Cases of interest 2021

Court of Appeal – Holidays Act 2003 – Commission – Ordinary weekly pay

The issue was whether, as a question of law, productivity or incentive-based payments were a regular part of an employee’s pay for the purposes of calculating ordinary weekly pay under the Holidays Act 2003 (Act).

Tourism Holdings Ltd (THL) employed “driver guides” for their Kiwi Experience tours. The driver guides, among other tasks, sold additional tourist experiences to their clients whilst on tour. The driver guides earned commission for each tourist experience sold. The commission was not paid with their usual wages, but was paid in a lump sum after the end of that tour.

When an employee takes a portion of their paid annual leave, the employer must pay the employee at a rate that is based on the greater of:

• the employee’s ordinary weekly pay (OWP) under section 8(external link) of the Act; or
• the employee’s average weekly earnings (AWE), being 1/52 of their gross earnings under section 14(external link) of the Act.

Commission is always included in the AWE calculation. However, the Labour Inspector and THL disputed whether the driver guides’ commission should be included in the OWP. Section 8(1)(b)(i)(external link) stipulates that productivity or incentive-based payments are included “if those payments are a regular part the employee’s pay”. The Employment Court found that the commission payments were not a regular part of their pay, and therefore need not be included.

The Court of Appeal overturned the Employment Court’s decision, finding that the commission should be included in the OWP calculation (see para 40). In coming to its decision, the Court of Appeal noted the following:

• Employees who earned commission should enjoy an equivalent benefit in their leave entitlement, which is consistent with the purpose of the Act (see para 35).
• The word “regular” means both substantive and temporal regularity. In this case, both meanings applied to the commission earned by the driver guides. Their commission was both regular and habitual (see para 36–37).
• The entitlement to commission arose when the driver guide booked an additional tourist experience for a client, rather than when they completed the documentation process (see para 38).

Labour Inspector of the Ministry of Business, Innovation and Employment v Tourism Holdings Ltd [2021] NZCA 1 [PDF 247KB](external link)

Employment Relations Authority – Personal grievance – Unjustified dismissal – Unpaid wages

The issue was whether eight employees were justifiably dismissed in accordance with a business interruption clause in their employment agreements. 

The employees worked in a café. In March 2019 the employer proposed to introduce a clause into their employment agreements. The clause stipulated that if the employer’s business was interrupted by, among other things, a pandemic, the employer would not be required to provide the employees with work or pay. It stated the employer would consult with the employees before deciding if the employment could continue (see para 10). The clause was agreed to by all parties shortly before the employees were dismissed on 19 March 2020. The dismissal letter indicated they were dismissed due to the effects of COVID-19 in accordance with the business interruption clause (see para 12).

The employees raised personal grievances and proposed that the employer apply for the wage subsidy in the short term. The employer declined to do so. The employer later wrote to the employees, saying the café had been closed for financial reasons and it had not been motivated by the COVID-10 related lockdown (see para 14). 

The Employment Relations Authority (Authority) found that the employees had been unjustifiably dismissed (see para 20). The Authority found the test for frustration of contract is high, and at the time the employees were dismissed, gatherings of up to 100 people were still permitted. The circumstances at the time did not warrant invoking the business interruption clause (see para 17). Even if they had, the employers did not meet its obligation under the clause to consult with the employees before making a decision (see paras 18–19). The employees were awarded compensation and lost wages (see paras 21–32). 

De Sousa v Bayside Fine Foods Ltd [2021] NZERA 27(external link)

Employment Relations Authority – Personal grievance – Dismissal – Misconduct

At issue was whether an employee was justifiably dismissed after objectionable behaviour.

The employee worked as an operator at a milk processing facility. Shortly after the Mosque shootings took place in Christchurch in March 2019, when asked what he thought, he drew a swastika and tally marks on his company overalls. A little later, he said “White Supremacy”. The employee’s actions made his colleagues uncomfortable. The employee said he had made an “ill-timed joke” (see para 15) and was not racist (see para 59). The employer, after conducting an investigation into the incident, summarily dismissed the employee.

The Authority found the employer had acted as a fair and reasonable employer would in all the circumstances, and it was open to them to dismiss the employee (see para 73). The Authority applied the test of justification in section 103A(external link) of the Employment Relations Act 2000 and found the employer had followed the correct process (see paras 34–49).  

The employee claimed that the person conducting the investigation should not have been involved because she told him she was offended by his actions. The Authority found that every person with authority to investigate was likely to have been offended (see para 64). 

Ilin v Goodman Fielder New Zealand Ltd [2021] NZERA 12(external link)

Employment Court – Privilege – Whether overheard telephone call privileged

At issue was whether a phone call, between a lawyer acting for the employer and the employer’s Employee Relations Manager, was privileged. 

The employee and her representative; the employer and his lawyer; and a member of the Employment Relations Authority (the Authority); all took part in a case management conference call, from three separate locations. After the Authority member concluded discussions, the lawyer continued talking to the employer, thinking that the conference call had ended. Unknown to the lawyer, the employee could still hear the conversation and was recording it.

The employee used information from the conversation as evidence in an affidavit she later filed in the Employment Court (the Court). The employee subsequently removed the information in question from the affidavit; however a copy of the original affidavit remained on file at the Court. 

The employer sought a decision from the Court as to whether it had privilege over the information originally put in the affidavit. It also applied for an order that the employee destroy the recording. The employee claimed that because she had removed the relevant evidence from her affidavit there was no longer a live justiciable issue and no further orders were warranted. 

The Court was satisfied there was still a live justiciable issue to be decided, as there was a strong possibility of the communication being raised in evidence and the original affidavit remained on the Court file (see para 14).

The Court found the conversation was privileged as it took place immediately after the case management conference and it touched on topics inherently connected to the lawyer’s provision of legal services in ongoing proceedings (see para 20). The Court found it was clear there was an intention that the communication was to be confidential (see para 21). 

The Court held there was no authority for the submission that the failure to take precautions to maintain confidentiality meant privilege did not apply (see paras 22, 27–29). The Court found disclosure of the conversation was involuntary and a mistake and therefore there was no waiver of privilege (see paras 29, 37, 39).

The Court ordered the employee to redact the information on the relevant affidavit filed in Court. The Court declined to order that the employee destroy the recording of the conversation. The Court held that establishing that the communication was confidential and privileged and should be treated as such was sufficient (see para 41).

Bowen v Bank of New Zealand [2021] NZEmpC 6 [PDF 251KB](external link)

Employment Court – Raising a personal grievance – Whether employee raised personal grievance with employer

Employment Court – Raising a personal grievance out of time – Whether relying on wrong advice from an employment advocate is an “exceptional circumstance” under the Employment Relations Act 2000, s 115 

At issue was:

• Whether a letter drafted by the employee’s advocate successfully raised a personal grievance.
• If not, whether the Court should grant the employee leave to raise a personal grievance out of time.

The employee was dismissed for providing false timesheets. The employee claimed the dismissal was unjustified. The employee’s advocate drafted a letter for the employee to give to the employer for the purpose of raising a personal grievance over the dismissal. The employee adopted the letter in its entirety and gave it to her employer. The letter said the employee’s dismissal was “unfair” but did not spell out how the dismissal was unfair.

The employer claimed the letter did not give sufficient detail to raise a personal grievance. The advocate wrote another letter a month later, that did give sufficient detail, but that letter was written more than 90 days after the employee’s dismissal. The employer claimed that the employee did not raise a personal grievance in time.

The Authority determined that the employee’s letter was sufficient to raise a personal grievance, when looked at in conjunction with the employee’s other communications with the employer during the disciplinary process.

The Court did not accept that statements the employee made prior to her dismissal formed part of the communication of the personal grievance (see para 19). However, the Court found the first letter was sufficient to raise a personal grievance in any case. The Court held the statement in the letter saying that the dismissal was “unfair”, though “not ideal”, was enough to raise a personal grievance under the Act, s 114(2)(external link) (see paras 21–22).

The Court observed that even if the first letter had not raised a personal grievance, exceptional circumstances would have allowed the employee to raise the personal grievance out of time. The Court considered that the exceptional circumstances that would apply under section 115(b) of the Act(external link) if the advocate himself sent a deficient letter to the employer, would also apply if the employee adopted the advocate’s deficient letter and sent it to the employer (see paras 25–27). 

Disabilities Resource Centre Trust v Maxwell [2021] NZEmpC 14 [PDF 204KB](external link)

Employment Court – Costs against the Authority – Whether threshold met for awarding costs against the Authority 

At issue was whether the Court should award costs against the Authority.

The applicant was an employment advocate. In an earlier proceeding the advocate was partially successful in a judicial review of an Authority costs determination. In its decision on the judicial review, the Court found the Authority member breached natural justice when the Authority member did not provide the advocate with an opportunity to be heard prior to determining costs and making a statement about the advocate.

The advocate sought costs against the Authority in relation to the judicial review. The Authority opposed the application on the basis it was immune from costs as judicial officers, save for in exceptional circumstances.

The Court had not previously considered whether Authority members were judicial officers. The Court accepted that based on (see para 5):

• section 176 of the Act(external link) which refers to proceedings in the Authority as “judicial proceedings”
• the treatment of Legal Complaint Review Officers as judicial officers by the High Court in various decisions
• the treatment of coroners by the Court of Appeal in Coroner’s Court v Newton [2006] NZAR 312 (CA) (Newton)

the approach to costs against Authority members should be the same as the approach taken with costs claims against other judicial officers:

[5]…the usual approach, namely that costs follow the event, does not apply and the Court will be slow to award costs against the Authority absent compelling circumstances.

The Court declined to impose costs. The Court held the procedural breach in this case was not sufficiently egregious or warranting of disapproval to meet the threshold for imposing costs set by the Court of Appeal in Newton (at paras 44–46 of that decision) (see paras 6–9). 

Samuels v Employment Relations Authority [2021] NZEmpC 9 [PDF 181KB](external link)

Employment Relations Authority – Temporary migrant – Unjustified disadvantage – Failure by employer to assist with new temporary work visa

Employment Relations Authority – Temporary migrant – Unjustified dismissal – Dismissal prior to expiry of work visa 

At issue was:

• Whether the employer unjustifiably disadvantaged the employee by failing to assist him in applying for a new temporary work visa.
• Whether the employer unjustifiably dismissed the employee when the employer appointed another person to the employee’s position three weeks prior to the employee’s temporary work visa expiring.

The employee was employed as Assistant Restaurant General Manager in a permanent position. When the employee started in the role, the employee’s open work visa was due to expire shortly.  The employer at that time assisted the employee to obtain a two-year employer assisted work visa. The employee said he expected the employer would continue to assist him with visa matters.

Some months in advance of the expiry of the employer assisted work visa, the employee emailed the employer asking for documentation to support his application for an essential skills work visa (by that time an essential skills visa was the applicable visa). The employer responded some weeks later. The employer noted that the employee’s work visa was due to expire and pointed out that the employee would need a valid work visa to continue his employment. The email made it clear the employee’s employment would terminate on the date of the expiry of his visa unless he provided evidence he had obtained a new visa. Shortly afterwards the employer “opened” the employee’s position for applications. The employee applied for the position thinking it was a formality.

Three weeks prior to the expiry of the employee’s employer assisted visa, the employer phoned the employee to tell him his application to retain his position was unsuccessful and as a result the employer could not support his application for a new visa. The employer told the employee a New Zealand citizen had been appointed to the position. The employee took the phone call as notice of dismissal.

The day before the employee’s visa was due to expire the employer emailed the employee to inform him that if he did not provide a copy of a visa before the end of the next day his employment would be terminated.

The employee claimed he was unjustifiably disadvantaged by the employer’s failure to assist with his visa application; and he was unjustifiably dismissed when the employer appointed another person to his position. The employer said it did not assist with the visa as it thought the employee had no prospect of success.

The Authority found that the employer unjustifiably dismissed the employee by replacing him before the expiry of his visa (see paras 31 and 32(c)). The Authority found the employer also unjustifiably disadvantaged the employee by (see para 32):

• failing to assist the employee with a visa while giving the impression it was going to assist him
• not being open and communicative with the employee about the fact it was actively seeking to replace the employee because it believed he would not be successful in getting a visa
• second-guessing what the outcome of the application of a visa application would be and predetermining that the employee would not want to waste money on it.

The Authority ordered the employer to pay the employee $18,000 compensation under section 123(1)(c)(i)(external link) of the Act, without any deduction for contribution (see para 34). The Authority did not award lost wages as the employee did not have a visa that would have allowed him to work after his dismissal (see para 33). 

Gill v Restaurant Brands Ltd [2021] NZERA 61(external link)

Court of Appeal – Leave to appeal – Inconsistency between legislation and collective agreement

The issue was whether the Court of Appeal would grant the applicant union leave to appeal an Employment Court decision.  

The employer was undergoing a restructure. Clause 1.21.8 of the relevant collective agreement stated:

Whenever vacancies or any new positions occur in the Service, not less than 14 days’ notice shall be posted inviting applications from the workers for the filling of such vacancies and such applications shall receive full consideration.

Section 30(external link) of the Fire and Emergency New Zealand Act 2017 stipulates that the procedural steps in the previous sections, such as notification of vacancies, merit-based appointment and review, do not apply if the employee has received a notice of redundancy. 

The union argued that on the basis of the collective, their members were entitled to be considered for all vacancies and that preference should not be given to employees who have been made redundant. The Employment Court found that there was an inconsistency between the collective agreement and the legislation, and that the legislation must prevail.  It dismissed the union’s application.

The Court of Appeal declined leave to appeal. It found the union’s argument was an “excessively literal and narrow interpretation of s 30” (see para 21). The interpretation would undermine the legitimate rights of non-union members (see para 27).  The Court of Appeal agreed with the Employment Court that at its core s 30 was a protective provision for affected employees (see paras 22–24).  

