× Alert

From 23 December 2023, 90-day trial periods are available for all employers. For more information, visit: 90-day trial periods extended to include all employers This site will be updated.

Cases of interest: November 2023

A summary of interesting or topical employment cases.

Breen v Prime Resources Company Ltd [2023] NZEmpC 199

Employment Court – Jurisdiction – Dispute versus personal grievance

At issue was whether the employee could bring an unjustified disadvantage claim in response to the late payment of his wages. The employer submitted that because the late payment derived solely from his genuine belief the employment agreement allowed him to withhold wages, an unjustified disadvantage claim was barred under section 103(3) (external link) of the Employment Relations Act 2000 (the Act).

The employer informed the employee he would not be paid his full wages because he had not been working his full hours during lockdown. The employer believed a deductions clause in the employment agreement allowed him to do this. The employer eventually paid the employee his full wages, albeit late. The employee pursued a claim in the Employment Relations Authority (the Authority) that he had been unjustifiably disadvantaged by the late payment of his wages. The Authority concurred and awarded the employee compensation.

The employer challenged the Authority’s decision to the Employment Court (the Court). It presented an argument that had not been put before the Authority: that s 103(3) of the Act meant the Authority did not have jurisdiction to hear the unjustified disadvantage claim. Section 103(3) creates an exclusion so that unjustifiable action giving rise to a personal grievance will not include “an action deriving solely from the interpretation, application, or operation, or disputed interpretation, application, or operation of any provision of any employment agreement.” The employer submitted that the wording of this section draws a distinction between personal grievances and disputes, and that disputes must be dealt with in accordance with section 129 (external link) of the Act (see paragraph 9). It submitted that the issue of late payment was a dispute as it derived solely from the interpretation and application of the employment agreement (see paragraph 6).

The Court set out that the way in which a litigant crafted their claim – whether in the form of a personal grievance or a dispute – was not important to whether it was excluded by s 103(3). The determinative factor was what the claim was derived from. If it was derived solely from the interpretation, application, or operation, or disputed interpretation, application, or operation of any provision of any employment agreement, it must be pursued through a disputes procedure and not a personal grievance (see paragraph 17). Whether an action will be found to “derive solely” from one of these sources will depend on the circumstances of the case (see paragraph 18). The Court held this approach aligned with Parliament’s intent as it recognised the intended distinctions between disputes and personal grievances, and the differing processes Parliament intended for their resolution (see paragraph 24).

The Court applied this framework to find s 103(3) of the Act barred the employee from bringing a personal grievance. The Court acknowledged the employer’s actions were contrary to the employment agreement and were unjustified. However, because the employer’s actions were based on a claim deriving solely from a genuine – albeit potentially misguided – interpretation of the employment agreement, the dispute procedure applied (see paragraph 25).

The employer’s challenge was successful, and the employee was jurisdictionally barred from bringing the personal grievance (see paragraph 27).

Breen v Prime Resources Company Ltd [2023] NZEmpC 199 (external link)

Malhi v Ministry of Business, Innovation and Employment [2023] NZERA 663

Employment Relations Authority – Parental leave payments – Employment status

An issue in this case was whether the applicant’s studies could be considered employment, in which case she would be eligible for parental leave payments.

Section 2BA(4) (external link) of the Parental Leave and Employment Protection Act 1987 (the PLEPA) requires a primary carer – either employed or self-employed – to work at least 10 hours a week for 26 of the 52 weeks leading up to the expected delivery date of the child in order to be eligible for parental leave payments.

The applicant was a PhD student at the University of Auckland (the University). She was on a university doctorate scholarship. This entitled her to $28,984.50 annually, with payments being made fortnightly. A requirement of the scholarship was that she undertake at least 40 hours of study a week – equivalent to a full-time job. In addition to her studies, the applicant worked part-time for the University as a graduate teaching assistant and a research assistant.

The Inland Revenue Department (IRD) rejected the applicants parental leave application on the basis that her part-time assistant work amounted to just 6.13 hours per week. It did not consider her PhD studies to be employment. The application was referred to the Ministry of Business, Innovation and Employment (MBIE), who confirmed the IRD’s decision. The applicant applied to the Authority for a review of this decision; if her studies were considered employment, then she would comfortably meet the 10-hour threshold.

