Cases of interest: May 2018

A summary of interesting or topical employment cases.

A Labour Inspector of the Ministry of Business Innovation and Employment v Smiths City Group Ltd [2018] NZEmpC 43 

Employment Court – Whether daily unpaid morning meetings constitute work – How compliance with the Minimum Wage Act 1983 should be assessed 

Every morning, before opening the store, Smiths City Group Limited conducts a short meeting with sales staff. Attendance at these meetings is expected, but no wage and time records are kept. The sales staff who attend are not paid for their time. The Court was required to consider whether these meetings constituted work for the purposes of s 6 of the Minimum Wage Act 1983 and, if so, whether commission and incentive payments should be taken into account in assessing compliance with the Act. 

Section 6 of the Minimum Wage Act requires payment for work at not less than the minimum rate but does not define what “work” means. The Court noted that an interpretation of “work” that would have confined its application to “… physical and mental exertion in the performance of one’s duties” was rejected by the Court of Appeal in Dea Services v Dickson [2011] NZCA 14 (see para [38]). The Court adopted the three factual inquiries established in Idea Services to conclude that the morning meetings were “work” (see para [69]). 

Firstly, when considering the level of constraints placed on the employees, the Court held that informality of the meetings is not material (see para [60]). Although staff had some limited freedom during the meetings, they were not entitled to be disruptive and had to listen (see para [66]). Constraint is not to be equated with compulsion (see paras [64] and [65]). The expectation to attend, and pressure placed on staff to do so, was direct and forceful. That expectation involved an exercise of power in a relationship with an imbalance of power. The practical reality was that sales staff had to attend in order to satisfy their employer’s expectations and not be seen as poor performers. The Court held this to be a sufficient constraint on the time of an employee, in the sense used in Idea Services (see para [65]). 

Dealing with the responsibility placed on employees, the Court accepted that most of the time the employees attending the meetings had no “active” responsibilities to discharge. However, they were obliged to sit and listen to the information that was being imparted and to absorb it (see para [48]). 

Finally, the meetings were held to be solely for the benefit of the employer (see para [59]). Any possible benefit to staff by enhancing their opportunity to earn commission or incentive payments was considered immaterial (see para [60]). Smiths City enjoyed the exclusive benefit of the meetings because it had a cost-free opportunity to prepare its staff for the working day (see para [68]). 

The Court held that the way Smiths City calculated and paid commission and/or discretionary incentives was indistinguishable from the method of payment, described as averaging, that was rejected in Idea Services (see para [76]). In Idea Services the Court of Appeal held that the key expression in s 6 is the phrase “rate of wages” meaning each unit of time (see para [73]). The employees to whom the improvement notice was directed were paid by the hour. Their entitlements under the Minimum Wage Act and Minimum Wage Orders must be calculated using the same unit of time. Commissions and incentive payments were additional income earned over and above the contractual hourly rate not in substitution for it (see para [77]). 

Consequently, Smiths City Group Limited was found not to have complied with the requirements of the Minimum Wage Act (see para [81]). 

Link to case [PDF 503 KB] (external link)  

New Zealand Nurses Organisation v Waikato District Health Board [2018] NZEmpC 47 

Employment Court – Determining entitlement to retirement gratuity – Interpretation of “retiring” 

At issue was the interpretation of a clause in the collective agreement which provides that WDHB “may pay a retiring gratuity to staff retiring from the organisation who have had not less than 10years’ service with the employer…”  The parties debated whether “retirement” was to be construed as “moving on” from WDHB or ceasing all gainful employment. 

The Court noted that earlier collective employment agreements between the parties, from which the provision in issue was grand parented, made a clear distinction between “retirement” and “resignation” (see para [62]). The parties intended distinction between the two concepts remained unaltered (see paras [62], [72], [81] and [83]).

The Court rejected the argument that requiring the employee to be withdrawing from work on a permanent basis in order to receive the gratuity would operate as an unreasonable restraint of trade. The employee would not be deprived of the right to work; they would merely be precluded from receiving the gratuity if they chose to do so (see para [98]). 

Ultimately, an employee will be held to be retiring from WDHB for the purposes of the retiring gratuity clause if the employee will not be, and has no intention of, taking up further regular paid work in any capacity (see para [108]). 