New Zealand Professional Firefighters Union Inc v Fire and Emergency New Zealand [2021] NZCA 60 [PDF 194KB](external link)

Employment Court – Protest to jurisdiction – Proper place for litigation – Employment overseas

The issue was whether, as a question of law, New Zealand employment institutions and the Employment Relations Act 2000 (Act) applied to an employment agreement between the Chief of the Defence Force and a New Zealand citizen employee who worked in Washington DC in the United States.  

The parties signed an individual employment agreement (IEA) that stipulated: 

You are a Locally Engaged Civilian staff member as defined under Section 90A of the Defence Act 1990.  Accordingly, New Zealand legislation does not apply, rather you are subject to United States of America Labor Laws and legislation.

However, the IEA also referred to personal grievances. The employee also accepted the New Zealand Defence Force Locally Employed Civilian’s Code of Conduct (Code), which was one of four documents comprising the employment agreement. The Code referred to the Act and applied it to all staff regardless of their location in the world.  There was therefore inconsistency in the documents as to which law was applicable. The employee was dismissed and sought proceedings in New Zealand.  

The Employment Court (Court) found in this preliminary decision that United States law applies, but does not preclude considering the Employment Relations Act due to the Code (see paras 118 and 122), for the following reasons:

• Section 90A(external link) of the Defence Act 1990 means the employer can choose to employ a person overseas under the local legislation. In this case, the employer expressly did so (see paras 93–94).
• The IEA specifically referred to United States Labor Laws, as did the employee’s previous employment agreements with the employer.
• Correspondence from the employer regarding the employment agreement also referred to United States law applying (see para 122).
• The parties accepted the Code was intentionally signed and applied to the employment relationship (see para 112).

The Court also found that New Zealand was the appropriate forum for the proceedings (see para 160). Both parties were domiciled in New Zealand. There would be impediments to the matter being heard in the United States, including costs (see para 162). Although two witnesses were based in Washington DC, arrangements could be made to hear their evidence remotely (see paras 160–161). 

The Court held that the Employment Relations Authority (Authority) also has the jurisdiction to apply foreign law (see para 146).

Radford v Chief of New Zealand Defence Force [2021] NZEmpC 35 [PDF 415KB](external link)

Employment Relations Authority – Personal grievance – Unjustified dismissal – Reinstatement

The issue was whether the employee had been unjustifiably dismissed in a redundancy process, and whether he should be reinstated to his position.

The employee was a manager with the employer for over seven years. The employee and his superior had discussed his communication style.  After a restructure in another department, the employer restructured the employee’s department. Three new managerial positions were created. The only person affected by the second restructure was the employee. Although his employment agreement stipulated that the first option in a redundancy was to consider redeployment, the employee was asked to apply for the new roles. He did so, but declined to attend an interview as he believed the employer was obligated to offer him one of the new roles. He believed the roles were clearly within his capabilities and he was humiliated by the process. 

The Authority found that the employer should have offered the employee a redeployment option, which rendered the dismissal unjustified (see para 51). The Authority found that the employer’s insistence that the employee establish his suitability for a new role was an inversion of their obligation to positively explore his redeployment (see para 46). 

Reinstatement is the primary remedy for an unjustified dismissal under section 125(external link) of the Act. The Authority found that the employment relationship could be successfully re-established. It noted that the presence of a vacancy is not required for reinstatement to be ordered (see para 56). The Authority ordered that the employee be reinstated into a position that was no less advantageous to his previous role within 28 days. It also ordered that the employee fully cooperate in any retraining required (see para 57).

Haddad v New Zealand Steel Ltd [2021] NZERA 106(external link)

Employment Relations Authority – Business Debt Hibernation Scheme – COVID-19

The issue was whether a debt owed by an employer to an employee was subject to the business debt hibernation scheme.

The government introduced the scheme to assist companies affected by COVID-19 to manage their debts. It is set out in Schedule 13(external link) of the Companies Act 1993, which states in clause 40(external link) that during the debt hibernation period a proceeding may not be taken against the entity in relation to a debt unless it pertains to an “excluded debt” as defined in clause 4(external link). 

The employee and employer entered into a record of settlement which was certified by a mediator at the Ministry of Business, Innovation and Employment. In that agreement the employer agreed to pay the employee compensation, holiday pay and a contribution towards his legal fees. The employer did not pay the sums, and subsequently entered into business debt hibernation. The Authority was asked to decide whether these sums were excluded debt.

The definition of excluded debt includes “any salary, wages, or other amounts owed by the entity to an employee in connection with the employment relationship”. The Authority found that the holiday pay was an excluded debt, but the compensation and legal fees were not.  The term “amounts owed by the entity to an employee in connection with the employment relationship” was informed by the preceding terms salary and wages and by the purpose of the scheme (see paras 21–29). The Authority declined to award a penalty or interest (see para 30). It also declined to issue a compliance order when the employer may not have been able to adhere to it in the circumstances (see para 33).

Thomson v Hispec Homes NZ Ltd [2021] NZERA 124(external link)

Court of Appeal – Leave to appeal – Personal grievance – Unjustified disadvantage – Failure to meet health and safety obligations

The Employment Court (the Court) held that the employer disadvantaged the employee by failing to meet its health and safety obligations to her. At issue was whether the Court of Appeal should grant the employer leave to appeal the Court decision. 

The employee was an assisted living support worker. The employee suffered injuries including concussion when an intellectually disabled client attacked her. The assault on the employee followed a series of other incidents involving the same client, including an assault on another support worker two days prior to the incident involving the employee. The employer did not carry out a safety review after that incident. The client had a history of sleep issues that affected his mood and behaviour, but had not been put on night-time sleep medication at the time the incident with the employee occurred.

The employee claimed she was unjustifiably disadvantaged by the failure of the employer to meet its health and safety obligations to her. The Employment Relations Authority (the Authority) found the employer did not breach its health and safety obligations.

The Employment Court (the Court) overturned the Authority determination. The Court found:

• The series of incidents involving the client suggested there was a pattern of the client not having enough sleep, which adversely affected his mood and behaviour (see para 12).
• There was an obvious need to address the issue (see para 13).
• The employer provided no evidence to explain why it did not do so (see para 13).
• A fair and reasonable employer could be expected to have followed up on the issue of night-time medication while waiting for an appointment with the Mental Health Disability Team (see para 13).
• There was no evidence the employer reviewed or addressed safety issues after the serious incident two days before the incident involving the employee (see para 15).
• The employee did not fail to meet her own health and safety obligations (see para 17). 

The employer sought leave to appeal the decision. The employer claimed the Court erred in law by:

• placing health and safety obligations on the employer which were properly those of third-party agencies (government and private health services providers that were required to assess and treat the client)
• conducting an impermissible assessment based on hindsight rather than foreseeability of harm and the employer’s obligation to take all reasonably practicable steps to address such harm
• taking insufficient account of the employee’s own health and safety obligations to take all reasonably practicable steps to address such harm.

The Court of Appeal declined leave to appeal. The Court of Appeal held that none of the questions of law posed met the criteria justifying leave (see para 19):

The Judge applied settled law to the facts found following a comprehensive review of the relevant evidence. The outcome on all issues was intensely fact-specific. In our view, no question of general or public importance arises. 

The Court of Appeal also held (see para 20):

• It was not reasonably arguable that the Judge placed health and safety obligations on the employer that were instead owed by third-party agencies.
• There was nothing in the judgment to suggest that the Judge made his assessment with the benefit of hindsight rather than focusing on the foreseeability of harm. 

Idea Services Ltd v Davis [2021] NZCA 111 [PDF 187KB](external link)

Employment Court – Injunction – Injunction restraining lockout

At issue was whether the Court should issue an injunction restraining the employer from locking out bus drivers after they had gone on strike and were threatening further industrial action, while bargaining for a new collective agreement. 

New Zealand Tramways and Public Passengers Transport Employees’ Union Wellington Branch Inc (the Union) were engaged in collective bargaining with two different bus companies: Wellington City Transport Ltd (WCTL) and Cityline (NZ) Limited (CNZL) (the employers) at once. The Union’s collective agreements with the employers expired at almost the same time. 

The employers and the union agreed that terms and conditions of employment should be the same across the two employers. The parties however had not gone so far as to formally enter bargaining for a Multi-Employer Collective Agreement (MECA); the Union had not carried out a ballot of its members under section 45(external link) under the Employment Relations Act 2000 (the Act), to get the consent of its members to enter a union-initiated MECA. The Union had also not carried out any ballot under section 47(external link) to get the consent of its members to enter an employer-initiated MECA. 

After eight months of bargaining without coming to agreement, the Union issued a notice of strike action. The notice was issued at 3 am and came into effect at 4 am the same day. 

In response, each of the employers issued a lockout notice to the Union. WCTL’s notice stated that specified employees of WCTL would be continuously locked out from 4 am on 24 April 2021, until they accepted the proposed collective agreement which was tabled on 14 April 2021. The notice identified both WCTL and CNZL as “the employer”. CNZL’s notice was to the same effect. The Union sought an injunction against the lockout on the basis the lockout notices were unlawful. 

The Court accepted that the Union had three separate grounds for an arguable claim that the lockout notices were unlawful (see para 53):

1. The effect of the lockout notices was to unlawfully require the Union to enter a MECA, when the union had not carried out the necessary ballot under section 45(external link) of the Act (see paras 26, 34–35, 41).
2. The effect of the lockout notices was to unlawfully require the Union to enter an employer-initiated MECA, when the union had not first complied with the requirement under section 47(3)(external link) of the Act that the Union must first hold a secret ballot if the Union believes the majority of members would not agree to an employer-initiated MECA (see paras 29–30, 34–35, 41).
3. The collective agreement proposed by the employers arguably contained an unlawful availability provision. If the collective agreement contained an unlawful availability provision the lockout notices would be unlawful because sections 83 and 84(external link) of the Act could not be interpreted to allow an employer to make a demand that an employee cannot not lawfully make; or an employee cannot lawfully accept (see paras 49–52).

The Court held the balance of convenience and overall justice favoured granting an injunction restraining the lockout. In coming to this decision the Court took into account that (see paras 61–66):

• The public interest favoured granting the injunction: while the Union strike was disruptive, it was time-limited; the difficulty with the employers’ lockout was that it was indefinite; it would have a significantly more draconian effect than did the strike.
• The fact the lockout notices were arguably illegal was a strong factor justifying the grant of the application.
• The Court was able to accommodate a prompt hearing of the substantive matter. 

MacLeod v Wellington City Transport Ltd [2021] NZEmpC 55 [PDF 257KB](external link)

Employment Relations Authority – Sale of business – Unjustified dismissal – Failure to employ worker on same terms and conditions

At issue was: 

• Whether the purchaser of a café unjustifiably dismissed the employee by offering him employment on less favourable conditions than those that applied under the former owner.
• Whether the employee was covered by the protections in part 6A(external link) of the Act for employees affected by restructuring.
• Whether the employee provided “food catering services” in “specified sectors, facilities or places of work” under schedule 1A(external link) of the Act.
• Whether the employee was entitled to enforce a provision of the sale and purchase agreement that required the purchaser to make any offer of employment to transferring employees on no less favourable terms than applied prior to the sale. 

The employee worked in a café for eight years, latterly as manager and barista. The café in question provided services to walk-in customers and also did catering for 20 clients, including community groups, schools and businesses (on and off-site) and catered for weddings, birthdays and funerals. 

The owner of the café sold the business to a company (the new employer). The sale and purchase agreement provided that the purchaser had the “sole discretion” to engage existing staff “on terms no less favourable than those on which they are currently employed by the vendor”. 

The new employer offered the employee employment on a 90-day trial basis and with no provision for continuity of accumulated sick leave. The new employer withdrew the offer when the employee would not accept the amended terms and conditions. The employee claimed the new employer unjustifiably dismissed him. 

The Authority found the employee came within the protections in part 6A(external link) of the Act applying to workers specified in schedule 1A(external link). As a protected employee, the employee should have been offered continued employment on the same terms and conditions he had with his former employer (see paras 33–34, 38–42). 

The Authority found that, under the Contract and Commercial Law Act 2017, section 10(external link), the employee was also entitled to enforce the provision in the sale and purchase agreement requiring the new employer to offer him employment on terms and conditions no less favourable than his previous terms and conditions, even though he was not a party to the contract (see para 48). The Authority rejected the submission by the employer that the terms the new employer offered were not less favourable. The Authority determined that putting an invalid 90-day trial provision in the new agreement and not carrying over the employee’s accumulated sick leave meant the new employment agreement was less favourable; even though the old employment agreement also contained a 90-day trial provision, this had well-since expired (see paras 47–48). 

The Authority awarded the employee four weeks lost wages and $8,000 compensation under section 123(1)(c)(i)(external link) of the Act (see para 59).

Hau v SA & AC Lester Ltd [2021] NZERA 109(external link)

Employment Relations Authority – Sole trader – Breaches of minimum employment standards – Penalties

At issue was the quantum of penalties the Authority should impose on an individual carrying out business as a sole trader for breaches of the Employment Relations Act 2000 (the ER Act) and the Holidays Act 2003 (the HA Act) in relation to 17 employees. 

The employer operated a dairy farm as a sole trader. The employer employed a number of temporary migrants on working holidays.  The Labour Inspectorate sought penalties against the employer for minimum employment standard breaches in relation to 17 of the employees. The employer accepted he had:

• failed to provide employment agreements to 16 of the employees
• provided the remaining employee with a non-compliant employment agreement
• failed to pay three employees holiday pay on termination of their employment
• failed to keep compliant time and wage records for all 17 employees
• failed to keep holiday and leave records for all 17 employees
• made public holiday-related breaches in relation to two of the 17 employees.