The Authority had to determine whether the applicant fit the definition of “employee” from section 6 (external link) of the Act. That required determining “the real nature” of the relationship. To do this, the Authority applied the same tests it would in an employment status case (see paragraph 17).

The Authority found the intention test did not support an employment relationship. The scholarship document stated it was “to encourage and support academically excellent domestic and international students” (see paragraphs 18–21).

The Authority found the control test did not support an employment relationship. The applicant submitted the University had significant control over her through the scholarship’s conditions: they required her to study at least 40 hours a week, and limited the hours of paid work she could undertake alongside her studies. However, the Authority found these conditions only imposed sufficient control to ensure the academic requirements of the scholarship were met. They did not meet the degree of control necessary to indicate an employment relationship (see paragraphs 22–28).

The Authority found the economic reality test also did not support an employment relationship. This test considers that in an employment relationship, the employee’s work will benefit the employer (see paragraph 29). The applicant submitted her studies would contribute to the University’s research and output figures, raising its international status (see paragraph 30). However, the Authority considered the applicant would receive the main benefit from the scholarship. Furthermore, completion of the doctorate was not guaranteed, in which case the University would receive no benefit (see paragraph 31). A number of other factors further worked against the applicant’s case under the economic reality test (see paragraph 32).

The Authority concluded the true nature of the relationship was not one of employment (see paragraph 37). It considered that to exercise its discretion and overturn MBIE and the IRD’s decision regardless, would contravene the purpose of the Act (see paragraphs 39–44). Consequently, the Authority confirmed MBIE’s decision to decline the application for parental leave payments (see paragraph 45).

Malhi v Ministry of Business, Innovation and Employment [2023] NZERA 663 (external link)

Bradley v Chief Executive of Whaikaha – Ministry of Disabled People [2023] NZERA 651

Employment Relations Authority – Jurisdiction – Injunction – Support providers for disabled family members

This determination considered a number of interim issues. The applicant’s substantive case has been adjourned – along with 17 other cases in the Authority – awaiting judgments on two cases currently before the Court of Appeal. The Court of Appeal cases, and the 17 adjourned cases in the Authority, seek a ruling on the employment status of people who provide support services for disabled family members. The support providers argue the Ministry of Health (the Ministry) is their employer; the Ministry argues the disabled people themselves are the employer.

The issues in this case were:

  • Who was responsible/had authority for the decision to dismiss the “nominated agent” and cease payments to the applicant?
  • Did the parties act lawfully in making these decisions?
  • Should an injunction be granted to prevent the dismissal and ceasing of payments?
  • Should any orders be made about appropriate payments to the applicant?

The applicant is a full-time carer for his severely disabled stepson (JD). The applicant’s pay is funded by Individualised Funding (IF) which comes from the Ministry of Health’s (now passed on to the newly formed Ministry of Disabled People’s) budget. IF funding relies on an initial assessment and regular reviews conducted by a Needs Assessment and Service Coordination (NASC) provider to determine the necessary funding. IF policy allows for a “nominated agent” to manage the use of funds and the employment arrangement (the Agent). As JD lacks capacity, the Agent effectively becomes the employer. IF policy further allows for an “IF Host Organisation” (the Host Organisation) to manage the funds and the accounting side of the relationship.

The applicant was paid $30 an hour for 40 hours a week. This comprised the majority of the $75,529 IF budget allocated for the care of JD. Both the applicant and the Agent agreed this was insufficient as the care of JD was essentially a 24/7 job. The Agent therefore submitted a timesheet to the Host Organisation for the applicant to be paid $45 an hour for 168 hours a week. The Host Organisation obliged as the Agent was effectively the employer. The Ministry was concerned; at this rate of pay JD’s annual IF budget would be exhausted in a matter of weeks. Further, the NASC provider had declined to increase the annual funding. The NASC provider – at the direction of the Ministry – advised the Agent that she was to be terminated from her role. The NASC provider advised the Agent her actions had left JD in an unsafe situation, in breach of Ministry policy. The Host Organisation advised the applicant it would discontinue payments until a new arrangement was put in place. The Ministry, the NASC provider and the Host Organisation were all named as respondents in the case.

