Cases of interest: September 2019

A summary of interesting or topical employment cases.

A Labour Inspector of the Ministry of Business, Innovation and Employment v IT-Guys NZ Ltd [2019] NZEmpC 115

Employment Court – Judgment of the full court – Challenge – Compliance order – Statutory interpretation – Whether Labour Inspector can use improvement notice to require payment of minimum wage and holiday pay arrears – Whether Labour Inspector should use demand notice to require payment of minimum wage and holiday pay arrears – Employment Relations Act 2000 – s 223D – s 224.

A Labour Inspector had issued an improvement notice to the employer to comply with the Minimum Wage Act 1983 and the Holidays Act 2003. The improvement notice required the employer to pay three named former employees wage arrears and holiday pay arrears. It also required the employer to review the public holiday and sick leave entitlements, and termination pay for another named former employee, and to pay that former employee any entitlements due and owing. After the employer did not comply with the notice, the Labour Inspector applied to the Employment Relations Authority to grant a compliance order, which it declined to do. The Labour Inspector then challenged the Authority’s determination in the Employment Court

The issue was whether an improvement notice under s 223D of the Employment Relations Act 2000 (Act) (external link) can require payment of minimum wage and holiday pay arrears. The employer did not take part in the Employment Court proceedings, but counsel assisting the court submitted that the Labour Inspector should have used a demand notice under s 224 (external link) . Counsel submitted that by not using s 224, the Labour Inspector misunderstands the statutory scheme, circumvents key protections for the employer in the demand notice process, and risks making s 224 a redundant section.

The Court found that the introduction of improvement notices in the Employment Relations Amendment Act 2010 (external link) was part of a more flexible approach to widen the tools available to Labour Inspectors (see para 25). The Court further found that if the enforcement mechanisms in part 11 of the Act (external link) are not viewed as a ‘range of tools’, then certain situations would require multiple enforcement mechanisms. For example, if an employer used the incorrect calculation method for holiday pay, then the Labour Inspector would need to issue an improvement notice to fix the calculation method going forward, and also issue a demand notice or initiate a wage recovery action to recover wage arrears (see para 46).

The Court granted the compliance order, applied a penalty of $7,000 for non-compliance and concluded that the various mechanisms in pt 11 of the Act are a range of tools potentially available to Labour Inspectors including when past non-compliance has resulted in money owed to employees (see paras 47, 50 and 51).

A Labour Inspector of the Ministry of Business, Innovation and Employment v IT-Guys NZ Ltd [2019] NZEmpC 115 — Employment Court of New Zealand (external link)

Watts & Hughes Construction Ltd v De Buyzer [2019] NZEmpC 116

Employment court – 90-day trial – Words and phrases – “to the effect that” – “in accordance with” – Contractual interpretation.

The employee had succeeded in claiming a personal grievance of unjustifiable dismissal in the Employment Relations Authority (Authority) after the Authority found that the following 90-day trial provision was invalid. The Authority found that the clause did not state when the 90-day trial period was to commence and was therefore faulty.

3 Trial period

3.1 The Employee’s employment is subject to a Trial Period of 90 days in accordance with S 67A of the Employment Relations Act 2000.

3.2 The Employer may terminate the Employee’s employment during the Trial Period. If the Employer does so the Employee is not entitled to bring a personal grievance or other legal proceedings in respect of the dismissal.

3.3 One week’s notice will be given to an Employee dismissed during or at the end of the Trial Period. In respect of any dismissal occurring within the 90 day trial period the Employer will act in good faith and be open and communicative with the Employee.

The Court found that the words of s 67A of the Employment Relations Act 2000 (external link) do not require specific word formulations to express that an employee is subject to a 90-day trial provision for the first 90 days of employment. The Court stated that “the inclusion of ‘to the effect that’ in s 67A(2) means a provision in an employment agreement complies with the section if the provision has the same general meaning and leads to the same result as specified in the section” (see para 13).

By including the words “in accordance with S 67A of the Employment Relations Act 2000” in the employment agreement, the trial period clause had the effect that for the first 90 days of employment, the employee was subject to a trial period (see paras 14–16). The Court further said that this is the meaning that a reasonable person with the background knowledge available to the parties at the time would have taken from the clause (see para 17).

The Court set aside the Authority’s determination.

Watts & Hughes Construction Ltd v De Buyzer [2019] NZEmpC 116 — Employment Court of New Zealand (external link)

Hatcher v Burgess Crowley [2019] NZEmpC 117

Employment Court – Preliminary issues – Holidays Act 2003 – Statutory interpretation – Leave and holiday records – Whether employers required to keep leave and holiday records for entirety of employment – s 81(4) – s 83

The employee was employed by the employer between 28 March 2004 and 9 November 2016. The employee considered that the amount he was paid by way of holiday pay when his employment ceased was less than it ought to have been. The employer provided the employee with holiday and leave information for the period January 2010 to November 2016. Information prior to January 2010 was not provided for.

The issues were whether s 81(4) of the Holidays Act 2003 (external link) requires an employer to keep and retain an employee’s holiday and leave records for the entire employment period of the employee; and where s 81(4) has not been complied with, what, if anything, are the consequences for the employer as regards s 83 of the Holidays Act 2003 (external link) .

The Court found that s 81(4) provides for a rolling time frame of not less than six years per entry. An employer who keeps the information required by s 81(2) in its holiday and leave record for six years from the date on which the information is entered into the holiday and leave record has complied with s 81(4) (see para 19). This finding made it unnecessary to conclude on the issue of s 83. However the Court found that where an employer fails to keep holiday and leave information for the period required, and that prevents an employee from bringing an accurate claim, then in the absence of evidence to the contrary, the Authority or Court on a challenge, may accept as proved statements that the employee has made about holiday and leave pay actually paid to the employee (see para 24).

Hatcher v Burgess Crowley [2019] NZEmpC 117 — Employment Court of New Zealand (external link)

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