The Authority awarded penalties of $30,000 against the employer for the breaches. In coming to that amount, the Authority took into account that:

• The employees were not as vulnerable as temporary migrants whose visas were tied to their employer, but were still unfamiliar with New Zealand employment standards and had little ready access to support and information (see para 42).
• The penalty needed to be a deterrent for other employers (see para 56).
• The employer’s actions were intentional; he had come to the attention of the Labour Inspectorate before, ten years previously – he was wilfully blind to his statutory obligations (see paras 30, 43 and 44).
• $30,000 was proportional to penalties awarded in other cases (see paras 70–71). 

Labour Inspector v Kenel [2021] NZERA 133(external link)

Alcohol Regulatory and Licencing Authority – Application for renewal of off-licence – Relevance of employment law breaches 

At issue was the extent to which employment breaches by the employer should be taken into account when deciding whether to renew the off-licence for a liquor store. 

The applicant applied to the South Waikato District Licencing Committee (the DLC) to renew the off-licence for one of its liquor stores. Prior to the DLC hearing, the Labour Inspectorate issued the applicant with an Improvement Notice in relation to employment breaches in the store. The Improvement Notice required the applicant to ensure its employment agreements and its time, wage and holiday and leave record keeping were compliant. At the DLC hearing, the Labour Inspectorate gave evidence of “a systematic pattern of illegal behaviours over the five years that were inquired into”. 

The DLC declined the renewal application (see para 29). The DLC found there was “a clear nexus between the employment standards breaches and the ability of the company, and its staff, to sell and supply alcohol safely and responsibly” (see para 27). 

The applicant appealed the decision to the Alcohol Regulatory and Licencing Authority (the ARLA). The applicant claimed the DLC gave the employment issues greater weight than was appropriate when deciding the applicant’s suitability to hold an off-licence (see para 66). The applicant also submitted that the DLC used the licencing process to punish the employer, when employment breaches were properly within the jurisdiction of the Employment Relations Authority. 

The ARLA confirmed the decision of the DLC that the applicant was not suitable to hold an off-licence (see para 132). The ARLA said the conclusion the applicant did not have appropriate systems, staff and training to comply with the law was “unavoidable” (see paras 136, 152). In coming to that decision, the ARLA took into account that the applicant had still not complied with the Improvement Notice from the Labour Inspectorate, when the deadline for compliance had passed five months earlier (see paras 135–136). 

Two Brothers Wholesale Ltd v Medical Officer of Health, Waikato District Health Board [2021] NZARLA 32 [PDF 540KB](external link)

Court of Appeal – Employee status – Jurisdiction of Employment Relations Authority to determine employee status in proceedings brought by the Labour Inspectorate

The issue was whether the Employment Relations Authority (Authority) had jurisdiction to determine whether pizza delivery drivers were employees or contractors in an action brought by the Labour Inspectorate; or whether only the Employment Court (Court) had jurisdiction to decide the drivers’ employee status. 

The Labour Inspector was pursuing a wage recovery claim on behalf of pizza delivery drivers. The company denied that the drivers were employees, arguing they were independent contractors. The Court decided that only the Court, not the Authority, had jurisdiction to decide whether workers were employees or contractors when the Labour Inspector was bringing a claim on the worker’s behalf. The Labour Inspector appealed to the Court of Appeal. 

The Court of Appeal overturned the Court’s decision, finding that the Authority did have jurisdiction to decide employment status. The Court of Appeal made the following findings:

• The Court’s conclusion was wrong because it was inconsistent with the text and with the purpose of both section 6(5)(external link) of the Employment Relations Act (Act), which states that the Court may declare whether a person is an employee, and the scheme of the enforcement provisions (see para 31).
• The Authority would always have to be satisfied that a worker is an employee before it went on to make a substantive determination (see para 32).  It has done so several times in the past (see paras 35–36).
• The suite of tools provided to the Labour Inspectorate was intended to allow it to manage non-compliance “in the most efficient way, avoiding lengthy and costly litigation” (see para 16). Having “different issues in the same action [decided] in different fora is plainly inefficient and would usually be regarded as an abuse of process” (see para 52).
• The natural and ordinary meaning of section 161(1)(c)(external link) is that that the Court only has exclusive jurisdiction to decide employment status if a s 6(5) application is made. Otherwise, the Authority has jurisdiction (see para 34). 

A Labour Inspector (MBIE) v Gill Pizza Ltd [2021] NZCA 192 [PDF, 265 KB](external link)

Employment Court – Triangular employment relationship – Dispute regarding true employer – Application for s 6(5) declarations 

At issue was whether the employer of eight employees was the recruitment company who hired the workers or the government department they were placed with. 

Inland Revenue (IR) had awarded the recruitment company (Madison) a contract to provide contingent labour to supplement its workforce while it undertook a significant business transformation. Consequently Madison employed the employees to fulfil those roles. The employees, through their union, claimed that Madison had placed them with IR in the manner of a recruitment company, and IR then became their employer (see para 38). 

The Court found that the employees were employed by Madison, not IR, for the following reasons:

• The employment agreements stipulated Madison as the employer, as did the agreement between IR and Madison (see para 157).
• Madison had on-going involvement in the employment arrangements (see para 130).
• The employees assigned by Madison did not undertake all duties that those employed directly by IR performed (see para 191).
• Performance and conduct issues were dealt with by Madison (see para 199).
• The employees made all pay, work hours and leave arrangements with Madison (see paras 150, 196, 207 and 211).
• The way in which the employment was conducted in practice was consistent with the documentation governing the relationship (see para 245).
• The employees were not vulnerable employees open to abuse (see para 277).
• The parties had genuine labour-hire arrangements (see para 255). 

The Court dismissed the application (see para 294). 

Head v Chief Executive of the Inland Revenue Department [2021] NZEmpC 69 [PDF, 697KB](external link)

Employment Court – Employee status – Family caregiver

At issue was whether a mother, who was the caregiver of her severely physically and mentally disabled adult son, should be declared an employee of the Ministry of Health (Ministry).  

The applicant was supported by a Work and Income benefit while providing primary care for her son. In 2018 she became aware that she could apply for funding under a Ministry scheme, called “Funded Family Care” (the scheme), instead of receiving a benefit.  Under the scheme, the recipient of care was purported to be the “employer” of the person providing care. The applicant commenced an application for funding under the scheme. 

As part of the application process, an agent of the Ministry assessed the disability level of the applicant’s son. The assessor found the applicant’s son needed 24 hour supervision for his safety and well-being. Following the assessment the Ministry determined the applicant was entitled to be funded for a maximum of 22 hours a week. The applicant decided not to complete the application for funding as she would have been worse off than she was on a benefit. She did not accept that her son had capacity to be her employer. 

The Ministry offered an alternative funding model named “Individualised Funding”. There were three options as to who the employer was under Individualised Funding (the disabled person, their agent or a “host” agency approved by the Ministry). The applicant decided not to apply for Individualised Funding either.  Instead she sought a declaration that she was an employee of the Ministry (see para 23). The applicant also sought compensation, lost wages and penalties. 

The Ministry disputed the jurisdiction of the Court to consider whether the Crown was entitled to require funding recipients of either scheme to accept an employment relationship (see para 24). It also disputed that the applicant was the Ministry’s employee. 

The Court found that:

• The Court did not have jurisdiction to decide whether the funding policies were lawful or to impose parameters around when funding might be available (see para 53).
• The Court had jurisdiction under s 6(5) of the Act to decide the applicant’s employee status. Parliament had not removed that jurisdiction (see paras 46–57).
• The applicant’s son had no capacity to enter into an employment relationship, or to have one imposed on him, due to his diminished mental capacity (see paras 26–28, 31).
• The applicant was an employee of the Ministry (see para 86). 

The Court found that the applicant was not an employee under the “ordinary s 6 test” because the required level of integration and control was not reached in the relationship (see para 93). However, the applicant was employed by the Ministry as a homeworker as defined in s 5 of the Act (see paras 75–86). The Court held that the applicant was entitled to a declaration that she was an employee (see para 96). 

The Court found the applicant would receive compensation for her personal grievance on the basis of discrimination and was entitled to lost wages (see para 96–99). The Court reserved the quantum of remedies (see para 107). The Court declined to award penalties as it did not find that the failures were deliberate (see para 103). 

Fleming v Attorney-General [2021] NZEmpC 77 [PDF, 446 KB](external link)

Employment Relations Authority – Personal grievance – COVID-19 redundancy

At issue was whether the employee was unjustifiably dismissed when she was made redundant when New Zealand entered COVID-19 related lockdown. 

The employee was a deckhand on a mail boat. Tourists would join the mail run to cruise around the Marlborough Sounds. The employee was employed on a fixed term agreement over summer due to the seasonal nature of the business. The employment was due to end on 31 May 2020. 

The employer’s business was heavily impacted by border restrictions in March 2020. The employer held a meeting on 16 March to discuss ramifications with the staff. However, the employee was elsewhere, as it was her rostered day off, and did not attend the meeting. On 18 March the employer announced it would be bringing forward its winter schedule to commence on 23 March. After the day’s cruise on 21 March, the employee’s manager boarded the boat and said to the employee “that was your last day mate” (see para 19). 

The next day the employee spoke to the employer’s human resources advisor. However, “the two were talking at cross purposes” because the employee believed she had already been dismissed the previous day (see para 25).  The human resources advisor, on the other hand, thought the conversation was part of consultation regarding redundancies. Following the misunderstanding there was a dispute between the parties regarding the applicable notice period. The company claimed the contract had been frustrated due to the pandemic (see para 28). After further discussions regarding options such as the wage subsidy scheme, the employee raised a personal grievance. 

The Authority found the employee had been unjustifiably dismissed (at para 40). It acknowledged there had been a mix-up but found that the employer had not consulted with the employee as it was required to do. The employer “exacerbated the situation by later proffering the unsustainable argument of frustration” (see para 39).  The employee was awarded $8,000 in compensation (see para 46). 

Siegmund v Marlborough Tour Company Ltd [2021] NZERA 180(external link)

The employer provided subcontractor services to the Chorus ultra-fast broadband project. A Labour Inspector approached the employer as part of a proactive investigation into such subcontractors. The Labour Inspector made a number of attempts to obtain from the employer a list of employees and the employees’ time and wage, holiday and leave records. After around nine months of delays, the employer finally provided some records but not others.

The Labour Inspector sought penalties against the employer and director in the Employment Relations Authority (the Authority) for failures to keep and provide employment records. The employer provided time and wage records for two employees to the Authority, but records for three employees were still outstanding. The Labour Inspector considered that holiday and leave records the employer provided were not compliant with section 81(external link) of the Holidays Act 2003.

The Authority imposed penalties of $19,200 on the employer and penalties of $8,000 on the director of the employer for failing to keep and produce employment records. The employer sought to challenge the determination in the Court on a de novo basis.

The Court found the employer’s responses to the Labour Inspector for the first nearly nine months of the Labour Inspector’s investigation were “woeful”. The Court held the employer failed to provide employment records to the Labour Inspector “forthwith” as required under section 229(2)(external link) of the Employment Relations Act 2000 (the Act) (see para 32). The Court held the information the employer did provide was incomplete (see paras 33, 35–38).

The Court held the director was not liable for a penalty for the breaches as a person-involved. The Court found the director did not intentionally fail to keep compliant records. The Court set aside the penalty awarded against the director by the Authority (see paras 46–48).

The Court reduced the penalty against the employer to $12,000. In coming to that decision the Court took into account:

• There was no evidence of any loss to any person as a result of the breaches (see paras 57–58).
• The employer had not come to the attention of the Labour Inspectorate before or been before the Authority (see para 58).
• The breaches were negligent rather than deliberate (see para 59).
• The director was “extremely remorseful” (see para 62).
• The financial position of the employer and the director was not good (the employer had ceased trading and the director had been without work for four months) (see para 65).

A1 Communication Ltd v Labour Inspector of Ministry of Business, Innovation and Employment [2021] NZEmpC 91 [PDF, 265KB](external link)

Employment Court – De novo challenge to Employment Relations Authority determination – Penalties – Record-keeping breaches – Failure to provide records promptly to Labour Inspector

At issue was whether the Employment Court (the Court) should impose penalties on the employer and the director of the employer for:

• breaching employment-related record-keeping requirements
• failing to provide records promptly to the Labour Inspectorate.

Also at issue was the amount of penalties the Court should order.

Employment Court – Employee status – Employee or independent contractor

The issue was whether the Employment Court (the Court) should make a declaration under section 6(external link) of the Employment Relations Act 2000 that a builder was an employee. 

The applicant worked for a building company (the respondent) as a builder for around three years. The respondent originally engaged the applicant in a “hand-shake” arrangement as an independent contractor, without a written contract. The applicant claimed the actual relationship became an employer/employee relationship. The applicant sought a declaration that he was an employee of the respondent.

The Court found that while the initial intention was for the parties to have a hirer/independent contractor relationship, overall the factual context pointed more firmly to the applicant being an employee; he was not in reality operating a business on his own account (see paras 64–65). 

In coming to that decision, the Court took into account that:

• The applicant worked under close control and direction of the respondent, to suit the respondent’s business needs (see paras 25–26).
• The applicant worked relatively consistent hours for the respondent over an extended period of time and did not work for anyone else (see paras 27–29).
• The applicant was integrated into the respondent’s business: from time to time he drove a company vehicle; to an outsider there was nothing to distinguish him from any other workers on site (see paras 30–33).
• While the applicant was not required to wear a uniform or identify with the respondent in other ways, there was no evidence employees were required to wear a uniform (see para 35).
• While the applicant was not prohibited from working elsewhere it would have been unrealistic for him to do so, as he was working for the respondent an average of 40 hours a week and spending three hours a day travelling to and from work (see paras 36–39).
• There was no evidence the applicant could subcontract or delegate his work (see para 40).
• The applicant did not invoice the respondent for his work but simply provided a screenshot of his hours (see para 44).
• The respondent applied for and was granted a wage subsidy for the applicant (see paras 48–49).
• The applicant did not provide his own tools for work, except for a tool-belt with some small tools (see paras 50–51).
• The respondent paid the applicant by the hour rather than for completion of tasks (see paras 52–54).
• The applicant had no opportunity to make a profit from his work and any goodwill from his work accrued to the respondent (see paras 56–57).

