Court – Unjustified dismissal – Interim reinstatement pending substantive hearing

At issue was whether the employee should be reinstated pending an investigation into his unjustified dismissal claim in the Authority.

The employee was employed as Site Engineer/Site Supervisor at a concrete plant. The employee claimed he was unjustifiably dismissed for misconduct after he failed to follow a required safety procedure. The employee sought interim reinstatement to his position pending an Authority investigation into his claim. The Authority declined to order reinstatement. The employee challenged this decision in the Court.

The Court upheld the decision not to award interim reinstatement. The Court accepted the employee had an arguable case that he was unjustifiably dismissed and an arguable case for reinstatement (see paras 21–22). However, the balance of convenience did not favour reinstatement (see paras 24–34). While the employee was suffering financial difficulties as a result of losing his job, he had obtained a mortgage holiday and was not at risk of losing his house.

The employee could be compensated for lost earnings if he succeeded in his substantive claim. There was no suggestion a gap in employment would mean the employee would not be able to do his job if he was reinstated later. The concerns of the employer (that it had lost trust and confidence in the employee and that other employees had said they would leave if the employee returned) may not be able to be reversed if the employee was given interim reinstatement and the employer later succeeded in defending the employee’s claim; the financial detriment to the employee from not being reinstated could be reversed if he were successful in his substantive claim.

The Court found overall justice did not displace the finding on the balance of convenience (see paras 35–36). The employee acknowledged he did not follow the relevant safety policy. Though he disputed the need to follow the policy, the employee was in a supervisory role on a worksite where health and safety were critical.

The Court upheld the Authority decision to decline interim reinstatement.

Smith v Fletcher Concrete & Infrastructure Ltd [2020] NZEmpC 125 [PDF]

Employment Relations Authority – Employee status – Employment Relations Act 2000, ss 63A and 68 – Whether a person who has been offered employment is an employee for the purposes of ss 63A and 68

At issue was whether someone who was negotiating the terms of an individual employment agreement with an employer, but did not conclude any agreement, was an employee for the purposes of the ss 63A and 68 of the Employment Relations Act 2000 (the Act).

The applicant’s original employer decided to transfer some services to another company. As a result, the applicant’s position became redundant. The company taking over the services (the new employer) offered a role to the applicant.

The applicant considered that the employment agreement with the new employer had terms that were not as good as under her previous agreement and/or were unlawful. The applicant tried to negotiate better terms. The new employer emailed the applicant a final amended employment agreement 16 minutes before the offer of employment was due to expire. The new employer refused to give any extension to the deadline for accepting the offer.

The applicant did not accept the amended employment agreement. The applicant sought a penalty against the new employer for unfair bargaining under ss 63A and 68 of the Act. The new employer claimed ss 63A and 68 did not apply to someone who had not entered into an employment agreement.

The Employment Relations Authority (the Authority) determined that the applicant was an employee for the purposes of s 63A, as she was a “prospective employee” under s 63A(7). The applicant was entitled to seek a penalty under s 63A(3) as the Act did not limit penalty actions to parties in employment relationships (see paras 96–99).

The Authority determined the applicant was not an employee for the purposes of s 68. The Authority determined s 68(external link) is not engaged unless an employment agreement has been concluded (see paras 100–103).

Begley v Tech Mahindra Ltd [2020] NZERA 309 [PDF]

Court of Appeal – Jurisdiction – Discrimination on basis of pregnancy – Human Rights Review Tribunal – Employment Relations Authority – Parental Leave and Employment Protection Act 1987, s 56 – Employment Relations Act 2000, s 161

The employee informed the employer that she was pregnant, 10 months after her employment began. She alleged that after that, her employment conditions worsened and she was forced to resign. The employer is facing a claim of discrimination in the Human Rights Review Tribunal (HRRT). It applied for an order striking out the claim for want of jurisdiction. The HRRT dismissed the application, and the employer sought judicial review in the High Court. The High Court dismissed the application, finding that the HRRT did have jurisdiction. The employer appealed the judicial review decision in the Court of Appeal.

At issue was whether the employee could only bring a cause of action as a parental leave complaint under the Parental Leave and Employment Protection Act 1987 (PLEPA), and could therefore only bring a cause of action in the Employment Relations Authority (Authority) (see para 2).

