Cases of interest: March 2021

A summary of interesting or topical employment cases.

New Zealand Professional Firefighters Union Inc v Fire and Emergency New Zealand [2021] NZCA 60

Court of Appeal – Leave to appeal – Inconsistency between legislation and collective agreement

The issue was whether the Court of Appeal would grant the applicant union leave to appeal an Employment Court decision.  

The employer was undergoing a restructure. Clause 1.21.8 of the relevant collective agreement stated:

Whenever vacancies or any new positions occur in the Service, not less than 14 days’ notice shall be posted inviting applications from the workers for the filling of such vacancies and such applications shall receive full consideration.

Section 30 (external link) of the Fire and Emergency New Zealand Act 2017 stipulates that the procedural steps in the previous sections, such as notification of vacancies, merit-based appointment and review, do not apply if the employee has received a notice of redundancy. 

The union argued that on the basis of the collective, their members were entitled to be considered for all vacancies and that preference should not be given to employees who have been made redundant. The Employment Court found that there was an inconsistency between the collective agreement and the legislation, and that the legislation must prevail.  It dismissed the union’s application.

The Court of Appeal declined leave to appeal. It found the union’s argument was an “excessively literal and narrow interpretation of s 30” (see para 21). The interpretation would undermine the legitimate rights of non-union members (see para 27).  The Court of Appeal agreed with the Employment Court that at its core s 30 was a protective provision for affected employees (see paras 22–24).  

New Zealand Professional Firefighters Union Inc v Fire and Emergency New Zealand [2021] NZCA 60 [PDF 210KB] (external link)

Radford v Chief of New Zealand Defence Force [2021] NZEmpC 35

Employment Court – Protest to jurisdiction – Proper place for litigation – Employment overseas 

The issue was whether, as a question of law, New Zealand employment institutions and the Employment Relations Act 2000 (Act) applied to an employment agreement between the Chief of the Defence Force and a New Zealand citizen employee who worked in Washington DC in the United States.  

The parties signed an individual employment agreement (IEA) that stipulated: 

You are a Locally Engaged Civilian staff member as defined under Section 90A of the Defence Act 1990.  Accordingly, New Zealand legislation does not apply, rather you are subject to United States of America Labor Laws and legislation.

However, the IEA also referred to personal grievances. The employee also accepted the New Zealand Defence Force Locally Employed Civilian’s Code of Conduct (Code), which was one of four documents comprising the employment agreement. The Code referred to the Act and applied it to all staff regardless of their location in the world.  There was therefore inconsistency in the documents as to which law was applicable. The employee was dismissed and sought proceedings in New Zealand.  

The Employment Court (Court) found in this preliminary decision that United States law applies, but does not preclude considering the Employment Relations Act due to the Code (see paras 118 and 122), for the following reasons:

  • Section 90A (external link) of the Defence Act 1990 means the employer can choose to employ a person overseas under the local legislation. In this case, the employer expressly did so (see paras 93–94).
  • The IEA specifically referred to United States Labor Laws, as did the employee’s previous employment agreements with the employer.
  • Correspondence from the employer regarding the employment agreement also referred to United States law applying (see para 122).
  • The parties accepted the Code was intentionally signed and applied to the employment relationship (see para 112).

The Court also found that New Zealand was the appropriate forum for the proceedings (see para 160). Both parties were domiciled in New Zealand. There would be impediments to the matter being heard in the United States, including costs (see para 162). Although two witnesses were based in Washington DC, arrangements could be made to hear their evidence remotely (see paras 160–161). 

The Court held that the Employment Relations Authority (Authority) also has the jurisdiction to apply foreign law (see para 146).

Radford v Chief of New Zealand Defence Force [2021] NZEmpC 35 [PDF 420KB] (external link)

Haddad v New Zealand Steel Ltd [2021] NZERA 106

Employment Relations Authority – Personal grievance – Unjustified dismissal – Reinstatement

The issue was whether the employee had been unjustifiably dismissed in a redundancy process, and whether he should be reinstated to his position.

The employee was a manager with the employer for over seven years. The employee and his superior had discussed his communication style.  After a restructure in another department, the employer restructured the employee’s department. Three new managerial positions were created. The only person affected by the second restructure was the employee. Although his employment agreement stipulated that the first option in a redundancy was to consider redeployment, the employee was asked to apply for the new roles. He did so, but declined to attend an interview as he believed the employer was obligated to offer him one of the new roles. He believed the roles were clearly within his capabilities and he was humiliated by the process. 

The Authority found that the employer should have offered the employee a redeployment option, which rendered the dismissal unjustified (see para 51). The Authority found that the employer’s insistence that the employee establish his suitability for a new role was an inversion of their obligation to positively explore his redeployment (see para 46). 

Reinstatement is the primary remedy for an unjustified dismissal under s 125 (external link) of the Act. The Authority found that the employment relationship could be successfully re-established. It noted that the presence of a vacancy is not required for reinstatement to be ordered (see para 56). The Authority ordered that the employee be reinstated into a position that was no less advantageous to his previous role within 28 days. It also ordered that the employee fully cooperate in any retraining required (see para 57).

Haddad v New Zealand Steel Ltd [2021] NZERA 106 [PDF 80KB] (external link)

Thomson v Hispec Homes NZ Ltd [2021] NZERA 124

Employment Relations Authority – Business Debt Hibernation Scheme – COVID-19

The issue was whether a debt owed by an employer to an employee was subject to the business debt hibernation scheme.

The government introduced the scheme to assist companies affected by COVID-19 to manage their debts. It is set out in Schedule 13 (external link) of the Companies Act 1993, which states in cl 40 (external link) that during the debt hibernation period a proceeding may not be taken against the entity in relation to a debt unless it pertains to an “excluded debt” as defined in cl 4 (external link)

The employee and employer entered into a record of settlement which was certified by a mediator at the Ministry of Business, Innovation and Employment. In that agreement the employer agreed to pay the employee compensation, holiday pay and a contribution towards his legal fees. The employer did not pay the sums, and subsequently entered into business debt hibernation. The Authority was asked to decide whether these sums were excluded debt.

The definition of excluded debt includes “any salary, wages, or other amounts owed by the entity to an employee in connection with the employment relationship”. The Authority found that the holiday pay was an excluded debt, but the compensation and legal fees were not.  The term “amounts owed by the entity to an employee in connection with the employment relationship” was informed by the preceding terms salary and wages and by the purpose of the scheme (see paras 21–29). The Authority declined to award a penalty or interest (see para 30). It also declined to issue a compliance order when the employer may not have been able to adhere to it in the circumstances (see para 33).

Thomson v Hispec Homes NZ Ltd [2021] NZERA 124 [PDF 40KB] (external link)

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Page last revised: 16 April 2021

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