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Cases of interest: October 2022

A summary of interesting or topical employment cases.

Butt v Attorney-General [2022] NZEmpC 183

Employment Court – Application to reopen – Inducement to enter a Record of Settlement – Misrepresentation 

At issue was whether the plaintiffs were induced to enter into a Record of Settlement on the basis of the defendant’s misrepresentation and, if so, whether the plaintiffs were entitled to cancel the contract. 

The plaintiffs had two adult children with intellectual disabilities. Their children required full-time care.  It was difficult for the plaintiffs to care for their children. The Ministry of Health funded Access Community Health (Access) to provide additional carers to relieve the parents. The parents commenced a claim in the Employment Court (Court) seeking better support and the ability to train their children’s carers. The parties came to an agreement following a judicial settlement conference. The draft Record of Settlement contained the following clause (see para 15):

… the Ministry of Health will cover training costs for two weeks for Mrs Sushila Butt to train the carers once agreed upon as between Access and the Butts.

The representatives for each side had a one-minute telephone conversation. The defendant then removed that clause from the agreement, noting in a track change “Access tells us that additional funding isn’t required for training” (see para 21). The plaintiff’s solicitor believed from the combination of the conversation and the note that the clause was not needed because Access already had funding to pay the plaintiffs to train their children’s carers (see para 77). The defendant’s solicitor knew that Access would not pay, or even allow, the plaintiffs to train their children’s carers (see para 50). 

The Court found the plaintiffs had been induced to enter into the Record of Settlement by a misrepresentation (see para 91) for the following reasons: 

  • The combination of the telephone conversation, the defendant’s solicitor’s silence on Access’ position regarding training and the note on the amended agreement “painted an erroneous picture to the plaintiffs” (see para 87). It amounted to misrepresentation (see para 89).
  • The plaintiffs emphasised from the beginning of the proceedings that the training issue was important to them. But for the misrepresentation, the plaintiffs would not have signed the Record of Settlement (see para 90). 

Under s 37 (external link) of the Contract and Commercial Law Act 2017, a party to a contract may cancel it if the effect of a misrepresentation was “substantially to reduce the benefit of the contract to the cancelling party”. The Court found the draft clause that was removed would have been beneficial to the plaintiffs in two ways (see para 110): 

  1. The plaintiffs would have benefitted from being paid to train the carers for two weeks.
  2. Arguably more importantly, the plaintiffs would have carers for their children that were trained to their satisfaction. 

The misrepresentation substantially reduced the benefit of the contract to the plaintiffs, and they were entitled to cancel the Record of Settlement (see paras 113–114). The plaintiffs were entitled to proceed with their claim (see para 118). 

Butt v Attorney-General [2022] NZEmpC 183 [PDF, 370KB] (external link)  

E tū Inc v Rasier Operations BV [2022] NZEmpC 192 

Employment Court – Declaration of employment status – Uber drivers 

At issue was whether the plaintiff Uber drivers were “employees” of Uber under s 6 (external link) of the Employment Relations Act 2000. 

Four Uber drivers sought declarations of employment status from the Employment Court (Court). The drivers worked providing Uber taxi rides and Uber Eats deliveries. Each of the plaintiff drivers gave evidence that in practice they acted as employees of Uber. 

The Court found that the “real nature of the relationship” between Uber and the plaintiff drivers was one of employment for the following reasons:   

  • Uber retained a significant level of control and subordination over the plaintiff drivers (see para 32). The plaintiff drivers had no control over the setting of fares for trips, which was solely determined by the App (see para 35). Their performance was “encouraged” and strictly monitored through a rating and disciplinary system, with the potential for deactivation from the App (see para 44).
  • The plaintiff drivers had “little to no opportunity to improve their economic position through professional or entrepreneurial skill”, so the ability to “grow their own business was virtually non-existent” (see para 46-47). They were not able to advertise for customers, nor were they able to increase profit by any means beyond working longer hours (see para 47, 49).
  • The degree “flexibility” and “choice” afforded to drivers in choosing their hours was largely illusory due to incentives and negative consequences for failing to maintain a high volume of rides and ratings (see para 55).
  • Flexibility is a feature of most modern employment relationships (casual employees also have no obligation to accept work) (see para 54).
  • The plaintiff drivers identified themselves as drivers for Uber, and part of the Uber business, when they logged onto the App and when picking up and delivering riders (see para 65-66).
  • The plaintiff drivers were provided with contracts on a take-it-or-leave-it basis (see para 76), with no realistic opportunity to negotiate the terms and conditions in which they were expected to work (see para 78). 

