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Cases of interest: November 2020

A summary of interesting or topical employment cases.

Berea v Best Health Foods Ltd [2020] NZERA 474

Employment Relations Authority – 90-day trials – Validity of 90-day trial provision – Validity of notice 

Key issues were:

  • Whether a 90-day trial provision in an employment agreement (EA) was valid.
  • Whether the employer could rely on a 90-day trial provision if the employer did not comply with the notice provision in the EA.

The employer emailed the applicant to offer her a marketing role. In the email, the employer said: “As usual there will be a 90-day trial period”. The employer later emailed the applicant a draft employment agreement (EA), containing a 90-day trial provision. The employer gave the applicant several days to review the EA.

The applicant accepted the offer by email. The day before starting work the applicant said she had read the EA and was “happy with it”. The applicant asked the employer for another copy of the EA with the correct starting date. The employer said he would print a copy when she came to start work. The applicant arrived to start work about 30 minutes earlier than the co-director who was going to sign the agreement. After a brief discussion, the applicant and the co-director signed the agreement, without further changes.

On the applicant’s first day the employer became unhappy with her work. That afternoon the employer told the applicant they did not need her any further. The applicant collected her belongings and left.

Later the same day the employer emailed a letter to the employee, purporting to give her notice that her employment was to be terminated in three days. The letter said the employer would pay her for the three days and not require her to work. The EA said the employment could be terminated with “three days’ notice by either party, or payment in lieu of such notice”.

The employee claimed the 90-day trial provision was not valid and she was unjustifiably dismissed.

The Employment Relations Authority (Authority) found the 90-day trial provision in this case was valid. The Authority found the trial provision was valid because, before starting work, the employee:

  • had notice there would be a 90-day trial provision in the offer of employment
  • had time to review the 90-day trial provision in the draft EA
  • agreed to the EA with the provision in it before starting work. 

The Authority found the purpose of 90-day trial provisions in the Employment Relations Act 2000, ss 67A and 67B (external link) , was to avoid 90-day trials being imposed post-commencement of work. In this case, the bargain agreeing to a 90-day trial had been struck before the employee started work; signing the EA after the employee started work made no practical difference (see paras 29–30). The Authority found the facts in this case could be distinguished from other cases where the employee signed an EA containing a 90-day trial provision after starting work, and the employer had not previously mentioned a 90-day trial (see paras 31–33).

The Authority found though the trial provision was valid; the employer could not rely on it, because the employer did not give the employee notice as required under the EA. The Authority found the employer failed to give notice, when it sent the employee away first and then purported to give her notice in a letter later on (see para 42). 

As the 90-day trial provision could not be applied, the employer needed to show the dismissal was justified (see para 47). The Authority found the dismissal was not justified. The employee was summarily dismissed, in a manner that was not provided for in her EA (see para 45). The employer did not give the employee sufficient time to orient herself and demonstrate her skill level. The dismissal was abrupt and the employee was given no opportunity for representation or input (see paras 53–55). The Authority awarded the employee lost wages and $12,000 compensation for distress, without any reduction for contribution (see paras 57–61).

Berea v Best Health Foods Ltd [2020] NZERA 474 [PDF 275 KB] (external link)  

Evans v JNJ Management Ltd [2020] NZEmpC 181

Employment Court – Personal grievance – Whether disadvantage claim intrinsically linked to dismissal claim – 90-day trial period 

At issue was whether an employee’s personal grievance for disadvantage was intrinsically linked to his unsuccessful dismissal claim. He was employed as Head of Security. His responsibilities included recruiting and training security staff. The employer engaged an external provider to carry out security work without informing him. The employee emailed the employer with concerns about the outsourcing of security services without his involvement. He also raised ardent concerns regarding the employer’s CCTV cameras. The employee believed that the cameras breached privacy laws because they recorded audio as well as video. 

The employer dismissed the employee under a 90-day trial period. The Authority found the trial period was valid, and the employee did not dispute that finding. However, the Authority also found that the employee’s personal grievance for disadvantage was so intrinsically linked to his dismissal grievance that it could not investigate it. The Employment Court (Court) disagreed (see para 25). 