The Court made a declaration that the applicant was an employee (see 68).

Barry v C I Builders Ltd [2021] NZERA 82 [PDF, 279 KB](external link)

Employment Court – De novo challenge to Authority determination – Workplace drug testing – Personal grievance – Unjustified disadvantage – Unjustified dismissal 

At issue in the case was: 

• Whether the way the employer required the employee to take a workplace drug test was justified.
• Whether the employer unjustifiably dismissed the employee when it assumed the employee had abandoned his employment, without seeking clarification of the situation from the employee.

The employee was a concrete finisher. The employee had worked for the employer in the past. The employer asked the employee if he would come back to work for the employer again. The employee agreed.

The employee’s application for work required him to agree to pre-employment and periodic random drug and alcohol testing. The employee’s employment agreement contained a clause providing for in-work drug testing on reasonable grounds:

Where the Employer has reasonable grounds for suspecting that the Employee is under the influence of illegal drugs while at work, the Employer may require the Employee to undergo a non-intrusive drug test (a urine test) which will be conducted by a registered medical professional. Upon receipt of a positive test the Employer shall discuss the results with the Employee and, whilst the failure of a drugs test is prima facie serious misconduct and justification for instant dismissal, the Employer may take into consideration any explanation received before any outcome is decided upon. 

The employer at the time also had a “Just Cause” drug testing policy, equivalent to that below.

CSL also reserves the right to conduct “Just Cause” testing. Where behaviour is observed that causes concern that an individual could be a potential or actual safety hazard to himself or others due to the effects or after effects of drugs and/or alcohol the manager will be informed and the individual then interviewed to determine whether testing is required. It is the responsibility of all employees to identify concerns about any individual’s immediate ability to perform their work and report such concerns promptly to management. 

On the employee’s first day back working for the employer, the employee got into an argument with a manager. The manager claimed he suspected the employee was on drugs because during the argument the employee quickly became agitated and started sweating. 

The manager asked the employee if he would take a drug test. The manager said he would take the employee for a test nearby. The manager claimed the employee replied straight away that there was no point because he would fail. The manager assumed that meant the employee was under the influence of drugs. The manager then sent the employee away. The manager said he was suspending the employee until he returned a clean drug test. The employee believed he had been dismissed. When the employee did not return to work the employer considered he had abandoned his employment. 

The Court found that the manner in which the employer required the employee to have a drug test was not justified (see para 83). In coming to that conclusion, the Court took into account that: 

• The employer breached the employment agreement by requiring the employee to have a drug test when there were no reasonable grounds for a test. The employee had worked in the morning prior to the argument without evidence of behaviour consistent with an immediate inability to perform work (see paras 77–80).
• The employer breached the “Just Cause” drug-testing policy by not conducting an interview with the employee before requiring him to take a drug test (see para 81).
• The employer also breached good faith by discussing the requirement for a drug test during the argument with the employee. The Court found a reasonable employer in the circumstances would have had a discussion on drug testing after allowing time for cooling down, rather than in the middle of an altercation (see para 82).

The Court held that a reasonable employer in the circumstances would not have sent the employee away to have a drug test as a knee-jerk response to an argument without adequately investigating the need for a test (see para 83). The Court found the employer also unjustifiably dismissed the employee, when it assumed he had abandoned his employment without seeking further clarification from the employee (see paras 104–107). The Court awarded the employee: 

• $12,000 compensation reduced by 10 per cent for contribution to $10,800
• Four months lost wages, also reduced by 10 per cent for contribution.

Concrete Structures (NZ) Ltd v Rottier [2021] NZEmpC 95 [PDF, 365KB](external link)

Employment Court – Minimum employment standards – Systematic underpayment of wages – Unlawful premium – Remedies – Penalties – Declarations of breach – Banning order against director

A key issue was what remedies the Court should award against a group of companies and the common director of the companies, for the following: 

• systematically making employees under-record hours
• systematically under paying wages
• failing to keep accurate time and wage records for the employees
• not complying with the Holidays Act 2003(external link)
• requiring an employee to pay a premium as a condition for getting work.

The Labour Inspectorate investigated complaints from eight employees working at various locations in a chain of six restaurants. The restaurants in the chain were operated by six different companies, all with the same director.

A Labour Inspector claimed the director told the eight employees to systematically record many fewer hours than they actually worked. The Labour Inspector claimed the employer then systematically underpaid the employees. The Labour Inspector calculated that the employer owed the eight employees over $286,000 in arrears. 

The Labour Inspectorate claimed that in relation to all eight employee the employers had: 

• breached the Minimum Wage Act 1983(external link) and the Holidays Act 2003(external link)
• breached section 130(external link) of the Employment Relations Act 2000 (the Act) by failing to keep accurate time and wage records.

The Labour Inspector claimed one of the defendant companies had also sought $10,000 payment from a prospective employee, as a condition of offering the employee a job, in breach of the Wages Protection Act 1983, section 12A(external link). The employee had paid $7,500 of the $10,000 demanded. 

The Court upheld the claims of the Labour inspector (see paras 63–66). The Court held that the director of the defendant companies was involved in the breaches of the companies, as he was “the driving force behind the employees not being paid properly” and the person who demanded a premium from an employee (see paras 70–71). 

The Court found the breaches were serious enough for the Court to make declarations of breach against three of the defendant companies and against the director as a person-involved under section 142B(external link) of the Act (see paras 85–88). The Court also:

• imposed a total of $195,200 in penalties against three of the defendant companies (see para 130)
• imposed a penalty of $112,800 against the director (see para 130)
• ordered three defendant companies to pay the employees compensation totalling close to $272,000, with interest (see paras 133 and 145)
• made a banning order against the director under section 142M(external link) of the Employment Relations Act 2000 (see paras 142–144).

The banning order banned the employer for two years from:

• entering into an employment agreement as an employer
• being an officer of an employer
• being involved in the hiring or employment of employees.

Labour Inspector of the Ministry of Business Innovation and Employment v Jeet Holdings Ltd [2021] NZEmpC 84 [PDF, 555KB](external link)

Employment Relations Authority – Interim reinstatement – Removal of claim to Employment Court – Questions of law – Whether questions about mandatory vaccination important questions of law warranting removal

At issue was whether the Authority should order removal of an interim reinstatement claim to the Court, on the basis important questions of law were likely to arise. The questions of law concerned the employee’s dismissal for declining to be vaccinated against COVID-19. 

The employee was a temporary border worker at a port. The Government issued an Order requiring “front-line” workers to be vaccinated in order to continue being employed at border facilities. The employee chose not to be vaccinated. The employer consequently terminated the employee’s employment with notice. 

The employee sought interim reinstatement pending an investigation into a claim for unjustified dismissal. The employee sought to have the interim reinstatement claim removed to the Court on the basis the dismissal claim would raise important questions of law. The employee’s representative claimed the dismissal claim raised questions including:

• Can an employer change an employee’s terms and conditions to include mandatory vaccination?
• If changes to conditions are imposed by a mandatory vaccination does this create a redundancy situation?
• If a vaccination is mandatory is such consistent with provisions of the New Zealand Bill of Rights?

The employer did not agree the claim raised the questions put forward by the employee, but supported the application for removal. The employer supported removal on the basis that it was the first time an employee was challenging an employer’s decision to dismiss an employee for not getting vaccinated (see para 20). 

The Authority dismissed the application for removal (see para 29). In coming to that decision the Authority determined that:

• It was arguable that the terms and conditions of employment had not changed, in the sense that the job location, tasks and duties remained the same and the employee was not compelled to take the vaccine (see para 24).
• Neither the Authority not the Court had jurisdiction or discretion to question the actions of the New Zealand Government or agencies, outside of any employment relationship. The appropriate forum for challenging a government decision was in the High Court by way of judicial review (see para 25).
• Any public interest was overstated, as the public interest involved a narrow contextual setting; and there was a need to be cautious about making a “cause celebre” for the relatively few border workers declining to be vaccinated (see para 26).
• The circumstances under consideration were not so novel that there were not any legal precedents and analogous cases (see para 27).
• Referring the matter to the Court would not necessarily expedite matters or contain costs (see para 27).

GF v OO [2021] NZERA 251 [PDF, 193KB](external link)

Employment Court – Record of settlement – Meaning of “full and final settlement” – Discretion to impose penalty

At issue was:

• Whether an employee who signed a record of settlement could still make a claim for unpaid wages and holiday pay.
• Whether the Authority has discretion over whether to award a penalty for a failure to provide wage and time records forthwith. 

The employee raised a personal grievance with the employer, as well as a claim for unpaid wages and holiday pay.  The parties signed a record of settlement under section 149(external link) of the Employment Relations Act 2000 (Act). The agreement stated, among other things, that:

• the employee would receive compensation
• the parties confirmed that they had not agreed to forego minimum entitlements
• the record of settlement was a full and final settlement of all matters between the parties arising out of their employment relationship. 

After being paid the agreed compensation, the employee lodged a claim in the Employment Relations Authority (Authority) for unpaid wages and holiday pay. The employee also sought that a penalty be imposed upon the employer for failure to provide wage and time records under section 130(external link) of the Act. The Authority dismissed the claim and declined to impose a penalty. The employee challenged the Authority’s determination. 

The Employment Court (Court) found that the employee could not bring a claim for unpaid wages and holiday pay (see para 49). The employee argued that minimum standards do not arise from the employment relationship itself (see paras 19–22). The Court found this distinction was artificial (see para 25). The term “all matters” should be given an expansive interpretation (see para 27). The Court observed that Parliament intended for settlements under s 149 to produce finality for parties (see paras 43–45). 

The employee submitted that the Authority was obliged to impose a penalty on an employer who delayed providing wage and time records (see para 58). The Court disagreed.  It found that the word “liable” in s 130(4) means that “an employer in default is exposed to the risk of a penalty”, but the Authority has discretion over whether to impose one (see para 61). 

Crossen v Yangs House Ltd [2021] NZEmpC 102 [PDF, 283KB](external link)

Employment Court – Personal grievance – Unjustified actions causing disadvantage – Reinstatement

At issue was whether the employee was disadvantaged by the unjustifiable actions of her employer. Also at issue was whether she should be reinstated to her position.

The employee was a Head of Department at a high school. She had a strained relationship with a staff member in her department. In March 2015, the teachers argued over which of their classes could use the department laptops. Following the incident, the employee took stress-related sick leave.

The employer undertook its own investigation into the incident with a view to arranging mediation. However, the teachers did not attend mediation. The employer then engaged an independent investigator. The investigator made recommendations for the department going forward, but found that “massive change was not necessary” (see para 63). The employee was not happy with the investigator’s recommendations. She remained on long term sick leave. Over the years, the parties tried to agree to a return-to-work plan. Subsequently the employer questioned whether the parties were incompatible. At the time of the hearing the employee had not returned to the school.

The employee raised three personal grievances with the school on the grounds of unjustifiable actions that caused her disadvantage. The Court assessed what had occurred under the test of justification in section 103A(external link) of the Act (see para 152). The Court dismissed the challenge, finding that:

• The employer investigated the matter so as to re-establish “a productive and harmonious environment within the department” rather than discipline either teacher (see para 176).
• The investigator’s report was thorough and independent (see paras 197 and 221).
• The investigator had given the employee opportunities to give her point of view (see para 204).
• The employer did not sanction the behaviour of either teacher (see para 209).
• The employer had not slavishly adhered to the report (see para 210).
• The employee raised a grievance on the grounds of bullying, but did not provide any particulars other than what had already been said about the incident. It was open to the school to conclude there were “no fresh matters requiring inquiry” (see para 233).
• The employer was not imposing roadblocks to the employee’s return that amounted to an unjustified suspension, as alleged (see para 239). The school wanted to hold preliminary discussions to agree to a plan before her return, which was “within the range of options which a fair and reasonable employer could take” (see para 263).
• The employer had acted in good faith and gone to considerable lengths to facilitate a return-to-work (see para 273).
• Although communications between the parties had at times become legalistic, this was largely due to adversarial communications sent on behalf of the employee (see para 325).
• Justified terminations on the grounds of incompatibility are rare (see para 291). However, the Court found that in this case allegations of incompatibility were among the steps a fair and reasonable employer could have taken in the circumstances (see para 298).

The Court had no jurisdiction to order reinstatement as the grievances were not established. The Court advised the parties to proceed in good faith (see para 329).

Smithson v Wellington College Board of Trustees [2021] NZEmpC 114

Employment Relations Authority – Personal grievance – Unjustified dismissal – Unjustified actions causing disadvantage – Serious misconduct – Medical incapacity

At issue was whether the employee was unjustifiably dismissed when her employment ended on the grounds of both serious misconduct and medical incapacity, as well as disadvantaged by the unjustifiable actions of the employer.

The employee was a lecturer at a university for 18 years, most recently a senior lecturer. She had previously suffered bouts of poor mental health, but had been stable for several years. In 2014 the employee was hospitalised and did not work for several months. The parties agreed to and executed a return-to-work plan. In that plan the employee stated she was willing for the employer to place her on sick leave at their discretion.

In early 2018 the employee’s husband informed the employer that the employee was experiencing psychotic episodes. The employee denied she was unwell. Although there had been no concerns with her work, the employer placed her on sick leave in reliance on the historic work plan. The employer removed her IT access. Consequently, the employee was unable to work on her courses or research papers. The employer later restored partial IT access, but her previous contacts were never recovered. The employee was medically cleared to gradually return to work but the employer did not allow her to return at that time. The employer issued the employee with a written warning for serious misconduct on the grounds that she had been dishonest about her medication, had hindered a psychiatrist in reporting on her health and breached the work plan.

