Cases of interest: February 2024

A summary of interesting or topical employment cases.

Keighran v Kensington Tavern Ltd [2024] NZEmpC 28

Employment Court – Personal grievance – Constructive dismissal – Breach of good faith – Remedies

Employment Court – Minimum standards breach – Failure to provide a written employment agreement – Penalties

At issue was:

  • Whether the employee had been constructively dismissed.
  • Whether the employer had breached good faith.
  • Should the Employment Court (Court) impose a penalty on the employer for failing to provide a copy of the employee’s written employment agreement.

The employer operated a tavern where the employee worked as the restaurant manager for more than 18 months. The employee unsuccessfully requested one of the directors of the employer (Director A) for a pay rise. The employee then became involved in an incident with a teenage co-worker. The co-worker and her family complained about the incident to Director A and the Police. The employee was asked to work from home temporarily. Later, Director A asked the employee to return to work or take time off. The employee repeated his request for a pay rise and did not return to work. Two days later, the employee informed Director A in an email that he would resign unless the employer gave him a pay rise. Director A declined the employee’s request.

The employee subsequently returned to work after an “ice-breaker” meeting with Director A. However, Director A told the employee, in front of other staff, that the employee’s role would be made redundant; he would be moved to manage the bar with the same pay and hours. The employee became upset. He left work early and went on sick leave. The employee later received a revised roster that saw his hours being reduced. He never returned to work.

The employee raised personal grievance claims for constructive dismissal, unjustified disadvantage and a breach of good faith.

The Court found the employee had been constructively dismissed (see paragraph 23). The Court stated:

  • The employee “reasonably believed that [the] employer did not want him to remain working in the business” (see paragraph 25).
  • The way in which the roster was drafted fed into the employee’s assessment that he had no choice but to resign (see paragraph 27).
  • The employer breached good faith because of its approach of communicating the change of the employee’s role and its manner of how the decision was made against the employee’s interest, which gave the employee no opportunity to comment on in advance (see paragraphs 62–63).
  • The employee’s complaint of not being provided a copy of his written employment agreement was made out because no record of the agreement could be found in the company system (see paragraph 65).

The Court awarded 3 months lost wages and $9,000 (being $14,000 in compensation minus the $5,000 already paid) to the employee. It also imposed a penalty of $500 on the employer for failing to provide the employee with a written copy of his employment agreement (see paragraph 70).

Keighran v Kensington Tavern Ltd [2024] NZEmpC 28(external link)(external link)

E Tū Inc v New Zealand Steel Ltd [2024] NZEmpC 29

Employment Court – Dispute – Collective Employment Agreement – Interpretation of make-up pay provision

At issue was the correct application of a “make-up pay” provision contained in the Collective Employment Agreement (CEA) for employees’ pay when working during the transition between their ordinary hours and Critical Path Shutdowns.

The union and the employer were in dispute over the interpretation of the Provision. It was set out as follows:

Where an employee is requested to do work outside his/her established ordinary hours of work and as [a] result is unable to complete his/her ordinary hours of work, he/she shall be paid make-up pay for those lost ordinary hours, paid at expected weekly/hourly earnings ...

The Provision had existed in the successive CEAs since 2011. Its interpretation turned on the meaning of “ordinary hours”. The employer’s position was that ordinary hours meant the number of hours an employee could ordinarily expect to work in a week. When the employees worked more hours than ordinary hours, they would be paid overtime. Make-up pay was payable to the employees for the lost hours when they worked less than their ordinary hours at the employer’s request. If the employees worked more hours in different hours from their usual shift hours, make-up pay was not payable.

This interpretation raised an issue of calculating make-up pay when the employees worked during the transition between their ordinary hours and “Critical Path Shutdowns” (CPS). When the employer implemented CPS, existing shifts were suspended. The employees would be moved to work for 12-hour shifts to cover 24-hour working cycles for 4 weeks and paid specific rates. Make-up pay was only available under limited conditions where the employees had “lost hours overall” during their transition between CPS and ordinary hours. If the employees worked more hours during the transition, they would not be eligible for overtime nor make-up pay.

