Cases of interest: October 2020

A summary of interesting or topical employment cases.

Morgan v Transit Coachlines Wairarapa Ltd [2020] NZEmpC 169

Employment Court – Annual leave – Determining annual leave entitlement – Whether period of continuous employment resets following unpaid leave exceeding one week 

Employment Court – Public holidays – Whether employee entitled to be paid for public holidays that fall within periods of unpaid leave 

At issue was:

  • Whether periods of unpaid leave during school holidays reset the employee’s “continuous employment” for the purpose of calculating annual leave entitlements under s 16 (external link) of the Holidays Act 2003 (the HA).
  • Whether the employee was entitled to be paid for public holidays that fell within periods of unpaid leave.

The employee was a bus driver who drove buses during the school term. In school holidays the bus driver was on unpaid leave, as provided for in his employment agreement (EA). In an earlier proceeding, the Court found the employee was a permanent employee, despite the unpaid breaks during the school holidays.

The employee’s EA stated that the employer would pay the employee eight per cent holiday pay at the end of the fourth term of the school year each year, “in satisfaction of any holiday pay entitlements”. The employer claimed the employee had no entitlement under s 16 (external link) of the HA to accrue any annual leave, because he did not ever work continuously for 12 months. 

The Employment Court (the Court) found that in the circumstances of the case, each period of unpaid leave did not break the accumulation of 12-months continuous employment; rather, the unpaid leave served to pause the accumulation of 12-months continuous employment. In coming to that conclusion the Court found:

The Court held that where an employee has more than one week of unpaid leave under their employment agreement and the parties have not agreed to adopt the methodology in s 16(3) (external link) of the HA, unpaid leave acts to pause the accruing of 12-months continuous employment, rather than resetting it; there is no entitlement to pay the employee eight per cent of their wages as holiday pay instead of having the employee accrue annual leave (see paras 20–23).

The Court found the employee was not entitled to be paid for public holidays that fell within his unpaid leave periods, as the public holidays did not fall on days on which he would otherwise have worked (see paras 33–38). 

Morgan v Transit Coachlines Wairarapa Ltd [2020] NZEmpC 169 [PDF 276KB] (external link)

CultureSafe NZ Ltd v Turuki Healthcare Services Charitable Trust [2020] NZEmpC 166

Employment Court – Jurisdiction of Employment Relations Authority – Jurisdiction to issue orders and award penalties and damages against employment advocates for breach of record of settlement — Jurisdiction to award damages for breach of record of settlement 

Employment Court – Penalties – Whether penalties against a company and individuals can be awarded “jointly and severally”

The plaintiffs in this case were:

  1. an employment consultancy company (the consultancy)
  2. two advocates who performed employment advocate services for the consultancy (one of the advocates was the director of the consultancy, the other provided services to the consultancy on contract).

Key issues in this case were:

  1. Whether the Employment Relations Authority (the Authority) had jurisdiction to issue compliance orders and suppression orders and impose penalties against the advocates and the consultancy.
  2. Whether the Authority had jurisdiction to award damages for a breach of record of settlement.
  3. Whether the Authority could award penalties against the plaintiffs “jointly and severally”.

The two advocates represented an employee at mediation in relation to a personal grievance. During the mediation the employer and employee settled their dispute. In the record of settlement (RoS) the parties agreed that:

  1. The terms of the RoS and the matters discussed in mediation were to be confidential to the parties and to the advocates.
  2. Neither party, including the consultancy, were to make derogatory or disparaging comments about the other.
  3. The consultancy was not to make any reference whatsoever to the employment relationship problem in any publication, including social media.

The RoS was signed by the employee and a representative of the employer.  The RoS was not signed by the advocates. 

Following the mediation, the advocates contacted government ministers and members of Parliament by letter or email and posted comments on the consultancy Facebook page in a way that breached the terms of the RoS. 

In response to the breaches, the Authority first issued interim compliance orders ordering the advocates to comply with the RoS. When the advocates continued to commit breaches, the Authority made the interim compliance orders permanent and imposed penalties of $30,000 total on the consultancy and the advocates. 

The Authority made the plaintiffs jointly and severally liable for payment of the penalties. The Authority further awarded damages of $3,000 against the plaintiffs.

In the Court the plaintiffs challenged the jurisdiction of the Authority to entertain claims against the plaintiffs when:

  • The plaintiffs were not party to the employment relationship between the employee and employer.
  • The plaintiffs were not parties to the RoS.
  • The Authority had no jurisdiction to award damages for a breach of RoS.

 The Court found the absence of an employment or contractual relationship did not stop the Authority from 

having jurisdiction to order compliance and penalties against the plaintiffs for breach of the RoS (see paras 49). The Court held:

There is no reason to read down the references to “person” in those provisions to include only parties to an employment relationship or parties to the RoS (see paras 51–53).

  • The Authority has jurisdiction to the extent the RoS settles an employment relationship problem. Here the RoS was entirely directed to settlement of an employment relationship problem (see para 55).
  • A person with knowledge of confidentiality and non-disparagement terms in a RoS is liable for a penalty if they breach those terms (see para 57).
  • The plaintiffs were each liable for a penalty under s 149(4) (external link) . All plaintiffs were well aware of the requirements for confidentially and non-disparagement. The advocates, as director and employee of the first plaintiff, were representing the employee at the mediation. The first plaintiff was referenced in the RoS (see paras 58–59).

The Court found there was no basis to award penalties on a ‘joint and several’ basis. This approach would have led to the outcome that each of the advocates would become liable for a penalty of $30,000 (see para 77). The Court reassessed penalties separately against each plaintiff and awarded penalties of:

  • $3,000 against the advocate who was performing services on contract
  • $5,000 against the director of the consultancy
  • $2,000 against the consultancy itself (see paras 78–92).

The Court found the Authority does not have jurisdiction to award damages for breach of a RoS. The Employment Court found s 162 (external link) of the Act, which allows the Authority to award damages for breach of contract in relation to an EA, did not allow the Authority to award damages in relation to a breach of a RoS. There was also no jurisdiction for awarding damages under s 161 (external link) , which sets out the jurisdiction of the Authority generally (see para 74). 

CultureSafe NZ Ltd v Turuki Healthcare Services Charitable Trust [2020] NZEmpC 165 [PDF 294KB] (external link)

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Page last revised: 17 November 2020

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