Cases of interest: December 2018 – January 2019

A summary of interesting or topical employment cases.

Affco NZ Ltd v NZ Meat Workers and Related Trades Union Inc [2018] NZCA 562

Court of Appeal – Whether wages payable to unlawfully locked out seasonal workers – Whether wages covered by Wages Protection Act 1983

The union represented seasonal workers who had not been re-engaged at the start of a new meat processing season. Previous litigation had determined that the employer had a continuing obligation to re-engage the workers and that they had been unlawfully unlocked out prior to re-engagement. At issue was whether the workers had an entitlement to wages and whether these entitlements were protected by the Wages Protection 1983 (WPA). The employer argued that the worker’s claim was limited to damages rather than wage arrears.

The Court of Appeal held that the seasonal workers occupied a special category and had an entitlement to be re-engaged and, therefore, an entitlement to employment (see para 31). This status was reflected in the collective agreement (see paras 32-36). In light of this special category, the appropriate remedy to compensate for the unlawful lockout was wage arrears (see para 38). The Court held that the reference to ‘wages’ in the WPA applied to the wages payable to workers (see para 48). The purpose of the WPA did not only relate to permanent employees but also contemplated protection for the seasonal workers (see para 52).

The Court concluded that the wages were payable to the unlawfully locked out seasonal workers and that these wages were protected by the WPA. Consequently, the employer had breached s 4 of the WPA by making unlawful deductions.

Link to case [PDF 400 KB] (external link)

Ovation New Zealand Ltd v The New Zealand Meat Workers and Related Trades Union Inc [2018] NZEmpC 151

Employment Court – Whether lawful to incorporate payments for rest breaks in piece rates – Whether putting on and removing protective equipment is ‘work’ for purpose of Minimum Wage Act 1983

The union represented employees who worked at three meat processing plants. The case addressed two main issues.

The first issue was whether piece rates incorporated payments for rest breaks and whether this was lawful.  The Employment Court examined the surrounding legislation and case law and concluded that Parliament did not stipulate the means by which payment for rest breaks would be made. Consequently, parties were free to agree that payments for rest breaks were to be included within the employees’ piece wage. Such a payment must be paid at the same rate for which an employee would have been paid at the time of the break (see paras 63-65). However, on the facts, the Court found that the piece workers at the three plants had not been provided with paid rest breaks (see para 194).

The second issue was whether time spent putting on or removing protective equipment at the beginning and ending of each shift, and at rest and meal breaks, was ‘work’ for the purposes of the Minimum Wage Act 1983 (MWA). The Court noted that the putting on and removing of equipment occurred while walking between areas and the time spent doing this was relevant (see paras 258-260). The time spent on putting on or removing equipment was to be assessed cumulatively rather than in each individual step (see para 262).

The Court applied Idea Services Ltd v Dickson [2011] NZCA 14,[2011] 2 NZLR 522. The Court held putting on or removing equipment imposed significant responsibilities and constraints on the freedom of the employees (see paras 266-270). The employer benefited from such actions as it was an essential part of the business (see para 271). Ultimately, the Court concluded that putting on or removing equipment could be considered work for which the employees were not paid (see para 280).

Link to case [PDF 1.3 MB] (external link)

TUV v WXY [2018] NZEmpC 154

Employment Court – Whether settlement agreement signed by mediator can be set aside for mental incapacity

The parties reached a settlement agreement privately and asked an MBIE mediator to sign the agreement. The mediator spoke to the employee over the phone and later signed the agreement. The employee subsequently obtained a medical opinion that she had been mentally incapacitated at the time she signed the settlement and when she spoke to the mediator. At issue was whether a settlement agreement signed by a mediator could be set aside for mental incapacity.

The Employment Court held that a mediator’s signature to a privately reached settlement agreement cannot be taken as certification that the contract was validity entered into (see paras 34-38). The Court noted the significant hurdles to proving incapacity would prevent any possible floodgate effect when allowing settlement agreements to be set aside for incapacity (see para 40). Section 149(3) did not prevent a party from challenging the validity of the agreement itself. If one party lacked mental capacity then the fundamentals of contract formation would not be made out and s 149(3) would not be engaged (see paras 45-46).

The Court held, based on medical evidence, that the employee was more likely than not mentally incapacitated when she signed the settlement agreement and had lacked capacity to instruct her lawyer (see para 54). However,the Court found that the employer did not subjectively know that the employee lacked the mental capacity to enter into the settlement agreement (see para 57). Further, the employer could not reasonably have been expected to have objectively known that the employee was mentally incapacitated (see paras 61-64).

The settlement agreement was not set aside.

Link to case [PDF 511 KB] (external link)

Kaikorai Service Centre Ltd v First Union Inc [2018] NZEmpC 160

Employment Court – Whether breach of good faith to refuse to include remuneration in collective agreement – Whether protests during bargaining breached good faith

The parties were in the early stages of collective bargaining. The union claimed that the employer breached good faith by refusing to collectively bargain about wages. The Employment Court held that remuneration is a fundamental aspect of the employment relationship but that does not mean a collective agreement must include remuneration. No legislation requires for remuneration to be provided for in a collective agreement (see para 42). The duty of good faith does not go so far as to require remuneration to be included in a collective agreement (see paras 43-45). The employer had bargained about the proposed pay in the agreement and rejected it with reasons which satisfied the requirements of good faith (see para 49 and 54).

When the bargaining stalled, the union held a protest to garner public support. During this protest, the union displayed a large inflatable rat with a sign reading “Don’t be a rat Mr DOBSON”, a reference to a director and shareholder. A sign was also displayed which misnamed the business as ‘Pak’nSlave’. The employer claimed these actions were in breach of good faith.

The Employment Court held that good faith does not require bargaining to be undertaken in a courteous way or to avoid a combative style (see para 63). The union and its members enjoyed the right of free speech which they were entitled to exercise (see para 64). The rat and the sign did not cross the threshold where it could be said to be so offensive or undermining that a breach occurred. No reasonable person in Mr Dobson’s position would have been insulted by the rat and sign (see para 66). The ‘Pak’nSlave’ sign was also not a breach of good faith and simply represented an attempt to exert legitimate pressure on the employer (see para 68).

Neither party breached the duty of good faith.

Link to case [PDF 418 KB] (external link)

Page last revised: 15 February 2019

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