The employer argued that the employee’s allegations brought the issue within the definition of a parental leave complaint under s 56(1) of PLEPA, and therefore she was obliged to follow the statutory procedures for settlement of parental leave complaints in PLEPA (see para 12). The employer also said that s 161 of the Employment Relations Act 2000 (Act) gives the Authority exclusive jurisdiction to make determinations about employment relationship problems generally, and because the employee’s complaint concerns a problem relating to or arising out of her employment relationship the Authority has exclusive jurisdiction to hear her complaint (see para 13).

The Court held that the HRRT’s jurisdiction is not ousted by PLEPA or the Act. The employee had an election as to which cause of action to pursue, which would determine whether the Authority or the HRRT has jurisdiction (see para 41). However the PLEPA would be relevant if the employer could justify its alleged discriminatory actions by showing that they were in accordance with PLEPA (see para 42).

Diamond Laser Medispa Taupo Ltd v Human Rights Review Tribunal [2020] NZCA 437 [PDF 236KB]

Employment Court – Jurisdiction of the Employment Relations Authority to make directions to employee’s representative ­– Sub judice rule – Ex-parte interim orders

At issue were what powers Authority has in respect of a series of directions to the employee’s advocate (Mr Halse) not to contact senior personnel of the plaintiff (the DHB), and not to publish adverse comments about the DHB’s position in the matter. These directions were later extended to the entity under which Mr Halse operated (CultureSafe), and to the employee herself. The further issues were whether the directions made were valid or enforceable, what powers the Court has to enforce Authority directions and whether it could do so in this case (see para 6).

The Court said that the Authority “is left to get on with the processes which it has the statutory responsibility to undertake” (see para 56). However, it stressed that while the Authority is an investigative body that is not inhibited by strict procedural requirements, it does enjoy the status and protections of judicial proceedings, and an Authority Member must be considered a judicial officer under s 176(2) of the Act (see para 59).

The Court considered the Authority’s ability to issue directions, particularly whether they can be issued to bind a representative as well as a party (see para 69). The Court held that the Authority has the broad jurisdiction to issue direction for the purposes of ensuring the fair conduct of proceedings before it; and that it can issue such directions against a representative (see para 86). Specifically, the Court held that a representative must comply with procedural rules and directions issued by the Authority within its jurisdiction, whether or not those rules or directions refer to a party only or to a representative. This is a necessary conclusion of s 160(1)(f) because Parliament could not have intended the dysfunctional alternative of a representative being able to disobey rules or directions of the Authority (see para 79). In regard to non-publication orders, the Court held that cl 10(1) of sch 2 allows the Authority to order that certain details are “not to be published”, and it would be absurd if Parliament intended all persons except representatives to be bound by such an order (see para 85).

The Court held all but one direction issued by the Authority to be valid.

The first direction that Mr Halse not make contact with the DHB while it was represented by counsel was held to be a valid direction. It was ensuring the investigation would proceed fairly and without improper pressure on the DHB (see para 110). The second direction was held to be valid as was its warning to the possibility of a penalty under s 134A of the Act (see paras 121­­–122).

The third direction was an oral direction the Authority made in the presence of the parties that the matter should remain sub judice pending the Authority’s determination, and the parties were not to make any public comments about the matter (see paras 26 and 126). The Court held that this was not a non-publication order made under cl 10 of sch 2 of the Act (see para 128), but the Authority had jurisdiction to issue this direction, and to balance the right of free speech against fair trial considerations (see para 135).

The fourth direction was issued after the investigation meeting and before the determination was issued. The DHB had filed an ex parte application for penalties against CultureSafe, Mr Halse and the employee. The DHB therefore requested substantive relief against two non-parties (see para 146). The Authority directed that a proceeding should be filed citing both Mr Halse and CultureSafe as respondents (see para 147). However the Authority made interim orders directing Mr Halse and the employee to comply with previous directions, and to take down various Facebook posts (see para 36). The Court found that the directions in the interim orders should not have been made, and the DHB should have issued fresh proceedings against the employee, Mr Halse and CultureSafe (see para 152).

Finally, the DHB clarified that it was not applying to the Court for enforcement of the Authority’s directions but was seeking penalties under s 134A and orders under s 196(external link) of the Act (in its form prior to amendment by the Contempt of Court Act 2019) (see para 161). The Court confirmed that an application for a penalty under s 134A that has been removed to the Court under s 178 of the Act is within the Court’s jurisdiction; and that no such jurisdictional issues arose in respect of s 196 of the Act (see paras 167–168).