The Authority began by determining the relevant authority of the Agent, the Ministry, and the Host Provider. It concluded that the Agent had authority to make decisions about how the annual budget would be used. However, the Ministry and the Host Provider were entitled to inquire into the situation if the Agent’s decisions would result in funding not lasting the year. Further, the Ministry was entitled to take actions to remedy non-compliance with IF policy and wider legislative requirements (see paragraph 77). The Host Provider was obligated to act on the directions of the Agent to increase the rate and hours of pay. However, it was also obligated to comply with a Ministry direction not to recognise an agent acting contrary to IF policy (see paragraphs 75, 76).

The Authority then investigated the lawfulness of the relevant decisions. The applicant submitted the NASC provider had acted unlawfully in two instances – the first being the scope, process and outcome of the needs assessment carried out for JD (see paragraph 80). The Authority took issue with a number of the NASC provider’s processes (see paragraphs 81-85). However, it chose to express no conclusion on the lawfulness of these processes for three reasons:

  • The Host Provider made a “tenable submission” that an issue with the funding and allocation of disability services was more properly a matter for consideration by judicial review in the High Court (see paragraph 86).
  • Funding and allocation of hours for supervision is one of the issues currently before the Court of Appeal in Fleming – one of the substantive cases aiming to determine the employment status of the support providers. The Authority therefore lacked jurisdiction to address this issue (see paragraph 87).
  • Responsibility for the inadequacy of the needs assessment did not fall solely at the feet of the NASC provider. The applicant was reluctant to engage with this process. Had he been more co-operative, JD may have been allocated additional support (see paragraphs 88-90).

The applicant further submitted the NASC provider had acted unlawfully in communicating the Ministry’s decision to terminate the Agent’s role. The Authority dismissed this submission. The NASC provider was simply acting as an agent of the Ministry; if the decision was unlawful, any responsibility lay with the Ministry (see paragraphs 91, 92).

The Authority moved on to consider the lawfulness of the Ministry’s actions. It determined the Ministry was entitled to decide the Agent could not continue in her role (see paragraphs 94-97). However, the Authority found two shortcomings in how the Ministry went about implementing this decision:

  • The Ministry should have provided the Agent an opportunity to respond to the prospect of removal before having the NASC provider communicate the decision (see paragraph 98).
  • The Ministry should not have accompanied removal of the Agent with a suspension of pay to the applicant. IF policy established an employment relationship between the applicant and the Agent (see paragraph 99). The Ministry risked interfering with that employment relationship by withholding funds from the applicant. A penalty for instigating a breach of a term of an employment agreement may have been awarded against the Ministry if matters proceeded to the point where the applicant was not paid (see paragraph 100).

The Authority therefore found the Ministry had acted unlawfully. However, it was not necessary for the Authority to issue an injunction to address the Ministry’s shortcomings. The parties had already agreed to restore the applicant to the payroll at the previous rate of $30 an hour for 40 hours a week (see paragraph 102). They had also agreed to restore the Agent to her role, on the condition she submitted timesheets at the original rate (see paragraph 103).

The Authority concluded its determination by addressing the applicant’s submission it should make orders on the appropriate number of hours and rate of pay that would “fairly reflect” the services he provided for JD (see paragraph 105). The Authority declined to do so for two reasons:

  • There were means for the applicant to address the level of support provided through engagement with the NASC provider’s existing needs assessment process (see paragraph 107).
  • The applicant’s submissions on this matter largely addressed the “big picture” already before the Court of Appeal in the Flemings and Humphreys cases. These cases will answer whether all hours of care provided by family members must be regarded as work. The Authority therefore lacked jurisdiction to do so in this determination (see paragraph 108).

Bradley v Chief Executive of Whaikaha – Ministry of Disabled People [2023] NZERA 651 (external link)

How helpful was this information?

Page last revised: 21 December 2023

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

Top