Cases of interest: October 2018

A summary of interesting or topical employment cases.

Roach v Nazareth Care Charitable Trust [2018] NZEmpC 123

Employment Court – Definition of employee – Whether a trial period in a second employment agreement was enforceable

The employee bought a personal grievance following his dismissal from his position as General Manager. The employee alleged that the trial provision in his employment agreement was invalid and the notice period given to him did not comply with the employment agreement. The facts of the case were unusual.  The employee had been offered and accepted a position with the employer as a Business Manager. However, before commencing work, the employer offered the employee the superior position of General Manager. Both employment agreements were to start on the same date and both contained a 90-day trial period.

Under s 67A(3) of the Employment Relations Act 2000 (ERA), a trial period will not be valid where an employee has been previously employed by an employer. At issue was how “employee” under this section was to be defined.

Section 6(1)(b)(ii) ERA extends the definition of employee to include “a person intending to work”, which is defined in s 5 ERA. However, the Court noted that the purpose of s 67A(3) ERA can be ascertained from s 67A(2)(a) ERA (para [45]). The Court adopted the approach advocated in Blackmore v Honick Properties Ltd [2011] NZEmpC 152. What is referred to by an employee having been “previously employed” is that there has already been an opportunity to assess the employee’s suitability for the work (para [45]). Consequently, an employer cannot impose a trial period on an employee who has already started work, or who has previously worked for the employer (para [45]).

Immediately before signing the General Manager’s agreement the employee was an employee only for a limited purpose (para [46]). The Court accepted that the employee had not been previously employed for the purposes of s 67A(3) (para [47]). Therefore the employer was entitled to offer the employee an employment agreement as General Manager containing a trial period to commence from the date the employee commenced work (para [47]).

The employer failed to comply with the notice requirements set out in the employment agreement when dismissing the employee.  The schedule to the employment agreement stated that the trial period could be terminated by giving one week’s notice. The Court held that the employee did not receive his contractual notice. Instead, the employer decided to end the relationship immediately and acted accordingly. The Court held that the agreement required notice to be given and, while this could be followed by garden leave, it did not authorise cessation of employment and payment in lieu (para [60]).  Consequently, the Court held that the employer’s failure to comply with the employment agreement meant that it could not rely on the notice period to protect it from the employee raising a personal grievance (para [62]). Ultimately, the Court held the employee was unjustifiably dismissed (para [67]).

Link to case [PDF 566 KB] (external link)

Gstech Limited v A Labour Inspector of the Ministry of Business Innovation and Employment [2018] NZEmpC 127

Employment Court – Whether the character of proceedings warrants a different approach to costs – Costs against a party discharging a statutory function

An issue arose as to whether the nature of the proceedings, namely the Labour Inspector discharging its statutory function to enforce employment standards, should be taken into account when determining any costs that were to be awarded.

The Court noted that the power to award costs is discretionary and a broad range of factors may be taken into account. These factors may include issues relating to broader public interest. Consequently, there may be cases where it is appropriate not to award costs, or to reduce costs, against a Labour Inspector discharging a statutory function. However, the legislation does not provide for a degree of immunity to the Labour Inspectorate from the usual cost consequences of pursuing litigation. Ultimately, each case must be assessed on the specific merits of that case (para [9]).

The Court held that it was not appropriate, or in the public interest, for the plaintiff to have to shoulder the significant burden of the problems with the Labour Inspector’s case (para [10])

Link to case [PDF 283 KB] (external link)

Page last revised: 26 October 2018

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