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Cases of interest: November 2022

A summary of interesting or topical employment cases.

Maheta v Skybus NZ Ltd (formerly Airbus Express Ltd) [2022] NZCA 516

Court of Appeal – Jurisdiction – Employment Court – Jurisdiction to stay Employment Relations Authority costs

Court of Appeal – Jurisdiction – Employment Court – Security for costs

Court of Appeal – Statutory interpretation – Meaning of “legally aided”

At issue was:

  • Whether the Employment Court (the Court) erred in holding it had no jurisdiction to stay the awarding of costs against the employee by the Employment Relations Authority (Authority).
  • Whether the Court erred in awarding security for costs against the employee on the basis that it could do so because he was not legally aided.

The employee sought to challenge an Authority determination. The employee also sought a stay on costs against him in relation to the same proceedings. At the time the employee made the application for a stay, the Authority had not yet issued its costs determination.

In a counter-claim, the employer sought $10,000 from the employee for security for costs for the challenge to the Court.

The Court declined a stay because the employee had not challenged the Authority costs determination (which was yet to be issued) under s 179 (external link) of the Employment Relations Act 2000 (the Act). In the alternative, the Court held it could not award a stay to prevent the Authority from issuing a costs determination, as the Court could not direct the Authority about its procedures (see para 5).

The Court awarded $10,000 security for costs against the employee. The Court considered it could award security for costs because the employee was not “legally aided” (see para 17). The employee had previously had an interim legal aid grant. The employee had withdrawn instructions from the barrister he obtained under that grant. At the time of the Court judgment, the employee was waiting for a replacement grant of legal aid. Legal Services approved a change of lawyer after the Court judgment was delivered.

The Court of Appeal found the Court erred in finding it had no jurisdiction to award a stay of costs (see paras 10–16). The Court of Appeal held that if the employee was seeking a stay of costs on the basis the substantive determination was incorrect, the employee did not have to challenge a costs determination under s 179 (external link) , before the Court could order a stay (see paras 14, 15).

The Court of Appeal held the Court erred in awarding security for costs against the employee on the basis it was allowed to do so because the employee was not legally aided. The Court of Appeal found the employee was legally aided. The Court of Appeal held the employee came within the meaning of “aided person” in the Legal Services Act 2011, ss 4(1) (external link) and 16(3) (external link) (see para 21).

Maheta v Skybus NZ Ltd (formerly Airbus Express Ltd) [2022] NZCA 516 [PDF, 216KB] (external link)

HLI v VMZ [2022] NZEmpC 201

Employment Court – COVID-19 – Unjustified dismissal – Non-compliance with vaccine mandate – Interim reinstatement

At issue was whether the employee should be awarded interim reinstatement, pending a hearing into his unjustified dismissal claim.

The employee was employed as a tug engineer in a port. Under the COVID-19 Public Health Response (Vaccinations) Order 2021 (external link) (the vaccination order), the employee was required to be vaccinated to perform his role. The employee was dismissed for not complying with the vaccination order. 

Following his dismissal, the employee was involved in or wrote various anti-vaccination communications that were sent to the employer. The communications threatened the employer with criminal complaints, accused it of murder, demanded $100 million as settlement and demanded that it “[c]ease and desist all coercion to comply to the procurement and administration of the COVID-19 vaccination” (see para 12).

The employee sought interim reinstatement in the Authority, pending a hearing into his claim of unjustified dismissal. The employee sought reinstatement on the basis (see para 19):

(a) He was not a person covered by the vaccination order.

(b) He had valid exemptions from the vaccination.

(c) The employer had failed to properly consider any modifications to his role that would allow him to continue working without vaccination.

The Authority declined to order reinstatement. The employee appealed the determination in the Court. In the interim, the Government revoked the vaccination order.

The Court declined to order interim reinstatement, as it considered permanent reinstatement was not seriously arguable (see para 30). The Court took into account that:

  • Another person had been appointed to the role (see para 26).
  • The employee’s “extreme” conduct after the dismissal meant trust and confidence no longer existed (see paras 26–29).

