Cases of interest: July 2019

A summary of interesting or topical employment cases

FMV v TZB [2019] NZCA 282

Court of Appeal — Employment Relations Act 2000, s 161 — Jurisdiction of High Court to hear employment case — Abuse of process — Duplication of Employment Relations Authority proceedings

The employee pursued two claims against the employer simultaneously:

  • a civil case in the High Court for damages for breach of duties of care (including failure to provide a safe working environment and failure to communicate in a full and frank manner);
  • a proceeding in the Employment Relations Authority (the Authority) covering the same issues.

The High Court struck out the civil proceedings on the basis that employment relations problems were in the sole jurisdiction of the Authority. To pursue both proceedings at once was also an abuse of process.

The employee appealed the High Court decision. The employee submitted the claim was “an action founded in tort” and so came under the exception in s 161(1)(r) of the Employment Relations Act (external link) (the Act).

The Court of Appeal found that under the Act, the foundation of jurisdiction was whether the matter to be determined was an employment relationship problem (see para 19). The High Court was correct in striking out the case for want of jurisdiction. The claim was “wholly dependent on [the employee’s] former employment relationship with [the employer]” — much of the pleadings copied word for word the “statement of problem” in the Authority. (see paras 20–22).

The Court of Appeal also found the High Court proceeding was an abuse of process as a duplication of the proceedings in the Authority, even though the High Court proceedings were filed first (see paras 23–28).

Link To Case [PDF 488KB] (external link)

Tourism Holdings Ltd v A Labour Inspector of the Ministry of Business, Innovation and Employment [2019] NZEmpC 87

Employment Court — Section 8(2) of the Holidays Act 2003 — Calculation of Holiday pay — Treatment of commissions — Whether commissions part of “ordinary weekly pay”

At issue was the calculation of “ordinary weekly pay” under the Holidays Act 2003, s 8(2) (external link) . The question was whether commissions that tourist bus operators earned on top of their wages should be included in calculations under s 8(2) as part of “ordinary weekly pay”. This was a test case because the Employment Court had not previously considered s 8(2) of the Act.

The bus operators were paid a daily pay rate when they went on trips. The trips ranged in length from a day to several weeks. On top of the daily pay rate, the drivers earned commissions for booking passengers in tourist activities. Under the employment agreement, commissions were payable only after:

  1. the bus operator submitted records of booked activities to the employer after the trip; and
  2. the employer confirmed the booking records with the activity providers; and
  3. the employer confirmed the passengers had done the booked activities.

Commissions were not payable if the passengers failed to do the activity.

The Employment Court found the commissions earned by the drivers did not form part of their “ordinary weekly pay” under s 8(2) (see paras 28–39). The Labour Inspector’s case “assumed commission was earned by the driver as soon as details of the extra activities booked, and undertaken, by passengers were provided to [the employer]”. That conclusion was inconsistent with the employment agreement. (see para 38). Practically, the employer could not could “ascertain what commission-related activities had been booked, paid for and undertaken” in a weekly period (see para 40). It would be inconsistent with s 8(2) to require holiday pay to be calculated, and to be payable, before there was a contractual obligation to pay (see para 41).

Link to case [PDF 393KB] (external link)

Advanced Personnel Services Ltd v Pitman [2019] NZEmpC 83

Employment Court — Employment Agreement — Indemnity provisions — Enforceability of clauses providing for indemnity costs

A key issue was whether an indemnity clause in an employment agreement (EA) was an unlawful attempt to contract out of the Employment Relations Act.

The employee breached his EA by leaving to work for a competitor and by using intellectual property of the employer to help the competitor. The employer sought damages against the employee in the Employment Relations Authority (the Authority). The Authority awarded the employer special and general damages with interest.

The employee’s EA contained an indemnity clause. Based on the indemnity clause, the Authority also awarded the employer $46,000 in indemnity costs. The indemnity costs were “about a 350 per cent increase on what might have been awarded by applying the tariff” (see para 48).

The employee challenged the indemnity costs in the Employment Court on the basis that the indemnity provision was an attempt to contract out of the Employment Relations Act 2000 (the Act) in breach of s 238 (external link) .

The Employment Court upheld the award of indemnity costs. It found the indemnity provision was not an unlawful attempt to contract out of the Act and the Court was obligated to enforce it — declining to award contractual indemnity was not within the Court’s discretion. However, “an assessment [was] needed as to whether the amount of solicitor-client costs [was] objectively reasonable” (see paras 50–55).

Link to case (external link)

Still haven't found what you're looking for?