Link to case [PDF 366 KB] (external link)  

Performance Cleaners All Property Services Wellington Ltd v Chinan [2018] NZEmpC 45 

Employment Court – Jurisdiction to awards costs where no jurisdiction exists to determine the claim

While determining two costs issues, the Court was required to determine a preliminary issue as to the Employment Relations Authority’s jurisdiction to determine costs. An earlier judgement of the Court found that the Authority did not have jurisdiction to consider the employer’s claim (see para [8]). Consequently, the employer submitted that there was no basis for the Authority to have made a costs order against it (see para [11]). 

Under cl 15 of the second schedule of the Employment Relations Act 2000 (ERA) the Authority may order costs against “any party to a matter.” The Act does not define the word “matter.” However, the Court rejected the employer’s argument that it could be conflated with the term “employment relationship problem” in s 161 ERA.

The employer’s submission would have effectively meant that “parties to a matter” was to be interpreted as “parties to an employment relationship problem which is within jurisdiction.” The Court considered this to be a substantial gloss on the language that Parliament chose to use (see para [16]). Furthermore, if the employer’s approach were to be adopted, the Authority would be unable to make any order as to costs for a successful party where the Authority investigates an issue as to jurisdiction and determines that there is a want of jurisdiction (at para [17]). Finally, the same approach would apply to the other provisions of the second schedule referring to “matters which are before the Authority”. The Court noted that it is inherently unlikely that Parliament intended that all these procedural provisions would not apply if the Authority determined there was a lack of jurisdiction (at para [18]).

 Where the Authority has a relationship problem before it, it is properly described as having a matter before it so that itis able to exercise the powers described in the second schedule of the Act (see para [23]). 

The Authority had jurisdiction to consider the costs issues notwithstanding the subsequent conclusion reached by the Court on the topic of jurisdiction (see para [24]). 

Link to case [PDF 426 KB] (external link)  

Johnston v The Fletcher Construction Company Ltd [2018] NZEMPC 40 

Employment Court – Jurisdiction to direct parties to private mediation 

The employer applied to the Court for a direction to private mediation. At issue was whether the Court’s power to direct mediation under s 188(2) of the Employment Relations Act 2000 is limited to mediation provided by the Ministry of Business, Innovation and Employment mediation services (MBIE mediation services). 

The Court determined that it was likely Parliament intended that court-directed mediation would be undertaken, at no cost, by specialist MBIE mediators appointed by the chief executive under s 144(1), and in accordance with the detailed processes and procedures set out in ss 144A-149A. Had Parliament intended to confer a broad discretion to direct mediation both within and outside of the mediation services provided for under the Act, it would have included an express ability to impose conditions on any such direction (see para [11]). 

While the definition of mediation under s 5 of the Act refers to mediation services provided by the chief executive or “any other person,” the definition of mediation services itself is confined to mediation services provided under s 144, namely by the Chief Executive and not by anyone else (see para [13]). 

The Court declined the application for a direction to private mediation and directed the parties to attend mediation provided by MBIE mediation services (see para [18]). 

Link to case [PDF 262 KB] (external link)  

Evans-Walsh v Southern District Health Board [2018] NZEmpC 46 

Employment Court – Whether notification to professional regulatory body breached record of settlement 

The employee argued that the DHB breached the terms of a confidential record of settlement by notifying the Nursing Council of New Zealand that she had resigned before the conclusion of an investigation into complaints about her. 

The Court noted that, if the DHB considered the employees resignation to be “… for reasons relating to competence,” the DHB was under a statutory duty to notify under s 34(4) of the Health Practitioners Competence Assurance Act 2003 (HPCAA). Section 34 requires a causal connection between a dismissal or resignation and the giving of notice. However, the threshold is that that the subject of competence was raised or played some part in the decision to end a nurse’s employment. It was not necessary for the DHB to establish a competence issue, to attempt to take into account the employee’s views about the complaints against her, or to try to ascertain why she had resigned before notifying (see para [41]). 

The settlement agreement qualified the requirement of confidentiality so that it only applied “so far as the law allows.” Consequently, the DHB did not breach the record of settlement by notifying the Nursing Council (see para [46]). 

Link to case [PDF 366 KB] (external link)

Page last revised: 26 June 2018

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