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Cases of interest: May 2021

A summary of interesting or topical employment cases.

A Labour Inspector (Ministry of Business, Innovation and Employment) v Gill Pizza Ltd [2021] NZCA 192

Court of Appeal – Employee status – Jurisdiction of Employment Relations Authority to determine employee status in proceedings brought by the Labour Inspectorate 

The issue was whether the Employment Relations Authority (Authority) had jurisdiction to determine whether pizza delivery drivers were employees or contractors in an action brought by the Labour Inspectorate; or whether only the Employment Court (Court) had jurisdiction to decide the drivers’ employee status. 

The Labour Inspector was pursuing a wage recovery claim on behalf of pizza delivery drivers. The company denied that the drivers were employees, arguing they were independent contractors. The Court decided that only the Court, not the Authority, had jurisdiction to decide whether workers were employees or contractors when the Labour Inspector was bringing a claim on the worker’s behalf. The Labour Inspector appealed to the Court of Appeal. 

The Court of Appeal overturned the Court’s decision, finding that the Authority did have jurisdiction to decide employment status. The Court of Appeal made the following findings:

  • The Court’s conclusion was wrong because it was inconsistent with the text and with the purpose of both s 6(5) (external link) of the Employment Relations Act (Act), which states that the Court may declare whether a person is an employee, and the scheme of the enforcement provisions (see para 31).
  • The Authority would always have to be satisfied that a worker is an employee before it went on to make a substantive determination (see para 32).  It has done so several times in the past (see paras 35–36).
  • The suite of tools provided to the Labour Inspectorate was intended to allow it to manage non-compliance “in the most efficient way, avoiding lengthy and costly litigation” (see para 16). Having “different issues in the same action [decided] in different fora is plainly inefficient and would usually be regarded as an abuse of process” (see para 52).
  • The natural and ordinary meaning of s 161(1)(c) (external link) is that that the Court only has exclusive jurisdiction to decide employment status if a s 6(5) application is made. Otherwise, the Authority has jurisdiction (see para 34). 

A Labour Inspector (MBIE) v Gill Pizza Ltd [2021] NZCA 192 [PDF, 265 KB] (external link)  

Head v Chief Executive of the Inland Revenue Department [2021] NZEmpC 69

Employment Court – Triangular employment relationship – Dispute regarding true employer – Application for s 6(5) declarations 

At issue was whether the employer of eight employees was the recruitment company who hired the workers or the government department they were placed with. 

Inland Revenue (IR) had awarded the recruitment company (Madison) a contract to provide contingent labour to supplement its workforce while it undertook a significant business transformation. Consequently Madison employed the employees to fulfil those roles. The employees, through their union, claimed that Madison had placed them with IR in the manner of a recruitment company, and IR then became their employer (see para 38). 

The Court found that the employees were employed by Madison, not IR, for the following reasons:

  • The employment agreements stipulated Madison as the employer, as did the agreement between IR and Madison (see para 157).
  • Madison had on-going involvement in the employment arrangements (see para 130).
  • The employees assigned by Madison did not undertake all duties that those employed directly by IR performed (see para 191).
  • Performance and conduct issues were dealt with by Madison (see para 199).
  • The employees made all pay, work hours and leave arrangements with Madison (see paras 150, 196, 207 and 211).
  • The way in which the employment was conducted in practice was consistent with the documentation governing the relationship (see para 245).
  • The employees were not vulnerable employees open to abuse (see para 277).
  • The parties had genuine labour-hire arrangements (see para 255). 

The Court dismissed the application (see para 294). 

Head v Chief Executive of the Inland Revenue Department [2021] NZEmpC 69 [PDF, 130KB] (external link)  

Fleming v Attorney-General [2021] NZEmpC 77

Employment Court – Employee status – Family caregiver 

At issue was whether a mother, who was the caregiver of her severely physically and mentally disabled adult son, should be declared an employee of the Ministry of Health (Ministry).  

The applicant was supported by a Work and Income benefit while providing primary care for her son. In 2018 she became aware that she could apply for funding under a Ministry scheme, called “Funded Family Care” (the scheme), instead of receiving a benefit.  Under the scheme, the recipient of care was purported to be the “employer” of the person providing care. The applicant commenced an application for funding under the scheme. 