Bay of Plenty District Health Board v CultureSafe New Zealand Ltd [2020] NZEmpC 149 [PDF 438KB]

Employment Court – Raising personal grievance – 90-day timeframe – Employment Relations Act 2000, s 114 – When does employment end on notice

At issue was whether the employee raised a personal grievance for unjustified dismissal within the 90-day timeframe contained in s 114 of the Act.

The employer wrote a letter to the employee on 16 January 2019 giving formal notice of termination for redundancy and telling her that the employer would be making a payment to her in lieu of notice (see para 8).

The Authority determined that the 90-day timeframe ran from the date on which the employee realised that her employment had been terminated, because it found the employee was confused for a period of time after receiving a letter advising that her employment had been terminated (see para 3). However, although the employee was not required to work out her notice period, this differed from being summarily dismissed (see para 13).

The Court held that the 90-day period ran from 28 January 2019, the date on which her notice period came to an end and not 16 January 2019, the date she received formal notice of termination (see para 15). The Court referred to two cases which found that the start of the 90-day timeframe ran from the end of a notice period. Poverty Bay Electric Power Board v Atkinson [1992] 3 ERNZ 413 (EmpC) found that because it was the employee who chose to receive payment in lieu of notice, it implied that the employer was willing to employ him up to the end of the notice period and so dismissal did not occur until that date (see para 10). Gibson v GFW Agri-Products Ltd [1994] 2 ERNZ 309 (EmpC) observed that employment does not end when notice is given, only when it has run its course unless it is a summary dismissal (see para 11). The Court of Appeal in GFW Agri-Products Ltd v Gibson [1995] 2 ERNZ 323 (CA) agreed that where dismissal is on notice (not a summary dismissal) the 90-day timeframe starts at the end of the notice period (see para 12).

The Court concluded that the employee did raise her personal grievance within the 90-day timeframe, coming to the same conclusion as the Authority but with different reasoning (see paras 17 and 18).

Ceres New Zealand LLC v DJK [2020] NZEmpC 153 [PDF 214KB]

Employment Relations Authority – Witness immunity from civil action – Health and Safety at Work Act 2015, s 168(1)(f) – Record of settlement – Non-disparagement

At issue was whether s 168(1)(f)(external link) of the Health and Safety at Work Act 2015 (HSWA) or the witness immunity rule overrode a non-disparagement clause in a record of settlement; and whether a compliance order and penalty were appropriate.

The record of settlement between the employee and the employer contained a non-disparagement clause. There had been a workplace accident prior to the settlement agreement being signed. WorkSafe New Zealand (WorkSafe) was undertaking an investigation into the workplace accident. During an interview with a WorkSafe inspector, the employer made disparaging comments about the employee. The employee sought a compliance order and penalties. The employer said that they were legally required to answer questions under s 168(1)(f) of HSWA and that this overrode the record of settlement (see paras 6–7).

The Authority determined that the comments made by the employer were clearly disparaging and a breach of the record of settlement, particularly because the employer implied the employee’s employment ended for a reason other than redundancy as was agreed in the record of settlement (see paras 29 and 33). While the employer was required to answer the WorkSafe inspector’s questions, and explain the shortcomings in the employer’s health and safety systems, the Authority determined that the employer went further than was necessary (see para 32).

Nevertheless, the Authority determined that the rule of witness immunity from civil action was absolute, and applied to the disparaging comments; because at the time the comments were made, judicial proceedings (a prosecution under HSWA) were in contemplation. Although the employer went further than necessary, the Authority declined to order compliance or penalties (see para 45).

Marshall v W Gartshore Ltd [2020] NZERA 376 [PDF 235KB]

Employment Court – Annual leave – Determining annual leave entitlement – Whether period of continuous employment resets following unpaid leave exceeding one week

Employment Court – Public holidays – Whether employee entitled to be paid for public holidays that fall within periods of unpaid leave

At issue was:

• Whether periods of unpaid leave during school holidays reset the employee’s “continuous employment” for the purpose of calculating annual leave entitlements under s 16(external link) of the Holidays Act 2003 (the HA).
• Whether the employee was entitled to be paid for public holidays that fell within periods of unpaid leave.

The employee was a bus driver who drove buses during the school term. In school holidays the bus driver was on unpaid leave, as provided for in his employment agreement (EA). In an earlier proceeding, the Court found the employee was a permanent employee, despite the unpaid breaks during the school holidays.