The employee was cleared to return to work in early 2019 but was shortly thereafter issued with a final written warning on the grounds of “aggressive and uncooperative” communication with a colleague. As a result of this communication, the employee had discovered the employer was keeping a secret log of her behaviour. She was removed from teaching. The employer dismissed the employee in May 2019, on the grounds of serious misconduct, medical incapacity and general trust and confidence issues. The employer considered there was a high likelihood of mental health relapse.

The Authority determined the employee was successful with four personal grievances on the grounds of unjustifiable actions by her employer, and was unjustifiably dismissed. The Authority found that:

• Employers cannot contract out of the requirement for procedural fairness in section 103A(3)(external link) of the Act. Therefore a fair and reasonable employer should have listened to the employee’s responses and investigated further if necessary before deciding she would be placed on sick leave (see para 52–54).
• The employer’s failure to adhere to procedural fairness disadvantaged the employee because it made her feel unheard and powerless (see para 57).
• The employer restricted the employee’s IT access because it was concerned about reputational risk, but offered no evidence of inappropriate email or IT use by the employee (see para 78). The employee was disadvantaged by losing contact details of a network compiled over 18 years, being unable to maintain contact with her research group and losing professional opportunities (see paras 82–83).
• The employer could not justify its decision to keep the employee on involuntary sick leave once medically cleared to return (see para 104).
• For a period of less than two weeks the employee misled the employer regarding her use of medication. The Authority found this was an isolated incident during a time when the employee was not having her views taken into account and she apologised for it (see paras 121–124).
• The employee was entitled to advise the employer that her then ex-husband was no longer her contact person as her circumstances changed (see para 150). Also, she was not culpably hindering the psychiatrist when she asked him not to speak to her ex-husband (see para 135).
• In the circumstances, the employee’s sharp email to a colleague did not justify a final warning (see para 176).
• The employee was entitled to decline to authorise the potential release of all of her medical records to her employer (see para 206).
• At the time the employer dismissed the employee on the basis of medical incapacity there was medical information available to it that the employee was not mentally unwell (see para 245).
• The employee was unjustifiably dismissed (see para 264).

The Authority awarded the employee $54,650 in compensation and exercised its discretion under section 128(3)(external link) of the Act to award lost wages for a period of 65 weeks, totalling $141,921 (see paras 285–286).

Scott v Vice-Chancellor of the University of Canterbury [2021] NZERA 311(external link)

Supreme Court – Employment-related tort actions – Jurisdiction of the High Court – Operation of Employment Relations Act 2000, s 161(1)(r)

At issue was whether the High Court had jurisdiction to hear an employee’s negligence action against an employer. The case concerned the interpretation of the “tort exception” in the Employment Relations Act 2000, section 161(1)(r)(external link). This case is of interest because it changes the law on jurisdiction as stated by the Court of Appeal in JP Morgan Chase Bank NA v Lewis (JP Morgan): 

JP Morgan Chase Bank NA v Lewis [2015] NZCA 255 [PDF, 276KB](external link)

The employee resigned after working for the employer for a year. Almost seven years later, the employee filed dual proceedings against the employer in the High Court and in the Employment Relations Authority (the Authority). In the High Court the employee claimed the employer negligently failed to protect her from harm. In the Authority the employee raised a personal grievance in relation to the same fact situation.

Initially the employee progressed only the claim in the Authority. However, after the Authority investigation was stayed, the employee sought to progress the High Court action.

The employer applied to strike out the High Court proceedings on the basis (see para 19):

1. The Authority had exclusive jurisdiction in relation to the dispute between the parties.
2. The claim was an abuse of process because it duplicated the employee’s personal grievance.

The High Court granted the strike out application. On appeal the Court of Appeal upheld the decision to strike out. The employee then appealed the Court of Appeal decision to the Supreme Court.

The appeal to the Supreme Court raised two questions (see para 25):

1. Were the employee’s High Court claims “employment relationship problems”?
2. If so, were they nevertheless excluded from the Authority’s jurisdiction by the tort exception in s 161(1)(r)?

In the Supreme Court, Winkelmann CJ and O’Regan and Williams JJ (the majority), in a joint judgment, dismissed the appeal. The majority held that if a claim “reflects a problem that relates to or arises from an employment relationship” it comes within the exclusive jurisdiction of the Authority, even if it could be framed another way. If a claim could be framed in terms of one or more of the examples in s 161(1)(a)–(qd), it must be brought before the Authority. If not, it is then a question of “whether the problem nevertheless relates to or arises out of an employment relationship” (see paras 94, 95, 127). In this case, as the employee’s tort action could be framed as a personal grievance it did not fall within the tort exception in s 161(1)(r) and came within the exclusive jurisdiction of the Authority (see para 134).

In taking the approach it did, the majority overturned the approach to jurisdiction under s 161(1) taken by the Court of Appeal in JP Morgan. JP Morgan held that whether a problem was an “employment relationship problem” and so under the exclusive jurisdiction of the Authority, depended on whether the problem “directly and essentially” concerned the employment relationship. According to JP Morgan, if the “essence” of a claim was not employment related the claim should not be regarded as within the Authority’s jurisdiction (see JP Morgan paras 95–97).

The majority rejected the “essence” approach in JP Morgan. The majority held the “essence” approach:

• was too arbitrary (see paras 87, 91)
• allowed parties to frame their pleadings so as to “plead their way out of the Authority’s distinctive jurisdiction” (see paras 90, 91)
• was not consistent with the legislature’s choice “not to ground the Authority’s jurisdiction in the way claims might be pleaded or traditionally categorised” (see para 92)
• invited “an inappropriately narrow inquiry in light of the broad language of the section” (see para 93).

Williams Young JJ in a minority judgment would have also dismissed the appeal, but for differing reasons (see paras 166–172). Glazebrook J, in dissent, would have allowed the appeal based on a “plain reading” of s 161(1)(r) (see paras 218–221).

FMV v TZB [2021] NZSC 102(external link)

Employment Court –Employment Relations Act 2000, Schedule 1B – Code of good faith for public health sector – Industrial action by public sector health workers – Obligation to provide “life preserving services” – Operation of cl 12 of the Code 

The New Zealand Nurses Organisation (the union) proposed to take strike action while bargaining for a multi-employer collective agreement with 20 DHBs. Under the Code of good faith for public health sector(external link) (the Code), District Health Boards (DHBs) had an obligation to provide “life preserving services” (LPS) during any industrial action (cl 11 of the Code). Under cl 12 of the Code, if the DHBs were unable to provide LPS during the industrial action using only non-union members, the DHBs were obligated to request the agreement of the union and its members to help with providing LPS. The parties were required to negotiate in good faith and “make every reasonable effort” to agree on arrangements for LPS. 

The DHBs sought declarations to clarify:

• the obligations that applied to the union and its members under cl 12 of the Code
• the enforceability of LPS agreements made under cl 12.

The DHBs sought the following specific declarations (see para 26):

1. An agreement entered into pursuant to cl 12(5) of the Code for the provision of an LPS agreement is legally binding and enforceable by way of a compliance order;
2. A refusal to comzply with an LPS agreement entered into in accordance with cl 12(5) of the Code would amount to a breach of the Code, and of the duty of good faith under section 4(external link) of the Employment Relations Act 2000 (the Act), in accordance with section 100D(4)(external link) of the Act; and
3. The defendant’s refusal to enter into LPS agreements unless they contain a “best endeavours” qualification would be in breach of its obligation under cl 12(5) of the Code to “meet and negotiate in good faith and make every reasonable effort to agree on” (the matters provided for in cl 12(5)(a) to (c) of the Code). 

The Employment Court made instead the following declarations (see para 134):

1. An agreement entered into pursuant to cl 12(5) of the Code for the provision of LPS is not enforceable as a contract.
2. Refusal to comply with an LPS agreement entered into in accordance with cl 12(5) of the Code would not amount to a breach of the Code so that s 100D(4) of the Act would apply; it may fall for assessment as a breach of a s 4 duty via s 100D(2)(a) of the Act.
3. A compliance order may be issued by the Authority under section 137(2)(external link) if there has been a non-observance of, or non-compliance with, the requirements of s 4, and if the Authority considers it appropriate to exercise its discretion under s 137(2) of the Act.
4. A Union decision not to enter into an LPS agreement unless there is a “best endeavours” qualification in respect of the provision of LPS support by members, on the grounds that the Union could not properly determine for a member whether that person should participate in a legal strike, where the Union did not hold an authority from members to do so, could not amount to a breach of the Union’s obligation under cl 12(5) of the Code to meet and negotiate in good faith. 

20 District Health Boards v New Zealand Nurses Organisation [2021] NZEmpC 138 [PDF, 378KB](external link)

Employment Relations Authority – Penalties – Breach of Improvement Notice – Employment record-keeping breaches – Failure to provide compliant employment agreements 

At issue was what penalty the Authority should impose on the employer for breaching an Improvement Notice issued by a Labour Inspector. 

The employer was a recruitment agency specialising in the construction and engineering sectors. A Labour Inspector found the employer had:

• breached employment record-keeping requirements
• used employment agreements that contained unlawful deduction provisions and omitted some lawfully necessary information.

The Labour Inspector issued the employer with an Improvement Notice.

The Improvement Notice required the employer to rectify the breaches before the end of the next month. The Labour Inspector subsequently agreed to four extensions to the deadline. A year after the Labour Inspector issued the Improvement Notice the employer had still not provided evidence of compliance. The Labour Inspector sought a penalty against the employer under the Employment Relations Act 2000, section 223F(external link) and a compliance order to enforce the Improvement Notice.

The Authority issued a compliance order but reserved determining penalties (see Labour Inspector v BF7 Trading Ltd [2021] NZERA 275, para 10). The employer failed to meet the deadline for compliance set in the compliance order. This case determined the amount of penalties the Authority should award.

Labour Inspector v BF7 Trading Ltd [2021] NZERA 275(external link)

The Authority considered the starting point for the penalty against the employer should be 40 per cent of the maximum penalty ($8,000). The starting penalty took into account that the failures identified in the Improvement Notice were “short comings in record keeping and documentation rather than specific instances of loss to identified workers”. It also took into account that the failures took place over a protracted period and the employer’s actions were deliberate (see paras 12–15).

The Authority determined the starting penalty of $8,000 should be uplifted to a final penalty of $10,000. The Authority considered an uplift to the starting penalty was warranted because the employer had been found liable for employment breaches by the Authority on eight previous occasions (see paras 19, 21). 

Labour Inspector v BF7 Trading Ltd [2021] NZERA 371(external link)

Employment Court – Personal grievance – Unjustified dismissal – 90 day trial – Compliance with notice period

At issue was whether the employee was dismissed in accordance with the notice period in a valid 90 day trail provision in the employment agreement. 

The employee was employed as a Marketing, Sales and Production Coordinator. The employment agreement contained a 90 day trial provision requiring three days’ notice of termination. It was signed before the employee commenced employment. Her first task was to give a presentation to a visiting delegation. However, the visit did not proceed. She was then asked to update the employer’s website. However, she was not given any training or assistance with content and was not provided with the necessary IT to complete the task. On the fourth day of her employment, directors of the employer met with the employee. They dismissed her during the meeting on the basis that they were unhappy with her work. Later that evening the employer emailed the employee a letter giving her three days’ notice of her employment being terminated. The employer advised it would pay her for those three days without her being required to work. 

The Employment Relations Authority (Authority) found that the employee had been unjustifiably dismissed. The employer challenged that finding in three respects (see para 2):

• The employment was terminated with three days’ notice.
• The employee’s summary dismissal on performance grounds was warranted.
• The employee’s contribution to her own dismissal should totally reduce any compensation award.

The Employment Court (Court) dismissed all three aspects of the challenge. It found that on the evidence the employee was verbally dismissed at the meeting without notice, rather than in writing later that evening (see para 68). Since the provisions of the otherwise valid 90 day trial provision were not complied with, the employer could not rely upon it (see para 72). The employee had followed all instructions. The Court found the employer had not been prepared for the employee’s arrival (see para 64) and had failed to give her sufficient orientation (see para 82). A fair and reasonable employer could not have dismissed her on performance grounds (see para 87). The employee did not contribute to the circumstances leading to her dismissal (see para 97).

The Court dismissed the challenge. It confirmed the remedies awarded by the Authority, being $3,774 in lost wages and $12,000 in compensation (see para 100).

Best Health Foods Ltd v Berea [2021] NZEmpC 155 [PDF, 290KB](external link)

Employment Relations Authority – Personal grievance – Unjustified dismissal – Unjustified action causing disadvantage – COVID-19 – Border worker – Vaccinations Order

At issue was whether an unvaccinated employee was unjustifiably dismissed or disadvantaged when her employment was terminated on the basis of the COVID-19 Public Health Response (Vaccinations) Order 2021(external link) (Vaccinations Order). 

The employee (who asked that her name not be published) was employed in a fixed term border protection officer role to assist in managing the risk of COVID-19 entering New Zealand in the maritime environment. In late 2020, the government identified border and managed isolation workers as being priority groups to be offered the COVID-19 vaccine. The New Zealand Customs Service (Customs) encouraged its employees to be vaccinated, but indicated it was not compulsory. Over the next few months, Customs tried to contact those employees who were not vaccinated. However, the employee did not engage with the employer regarding the vaccination. On 8 April 2020, the Prime Minister announced that front line border workers must be vaccinated. 

Customs undertook a health and safety risk assessment and found that the employee could not continue in their border role in light of the Vaccinations Order. Customs considered suitable redeployment options for the employee but found none were available (see para 46). The employee did not provide their reasons for deciding not to be vaccinated. The employee did say they considered the Vaccinations Order a breach of their right to refuse to undergo medical treatment under section 11(external link) of the New Zealand Bill of Rights Act 1990. Customs acknowledged the employee’s right to decline the vaccination but emphasised it was not trying to force its employees to be vaccinated (see para 60). It was Customs’ view that the employee was an “affected worker” under the Vaccinations Order and its obligation was to ensure that border workers were vaccinated (see para 63). 