The union argued that there was no reference to “hours overall” in the CEA. It also claimed that that the employer failed to maintain the status quo as required by the CEA. Further, the practice of calculating make-up pay for CPS varied across different plants.

The Court held the Provision had the meaning asserted by the union: make-up pay may be payable for time before and/or after employees went on critical paths (see paragraphs 46–48). It stated:

  • The history before 2018 showed the custom and practice of the Provision had generally been in line with the union’s interpretation. The employer’s attempt to amend the Provision during the CEA bargaining in 2018 and the CEA including the same wording for the Provision since 2011 were also relevant (see paragraphs 34–35).
  • The employer had argued ordinary hours should focus on the number of hours to be worked in a week. However, the relevant provision that set out the parameters for establishing employees’ ordinary hours also “included other factors – the hours per day to be worked and the hours of the week” (see paragraph 38).
  • Although the employer may have felt that paying make-up pay when an employee worked the same number of hours in a week but at different times was not warranted, evidence showed there were negative consequences for employees working outside their normal hours. It was “not illogical” that [the employer] paid a premium to move employees from their ordinary hours, or that employees got compensated for moving”. This was how the clause had operated under successive CEAs (see paragraphs 40, 42).
  • The employer’s interpretation of the Provision focused on “financial loss” and included “overtime hours in its assessment of hours worked”. However, penal rates and overtime were not to compensate employees for having their hours of work changed and they were not relevant to this assessment (see paragraphs 41, 43–44).
  • The employer’s failure to maintain the status quo was in breach of the CEA (see paragraph 50).

E Tū Inc v New Zealand Steel Ltd [2024] NZEmpC 29(external link)

Bhamji v Chief Executive of the Department of Corrections [2024] NZERA 70

Employment Relations Authority – Personal grievance – Unjustified disadvantage – Implied terms

Employment Relations Authority – Failure to consult before introducing new roster system – Breach of good faith

At issue was whether there was an implied term regarding shift requests in the employment agreement between the parties. And if so, whether any remedies should be awarded to the employee.

The employee was a nurse at a prison for over 12 years. She was advised about a shift requests arrangement at her original interview. Under the arrangement employees could ask for 4 shift requests per roster. The employer gave evidence that rostering was a particularly difficult task that created friction among the employees. The employee raised issues over the years and was told on 3 different occasions that there “was no right as such to shift requests”. The employee requested that she be rostered on morning shifts throughout April due to Ramadan. Three weeks later, in late March, the employer advised the staff that due to “constant concerns” over the roster they would be moving to a rotating roster shift system. The employer said that particular requests could be accommodated by employees swapping shifts between them. A couple of weeks later, the employee suffered a workplace injury. Her gradual return to work programme meant she was not on the roster until her employment terminated months later.

The employee claimed there was an implied term allowing shift requests in her employment agreement with the employer. She raised a personal grievance on the grounds that an unjustified action of the employer caused her disadvantage. She also sought remedies for claims the employer failed to have a written employment agreement in place and breached good faith.

The Authority found that although it was finely balanced, the “shift requests arrangement did not reach the point of becoming a term established by custom” (see paragraph 88). In doing so, it considered:

  • The arrangement had been in place for at least 12 years (see paragraph 71).
  • There was “some certainty about the practice” (see paragraph 80).
  • The employee’s manager had told her there was nothing in the collective agreement that stated that the employer had to accommodate requests (see paragraph 72).
  • Indeed, it was not a term in the collective agreement. There were no written details of the arrangement (see paragraphs 74, 77).
  • Some benefits that continued for years have been found to only be a privilege (see paragraph 70).
  • A message from a union delegate showed the union considered the arrangement was within the discretion of the employer (see paragraph 82).
  • Although there was an argument the arrangement had sufficient notoriety, the employer had resisted the arrangements becoming a term of the agreement (see paragraph 75).

The Authority found the employee did not suffer a disadvantage (see paragraph 93). It also found the employer had not failed to provide a written employment agreement (see paragraph 112). However, it found that the employer had breached good faith for failing to consult before introducing the rotating roster (see paragraph 124). The breach did not result in a penalty being ordered (see paragraph 128).

Bhamji v Chief Executive of the Department of Corrections [2024] NZERA 70(external link)

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