The employee’s EA stated that the employer would pay the employee eight per cent holiday pay at the end of the fourth term of the school year each year, “in satisfaction of any holiday pay entitlements”. The employer claimed the employee had no entitlement under s 16(external link) of the HA to accrue any annual leave, because he did not ever work continuously for 12 months.

The Employment Court (the Court) found that in the circumstances of the case, each period of unpaid leave did not break the accumulation of 12-months continuous employment; rather, the unpaid leave served to pause the accumulation of 12-months continuous employment. In coming to that conclusion the Court found:

• The employee’s terms of employment did not fit within any provisions of the HA that allow an employer to pay eight per cent of his wages as holiday pay (namely ss 23, 25, 28 and 34) (see paras 12–19):
• Sections 23 and 25 only apply to employment that is to be terminated without any prospect of continuing.
• Section 28 only applies to fixed-term agreements of less than 12 months or cases of “intermittent or irregular” employment.
• Section 34 only applies to employment agreements containing only one closedown period.
• The parties had not made an arrangement under s 16(3) of the HA to include more than one week of unpaid leave in a 12-month period of continuous employment, which would have allowed the employer to use the formula specified in s 16(3) to calculate holiday pay.
• The Court held that where an employee has more than one week of unpaid leave under their employment agreement and the parties have not agreed to adopt the methodology in s 16(3) of the HA, unpaid leave acts to pause the accruing of 12-months continuous employment, rather than resetting it; there is no entitlement to pay the employee eight per cent of their wages as holiday pay instead of having the employee accrue annual leave (see paras 20–23).

The Court found the employee was not entitled to be paid for public holidays that fell within his unpaid leave periods, as the public holidays did not fall on days on which he would otherwise have worked (see paras 33–38).

Morgan v Transit Coachlines Wairarapa Ltd [2020] NZEmpC 169 [PDF 276KB]

Employment Court – Jurisdiction of Employment Relations Authority – Jurisdiction to issue orders and award penalties and damages against employment advocates for breach of record of settlement — Jurisdiction to award damages for breach of record of settlement

Employment Court – Penalties – Whether penalties against a company and individuals can be awarded “jointly and severally”

The plaintiffs in this case were:

1. an employment consultancy company (the consultancy)
2. two advocates who performed employment advocate services for the consultancy (one of the advocates was the director of the consultancy, the other provided services to the consultancy on contract).

Key issues in this case were:

1. Whether the Employment Relations Authority (the Authority) had jurisdiction to issue compliance orders and suppression orders and impose penalties against the advocates and the consultancy.
2. Whether the Authority had jurisdiction to award damages for a breach of record of settlement.
3. Whether the Authority could award penalties against the plaintiffs “jointly and severally”.

The two advocates represented an employee at mediation in relation to a personal grievance. During the mediation the employer and employee settled their dispute. In the record of settlement (RoS) the parties agreed that:

1. The terms of the RoS and the matters discussed in mediation were to be confidential to the parties and to the advocates.
2. Neither party, including the consultancy, were to make derogatory or disparaging comments about the other.
3. The consultancy was not to make any reference whatsoever to the employment relationship problem in any publication, including social media.

The RoS was signed by the employee and a representative of the employer. The RoS was not signed by the advocates.

Following the mediation, the advocates contacted government ministers and members of Parliament by letter or email and posted comments on the consultancy Facebook page in a way that breached the terms of the RoS.

In response to the breaches, the Authority first issued interim compliance orders ordering the advocates to comply with the RoS. When the advocates continued to commit breaches, the Authority made the interim compliance orders permanent and imposed penalties of $30,000 total on the consultancy and the advocates.

The Authority made the plaintiffs jointly and severally liable for payment of the penalties. The Authority further awarded damages of $3,000 against the plaintiffs.

In the Court the plaintiffs challenged the jurisdiction of the Authority to entertain claims against the plaintiffs when:

• The plaintiffs were not party to the employment relationship between the employee and employer.
• The plaintiffs were not parties to the RoS.
• The Authority had no jurisdiction to award damages for a breach of RoS.

The Court found the absence of an employment or contractual relationship did not stop the Authority from having jurisdiction to order compliance and penalties against the plaintiffs for breach of the RoS (see paras 49). The Court held:

• The Employment Relations Act 2000 (the Act), ss 137(1)(a)(iii)(external link), 137(2)(external link) and 149(4)(external link) provide that the Authority may:
  • issue compliance orders to require a “person” to comply with a RoS.
  • award penalties against a “person” for breaching a RoS.