The Authority found that the employee had been provided with numerous opportunities to engage with Customs about any concerns with the vaccination process and its health and safety assessment (see para 96). The Authority held that the employee’s role had to be performed by a vaccinated person under the Vaccinations Order (see para 101). Customs’ decision to dismiss the employee was thoroughly considered “in a very difficult contextual background” (see para 100). The Authority noted that good faith obligations go both ways and found the employee failed to engage with Customs (see para 113). The personal grievance was dismissed (see para 117). 

GF v New Zealand Customs Service [2021] NZERA 382 [PDF, 85KB](external link)

High Court – Judicial review – COVID-19 – Border worker – Vaccinations Order 

At issue was whether the COVID-19 Public Health Response (Vaccinations) Order 2021 (Vaccinations Order) was lawful. The applicant, who was the same person as the employee in the Authority case directly above, sought judicial review of the order. 

The applicant challenged the lawfulness of the Vaccinations Order on two grounds (see para 3):

• It was beyond the legal authority of the COVID-19 Public Health Response Act 2020(external link) (CPHRA) due to required conditions not being met.
• It was irrational, and therefore unlawful, primarily because of its consequences for unvaccinated workers.

The applicant asked the High Court to declare the Vaccinations Order was unauthorised and set it aside (see para 4). 

The applicant made various submissions, including that the Vaccinations Order was (see paras 11–13):

• invalid because it had been signed by an Associate Minister of Health rather than the Minister of COVID-19 response
• not prescribed by law for the purposes of the CPHRA
• a medical experimentation because it only had provisional consent
• in breach of the CPHRA because it was “unlikely” the Minister was satisfied that it would be appropriate in achieving the purposes of the CPHRA if he had considered social and economic factors such as “mass terminations of employment”
• an unreasonable limitation on the rights guaranteed by the New Zealand Bill of Rights Act 1990(external link), specifically the right to refuse to undergo medical treatment (section 11(external link)) and freedom from discrimination (section 19(external link)). 

The High Court found that the Vaccinations Order was neither beyond the legal authority of the CPHRA nor irrational (see para 127). It dismissed the applicant’s submissions as misconceived for the following reasons:

• The Associate Minister of Health signed the Vaccinations Order. The Associate Minister was a medical doctor and infectious disease physician with a PhD in epidemiology prior to entering Parliament. She lawfully signed the Vaccinations Order under section 7(external link) of the Constitution Act 1986 at the request of the Minister of COVID-19 response because he was unavailable at the time (see paras 20–33).
• The Minister was satisfied the Vaccinations Order was appropriate to achieve the purpose of the CPHRA. The Minister was convinced there was a strong public health rationale as border workers may be exposed to and infected by COVID-19 in the course of their work and go on to transmit the virus in the community. The Court found that conclusion was “logical and rational” given the advice he had received (see paras 29–41).
• The provisional approval for the use of the Pfizer vaccine in New Zealand was granted on the basis of comprehensive information. The High Court noted it was originally granted provisional approval in the United States but then went on to receive full approval. The High Court found it was not possible to categorise use of the vaccine as being the equivalent of medical experimentation (see para 47).
• The High Court found it was clear the Minister did have regard to social and economic factors when making his decision, even though the requirement to do so was discretionary rather than mandatory (see para 57). It found the claim that the Vaccinations Order could have resulted in mass terminations of employment was an over-statement when over 95 per cent of the employee’s colleagues were in fact vaccinated (see para 52).
• The advice to the Minister considered whether less intrusive means of reducing the risk of COVID-19 being transmitted to and by border workers, such as social distancing, masks, cleaning and testing, could have been as effective as vaccination, and found that they could not be (see paras 82–86). The Court found that to the extent that the requirement to be vaccinated might amount to discrimination, the benefits of the requirement outweighed any discrimination. The limitation was proportional and demonstrably justified (see para 93).

The application for judicial review failed (see para 127). 

GF v Minister of COVID-19 Response [2021] NZHC 2526 [PDF, 389KB](external link)

Employment Court – Jurisdiction of Employment Relations Authority – Ordering interim reinstatement in advance of dismissal – COVID-19 – Border worker – Vaccinations Order 

At issue was whether the Authority had the ability to order interim reinstatement pre-emptively before the employee was dismissed. 

The employee worked at the Auckland International Airport (Airport) for 15 years. His role was covered by the COVID-19 Public Health Response (Vaccinations) Order 2021 (Vaccinations Order). The employee decided against being vaccinated. The Airport effectively placed the employee on paid suspension until his termination date of 30 September 2021. The employee sought an order from the Authority prohibiting the termination of his employment. The Authority issued a minute stating that it did not consider it had the statutory basis to make such an order due to its “anticipatory nature” (see para 3). 

The employee challenged that position in Court with urgency. The relevant legislation was section 127(external link) of the Employment Relations Act 2000 (Act). Section 127(1) stipulates:

The Authority may if it thinks fit, on the application of an employee who has raised a personal grievance with his or her employer, make an order for the interim reinstatement of the employee pending the hearing of the personal grievance. 

The Court discussed that interim reinstatement is usually considered in the context of an unjustified dismissal personal grievance after a dismissal had taken place. However, it was open to the Authority to order an interim reinstatement when the personal grievance had been raised as a disadvantage grievance rather than an unjustified dismissal (see para 25–26). 

The Court found that the Authority did have jurisdiction to make the sought order (see para 37). The decision centred on whether the Authority had the ability to do so, rather than whether or not it should have made the order sought in the circumstances. 

WN v Auckland International Airport Ltd [2021] NZEmpC 153 [PDF, 226KB](external link)

Court of Appeal – Holidays Act 2003, s 14 – Bonus payments – Meaning of "gross earnings"

At issue was the following question of law:

Did the Employment Court err in law by concluding that payments made by the appellant from its short term incentive bonus schemes were “payments that the employer is required to pay to the employee under the employee’s employment agreement” and therefore fell within the definition of “gross earnings” under section 14(external link) of the Holidays Act 2003? 

The employer implemented a discretionary bonus scheme for some senior employees. The circumstances of the scheme were (see paras 11–13):

• Employees were invited to join the scheme by letter.
• The letter described the scheme as a discretionary bonus scheme.
• The letter outlined various conditions and targets that would be factored into the bonus scheme.
• The letter stated that any payments under the scheme were “totally at the discretion of [the employer]” and there was “no guarantee of any payment” even if the relevant criteria were achieved.
• The letter explicitly stated that “any bonus payments made under this Scheme will not come within the definition of ‘total gross earnings’ for the purposes of holiday pay calculations under the Holidays Act 2003”.
• When accepting the offer to join the scheme, employees had to acknowledge that the scheme was discretionary and the employer could decide not to make a payment under the scheme and could “amend, revoke or discontinue this Scheme at any time”. 

The employer considered it did not need to take the bonus payments into account when calculating the amount of holiday pay it was obliged to pay, because the payments made under the scheme were discretionary payments for the purposes of section 14(external link) of the Holidays Act 2003 (the HA). 

The Labour Inspector disagreed. The Labour Inspector consider the payments were a part of gross earnings, not discretionary payments. The Employment Court (the Court) found in favour of the Labour Inspector. The employer appealed the decision to the Court of Appeal (CoA). 

The CoA held the meaning of section 14(external link) of the HA was clear. If an employer was not contractually bound to make a payment it was discretionary; if the employer was contractually bound to make a payment then the payment was gross earnings. The CoA found that the source of the contractual obligation, whether in the employment agreement or otherwise, was “irrelevant” (see paras 29, 33, 39). 

The CoA held the employer did not need to take the bonus payments into account when calculating the amount of holiday pay it was obliged to pay, as the payments were discretionary (see paras 40, 41). The CoA held the Court erred in finding the payments were payments the employer was obliged to pay under the employees’ employment agreement (see para 46). 

Metropolitan Glass & Glazing Ltd v Labour Inspector, Ministry of Business and Innovation and Employment [2021] NZCA 560 [PDF, 271KB](external link)

High Court – Alcohol licencing – Impact of employment law breaches on licence applications 

At issue was whether the High Court (HC) should grant a stay of a decision by the Alcohol Regulatory and Licensing Authority (the ARLA) to cancel or suspend:

• the first applicant’s off-licences for five bottle stores
• the second and third applicants’ managers’ certificates for the bottle stores.

The ARLA found that over a period of four years the first applicant (the employer) had “failed to pay four employees minimum wage entitlements, failed to pay employees holiday pay, and failed to keep time and wage records and holiday and leave records for 59 employees” (see paras 11–13). The ARLA found the employment standards breaches were evidence of improper conduct under section 280(3)(a)(external link) of the Sale and Supply of Alcohol Act 2012. The ARLA took the breaches into account when it found the first applicant was not suitable to hold off-licences for its bottle stores; and the second and third applicants (the directors of the employer) were not suitable to hold managers’ certificates.

The applicants claimed the ARLA erred in concluding the employment standards breaches were evidence of improper conduct under section 280(3)(a)(external link). The applicants sought a stay of the cancellations and suspensions pending an appeal against the ARLA decision.

The HC dismissed the application for a stay. The HC found the issues around the suitability of the applicants and the “ongoing operation concerns” were “real” and the applicants had failed to convince the HC that they no longer existed (see para 175). 

Nekita Enterprises Ltd v Christchurch City Council Alcohol Licensing Inspector [2021] NZHC 2598 [PDF, 349KB](external link)

Employment Court – Judicial review – Employment Relations Authority directions – Directions concerning District Court judgment that was subject to suppression orders 

At issue was whether the Employment Relations Authority (the Authority) should have made the following directions in relation to a District Court judgment that was subject to name suppression orders:

• directions requiring the employee to produce an unredacted copy of the judgment
• directions that the Authority would produce an unredacted copy of the judgment on its own motion, using a copy the employee filed in another proceeding, involving a third party. 

The employee was pursuing various employment relationship problems in the Authority. Prior to the Authority proceedings, the employee was also the subject of proceedings in the District Court. The employer believed the District Court  judgment relating to the employee (the judgment) was relevant to the Authority proceedings. The employer sought to have access to the judgment on a “counsel to counsel basis”. 

The Authority made multiple directions requiring the employee to produce an unredacted copy of the judgment, so that the Authority could determine the judgment’s relevance. The Authority did not make any specific directions to safeguard the judgment if the employee were to provide it. 

The employee failed to provide an unredacted copy. The Authority directed that it would produce the judgment on its own motion, using the unredacted copy the employee had filed for the other proceeding involving a third party. 

The Authority made all the relevant directions in the form of minutes. The employee sought judicial review of the minutes. 

The Court first considered whether judicial review of the minutes was within the Court’s jurisdiction. The Court held it could judicially review the minutes because:

• The minutes were determinations for the purpose of section 179(1)(external link) of the Employment Relations Act 2000 (see paras 110–114).
• The directions in the minutes were not merely procedural and so barred from review; the directions related to important rights held by the employee as a result of the District Court suppression order (see paras 120–125).

The Court allowed the first directions (that the employee should provide the unredacted judgment) but with extra safeguards. The Court imposed the following conditions:

• The unredacted copy of the judgment should be used only for an investigation meeting to consider the judgment’s relevance (the relevance meeting).
• The relevance meeting should be attended only by an Authority member and the parties’ representatives.
• The employer’s representative should sign a written undertaking to the Authority and to the employee’s representative as to confidentiality.
• The Authority member conducting the relevance meeting should be a member other than the one who had conducted the investigation so far (see paras 137–144 and 165, 166).

The Court set aside the Authority direction that it would produce the judgment on its own motion, using the unredacted copy of the judgment the employee had filed in another proceeding. In coming to that decision, the Court took into account the following:

• Using information or evidence on one file for the purposes of another could lead to misunderstandings and procedural error (see para 149).

• Natural justice problems may arise if parties are not fully heard as to whether information disclosed for one matter should be introduced as evidence in another (see paras 150–152, 158).
• If Parliament had intended the Authority’s powers of investigation to override fundamental rights, it would have adopted unequivocal statutory language to that effect (see para 154).
• The broad power given to the Authority to “take into account such evidence and information ‘as in equity and good conscience it thinks fit, whether strictly legal or not’…must be guided by settled principles of common law” (see para 155). 

The Court observed that it was regrettable the Authority had not fully evaluated either of the following options:

• having the Authority Member-alone inspect the judgment for relevance
• having another “judicial officer not connected with the case” inspect the judgment.

The Court noted it was “well-established” that these options were available to the Authority (see paras 127–131). 

UXK v Talent Propeller Ltd [2021] NZEmpC 167 [PDF, 379KB](external link)

Employment Relations Authority – Employment status – Fencer – Property maintenance business 

At issue was whether the applicant was an employee or a contractor. 

The applicant worked for a property maintenance company doing fencing work. The applicant claimed he did the work as an employee rather than a contractor. The applicant claimed he was entitled to payment of outstanding statutory entitlements including annual leave, sick leave, statutory holidays and payment of KiwiSaver contributions. The employer claimed no payments were owing as the applicant was a contractor. 

The Authority determined that the real nature of the relationship between the parties was one of employment (see para 98). In coming to that decision the Authority took into account the following:

• There was no common intention that it was to be a contractual relationship (the respondent intended a contractual relationship, but the applicant did not) (see paras 53–54).
• The respondent exerted control of the worksite (see paras 59–63).
• While the applicant had a pattern in the latter months of working for the employer of taking absences from work, this was driven by health issues and not by the applicant exercising autonomy or choice about when to work (see paras 64–68).
• The applicant had only done two jobs outside of his work for the respondent (see para 69).
• There was only evidence of one occasion where the applicant had turned down working at a site the respondent asked him to go to (see para 70).
• The respondent supplied the applicant with a work van with the applicant’s name on the door and a company fuel card, eftpos card and Bunnings card (see paras 73–80).
• The applicant never provided quotes for jobs (see para 81).
• The applicant had no input into his pay or bonuses (see para 84).
• The applicant bore no risk from the business or chance of making a profit (see para 85).
• There was no evidence the applicant was operating a business on his own account (see paras 92, 94). 

