AFFCO v NZ Meat Workers & Related Trade Union Inc  NZCA 482
Court of Appeal - Continuity of seasonal employment - Lockout of seasonal employees
The union members were seasonal workers employed under a collective agreement. During the off-season the workers were not paid and were free to work elsewhere, although the employer was obliged to re-engage workers according to seniority at the start of the new season. The union alleged an unlawful lockout took place when the employer refused to re-engage workers unless they signed individual employment agreements.
The Employment Court had held that there was a continuous employment relationship which endured through the off-season and consequently the seasonal workers had been locked out. The Court of Appeal held this approach erred in its interpretation of the applicable collective agreement. There was an established line of case law which held that seasonal employment in the meat industry does not continue throughout the off-season. The parties should have been assumed to have bargained for the collective agreement on this understanding of the law (see para 38). There would need to be clear evidence of the parties’ intention to depart from this industry standard (see para 49). On the facts, no such intention could be ascertained. The employment was not continuous throughout the off-season (see para 54).
However, the Court of Appeal held the employer unlawfully locked out the workers despite the lack of an employment relationship during the off-season. Although s 82 (external link) applies only to ‘employees’, the context required that the default definition of ‘employee’ in s 6 (external link) was departed from (see para 58-67). The seasonal workers were owed ongoing and enforceable contractual rights which endured through the off-season. The employer’s conduct effectively defeated these rights and took advantage of the inherent inequality of the employer’s relationship with seasonal workers. The meaning of lockout in s 82 (external link) was held to extend to where an employer refuses or fails to engage seasonal workers for any work for which it would usually engage them, where it is done with the purpose of compelling them to accept its terms of employment (see para 71).
Court of Appeal - Fine for non-compliance of monetary compliance order
The employer had failed to comply with a compliance order issued by the Employment Relations Authority requiring the payment of outstanding holiday pay. The Employment Court had issued a fine under s 140(6) (external link) of the Employment Relations Act 2000 in response to this failure to comply. By the time of the hearing the employer had complied and paid the sum to the employee.
The Employment Court confirmed that there was jurisdiction under s 140(6) (external link) to impose a fine for non-compliance where the underlying order was for a monetary payment (see para 50-55). However, this power was to be exercised sparingly. The Court of Appeal set out some relevant factors when measuring the amount of the fine (see para 76). The wording of s 140(6) (external link) did not prevent a fine from being imposed even where compliance had been achieved, although it was a factor in measuring the amount (see para 77).
The Court of Appeal reduced the amount of the fine awarded by the Employment Court on the grounds that the compliance had been achieved, the sum involved was modest and the employer was financially unsound (see para 78).
Court of Appeal - Rate of pay for paid rest breaks
The parties disputed the meaning of the phrase ‘paid rest breaks’ in s 69ZD (external link) of the Employment Relations Act 2000. The employer claimed that it was not bound to pay rest breaks at the ordinary work rate; rather it was open to the parties to agree a special rate.
The Court of Appeal upheld the Employment Court’s decision that paid rest breaks must be paid at the same rate for which the employee would be paid for work. The parties were not permitted to contract out of this entitlement (see para 16).