Cases of interest: July 2020

A summary of interesting or topical employment cases.

Cowan v Kidd [2020] NZEmpC 110

Employment Court – Employee status – Personal grievance – Unjustified dismissal – Penalty – Minimum standards – Arrears

At issue was whether a man’s friend had been his employee; and, if so, whether the Court would order remedies in the circumstances.

Mr Cowan and Mr Kidd were friends for almost fifty years.  Mr Kidd operated several businesses in partnership with his son (Kidd Partnership).  Mr Cowan received superannuation.  When Mr Cowan’s matrimonial home was sold after the breakdown of his marriage, Mr Kidd provided him with somewhere to live free of charge.  Mr Cowan started driving trucks for the Kidd Partnership, and in time also assisted with construction, maintenance and farm work.  After a year, the Kidd Partnership transferred a section of land with an agreed value of $80,000 to Mr Cowan at no cost (see para 16).  The intention of both parties was that Mr Cowan would purchase a pre-fabricated house and the Kidd Partnership would assist him with constructing it on the section (see para 17).  Mr Cowan would then have a home of his own.  The Court found Mr Kidd had mixed motives with this provision, both concern for his friend and recognition of his assistance (see para 18).

The parties never had a conversation regarding the arrangement and did not make any sort of written agreement.  The house intended for the section did not eventuate.  After seven years, Mr Cowan made a wage claim and raised a personal grievance (see para 25). 

In deciding whether Mr Cowan had been an employee, the Court considered that the parties did not have a written agreement and that Mr Cowan could decline work at any time (see para 38).  The other employees of the Kidd Partnership understood that Mr Cowan was not an employee and did not expect him to work at the level or consistency of an employee (see para 27).  On the other hand, Mr Cowan did perform work the Kidd Partnership would otherwise have had to pay someone else to do (see para 34).  Also, Mr Cowan expected reward for undertaking the work (see para 33).

The Court found that Mr Cowan was a casual employee of the Kidd Partnership.  It used available evidence such as log books to ascertain the hours worked (see para 42) and awarded the minimum wage for those hours (see para 52).  It found Mr Cowan was owed $104,600.85 in wage, public holiday and holiday pay arrears, as well as interest on that sum (see para 66).  The Court also found that Mr Kidd must pay a penalty of $18,000, and his less-culpable son a penalty of $2,000, for breaching minimum employment standards.  Of those penalties, $10,000 was to be paid to Mr Cowan and the other $10,000 to the Crown (see para 68).  As Mr Cowan was a casual employee, he was unsuccessful with his personal grievance for unjustified dismissal (see para 56).

Cowan v Kidd [2020] NZEmpC 110 [PDF 330KB] (external link)

De Wys v Solly’s Freight (1987) Ltd [2020] NZERA 285

Employment Relations Authority – Personal grievance – Unjustified dismissal – COVID-19-related redundancy

At issue was whether the employer had unjustifiably dismissed two employees when it terminated their employment during lockdown on the grounds of redundancy.

The employer was a trucking and general contracting business.  When the government announced the upcoming COVID-19 related Level-4 lockdown on Monday 23 March, the employees were advised the employer was applying for the wage subsidy and an essential goods freight exemption.  In a letter to staff the employer said “If the subsidy is received well and good, if not changes to our operations will become absolutely necessary” (see para 12).  Before the subsidy was confirmed, however, the employer decided to make several employees redundant. 

The employer argued before the Authority that it had kept its staff informed of its business decisions where “the standard expected of a fair and reasonable employer was significantly altered by the context of the global pandemic and economic turmoil” (see para 42).  The Authority found that the employer could not have reasonably decided at that early stage that the employees were surplus to requirements when it received the wage subsidy (see para 41).  When deciding which employees would be made redundant, the employer formulated selection criteria but did not advise the employees of those criteria or give them the opportunity to comment (see para 56).

The Authority determined the two employees had been unjustifiably dismissed.  The employer was ordered to pay Mr de Wys $10,000 in compensation and $18,907 lost wages (see para 73) and Mr Jenney $15,000 in compensation and $14,132 in lost wages (see para 79).

De Wys v Solly’s Freight (1987) Ltd [2020] NZERA 285 [PDF 110KB] (external link)

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