There is no reason to read down the references to “person” in those provisions to include only parties to an employment relationship or parties to the RoS (see paras 51–53).

• The Authority has jurisdiction to the extent the RoS settles an employment relationship problem. Here the RoS was entirely directed to settlement of an employment relationship problem (see para 55).
• A person with knowledge of confidentiality and non-disparagement terms in a RoS is liable for a penalty if they breach those terms (see para 57).
• The plaintiffs were each liable for a penalty under s 149(4). All plaintiffs were well aware of the requirements for confidentially and non-disparagement. The advocates, as director and employee of the first plaintiff, were representing the employee at the mediation. The first plaintiff was referenced in the RoS (see paras 58–59).

The Court found there was no basis to award penalties on a ‘joint and several’ basis. This approach would have led to the outcome that each of the advocates would become liable for a penalty of $30,000 (see para 77). The Court reassessed penalties separately against each plaintiff and awarded penalties of:

• $3,000 against the advocate who was performing services on contract
• $5,000 against the director of the consultancy
• $2,000 against the consultancy itself (see paras 78–92).

The Court found the Authority does not have jurisdiction to award damages for breach of a RoS. The Employment Court found s 162 of the Act, which allows the Authority to award damages for breach of contract in relation to an EA, did not allow the Authority to award damages in relation to a breach of a RoS. There was also no jurisdiction for awarding damages under s 161, which sets out the jurisdiction of the Authority generally (see para 74).

CultureSafe NZ Ltd v Turuki Healthcare Services Charitable Trust [2020] NZEmpC 165 [PDF 294KB]

Employment Relations Authority – 90-day trials – Validity of 90-day trial provision – Validity of notice

Key issues were:

• Whether a 90-day trial provision in an employment agreement (EA) was valid.
• Whether the employer could rely on a 90-day trial provision if the employer did not comply with the notice provision in the EA.

The employer emailed the applicant to offer her a marketing role. In the email, the employer said: “As usual there will be a 90-day trial period”. The employer later emailed the applicant a draft employment agreement (EA), containing a 90-day trial provision. The employer gave the applicant several days to review the EA.

The applicant accepted the offer by email. The day before starting work the applicant said she had read the EA and was “happy with it”. The applicant asked the employer for another copy of the EA with the correct starting date. The employer said he would print a copy when she came to start work. The applicant arrived to start work about 30 minutes earlier than the co-director who was going to sign the agreement. After a brief discussion, the applicant and the co-director signed the agreement, without further changes.

On the applicant’s first day the employer became unhappy with her work. That afternoon the employer told the applicant they did not need her any further. The applicant collected her belongings and left.

Later the same day the employer emailed a letter to the employee, purporting to give her notice that her employment was to be terminated in three days. The letter said the employer would pay her for the three days and not require her to work. The EA said the employment could be terminated with “three days’ notice by either party, or payment in lieu of such notice”.

The employee claimed the 90-day trial provision was not valid and she was unjustifiably dismissed.

The Employment Relations Authority (Authority) found the 90-day trial provision in this case was valid. The Authority found the trial provision was valid because, before starting work, the employee:

• had notice there would be a 90-day trial provision in the offer of employment
• had time to review the 90-day trial provision in the draft EA
• agreed to the EA with the provision in it before starting work.

The Authority found the purpose of 90-day trial provisions in the Employment Relations Act 2000, ss 67A and 67B, was to avoid 90-day trials being imposed post-commencement of work. In this case, the bargain agreeing to a 90-day trial had been struck before the employee started work; signing the EA after the employee started work made no practical difference (see paras 29–30). The Authority found the facts in this case could be distinguished from other cases where the employee signed an EA containing a 90-day trial provision after starting work, and the employer had not previously mentioned a 90-day trial (see paras 31–33).

The Authority found though the trial provision was valid; the employer could not rely on it, because the employer did not give the employee notice as required under the EA. The Authority found the employer failed to give notice, when it sent the employee away first and then purported to give her notice in a letter later on (see para 42).