The Court considered that the balance of convenience and overall justice also did not favour the employee; interim reinstatement would affect the person who had taken over the role and other employees against whom the employee had made “serious allegations and implied threats”; whereas the employee had had some work since his employment ended (see para 33, 34). The Court considered the employee also had a “relatively weak case for unjustifiable dismissal and his post-employment conduct [had] almost certainly cause irreparable harm to the relationship with the employer” (see para 35).

HLI v VMZ [2022] NZEmpC 201 [PDF, 189KB] (external link)

Key Industries Ltd v Perrin [2022] NZERA 573

Employment Relations Authority – Breach of confidentiality – Special damages – Costs of related High Court proceedings

In earlier proceedings, the employer pursued a claim in the High Court, against a former employee, for breach of confidentiality. At issue in this case was the quantum of special damages the Authority should award to cover the employer’s High Court costs.

The employer’s former employee retained and misused the employer’s confidential information, in breach of the employment agreement. To protect its business following the breach, the employer took action against the former employee in the Authority and High Court. The employer sought special damages to cover its full costs in the High Court.

The Authority ordered the former employee to pay $93,120.97 (with interest) in special damages to cover the “legal costs actually, reasonably and appropriately incurred” in the High Court proceedings (see paras 61, 62, 65). In awarding special damages that fully covered the High Court costs, the Authority relied on the Court of Appeal decision Binnie v Pacific Health Ltd [2002] 1 ERNZ 438 (CA), para 18, which held that with special damages, costs “would be recoverable in full” (see para 60).

Key Industries Ltd v Perrin [2022] NZERA 573 [PDF, 43KB] (external link)

Stewart v AFFCO New Zealand Ltd [2022] NZEmpC 200

Employment Court – Unjustified disadvantage – Individual employment agreement – Non-compliant availability provision

At issue was whether the employee was unjustifiably disadvantaged by the existence of availability provisions in his employment agreement that did not comply with s 67D(3)(b) (external link) of the Act. 

The employee was employed in a seasonal position at a meat-processing plant. The employee’s individual employment agreement required the employee to work extra hours as required, but did not include any compensation provision, as required by s 67D(3)(b) (external link) of the Act. The employer subsequently offered to employ the employee under an employment agreement that included a 1.5 per cent pay rise, as compensation for availability. The employee declined the offer. The employee considered a 1.5 per cent rise did not amount to compensation for availability when it worked out at “a little over 14 dollars a week”. The employee claimed he was unjustifiably disadvantaged by the existence of a non-compliant availability provision in his employment agreement. The employer claimed he was not disadvantaged because the employer had never enforced the provision against him. The employer had not needed to enforce the provision, because the employee had not refused to work overtime.

The Authority found the availability provisions in the employment agreement breached s 67D(3)(b) (external link) of the Act. However, the Authority found the employee was not disadvantaged by the breach, because the employer had not enforced the availability provision. The employee challenged that finding in the Court.

The Court found the employee was disadvantaged by the inclusion of the availability provisions in the employment agreement, when the employer had not provided consideration for the availability (see paras 49, 91). The Court directed the parties to try to determine the amount of compensation themselves. The Court held that if the parties were not able to agree, the Court had jurisdiction to award an amount of compensation under s 123(1)(c)(ii) (external link) of the Act (see para 86).

Stewart v AFFCO New Zealand Ltd [2022] NZEmpC 200 [PDF, 309KB] (external link)

New Zealand Tramways and Public Passenger Transport Employees Union v Wellington City Transport Ltd [2022] NZERA 629

Employment Relations Authority – Contractual interpretation – Provision providing indemnity against cost of criminal proceedings – Discharge without conviction

At issue was whether the employer should cover the employee’s legal costs when he was found guilty of a crime, but was discharged without conviction.

The collective agreement between the union and the employer stated that the employer would pay the legal fees of any driver who “successfully defends” charges against them. An employee was found guilty of operating a vehicle carelessly causing injury, but was discharged without conviction. The employer refused to cover the employee’s legal costs because the employee was found guilty. The union considered the focus was on the outcome for the employee, and not having a conviction equated to successfully defending a charge.

