Cases of interest: June 2019

A summary of interesting or topical employment cases.

First Union Incorporated v Jacks Hardware and Timber Limited [2019] NZERA 374

Employment Relations Authority – Collective bargaining – Fixing provisions of collective agreement

First Union Incorporated (‘the Union’) initiated collective bargaining with Jacks Hardware and Timber Ltd trading as Mitre 10 Mega Dunedin and Mitre 10 Mosgiel (‘the employer’) on 13 October 2013.  Since 2015 the proceedings have resulted in seven Employment Relations Authority (‘the Authority’) determinations, two recommendations of the Authority after facilitation processes and six Employment Court judgments (see para 22).  This determination of the Authority culminated in the first collective agreement between the parties by fixing the last remaining disputed terms.

This was the first time since section 50J (external link) was inserted in the Employment Relations Act 2000 (‘the Act’) in 2004 that the Authority was required to fix the provisions of a collective agreement. 

The Authority was required to fix two terms:

  1. the term (duration) of the agreement.
  2. remuneration.

The Union sought remuneration of $21.50 per hour for Tier 1 (entry-level) employees, $23.00 per hour for Tier 2 employees and an additional trade qualification rate of $3.00 per hour.  The employer sought to set their lowest pay rate at 25 cents above the minimum wage, being $17.95 per hour for Tier 1 employees and $18.70 per hour for Tier 2 employees.  It also sought to keep its existing rate of $1.00 per hour for the additional trade qualification rate (see paras 11­­­­-16).

The Union argued that the wages should be fixed in line with a main competitor chain of hardware stores and a major supermarket model.  The employer disagreed, preferring to be compared to two other Mitre 10 stores in small towns.

The Authority noted that the Act does not outline any process for the Authority to follow when fixing the terms of a collective agreement.  It affirmed it was acting in line with the purposes of the Act, including building productive employment relationships based on good faith, addressing the inherent inequality of power in employment relationships and promoting collective bargaining (see paras 17-21).

The Authority considered the following factors in coming to its decision:

  • comparable wages in the market,
  • the financial position of the company,
  • the length of time between the initiation and finalisation of the collective agreement,
  • pressure in the economy to increase wages, and
  • the employer’s preference to maintain internal parity.

After weighing the evidence and arguments of the parties, the Authority concluded that the Tier 1 wages would be fixed at $19.00 per hour, Tier 2 at $21.00 per hour and the additional trade qualified rate at $2.00 per hour (see para 64). 

The Authority found that the term of the collective agreement should be fixed to operate from the date of the determination until 31 August 2020.

Link to case [PDF 50KB] (external link)

Horizon Concepts Ltd v Hayward [2019] NZEmpC 75

Employment Court – Whether employee or contractor

Mr Hayward had worked for the director of the business since 2000 in a number of companies.  Their relationship came to an abrupt end following a dispute in July 2017.  Mr Hayward raised a personal grievance with Horizon Concepts Ltd claiming he had been unjustifiably dismissed.  In a preliminary finding the Employment Relations Authority found Mr Hayward was an employee.  Horizon Concepts Ltd challenged that determination in the Employment Court, arguing he was in fact a contractor and therefore unable to raise a personal grievance.

The parties agreed that Mr Hayward had been an employee until June 2016.  At that time he ceased working for another of the director’s companies and started with two more, including Horizon Concepts Ltd.  At the same time, the parties agreed that his method of remuneration would change from wages to GST invoicing.  The parties discussed this change with an accountant and made the necessary arrangements.  Although the parties disagreed on who initiated the change to invoicing, the Court found that the parties intended to create an independent contracting relationship (see para 27).  It found the introduction of invoicing was a “significant departure from previous arrangements” (see para 17).

As well as the intention of the parties, the Court discussed the other common law tests used to ascertain whether a worker is an employee or a contractor, including the “control test”, the “integration test” and the “fundamental or economic reality test” (see paras 29-39).  It found that although Horizon Concepts Ltd exercised control over Mr Hayward, he also enjoyed some autonomy.  Mr Hayward had taken advice regarding being a contractor, appreciated the financial benefits and actively taken advantage of them. 

The Court found that Mr Hayward had intended to be a contractor and was comfortable with the arrangement until the working relationship broke down (see para 40).  Mr Hayward had been a contractor since June 2016 and the Court therefore had no jurisdiction to consider a grievance.

Link to case [PDF 435KB] (external link)

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