As the 90-day trial provision could not be applied, the employer needed to show the dismissal was justified (see para 47). The Authority found the dismissal was not justified. The employee was summarily dismissed, in a manner that was not provided for in her EA (see para 45). The employer did not give the employee sufficient time to orient herself and demonstrate her skill level. The dismissal was abrupt and the employee was given no opportunity for representation or input (see paras 53–55). The Authority awarded the employee lost wages and $12,000 compensation for distress, without any reduction for contribution (see paras 57–61).

Berea v Best Health Foods Ltd [2020] NZERA 474 [PDF 275 KB]

Employment Court – Personal grievance – Whether disadvantage claim intrinsically linked to dismissal claim – 90-day trial period

At issue was whether an employee’s personal grievance for disadvantage was intrinsically linked to his unsuccessful dismissal claim. He was employed as Head of Security. His responsibilities included recruiting and training security staff. The employer engaged an external provider to carry out security work without informing him. The employee emailed the employer with concerns about the outsourcing of security services without his involvement. He also raised ardent concerns regarding the employer’s CCTV cameras. The employee believed that the cameras breached privacy laws because they recorded audio as well as video.

The employer dismissed the employee under a 90-day trial period. The Authority found the trial period was valid, and the employee did not dispute that finding. However, the Authority also found that the employee’s personal grievance for disadvantage was so intrinsically linked to his dismissal grievance that it could not investigate it. The Employment Court (Court) disagreed (see para 25).

The Court found that the employer’s actions regarding the reorganisation of its security operations took place before dismissal was contemplated (see paras 26–28). The employer breached its good faith obligations by failing to consult the employee regarding its proposed restructure (see para 35). The employer also breached the dispute resolution process in the employment agreement when it failed to reply to the employee (see para 40).

The Court awarded the employee $5,000 in compensation due to the employer’s unjustifiable actions (see para 44).

Evans v JNJ Management Ltd [2020] NZEmpC 181 [PDF 245 KB](external link)

Employment Court – Collective Agreement – Interpretation – Disregarded sick leave – Costs

At issue was whether the employer was able to exercise discretion when deciding upon a payment for an employee’s sick leave under a collective agreement.

The employee was an early childhood teacher. She made a complaint to her employer when bullying issues arose within the workplace. The employee then went on extended sick leave, never returning to her role. The Authority found that she had been unjustifiably disadvantaged and awarded her $30,000 in compensation. However, the employee’s claim that she had been unjustifiably dismissed was unsuccessful.

The Authority found that the employee was entitled to disregarded sick leave under the following term of her collective agreement:

Sick leave not exceeding an overall aggregate of two years may be granted by the employer in circumstances where an illness can be traced directly to the conditions or circumstances under which the teacher is working, or where an injury suffered by the teacher in the discharge of duties occurred through no fault of the teacher, and where payment has not been made by the Accident Rehabilitation and Compensation Insurance Corporation. Leave granted under this sub-clause will not be debited from the employee’s sick leave entitlement.

The employer had assessed factors which it considered were relevant and offered the employee three months’ sick leave. The employee, and the Authority, thought that insufficient.

The Court decided that the word “may” in the relevant term did not mean that the employer had discretion to pay a lesser period than the full two years, for the following reasons:

• The employee had been sick for over two years and there was no dispute that that her illness was directly attributable to her role (see para 19).
• Another term in the agreement specifically included “in its discretion” but this term did not (see para 13).
• The term “may” has in the past been interpreted as meaning “must” (see para 10).
• The context of the term was a collective agreement that was particularly generous with sick leave entitlements (see para 12).
• There was no evidence that the parties intended for the word “may” to deliberately indicate an increase in discretion (see para 18).\

The employer’s challenge therefore failed.

The employee cross-challenged on the limited scope of the Authority’s costs award and was successful in a modest increase, being awarded $9,170 rather than $7,666 (see para 30). The employee had sought their full costs of $32,000, but the Court noted that awards of this amount would undermine accessibility. While parties are entitled to decide whether they wish to be represented in the Authority, their decisions are not automatically visited on the other party (see para 29).

Canterbury Westland Kindergarten Assoc Inc v Barnes [2020] NZEmpC 199 [PDF 320 KB]

Employment Court – Minimum employment standards – Penalties - Employment Relations Act 2000 – Holidays Act 2003 – Minimum Wage Act 1983 – Wages Protection Act 1983

At issue was whether the employers should be issued with penalties or a banning order due to breaches of their employee’s minimum employment standards. The employers were a married couple operating a bakery. The Labour Inspector investigated the bakery and found breaches of minimum employment standards, including failures to:

• keep wage and time records
• keep holiday and leave records
• pay the minimum wage
• pay annual holiday pay
• pay public and alternative holiday pay.