Senty v S & J Property Maintenance Ltd [2021] NZERA 428(external link)

Employment Relations Authority – Prolonged failure to pay wages – Claim for constructive dismissal

Employment Relations Authority – Breach of employment agreement – Requirement to pay agreed wages – Requirement to reimburse work expenses – Arrears – Penalties 

At  issue was:

• whether the employee was constructively dismissed when he left his employment after not being paid properly and not being reimbursed for work expenses for more than a year
• what amount of arrears the employer should pay
• what penalties for breaches of the employment agreement should apply. 

The employee worked for the employer as a truck driver for a period of around 14 months. There was no written employment agreement. Over the 14 months, the employer frequently either did not pay the employee at all, or underpaid him. The employer also often did not reimburse the employee for money he spent on fuel for the truck. 

The employee said he raised the fact he was not being paid four or five times.  The employer made some part-payments to the employee, but did not fully resolve the arrears. Finally the employee told the employer he could not continue to work without being paid and would not come back until he was paid properly. The employee claimed he was constructively dismissed. 

The Authority dismissed the claim for constructive dismissal. The Authority found the 14-month period from the time the employee first raised a complaint about his wages until the time he left the company was so long that the employee’s resignation could not be said to have been caused by the breaches; the causal chain was broken because of the choice by the employee not to resign at earlier relevant times (see paras 33–37). 

The Authority awarded the employee $53,093.75 in unpaid wages; $9,952.04 as reimbursement of work expenses; and a $12,000 penalty against the employer for breach of the employment agreement (see para 76). 

Robertson v Stevryn Holdings Ltd [2021] NZERA 452(external link)

Employment Relations Authority – Failure to keep and produce wage and time records – Compliance order – Penalties – Liability of director 

At issue was whether the Authority should award a compliance order and penalties against the employer and the director of the employer for:

• failing to keep wage, time and holiday records
• failing to provide wage, time and holiday records to a Labour Inspector. 

The employer provided labour hire services to the local horticulture industry. A Labour Inspector carried out an inspection at an orchard in the area. The Labour Inspector found several immigrant workers working in the orchard without the necessary visas to allow them to work. The immigrant workers said they were employed by the employer in question. 

Following the inspection of the orchard, the Labour Inspector began an investigation into the employer. The Labour Inspector asked the employer to provide wage, time and holiday records for employees, along with other supporting documents. 

Eighteen months after the initial request from the Labour Inspector, the employer had still not provided the necessary records. Inland Revenue Department figures showed that in the relevant period the employer had engaged at least 79 employees. 

The Authority accepted that the employer failed to provide records when required to do so (see para 42). The Authority awarded penalties of $17,000 against the employer and $8,500 against the director as a person-involved in the breaches (see para 43). The Authority ordered the employer to provide the Labour Inspector with the required records within one month. 

In determining the quantum of penalties, the Authority took into account that there was no evidence of any attempt to remedy or mitigate the breaches; the respondents responded to warnings and reminders about the failures and then failed to honour subsequent undertakings (see paras 27, 30). 

Labour Inspector v K Contracting Ltd [2021] NZERA 421(external link)

Employment Relations Authority – Breaches of minimum employment standards – Penalties – Costs – Liability of director 

At issue was whether the Authority should award penalties and costs against a director, as a person-involved in breaches of minimum employment standards. 

A Labour Inspector found an employer was responsible for 11 breaches of minimum employment standards against two employees. The breaches involved:

• failing to pay for annual holidays, public holiday entitlements, time-and-a-half, alternative holidays and days that would otherwise be working days
• failing to keep required records of wages, time, holidays and leave.

The employer had also failed to pay sick pay to one of the employees. The employer owed each employee more than $16,000. 

By the time of the investigation, payment of arrears had been resolved. The Labour Inspector sought only penalties against the director, as a person-involved in the breaches (penalties against the employer were not possible as the employer had been placed into liquidation). 

The Authority determined the director should pay a penalty of $28,000 and costs of $2,071.76. In determining the quantum of penalties, the Authority took into account:

• The director took advantage of the relative inequality of power, particularly as both affected workers were migrants whose work status was dependent on their employment (see paras 13, 21).
• The breaches spanning two years were part of how the director organised and administered his company’s affairs (see para 14).
• Though the director submitted the breaches were not intentional, objectively observed, they were known and intended (see para 16).
• The employer benefitted financially by not paying the arrears when they were due (see para 17).
• The fact the director eventually paid the arrears should not be given weight, otherwise it would create a perverse incentive for employers to “sit on their hands” until forced to pay (see para 18).
• The director sought to denigrate the employees and showed no remorse (see para 19). 

Labour Inspector v Doma [2021] NZERA 469(external link)

Supreme Court – Holidays Act 2003 – Commission – Ordinary Weekly Pay

At issue was whether, as a question of law, productivity or incentive-based payments were a regular part of an employee’s pay for the purposes of calculating ordinary weekly pay under the Holidays Act 2003 (HA). 

Tourism Holdings Ltd (THL) employed “driver guides” for their Kiwi Experience tours. The driver guides, among other tasks, sold additional tourist experiences to their clients whilst on tour. The driver guides earned commission for each tourist experience sold. The commission was not paid with their usual wages, but was paid in a lump sum after the end of that tour.

When an employee takes a portion of their paid annual leave, the employer must pay the employee at a rate that is based on the greater of:

• the employee’s ordinary weekly pay (OWP) under section 8(external link) of the HA; or
• the employee’s average weekly earnings (AWE), being 1/52 of their gross earnings in the 12 months immediately before the holiday under section 14(external link) of the HA.

Commission is always included in the AWE calculation. However, the Labour Inspector and THL disputed whether the driver guides’ commission should be included in the OWP. Section 8 stipulates that productively or incentive-based payments are only to be included if they are “a regular part of the employee’s pay”.

The Supreme Court found that in the statutory context “regular part” should be construed in relation to the time period in s 8(2), being four weeks. The Supreme Court held that the alternative timeframes for calculation suggested by the parties (being either one week or per trip) would result in a “lumpiness” in holiday pay inconsistent with the aims of the HA (see para 43). The Supreme Court decided (at para 54):

Payments are “a regular part of the employee’s pay” if they are of a kind made regularly when assessed against the standard of a four-week period.

Tourism Holdings Ltd v Labour Inspector of the Ministry of Business, Innovation and Employment [2021] NZSC 157 [PDF, 117KB](external link)

Court of Appeal – Minimum Wage Act 1983, s 6 – Whether s 6 applies to employees who do not perform work – COVID-19

At issue was whether, in the absence of sickness, default, or accident, the minimum wage is payable for all of a worker’s agreed contracted hours of work; or whether it is lawful to make deductions from wages for lost time not worked at the employer’s direction.

The employer provided inflight catering services to passenger aircraft. The five applicants were full-time employees. Their employment agreements provided for a minimum 40-hour week. The employees’ rate of pay was the minimum wage at that time. When New Zealand entered an Alert Level 4 lockdown due to the COVID-19 pandemic in March 2020, the employer was deemed an essential service. However, there was a lot less demand for inflight catering. The employer partially closed down. The applicant employees were not required to work. The employer proposed to its employees that they would be paid 80 per cent of their normal pay, conditional upon the employer receiving the government wage subsidy. 

The parties disagreed over whether this arrangement breached the Minimum Wage Act 1983(external link) (MWA). The relevant provisions were:

6 Payment of minimum wages

Notwithstanding anything to the contrary in any enactment, award, collective agreement, determination, or contract or service, but subject to sections 7 to 9, every worker who belongs to a class of workers in respect of whom a minimum rate of wages has been prescribed under this Act, shall be entitled to receive from his employer payment for his work at not less than that minimum rate.

7 Deductions for board or lodging or time lost

…

(2) No deduction in respect of time lost by any worker shall be made from the wages payable to the worker under this Act except for time lost—

(a) by reason of the default of the worker; or

(b) by reason of the worker’s illness or of any accident suffered by the worker.

The Court of Appeal found (at para 54):

It is not lawful to make deductions from wages for lost time not worked at the employer’s direction. The minimum wage is payable for the hours of work that a worker has agreed to perform, but does not perform because of such a direction.

The Court of Appeal held that the s 6 term “payment for his work”, if read in isolation, could either be a reference to work actually performed by the employee, or work the employee agreed to perform (whether or not it was actually performed). However, s 6 must be read in the context of the MWA as a whole. Section 7(2) would be superfluous if s 6 only applied to time actually worked. It is concerned with time lost, that being time that was agreed to be worked but for specific reasons was not worked (see paras 42–45).

The Court of Appeal decided that the “only logical” reading of s 6 is that the minimum wage must be paid for the whole of the time the parties agreed the employee would work (see para 46). The MWA is a basic protection that “sets a floor below which employers and employees cannot go” (see para 47).

The Court of Appeal observed that parties are able to agree that employees take leave without pay, and the MWA would not apply to that leave (see para 51). In this case, however, there was no agreement between the parties that would justify not paying the employees the minimum wage (see para 55).

Sandhu v Gate Gourmet New Zealand Ltd [2021] NZCA 591 [PDF, 251KB](external link)

Employment Court – Temporary migrant – Unjustified dismissal – Unjustified disadvantage

At issue was whether a migrant was unjustifiably dismissed and/or disadvantaged when his employment was terminated on the basis of the expiration of his visa.

The employee was an assistant restaurant manager. He was employed on a permanent basis. At the start of his employment the employer assisted him in gaining a two year Post-Study Work Visa. The employment agreement stipulated that the employment would terminate if the employee did not have the legal right to work in New Zealand. More than three months prior to the visa expiring, the employee emailed the human resources department seeking assistance with documentation to apply for a further visa. The employer was obligated to advertise the position to see if it was able to recruit a New Zealander before supporting the visa application. The employee applied for the position. He followed up a couple of times before his manager told him his application was unsuccessful. Two of the suitable applicants for the position were New Zealanders. One was selected for the role and began work shortly thereafter. The employee assumed at that stage that his employment was terminated. He worked until the expiration of his visa and then raised a personal grievance with the employer.

The Employment Court (Court) found the employee had been unjustifiably dismissed and disadvantaged by the actions of his employer for the following reasons:

• The employer had not kept the employee informed of the process required in order to support his visa application, including the “New Zealanders first” labour market test (see para 84).
• The employer did not discuss options with the employee, even when another assistant restaurant manager position became available, as a fair and reasonable employer would have done (see para 92).
• The New Zealander who was appointed to the employee’s position resigned the day before the employee’s visa expired. The Court found the duty of good faith required the employer to discuss further options with the employee at that point (see para 99). By the date the employment was terminated the employer had in fact been unable to fill the position with a New Zealander (see para 103). 
• The employer failed to communicate constructively with the employee (see para 121).
• The employee was not given reasonable opportunity to respond to the circumstances which were known to the employer, but not to him (see para 132).

The Court awarded the employee $25,000 in compensation and $19,950 in lost wages (see paras 154 and 181)

Restaurant Brands Ltd v Gill [2021] NZEmpC 186 [PDF, 350KB](external link)

Employment Court – Interim reinstatement – COVID-19 – Border worker – Vaccinations Order

At issue was whether the Court would reinstate the employee on an interim basis after he declined to be vaccinated against COVID-19, contrary to a vaccine mandate.

The employee worked at the Auckland International Airport (Airport) for 15 years. His role was covered by the COVID-19 Public Health Response (Vaccinations) Order 2021(external link) (Vaccinations Order). The employee said he was terrified at the prospect of the vaccine, which he described as “experimental mRNA gene altering therapy” (see para 51). He proposed to the Airport that his role be changed to accommodate him not working “airside” so that his role would not be covered by the Vaccinations Order. The employer declined his proposal, on the basis that it was not feasible and would unfairly place more responsibilities on the employee’s colleagues. The employment was terminated. The employee sought interim reinstatement in the Court until his substantive grievance for unjustified dismissal could be heard by the Authority.

The Court granted his application. The Court found:

• The employee’s argument that the Vaccinations Order could be interpreted narrowly to exclude his role was only weakly arguable. Although section 6(external link) of the New Zealand Bill of Rights Act 1990 stipulates that an enactment should be given a meaning that is consistent with the rights contained (such as the right to refuse medical treatment) where possible, the words of the Vaccinations Order are clear and precise (see paras 136143). Therefore, the employee’s permanent reinstatement claim is only weakly arguable (see para 171).
• However, the process elements of the employee’s dismissal grievance were arguable (see para 172).
• The employer had not adequately responded to the employee’s proposal that his role be changed (see paras 145153).
• The employee had sought support from his GP in obtaining a medical exemption to vaccination due to a medical condition, but was not successful. Irrespective of this, the Court found there was an “active obligation on the employer to constructively consider and consult on alternatives where there is an objectively justifiable reason not to be vaccinated” (see para 165).
• Reinstatement is a primary remedy under section 125(external link) of the Employment Relations Act 2000. It would reinstate good faith obligations on the parties (see para 193). The topic of the safety of the vaccine needed “reliable information to facilitate constructive dialogue between the parties” (see para 177).

The Court ordered the employee be reinstated until the Authority’s substantive hearing and determination. The employee was unable to physically return to the workplace, which had since introduced a vaccination policy requiring all employees be vaccinated, whether or not they were covered by the Vaccinations Order. The Court ordered the employee be placed on two months of paid leave and thereafter unpaid leave until further order of the Authority (see para 207). The Court also ordered the parties attend mediation.

WXN v Auckland International Airport Ltd [2021] NZEmpC 205 [PDF, 455KB](external link)

Employment Relations Authority – Redundancy – Unjustified dismissal – Unjustified disadvantage

At issue was whether the employee was unjustifiably dismissed when her role was disestablished due to redundancy soon after an investigation was conducted on the basis of a complaint made by the employee.