The Court found that the employer’s actions regarding the reorganisation of its security operations took place before dismissal was contemplated (see paras 26–28). The employer breached its good faith obligations by failing to consult the employee regarding its proposed restructure (see para 35). The employer also breached the dispute resolution process in the employment agreement when it failed to reply to the employee (see para 40). 

The Court awarded the employee $5,000 in compensation due to the employer’s unjustifiable actions (see para 44). 

Evans v JNJ Management Ltd [2020] NZEmpC 181 [PDF 245 KB] (external link)  

Canterbury Westland Kindergarten Assoc Inc v Barnes [2020] NZEmpC 199 

Employment Court – Collective Agreement – Interpretation – Disregarded sick leave – Costs 

At issue was whether the employer was able to exercise discretion when deciding upon a payment for an employee’s sick leave under a collective agreement. 

The employee was an early childhood teacher. She made a complaint to her employer when bullying issues arose within the workplace. The employee then went on extended sick leave, never returning to her role. The Authority found that she had been unjustifiably disadvantaged and awarded her $30,000 in compensation. However, the employee’s claim that she had been unjustifiably dismissed was unsuccessful. 

The Authority found that the employee was entitled to disregarded sick leave under the following term of her collective agreement:

Sick leave not exceeding an overall aggregate of two years may be granted by the employer in circumstances where an illness can be traced directly to the conditions or circumstances under which the teacher is working, or where an injury suffered by the teacher in the discharge of duties occurred through no fault of the teacher, and where payment has not been made by the Accident Rehabilitation and Compensation Insurance Corporation. Leave granted under this sub-clause will not be debited from the employee’s sick leave entitlement. 

The employer had assessed factors which it considered were relevant and offered the employee three months’ sick leave. The employee, and the Authority, thought that insufficient.  

The Court decided that the word “may” in the relevant term did not mean that the employer had discretion to pay a lesser period than the full two years, for the following reasons: 

  • The employee had been sick for over two years and there was no dispute that that her illness was directly attributable to her role (see para 19).
  • Another term in the agreement specifically included “in its discretion” but this term did not (see para 13).
  • The term “may” has in the past been interpreted as meaning “must” (see para 10).
  • The context of the term was a collective agreement that was particularly generous with sick leave entitlements (see para 12).
  • There was no evidence that the parties intended for the word “may” to deliberately indicate an increase in discretion (see para 18). 

The employer’s challenge therefore failed.  

The employee cross-challenged on the limited scope of the Authority’s costs award and was successful in a modest increase, being awarded $9,170 rather than $7,666 (see para 30). The employee had sought their full costs of $32,000, but the Court noted that awards of this amount would undermine accessibility. While parties are entitled to decide whether they wish to be represented in the Authority, their decisions are not automatically visited on the other party (see para 29). 

Canterbury Westland Kindergarten Assoc Inc v Barnes [2020] NZEmpC 199 [PDF 320 KB] (external link)  

Labour Inspector v Chhoir [2020] NZEmpC 203 

Employment Court – Minimum employment standards – Penalties - Employment Relations Act 2000 – Holidays Act 2003 – Minimum Wage Act 1983 – Wages Protection Act 1983 

At issue was whether the employers should be issued with penalties or a banning order due to breaches of their employee’s minimum employment standards. The employers were a married couple operating a bakery. The Labour Inspector investigated the bakery and found breaches of minimum employment standards, including failures to:

  • keep wage and time records
  • keep holiday and leave records
  • pay the minimum wage
  • pay annual holiday pay
  • pay public and alternative holiday pay. 

The employer had accepted the breaches and paid their employees the full $36,191 found to be owing (see para 3).

The Labour Inspector applied to the Court for penalties and banning orders. The Court ordered the first defendant to pay $50,000 and the second defendant to pay $20,000 in penalties (see para 71). It held the breaches were intentional (see para 46) and there was a degree of opportunism involved (see para 50). The Court found that although the first defendant had taken the lead in managing the employees and negotiating their terms and conditions, the second defendant had been complicit (see para 45).   

The Court declined to impose banning orders. It noted that, like the employees, the employers were migrants who moved to New Zealand to find a better life. They were first-time offenders who had paid the arrears and acknowledged wrong-doing (see paras 37–39). 

Labour Inspector v Chhoir [2020] NZEmpC 203 [PDF 260 KB] (external link)

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Page last revised: 16 December 2020

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