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Cases of interest: December 2021

A summary of interesting or topical employment cases.

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

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 s 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 s 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 [PDF] (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] (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] (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 s 6(5) (external link) of the Employment Relations Act 2000 before commencing or continuing a proceeding under s 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 s 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, 290KB] (external link)  

Labour Inspector v Southern Taxis Ltd [2021] NZCA 705

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 s 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 s 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 s 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)  

Humphreys v Chief Executive of the Ministry of Health [2021] NZEmpC 217

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 s 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 (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 s 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 s 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] (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 s 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)  

Maritime Union of New Zealand Inc v ISO Ltd [2021] NZERA 569

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 s 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 ss 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 [PDF, 490KB] (external link)

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Page last revised: 27 January 2022

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