For the reasons above, the Court concluded that each of the plaintiff drivers were in an employment relationship when driving for the benefit of the Uber businesses (see para 82). 

The Court noted that the declarations made in respect of the four plaintiff drivers did not automatically extend to all Uber drivers. Employment status will continue to be determined on a case-by-case basis (see para 95). 

E tū Inc v Rasier Operations BV [2022] NZEmpC 192 [PDF, 480KB] (external link)  

Enterprise Motor Group (New Lynn) Ltd v Labour Inspector of the Ministry of Business, Innovation and Employment [2022] NZEmpC 194 

Employment Court – Minimum wage – Monthly commission – Method of calculation – Averaging –Improvement Notice 

At issue was whether the employer’s method of calculating wages complied with the Minimum Wage Act 1983 and relevant orders (Minimum Wage Act).  

The employees were salespeople who sold vehicles. They were paid an increasing rate of commission depending on how many vehicles they sold. The employees were paid a weekly advance payment which was deducted from their commission at the end of the month. The employees also earned bonuses and incentives.  

The employer’s calculated wages by (see para 33): 

  1. calculating the value of all commission, advances and bonus payments to the employee for each calendar month.
  2. evenly apportioning those payments to the calendar weeks.
  3. assessing whether the employees received at least the minimum wage for each hour worked in each week (or later, fortnight).
  4. topping up the wages of any employee who did not. 

After undertaking an investigation, the Labour Inspector found that the employer’s method of calculating the wages did not comply with the Minimum Wage Act. The Labour Inspector considered the method used averaging, which was impermissible (see para 35). The Labour Inspector issued the employer with an improvement notice. 

The Court found the employer’s method of calculation did comply with the Minimum Wage Act (see para 66). The Court held the method did not attempt to off-set an underpayment in one week (or fortnight) against earnings in another period, and therefore differed to impermissible averaging (see para 62). The Court found it allowed for the variable nature of the industry (see para 64). The Court amended the improvement notice (see para 81). 

Enterprise Motor Group (New Lynn) Ltd v Labour Inspector of the Ministry of Business, Innovation and Employment [2022] NZEmpC 194 [PDF, 270KB] (external link)  

Dhiman v Naanak Ltd (In liquidation) [2022] NZERA 510 

Employment Relations Authority – Minimum employment standards breaches – Recovery of arrears 

At issue was whether the employer breached several minimum employment standards under the Employment Relations Act 2000 (ERA), the Holidays Act 2003 (HA), the Minimum Wage Act 1983 (MWA), the Wages Protection Act 1983 (WPA). 

The employee worked at a pizza making business from July 2012 to September 2020. The employee started his employment as a migrant on a sponsored work visa from the employer. The employee was not provided with an employment agreement. The employee claimed that he worked in excess of 50 hours per week but was only paid for 40-hour weeks. The employee also claimed that he was provided with no annual leave, paid sick leave or public holiday pay. 

The employee sought arrears of wages for unpaid hours worked, holiday pay and interest on such. The arrears were sought against the sole director and shareholder personally, after the company went into liquidation. The Employment Relations Authority (Authority) accepted that the director was an active party to the alleged breaches and liable to any arrears or penalties awarded. 

The Authority found that the employer was liable to several breaches of minimum employment standards, including (see paras 24–29, 35, 37, 43):

The Authority awarded the following against the director (see para 47–48): 

  • arrears of wages in the amount of $69,981 with interest
  • arrears of holiday pay in the amount of $28,153.14 with interest. 

Dhiman v Naanak Ltd (In liquidation) [2022] NZERA 510 [PDF, 60KB] (external link)

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Page last revised: 29 November 2022

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