The employer had accepted the breaches and paid their employees the full $36,191 found to be owing (see para 3).

The Labour Inspector applied to the Court for penalties and banning orders. The Court ordered the first defendant to pay $50,000 and the second defendant to pay $20,000 in penalties (see para 71). It held the breaches were intentional (see para 46) and there was a degree of opportunism involved (see para 50). The Court found that although the first defendant had taken the lead in managing the employees and negotiating their terms and conditions, the second defendant had been complicit (see para 45).

The Court declined to impose banning orders. It noted that, like the employees, the employers were migrants who moved to New Zealand to find a better life. They were first-time offenders who had paid the arrears and acknowledged wrong-doing (see paras 37–39)

Labour Inspector v Chhoir [2020] NZEmpC 203 [PDF 260 KB]

Employment Court – Employee status – Uber driver

At issue was whether the plaintiff was an employee or contractor.

The plaintiff was a driver for the Uber ride-sharing business. The plaintiff’s access to the Uber Driver App was deactivated after Uber received a complaint about the plaintiff. The plaintiff sought a declaration that he was an employee of the first and/or second defendant, so that he could pursue a personal grievance for unjustified dismissal.

The Employment Court (the Court) found the plaintiff was not an employee. In coming to that decision the Court took into account that:

• The plaintiff’s service agreement was not, in form, an employment agreement (see paras 41–46)
• The relationship operated in practice in line with the Services Agreement (see paras 47–49)
• While the plaintiff could not build a client base, he made other business decisions to potentially improve profitability (see paras 50–52)
• While the work of drivers was integral to the defendants’ business, the defendants had little control over drivers (see paras 53–54)
• There was no established industry practice across ride-sharing businesses that assisted in determining whether the plaintiff was an employee (see para 55).

[PDF link] Arachchige v Rasier New Zealand Ltd [2020] NZEmpC 230 [PDF 400KB]

Employment Court – Personal grievance – Unjustified disadvantage – Failure to provide a safe workplace – Failure to protect employee from assault by service user

The key issue was whether the employer took sufficient steps to protect the health and safety of an assisted-living support worker who was assaulted by a service user.

The employer provided support services to disabled service users. The employee worked as a support worker. The employee supported a service user who was living in a residence operated by the employer. The service user had a history of aggressive behaviour and behavioural incidents, including assaults. In the year 2016 there were 47 incident reports relating to the service user’s behaviour. In November 2016 a doctor prescribed the service user Clonazepam to treat his agitation. In December 2016, the service user assaulted another support worker. That assault resulted in the support worker filing a complaint with police.

In January 2017, an incident occurred where the service user chased the employee, tackled her to the ground and hit her around the head, shoulder and arm, causing her to lose consciousness (the January incident). After the January incident, the employee had a long period off work before returning to work part-time. In November 2019, the employee ceased working as the injuries she suffered in the January incident resulted in her being unable to continue doing the work. Subsequently the employee did not work and was on a benefit.

Following the January incident, the employer made a new safety plan for support workers to use when working with the service user. The employer also obtained sleep medication to give to the service user, to help with sleep issues that worsened his behaviour.

The employee claimed she was unjustifiably disadvantaged by the employer taking inadequate steps to provide a safe working environment. The Employment Relations Authority (the Authority) dismissed the employee’s claim – see: Davis v Idea Services Ltd [2019] NZERA 610, para 35 [PDF 230KB] [PDF Link]

The Court reversed the finding of the Authority. The Court found the employer disadvantaged the employee by not taking necessary steps to protect her health and safety (see paras 174–178). In coming to that decision the Court found:

• There was a clear picture from the incident reports of deteriorating behaviour arising from significant and ongoing sleep deprivation. By late November 2016, a fair and reasonable employer could be expected to have followed up on the issue of night-time medication (see paras 151–153).
• There was a pattern of the service user becoming agitated, throwing things around, slamming doors and swearing (see paras 156–157). The decision by the employer in November 2016 that the service user should be administered Clonazepam could not have been expected to be a complete answer, or a substitute for night-time medication (see paras 158–159).
• The assault by the service worker on another support worker in December 2016 was a red flag. A fair and reasonable employer could have been expected to review the service user’s care arrangement in response (see paras 160–163).

