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Cases of interest: April 2021

A summary of interesting or topical employment cases.

Idea Services Ltd v Davis [2021] NZCA 111

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 185KB] (external link)  

MacLeod v Wellington City Transport Ltd [2021] NZEmpC 55

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 s 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 s 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 s 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 s 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 ss 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 255KB] (external link)  

Hau v SA & AC Lester Ltd [2021] NZERA 109

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 pt 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 sch 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 pt 6A (external link) of the Act applying to workers specified in sch 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, s 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 s 123(1)(c)(i) (external link) of the Act (see para 59). 

Hau v SA & AC Lester Ltd [2021] NZERA 109 [PDF 55KB] (external link)

Labour Inspector v Kenel [2021] NZERA 133

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 [PDF 45KB] (external link)  

Two Brothers Wholesale Ltd v Medical Officer of Health, Waikato District Health Board [2012] NZARLA 32

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)

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Page last revised: 19 May 2021

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