As part of the application process, an agent of the Ministry assessed the disability level of the applicant’s son. The assessor found the applicant’s son needed 24 hour supervision for his safety and well-being. Following the assessment the Ministry determined the applicant was entitled to be funded for a maximum of 22 hours a week. The applicant decided not to complete the application for funding as she would have been worse off than she was on a benefit. She did not accept that her son had capacity to be her employer. 

The Ministry offered an alternative funding model named “Individualised Funding”. There were three options as to who the employer was under Individualised Funding (the disabled person, their agent or a “host” agency approved by the Ministry). The applicant decided not to apply for Individualised Funding either.  Instead she sought a declaration that she was an employee of the Ministry (see para 23). The applicant also sought compensation, lost wages and penalties. 

The Ministry disputed the jurisdiction of the Court to consider whether the Crown was entitled to require funding recipients of either scheme to accept an employment relationship (see para 24). It also disputed that the applicant was the Ministry’s employee. 

The Court found that:

  • The Court did not have jurisdiction to decide whether the funding policies were lawful or to impose parameters around when funding might be available (see para 53).
  • The Court had jurisdiction under s 6(5) of the Act to decide the applicant’s employee status. Parliament had not removed that jurisdiction (see paras 46–57).
  • The applicant’s son had no capacity to enter into an employment relationship, or to have one imposed on him, due to his diminished mental capacity (see paras 26–28, 31).
  • The applicant was an employee of the Ministry (see para 86). 

The Court found that the applicant was not an employee under the “ordinary s 6 test” because the required level of integration and control was not reached in the relationship (see para 93). However, the applicant was employed by the Ministry as a homeworker as defined in s 5 of the Act (see paras 75–86). The Court held that the applicant was entitled to a declaration that she was an employee (see para 96). 

The Court found the applicant would receive compensation for her personal grievance on the basis of discrimination and was entitled to lost wages (see para 96–99). The Court reserved the quantum of remedies (see para 107). The Court declined to award penalties as it did not find that the failures were deliberate (see para 103). 

Fleming v Attorney-General [2021] NZEmpC 77 [PDF, 250 KB] (external link)  

Siegmund v Marlborough Tour Company Ltd [2021] NZERA 180

Employment Relations Authority – Personal grievance – COVID-19 redundancy 

At issue was whether the employee was unjustifiably dismissed when she was made redundant when New Zealand entered COVID-19 related lockdown. 

The employee was a deckhand on a mail boat. Tourists would join the mail run to cruise around the Marlborough Sounds. The employee was employed on a fixed term agreement over summer due to the seasonal nature of the business. The employment was due to end on 31 May 2020. 

The employer’s business was heavily impacted by border restrictions in March 2020. The employer held a meeting on 16 March to discuss ramifications with the staff. However, the employee was elsewhere, as it was her rostered day off, and did not attend the meeting. On 18 March the employer announced it would be bringing forward its winter schedule to commence on 23 March. After the day’s cruise on 21 March, the employee’s manager boarded the boat and said to the employee “that was your last day mate” (see para 19). 

The next day the employee spoke to the employer’s human resources advisor. However, “the two were talking at cross purposes” because the employee believed she had already been dismissed the previous day (see para 25).  The human resources advisor, on the other hand, thought the conversation was part of consultation regarding redundancies. Following the misunderstanding there was a dispute between the parties regarding the applicable notice period. The company claimed the contract had been frustrated due to the pandemic (see para 28). After further discussions regarding options such as the wage subsidy scheme, the employee raised a personal grievance. 

The Authority found the employee had been unjustifiably dismissed (at para 40). It acknowledged there had been a mix-up but found that the employer had not consulted with the employee as it was required to do. The employer “exacerbated the situation by later proffering the unsustainable argument of frustration” (see para 39).  The employee was awarded $8,000 in compensation (see para 46). 

Siegmund v Marlborough Tour Company Ltd [2021] NZERA 180 [PDF, 185 KB] (external link)

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Page last revised: 17 June 2021

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