[PDF Link] Davis v Idea Services Ltd [2020] NZEmpC 225 [PDF 370KB](external link)

Employment Court – Minimum Wage Act 1983, s 6 – Whether s 6 applies to employees who do not perform work

At issue was whether the employer breached the Minimum Wage Act 1983 (the MWA), s 6(external link) when it paid employees less than the minimum wage for periods when they did not perform work.

The employer operated an airline catering business. In response to the SARS-CoV-2 pandemic, the Government required all but essential service providers to cease operating for a period of time. The employer was allowed to continue operating as an essential service provider. Due to decreased demand, the employer did not need all its employees to perform work. Employees for whom there was no work stayed at home. Under their collective employment agreements (CEAs), the employees had agreed to work 40 hours per week.

The employer paid employees who did not perform work only 80 per cent of their pay. 80 per cent of their pay was less than what the employees would have got if they had been paid the minimum wage for their agreed hours.

The Authority found that if the employees were ready, willing and able to carry out their work, the employer was required to pay them at least the minimum wage, regardless of any agreement the employer may have made to the contrary – see: Sandhu v Gate Gourmet New Zealand Ltd [2020] NZERA 259, paras 36–41 [PDF 300KB](external link)

The employer challenged the Authority determination in the Court. The challenge was limited to the finding that entitlements under the MWA applied to the employees, despite the employees, at the relevant times, performing no work for the employer.

In a split Court decision, the majority found there was no breach of the MWA. The Court held (see paras 39–45):

• The MWA, s 6 (external link)only applied if employees performed work
• The MWA, s 7(2)(external link) prohibiting deductions for time lost, only came into play if employees performed work.
  Chief Judge Inglis, in the minority dissenting judgment, said she would have found there was a breach of the MWA. The Chief Judge maintained that as long as the employees’ failure to perform was not due to their default, illness or accident, the employer was obliged to pay the employees at least the minimum wage (see paras 69–71).

[PDF link] Gate Gourmet New Zealand Ltd v Sandhu [2020] NZEmpC 237 [PDF 320KB]

Employment Court – Individual employment agreements – Availability provisions – Breach of the Employment Relations Act 2000, ss 67D and 67E – Exercise of discretion to issue compliance order – Whether Employment Court should issue compliance order while collective bargaining taking place.

At issue was whether the Employment Court (the Court) should issue a compliance order to compel the employer to make an employee’s individual employment agreement (IEA) comply with the availability provisions in ss 67D(external link)and 67E(external link) of the Employment Relations Act 2000 (the Act), while the employer at the same time was engaged in bargaining with the relevant union for a collective agreement.

The employee’s IEA required him to work varying hours and/or day and night shifts. The IEA included a statement that the employee had “no set entitlement to particular days, shifts, or hours of work unless otherwise agreed in writing with the Employer”. The employee was guaranteed a retainer of 60 hours per fortnight; if the employee worked fewer than 60 hours he was payed for 60 hours; if he worked more than 60 hours, he was paid the extra hours.

The Authority determined that the employee’s IEA breached ss 67D(external link)and 67E(external link)of the Act (the availability provisions). However the Authority declined to issue a compliance order to remedy the breach. The employee challenged the decision not to issue a compliance order. In the period between the Authority determination and the Court hearing, the employer changed its practice to better comply with the availability provisions, but it did not change the employee’s IEA.

The Court agreed with the Authority that the IEA breached the availability provisions. It found that a change in practice by the employer was not sufficient to remedy the breaches (see paras 15, 27–31).

The Court declined to issue a compliance order. The Court accepted that without a compliance order there was a risk the employer would continue to breach the availability provisions (see para 42). However, the Court found that, to issue a compliance order while the employer and the relevant union were undergoing bargaining for a collective agreement, would compel the employer to bargain with the union to secure a compliant collective agreement (under s 32(1)(d)(ii)(external link) of the Employment Relations Act 2000). The Court found this would place the employer and union under pressure that would not normally apply in collective bargaining (see paras 43–47).

The Court held it would be preferable to encourage the employer and union to reach a comprehensive collective agreement before making a compliance order (see para 48). The Court adjourned the proceeding for four months to give the employer and the relevant union time to conclude a collective agreement (see para 49).

[PDF Link] Lye v ISO Ltd [2020] NZEmpC 231 [PDF 250KB]