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Employment Court finds employer was not entitled to require lockdown leave, due to process errors

The Employment Court has ruled that Carter Holt Harvey LVL did not consult adequately with its employees before requiring them to take annual leave during the nationwide Level 4 lockdown in 2020.

The case was brought by E tū and three employees of Carter Holt Harvey LVL (CHH LVL), a company in the CHH Group of companies that runs a manufacturing plant at Marsden Point.

CHH LVL, on learning of the lockdown, had directed its employees to use eight days of leave (being annual leave or, if the employee had no entitlement, unpaid leave) during the third and fourth weeks of the lockdown, when their facility would be closed.

The case is the first to examine the Holidays Act with regard to an employer directing employees to take holiday leave during a period of lockdown.

The employees argued that CHH LVL had an obligation to seek an agreement with its employees on when leave should be taken, which had not been met; and that the employer had failed to provide the required 14 days’ notice.

In support of the plaintiffs, the NZCTU contended that as the employees had not had an opportunity for rest and recreation – being largely unable to leave their homes – they could not be said to have taken annual holidays in terms of the Holidays Act.

The Employment Court ruled that CHH LVL did give sufficient notice of the requirement to take leave, but had failed to consult with its employees about doing so. Only when consultation had taken place, but no agreement had been reached, could an employer then give notice requiring leave to be taken.

The Court rejected the argument that the leave taken could not be considered annual holidays, and found instead that there was no obligation on employers to ascertain how their employees would be using their annual holidays.

MBIE considers that the Court’s judgment is consistent with advice MBIE published at the time of the lockdown, that:

  • Regular employment law still applies to all employment relationships – regardless of the circumstances that we find ourselves in.
  • Employer and employee should first seek to reach agreement in good faith on what approach will be taken.
  • All businesses, including those using the Wage Subsidy Scheme, must follow legal requirements when making decisions about hours of work, rates of pay, or leave. They cannot unlawfully require or compel employees to use their leave entitlements.

Read the full judgement – Employment Court [PDF, 350KB] (external link)

Taking annual holidays

Leave and pay entitlements during COVID-19

 

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