Cases of interest: November 2016

A summary of interesting or topical employment cases.

New Zealand Basing Ltd v Brown [2016] NZCA 525

Court of Appeal – Age discrimination – Whether Employment Relations Act 2000 applied

The respondents were two pilots whose employment agreements required them to retire from service at 55 years old. They argued that the laws of New Zealand prevented this, although the employment agreements were stated to be subject to the law of Hong Kong. The Court of Appeal considered whether the Employment Relations Act 2000 applied to override the parties’ agreement that Hong Kong law applied to the employment agreements, and if not, whether the application of Hong Kong law would be contrary to public policy.

The Court of Appeal held that the parties’ choice of law clause was of “decisive significance” (see para 58) and that s 238 could not operate to override this agreement. The Court stated that “[s]ection 238 does not of itself justify the wholesale replacement of carefully drafted transnational bargains with New Zealand’s employment regime, even if a court considers the domestic protections more advanced or attractive than those under the foreign law of contract” (see para 57). The law of Hong Kong was the proper law of the contract.

The public policy exception also did not apply, since the Court did not consider the prohibition on forced retirement under 65 to be an “absolute value that must trump transnational contracting” (see para 74). Further, the absence of such a protection would not “shock the conscience of a reasonable New Zealander” (see para 83). The Court also took into account the advantages that the pilots received from having the law of Hong Kong apply to their employment, such as favourable tax rates (see para 77), and held that there was no reason to use the exception to defeat the parties’ private bargaining intentions.

The appeal was allowed.

Link to case (external link)

Borsboom v Preet PVT Ltd [2016] NZEmpC 143

Employment Court – Approach to imposition of penalties for minimum standards

A Full Court of the Employment Court set out guidance about how the Employment Relations Authority should approach penalties, especially where multiple breaches of minimum employment standards are involved.

The Court examined the legislative history of penalties in employment law, the objectives of such penalties, and how comparable jurisdictions treat penalties. The Court adopted a “framework which will be transparent and predictable but still also allow to be taken into account relevant case-specific factors” (see para 137). The steps to be followed when fixing penalty amounts are as set out below in paragraph 151 of the judgment:

Step 1: Identify the nature and number of statutory breaches. Identify each one separately. Identify the maximum penalty available for each penalisable breach. Consider whether global penalties should apply, whether at all or at some stages of this stepped approach.

Step 2: Assess the severity of the breach in each case to establish a provisional penalties starting point. Consider both aggravating and mitigating features.

Step 3: Consider the means and ability of the person in breach to pay the provisional penalty arrived at in Step 2.

Step 4: Apply the proportionality or totality test to ensure that the amount of each final penalty is just in all the circumstances.

Link to case (external link)

Xtreme Dining Ltd t/a Think Steel v Dewar

Employment Court – Extent of obligations to mitigate loss – Whether 100% reduction in remedies allowed

A Full Court of the Employment Court considered to what extent a dismissed employee is required to mitigate their loss, and whether section 124 (external link) of the Employment Relations Act 2000 allows a 100% reduction in remedies.

The plaintiff argued that the defendant had not provided sufficient evidence to show that he had tried to find another job after his dismissal. The Court held that, where an employer argues that an employee has not sufficiently mitigated their loss, the employer must prove that the employee acted unreasonably (see para 103). The employee does not have to prove that they acted reasonably, although they must provide evidence of the steps they took to mitigate their loss (see para 104).

The Court also held that s 124 “does not permit complete removal of a previously established remedy”, but the “absence of a remedy in rare cases, notwithstanding the establishing of a personal grievance may be appropriate” (see para 216). In this case, it was not appropriate to have a “nil award of remedies” (see para 228).

Link to case (external link)

Lowe v Director-General of Health, Ministry of Health [2016] NZSC 143

Supreme Court – Leave to appeal granted

The Supreme Court granted leave to appeal the Court of Appeal’s decision (external link) on whether the appellant was a “homeworker” for the purposes of section 5 (external link) of the Employment Relations Act 2000 and therefore an employee of the respondents.

Link to case (external link)

Fraser v McDonald’s Restaurants (New Zealand) Ltd [2016] NZERA Auckland 370

Employment Relations Authority – Matter removed to Employment Court

The Employment Relations Authority removed the matter to the Employment Court as it raised important questions of law concerning interpretation of the recently enacted s 67D (external link) of the Employment Relations Act 2000 on availability provisions.

Doran v Carrick Holdings Ltd [2016] NZERA Auckland 371 (external link) was removed at the same time as it concerned a similar problem.

Link to case (external link)

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