The employee held a senior executive role with an insurance broker. She had worked for the employer for over nine years and had significant responsibilities. The employee had enjoyed her employment until the relationship between the employee and her manager deteriorated. The employee made a complaint to the employer, raising a personal grievance on the basis of actions of the manager that she considered had caused her disadvantage. The complaint was in time investigated. However, the investigation found the complaints of harmful behaviour were not established.

Shortly after the investigation was completed the employer announced the organisation would be restructured. The employer proposed the employee’s role would be disestablished but set out options for redeployment. The employee applied for two roles but was not successful. Her employment was terminated on the basis of redundancy. 

The Employment Relations Authority (Authority) found the employee had been unjustifiably dismissed and disadvantaged on the following grounds:

• The Authority found the employer had genuine business reasons to restructure (see para 128). Other employees were directly affected.
• However, the Authority found there was evidence the employer’s process “was not wholly objective” (see para 129):
  • The employer had held a meeting encouraging a colleague of the employee to apply for an alternative role but did not do the same for the employee.
  • It had not met with the employee to receive her feedback on the restructure in person despite saying it would.
  • The employer removed the employee’s IT access before her applications for alternative roles had been determined.
• The employer had used an external recruitment company to assess the applications for the alternative roles. The recruitment company had said the employee was capable of performing a role. Even though the employee was not the recruiter’s first choice within a group including external applicants, the employer had an obligation to the employee to explore redeployment options (see para 134).
• The employer could not fairly say they had exhausted redeployment options (see para 135). The employee’s dismissal was therefore unjustified (see para 136).
• The employee claimed ten unjustifiable actions by the employer caused her disadvantage. The Authority found two of those grounds established a personal grievance. The employer failed to investigate further concerns raised by the employee during the course of the investigation. Also, the employer reversed a bonus payment without explanation (see paras 119–120).

The Authority declined to reinstate the employee to a position with the employer, finding it could not be satisfied the employment relationship could be successfully re-established (see para 145). The Authority awarded the employee $40,000 in compensation and eight months’ lost remuneration as well as $10,000 for a vehicle allowance and an incentive payment (see para 164).

Montgomery v Crombie Lockwood (NZ) Ltd [2021] NZERA 520(external link)

Supreme Court – Jurisdiction of Employment Relations Authority – Application by Labour Inspector to determine whether person is employee or contractor

At issue was:

• whether the Labour Inspector could get the Employment Relations Authority (the Authority) to determine whether a group of pizza delivery drivers were employees or contractors; or
• whether the Labour Inspector had to go to the Employment Court (the Court) to get a declaration under section 6(5)(external link) of the Employment Relations Act 2000 (the Act) that the drivers were employees. 

The appellant, Gill Pizza Ltd (Gill), operated a Pizza Hut franchise. A Labour Inspector claimed pizza delivery drivers working for Gill were employees. The Labour Inspector claimed Gill was in breach of its obligations to the drivers under the Minimum Wage Act 1983 and Holidays Act 2003. Gill claimed the drivers were independent contractors and it had no employment obligations in relation to them. The Labour Inspector applied to the Authority to determine the drivers’ employee status. 

The Authority determined that under section 6(5), (6)(external link) of the Act, only the Court could determine the employee status of the drivers, on application by, or with consent of, each driver (see Labour Inspector of the Ministry of Business, Innovation and Employment v Gill Pizza Ltd [2018] NZERA Wellington 113(external link)). 

The Labour Inspector challenged the Authority determination in the Court. The Court upheld the Authority’s position (see Labour Inspector (Ministry of Business, Innovation and Employment) v Gill Pizza Ltd [2019] NZEmpC 110 [PDF, 244KB](external link), [2019] ERNZ 324). Subsequently, the Court of Appeal reversed the Court decision (see Labour Inspector (Ministry of Business, Innovation and Employment) v Gill Pizza Ltd [2021] NZCA 192 [PDF 326KB](external link), [2021] ERNZ 237). Gill appealed to the Supreme Court. 

The Supreme Court granted Gill leave to appeal on the following question (see para 6):

whether the Court of Appeal was correct to conclude that the Employment Court erred in finding that, if a defendant asserts there is no employment relationship, the Labour Inspector must first seek a declaration of employment status from the Employment Court under section 6(5)(external link) of the Employment Relations Act 2000 before commencing or continuing a proceeding under section 228(1)(external link) of that Act. 

The Supreme Court found the Court of Appeal was correct in finding that if a defendant denies an employment relationship, a Labour Inspector can apply to the Authority to determine employee status; it is not necessary for the Labour Inspector to first seek a declaration of employee status from the Court under section 6(5)(external link). The Supreme Court dismissed the appeal (see para 69). 

Gill Pizza Ltd v A Labour Inspector (Ministry of Business, Innovation and Employment) [2021] NZSC 184 [PDF, 288KB](external link)

Court of Appeal – Employment Relations Act 2000, s 142W – Liability of persons-involved in an employment standards breach – Level of knowledge required for liability

At issue was the level of knowledge required to establish liability for a person “involved in a breach” of employment standards under section 142W(1)(external link) of the Act. 

The employer operated a taxi business. The employer had a number of “commission” drivers it treated as independent contractors. The Court found the drivers were employees. The Court found the employer was liable to pay four drivers a total of  around $80,000, to meet its obligations to the drivers under the Minimum Wage Act 1983 and Holidays Act 2003. 

The employer ceased trading and was unable to pay the amount owing. The Labour Inspector sought to make the former directors of the employer liable for the arrears  under section 142W(1)(external link) of the Act, as persons-involved in the breaches. The former directors claimed they were not liable, as they had genuinely believed the drivers were independent contractors. 

The Authority found the directors were involved in the breaches and found them liable for the amounts owing (see para 19). In a challenge to the Authority determination, the Court found the directors were not liable because they genuinely believed the drivers were not employees. The Court considered that liability under section 142W(1)(external link) required deliberate involvement in a breach (see paras 31–33). 

The Labour Inspector appealed the Court decision on the following question of law (see para 6):

What is the level of knowledge required to establish liability for a person “involved in a breach” of employment standards under s 142W(1) of the Employment Relations Act 2000?

The Court of Appeal held that what was required for liability of persons-involved was “whether each of them knew the essential facts establishing the breaches”. The Court of Appeal held (see para 7):

[I]t is irrelevant that the Grants believed that the drivers were not employees. Rather, the inquiry should focus on whether they knew the primary facts that led to the finding that the drivers were employees, and the primary facts relevant to the finding that Southern Taxis had failed to make the required payments to those drivers. 

The Court of Appeal allowed the appeal. The Court referred proceedings back to the Court to be redecided based on the answer to the question of law (see para 8). 

Labour Inspector v Southern Taxis Ltd [2021] NZCA 705 [PDF, 320KB](external link)

Employment Court – Employer identity – Family member providing government-funded care to disabled adult child

At issue was whether the Court should make a declaration that the Ministry of Health (the Ministry) was the employer of a man who provided full-time care to his high-needs disabled daughter. 

The plaintiff provided full-time care for his adult daughter, who suffered from physical disabilities as well as severe mental incapacity. For more than 15 years, the Ministry provided funding to the applicant for the care of his daughter, under two successive funding arrangements. Under each funding arrangement, the Ministry provided funding on the basis that the applicant’s daughter was his employer and the Ministry was simply a “detached funder having set the overarching policies”.

The Ministry admitted that an employment relationship between the applicant and his daughter was “artificial” but claimed that such a relationship had been deemed by Parliament to exist (see para 49). 

The applicant sought a declaration from the Court that the Ministry was the employer. The Ministry disputed the jurisdiction of the Court to make a declaration of employee status in the circumstances. The Ministry claimed the funding and the grounds on which it was providing funding were a matter for the Crown and, if appropriate, the High Court on judicial review proceedings. 

The Court rejected any lack of jurisdiction. The Court held it had exclusive jurisdiction to decide whether a person was or was not in an employment relationship and with whom. The Court did not see the steps taken by Parliament to establish the Ministry’s funding scheme as “carving out” an area of jurisdiction that the Court would otherwise have. The Court held such an interpretation would render the Court’s exclusive jurisdiction under section 6(5)(external link) “nugatory” (see paras 38–40). 

In deciding whether the Ministry was the applicant’s employer, the Court referred to a case involving similar facts, decided by the Court earlier in the same year (see Fleming v Attorney-General [2021] NZEmpC 77 [PDF 446KB](external link), [2021] ERNZ 279 (Fleming)). In Fleming, the Court made a declaration that the Ministry was the employer. The Court noted that it was not bound by the approach adopted in Fleming, and was considering the matter afresh (see para 8). 

The Court held that the applicant was employed by the Ministry as a homeworker for the purposes of section 5(external link) of the Act (see para 100). In coming to that decision the Court took into account the following:

• The Court agreed that an employment relationship between the applicant and his daughter was “artificial” in the sense that there could not be an employment relationship where one party lacked the capacity to understand the most basic obligations and liabilities of the role (see paras 50, 53, 54, 57, 59).
• If Parliament had wished to deem certain categories of carers as employees of the people they cared for, it would have done that clearly. Parliament had made no attempt to amend the Act to clarify the matter. This reinforced the conclusion that the statutory provisions governing the funding assistance scheme were about funding; they did not reflect an intention of Parliament to create an employment relationship which could not otherwise exist (see paras 51, 52).
• Once the applicant’s daughter became an adult, the State was responsible for her and the applicant was not (see para 57).
• The way the Ministry or the applicant described the relationship was not determinative (see paras 60, 97).
• The evidence did not support a “hands-off” relationship between the Ministry and the applicant; rather, the Ministry “sat firmly in the driver’s seat” (see paras 47–48).
• The State asserted control over the care for the applicant’s daughter through a Gazette Notice and associated policies governing the caregiving role; and through documentation, including an employment agreement between the applicant and his daughter drafted by the Ministry (see paras 61, 92, 96).
• Lack of day-to-day control over what the applicant did as a caregiver pointed away from an employment relationship, but did not exclude an employment relationship. Lack of day-to-day control reflected the realities of the situation and location in which the applicant carried out the work (see paras 92–94).
• The Court accepted that the Ministry “engaged” the applicant as a homeworker in terms of section 5(external link) of the Act (see paras 62–90). 

The Court observed that the conventional indicia of an employment relationship, taken from the case Bryson v Three Foot Six Ltd (No 2) [2005] NZSC 34 [PDF 91KB](external link), [2005] 3 NZLR 721 (Bryson) pointed away from an employment relationship between the applicant and the Ministry (see paras 91–98). The Court considered that over 15 years since Bryson was decided, it could be time for a refresh of the test in Bryson (see para 99). 

The Court made a declaration under section 6(external link) of the Act that the applicant was employed by the Ministry as a homeworker (see para 100). 

Humphreys v Chief Executive of the Ministry of Health [2021] NZEmpC 217 [PDF, 370KB](external link) 

Employment Relations Authority – Employment Relations Act 2000, s 20 – Union access to worksite – COVID-19 environment – Breach of s 20 – Compliance order – Penalties

At issue was:

• whether the employer breached a union’s right to workplace access under section 20(external link) of the Act.
• whether the Authority should:
  • order the employer to comply with union access obligations
  • award penalties against the employer for breaching access obligations.

The Maritime Union of New Zealand Inc (MUNZ or the union) represented members working at various ports in New Zealand. There was one port (Northport) where the union apparently had no members. The union made several unsuccessful attempts and/or requests to visit the Northport site to discuss union matters with workers, but the employer denied the union access. 

At the relevant time, New Zealand was in COVID-19 alert level 1, the lowest level. The port claimed it was required to deny access to union officials under COVID-19 Industry Protocols. The protocols stated that “no external persons are allowed in portacoms and mess rooms” (see para 22). The employer said that in barring access to the union it was “requiring compliance with its existing and reasonable health and safety procedures and COVID-19 Operational Control Measures” (see para 67). In the same time period, another company at the port did allow access to a union official. 

The union applied to the Authority for:

• an order requiring the employer to comply with union access obligations
• a penalty for breach of good faith for denying access.

The union submitted that it was not reasonable to deny access when:

• The workers concerned were allowed to mix freely with people outside of the workplace.
• The risk of COVID-19 entering the workplace came primarily from the other side of the border (ie from the crews of vessels).
• A union official entering the workplace posed minimal risk. 

The Authority accepted that the employer was being unreasonable in denying the union to access the workplace (see paras 68–77). The Authority took into account that:

• The “risk at the border arises from those on board ships, not from union officials visiting the site” (see paras 70–73).
• The employer’s approach did “not recognise that union access is mandated in legislation”. The legislation envisages “unions going to where the workers are working”, rather than meeting workers offsite (see paras 74, 75).
• While there are hazards at ports, the employer did not establish that this was a reason to deny access (see para 76).

The Authority determined the employer “breached the Act on three occasions by failing to allow MUNZ access at Northport” (see para 77). The Authority ordered the employer to:  (see para 83):

comply with its obligations under sections 20(external link), 20A(external link) and 21(external link) the Act by providing access to MUNZ officials and employees relating to conducting union business to ISO’s Whangarei worksite, including smoko and mess rooms, subject to Covid Protection Framework restrictions, reasonable restrictions regarding escorted or directed visits and restrictions imposed by Northport.

The Authority required the employer to provide access within four days.

The Authority ordered the employer to pay a penalty of $15,000 for “an ongoing breach of the employer’s obligations to allow access with appropriate restrictions” (see para 91). The Authority said it was “important to deter employers from readily concluding that access rights can be denied with little consideration of reasonable restrictions which would allow access” (see para 96). The Authority took into account that the employer was a “substantial employer, operating at a number of ports” and had “access to legal advice” (see para 92).

Maritime Union of New Zealand Inc v ISO Ltd [2021] NZERA 569(external link)