Cases of interest: March 2024

A summary of interesting or topical employment cases.

Mount Cook Airline Ltd v E Tu Incorporated [2024] NZCA 19

Court of Appeal – Question of law – Minimum wage – Part-time employees

At issue was whether the pay rates of part-time employees breached the Minimum Wage Act 1983.

The employer employed both part-time and full-time cabin crew. Part-time crew worked 6 days a fortnight, while full-time crew worked 9 days a fortnight. The collective agreement stipulated that part-time crew – who did 2 thirds the work of full-time crew – were to be paid 2 thirds of the salary. This is known as a “pro-rata” salary.

The union challenged this pro-rata approach to the Employment Court (the Court) on the grounds it breached the requirements of the Minimum Wage Act 1983. More specifically, it claimed it breached clause 4 (d)(external link) of the Minimum Wage Order 2021, which states “the following rates are the minimum rates of wages payable to an adult worker: … in all other cases, – $1,600 per fortnight…”. The Employment Court found in favour of the employer. It interpreted clause 4(d) as requiring a minimum payment of $1,600 per fortnight, regardless of the hours actually worked during that fortnight. In doing so, it interpreted “rate” of pay to mean a fixed amount payable for a unit of time (see paragraph 27).

The subject of this judgment was an appeal by the employer to the Court’s finding. The appeal was based on the following question of law (see paragraph 3): “was the Employment Court correct in its interpretation of cl 4(d) of the Minimum Wage Order 2021 as it applies to part-time salaried employees?”

The Court of Appeal held the Court had erred in its interpretation of clause 4(d) (see paragraph 72). It held the key issue was determining the meaning of the word “rate” in clause 4(d). The Oxford Dictionary defines rate as “the relationship by which the amount or number of one thing corresponds proportionally to the amount or number of another, typically stated as a particular numerical amount per unit (esp. a unit of time)” (see paragraph 45). The Court of Appeal held this definition, which supported the employer’s pro-rata approach, was the commonly understood meaning of the word “rate” (see paragraph 46). The minimum wage rate of $1,600 must be paid to someone who works a full 80-hour fortnight. The minimum rate for a part-time worker must be calculated proportionally to how much of that full 80-hour fortnight they worked (see paragraph 52). This was the pro-rata approach the employer had been using.

The Court of Appeal held its previous judgment in Hopper v Rex Amusements, Ltd [1949] NZLR 359 (CA) supported the pro-rata interpretation (see paragraphs 37–42), as did other previous case law (see paragraphs 65–69), and statutory purpose and context (see paragraphs 53–64).

The appeal was allowed (see paragraph 73).

Mount Cook Airline Ltd v E Tu Incorporated [2024] NZCA 19(external link)

Ugone v Star Moving Ltd [2024] NZEmpC 48

Employment Court – Breach of compliance order – Penalties

At issue was the fine that should be imposed on the director of the employer (the Director) for breaching a compliance order.

The Employment Relations Authority (the Authority) had ordered the employer to pay $28,275.09 in lost wages, $27,500 in compensation, $6,000 in penalties and $842.25 in arrears (see paragraph 3). It then made compliance orders for these awards (see paragraph 6). A compliance order was also made against the Director to take all necessary steps to ensure the employer complied (see paragraph 7). The figures were eventually paid, however not until nearly 2 months after the date stipulated by the compliance order (see paragraph 7). The elapsed time between the Authority’s substantive determination and the receipt of payment was about 6 months (see paragraph 8).

The Court found it would be appropriate to impose penalties against the employer and/or the Director despite the outstanding figures having eventually been paid. It looked to previous case law which held that although the primary purpose of a compliance order is to compel compliance, it also has the purpose of imposing a sanction for non-compliance (see paragraph 27). The Court held that only in rare cases would non-compliance be excused (see paragraph 28).

The Court began by considering the sanctions that should be imposed against the Director. It held that the failure to comply could not be regarded as mere inaction; there was no meaningful difference between inactivity and disobedience (see paragraph 30). The Court chose to impose a $20,000 penalty against the employer. It began with a figure of $15,000 to represent the absence of any reason for the failure to comply (see paragraph 32). This was increased to $21,000 to represent the Director’s track record, the deliberate nature of the breaches and the need for deterrence (see paragraph 43). The Court then applied a minor reduction of $1,000 to acknowledge the orders had eventually been complied with (see paragraph 45).

The Court directed that $10,000 of the $20,000 fine be paid to the employee (see paragraph 48). It also warned the Director that if other cases come before the Court involving requests for sanctions for not complying with Authority determinations, he faces a serious risk of a custodial sentence (see paragraph 52).

The Court recorded that the employer (Star Moving) had breached the compliance order but declined to impose further sanctions against the employer to avoid the risk of double counting (see paragraph 47).

Ugone v Star Moving Ltd [2024] NZEmpC 48(external link)

Le v Your Car NZ Ltd [2024] NZERA 123

Employment Relations Authority – Jurisdiction – Compliance order – Record of settlement

At issue was whether the Authority should order compliance with a settlement agreement which had not been signed by a mediator under section 149(external link) of the Employment Relations Act 2000 (the Act).

The settlement agreement stipulated the employee was to be paid $5,000 in 2 $2,500 instalments. The employer paid the first instalment but failed to pay the second.  The employee applied to the Authority for a compliance order in respect of the second instalment.

The Authority determined it did not have jurisdiction to grant the compliance order. It held that section 151(external link) of the Act limits the Authority’s jurisdiction to order compliance with settlement agreements; the jurisdiction is limited to settlement agreements which have been signed by a mediator (see paragraph 13).

However, the Authority invoked jurisdiction to offer an alternative remedy. It began by setting out that under section 162(external link) of the Act, it has the power to make contractual orders “in any matter related to an employment agreement” (see paragraph 14). It then stated the Court in Kerr v Associated Aviation (Wellington) Ltd [2005] ERNZ 623 had found settlement agreements not signed by a mediator relate to (and arise from) employment agreements (see paragraph 15). Furthermore, FMV v TZB [2021] NZSC 102 and section 161(external link) of the Act establish the Authority’s exclusive jurisdiction to make determinations about employment relationship problems. The Authority found the settlement agreement in this case arose from the employment relationship, so it had jurisdiction to offer a contractual remedy (see paragraph 16).

The Authority stated that although the employee’s claim for a compliance order was unsuccessful, under section 160(3)(external link) the Authority is not bound to treat the matter as described in the statement of problem (see paragraph 17). It therefore made a contractual order under s 162 that the employer pay the remaining $2,500 (see paragraph 18).

Le v Your Car NZ Ltd [2024] NZERA 123(external link)

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