Cases of interest: June 2017

A summary of interesting or topical employment cases.

Waikato District Health Board v New Zealand Nurses Organisation [2017] NZCA 247

Employment Court - Order for rehearing - Recalling judgment - Failure to consider issue

The employee claimed a retirement gratuity under the collective agreement. At issue was whether the employee had in fact retired and whether she had undertaken the continuous service required to qualify for the gratuity.

The matter reached the Employment Court. Judge Ford held that the employee did not undertake the required continuous service. On the basis of this finding, Judge Ford held that it was not necessary to determine whether or not the employee had in fact retired. The union applied for a recall of Judge Ford’s decision, or alternatively a rehearing, on the basis that he had not determined its independent challenge to the Authority’s determination on whether retirement occurred.

Chief Judge Colgan declined a recall, but granted a rehearing because Judge Ford’s dismissal of the union’s application without considering or deciding the retirement issue had brought about a real possibility of a miscarriage of justice. The employer appealed the Chief Judge’s decision to grant a rehearing.

The Court of Appeal held that the decision to grant a rehearing did not reflect any error of law or principle (see para 51). The role of the Employment Court is to act to minimise future employment conflicts (see para 43). Multiple challenges to Authority determinations are procedurally independent of each other, in a way that appeals and cross-appeals in general civil jurisdiction are not: (see para 46). The retirement issue brought by the union and employee raised issues of broad application (see para 49). This issue was not a hypothetical one but had arisen between an individual employee and her employer: (see para 50).

In addition, the Court of Appeal held that the Employment Court does have the power to recall judgments. Although, there is no express provision in the Employment Relations Act 2000 or its regulations, the Employment Court can have recourse to the High Court Rules where there is no applicable procedural rule in the Employment Court (see para 54). Failure to decide an issue (as happened here) is a recognised ground for recall (see para 55).

The appeal was dismissed.

Link to case (external link)

8i Corporation v Marino [2017] NZEmpC 69

Employment Court - Section 149 settlement agreement - Penalty clause

The Employment Court assessed whether s 149(3) of the Employment Relations Act 2000 (“Act”) precluded it from examining whether a mediator-signed settlement agreement included an unlawful penalty clause.

The Employment Court held the reference to “enforcement purposes” in s 149(3)(b) meant that terms may be brought before the Court to determine whether they are enforceable (see para 22). Section 149(3)(b) is akin to a privative provision which requires narrow construction (see para 24-25). Allowing a penalty clause to be enforceable could lead to extreme consequences (see para 28-29). The lawfulness or otherwise of a term of an agreement will be relevant to the question of enforceability (see para 32). Had Parliament intended to override the common law position on penalty clauses it would have done so expressly (see para 37). The Court concluded that s 148(3) did not prevent it from assessing whether a settlement agreement contained an unlawful penalty clause (see para 48).

The Court also examined whether there were limits to what a mediator could certify. The Court concluded that it is not within the scope of a mediator’s discretionary power to certify a s 149 settlement agreement which contained a penalty clause and, if that had been done, the certification would be ineffective (see para 49).

Link to case (external link)

Stormont v Peddle Thorp Aitken [2017] NZEmpC 71

Employment Court - Special damages for costs

The employee brought two successful claims. First, a personal grievance for unjustified dismissal by way of redundancy. Second, a breach of good faith where the employer had failed to apply the correct methodology for calculating the employee’s bonus (see para 50).

The Employment Court considered whether to award special damages for legal costs. The Court noted that the Court of Appeal’s obiter endorsement of special damages in Binnie v Pacific Health Ltd [2002] 1 ERNZ 438 (see para 94). On the facts, a bright line could be drawn between the legal costs associated with the redundancy process and the efforts to recover the bonus. The bonus costs were appropriately dealt with under cl 19 of schedule 3 of the Act. It was appropriate to deal with the redundancy costs as special damages. The Court noted that its powers allowed the awarding of special damages but that care must be taken to ensure that such costs have not already been incorporated within another head of relief (see para 96).

The Court awarded special damages for costs.

Link to case (external link)

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