The Authority determined that what was important was the finding of guilt or fault, not the sentencing outcome:

[29] If, in the course of receiving a discharge without conviction, it is accepted or found an offence occurred, then it follows the charges cannot have been successfully defended, regardless of the sentencing outcome.

The Authority preferred the employer’s interpretation of the indemnity provision:

[30] I prefer [the employer]’s interpretation of clause 24, that for the purposes of an employer reimbursing legal costs incurred by an employee in relation to criminal charges connected with that employee’s work, that the meaning of to “successfully defend” does not include a discharge without conviction.

New Zealand Tramways and Public Passenger Transport Employees Union v Wellington City Transport Ltd [2022] NZERA 629 [PDF 222KB]

Quinton-Boundy v Waimakariri District Council [2022] NZERA 616

Employment Relations Authority – Unjustified disadvantage – Constructive dismissal – Bullying – Failure to take reasonable steps to prevent harm 

At issue was whether the employer unjustifiably constructively dismissed the employee when it failed to take action to protect the employee from harm from bullying.

The employee was employed in a district council as the manager of the Environmental Services Unit (ESU). The employee had an executive assistant (EA) who reported to her. The employee’s manager and the EA had a close relationship going back many years. The effect of the relationship was that they would discuss operational matters to do with the ESU and effectively bypass and undermine the employee in her role as ESU manager.

The employee had numerous discussions with Human Resources (HR) about the pair’s behaviour, over more than a year. The employee told them she was feeling harassed by her EA and not supported by her manager; that she was stressed and tired of the lies and manipulation; that her EA would constantly report to her manager behind her back; that there was no respect and that she was being ignored and shut out.

HR repeatedly responded by advising her to discuss her concerns with her manager and to performance manage her EA.  The employee’s attempts to performance manage the EA failed. HR escalated the employee’s concerns to the Chief Executive.

The Chief Executive discussed with the employee’s manager the possibility of him moving into a special project role or another such arrangement, pending his retirement; in the meantime, the manager remained in his existing role. The Chief Executive did not follow up with the employee how she was coping or if anything else was required; he considered the matter was resolved with the prospect of the manager moving on at some time.

The employee’s manager worked another two months in his role before resigning with three months’ notice. The employee continued to have the same problems with her manager and the EA while the manager worked out his notice. The employee continued to raise issues with HR without any result.

Nearly six months after raising matters with the Chief Executive, the employee resigned, saying she was feeling strained and harassed by her EA ignoring her; and had become upset and overwhelmed with her manager undermining her and escalating tensions with ESU staff. The employee claimed she was unjustifiably constructively dismissed, as the employer had breached its duty to provide a safe workplace.

The Authority accepted the employee was unjustifiably constructively dismissed. The Authority determined that the employer “failed to meet its duty to provide a safe workplace and in the circumstances, this was sufficiently serious to warrant [the employee] resigning” (see para 41). The Authority found the employer’s “response to the foreseeable and actual bullying…was wholly inadequate” (see para 40). The Authority stated that the employer (see para 37):

responded to the complaints and the knowledge it had in addition to those complaints by continually expecting [the employee] to manage her own relationships with [the pair]. This was wholly inadequate. It was clear that this was not working and more was required both for [the employee] and for the ESU team.

The Authority said the bullying had been foreseeable as witnesses gave evidence of a previous ESU manager having a similar experience (see para 36). The Authority took into account that the employer had taken no action in relation to the EA; the Authority considered that even with the employee’s manager resigning, problems with the EA would have continued (see paras 45, 47).

The Authority found that the employer should have initiated an independent investigation and then taken appropriate action based on the outcome. The Authority considered the employer knew that, but chose not to take those steps because of the long service and pending retirement of the employee’s manager (see para 39).

The Authority ordered the employer to pay (see para 72):

  • $32,000 compensation for distress under s 123(1)(c)(i) (external link) of the Act
  • 20 weeks lost remuneration
  • a penalty of $12,000 for breach of good faith.

Quinton-Boundy v Waimakariri District Council [2022] NZERA 616 [PDF 59KB]

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Page last revised: 19 December 2022

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