Cases of interest: May 2024

A summary of interesting or topical employment cases.

E Tū Inc v Singh [2024] NZEmpC 84

Employment Court – Employment Relations Act 2000, s 103A – Procedural and substantive fairness – Disciplinary proceedings – Process required when employer is a union

Employment Court – Personal grievance – Unjustified suspension – Unjustified dismissal – Remedies

At issue was whether the employer justifiably suspended and dismissed an employee. The employer was a union and the employee was a union organiser.

The union organiser became Facebook friends with the director of a third party employer (HVF) and shared increasingly personal messages with her. HVF allegedly took a premium for employment from a migrant employee and also did not pay her all her wages. The Migrant Workers’ Association (MWA) organised a meeting between HVF and the migrant employee at union premises. The migrant employee was represented by the President of the MWA. The union organiser attended the meeting after travelling from Auckland to Hamilton in a union car to do so. Another union employee also attended, as did the migrant employee's husband, who was a union member.

During the meeting the union organiser was asked to recommend a settlement. He proposed a settlement in which HVF was to pay the migrant employee money. HVF agreed to the settlement, but did not pay the sum agreed to.

Two years later HVF raised a complaint of harassment against the union organiser and the other union employee who attended the meeting. HVF threatened to go to the media if the union did not address her concerns.

The union suspended the employee; carried out an investigation; and then dismissed the union organiser for serious misconduct, all within 3 weeks of receiving the complaint. The employer considered the union organiser was at the meeting with HVF to support her as the employer. The employer did not speak to other attendees at the meeting to confirm its view. In the Court hearing, the witnesses alleged the union organiser was not the person who convened the meeting or arranged for it to be held in union premises. The witnesses said he did not represent HVF in the meeting.

In its letter giving reasons for the dismissal, the union said that the union organiser "seriously compromised" himself and the union by purporting to act simultaneously as the employer's "support person, a mediator and some kind of adjudicator in an employment case" and by then moving into "an enforcement role". The union said this was unethical and severely compromised the union and destroyed trust and confidence.

The Employment Court (the Court) found the suspension was unjustified. It held the employer had not considered alternatives to suspension, as required under the collective employment agreement (see paragraphs 52–56). The Court found the dismissal was also unjustified (see paragraph 94) as:

  • The union did not talk to witnesses before making a decision (see paragraphs 62–68).
  • The union's central concern, that HVF was an employer, not an employee, was never clearly expressed to the union organiser (see paragraph 70).
  • The union did not have due regard to the 2-year period that had lapsed since the events complained of occurred (see paragraph 77).
  • There was a lack of clarity as to who made the decision to dismiss (see paragraphs 78–85).
  • The reasons given for the dismissal in the dismissal letter were at odds with the reasons given in the hearing before the Court (see paragraphs 74, 86–90).
  • Alternatives to dismissal were not considered (see paragraph 93).

In deciding that the suspension and dismissal were unjustified, the Court took into account that, as an employer, the union was " well resourced, most particularly in respect of its knowledge and understanding of employment requirements, including around disciplinary processes" (see paragraph 50). The Court commented that more was to be expected of a well-resourced employer at every stage of the disciplinary process (see paragraph 49):

…the Authority/Court must (not may) have regard to the employer’s resources in assessing the justification for what they did and how they did it. A well-resourced employer can be expected to do more; an owner/operator of a small business not so much. Resources may impact at each stage of the process – the nature and extent of the steps reasonably required of employer X as opposed to employer Y; and the scope of the options that may reasonably be available to employer X as opposed to Y in terms of (for example) disciplinary outcome. This is a key consideration which is often overlooked. As the Act makes clear, a one-size-fits-all approach is not the applicable framework for assessing justification.

E Tū v Singh [2024] NZEmpC 84(external link)

Henderson Travels Ltd (in liq) v Kaur [2024] NZEmpC 88

Employment Court – Challenge – Costs – Liquidation of employer – Liability of third party

Employment Court – Liquidation of employer – Joinder of third party for purpose of costs

At issue was whether the employee could join a related third party company to a proceeding for the purpose of costs, following the liquidation of the employer.

The Employment Relations Authority (the Authority) ordered the employer to pay the employee unpaid wages and holiday pay, and to refund a premium she paid in contravention of the Wages Protection Act 1983 (see Kaur v Henderson Travels Ltd [2021] NZERA 418(external link)). The employer unsuccessfully challenged the determination in the Employment Court (the Court; see Henderson Travels Ltd v Kaur [2023] NZEmpC 181(external link)).

Following the Court decision the employer went into liquidation. In this proceeding, the employee sought to join a "sister company" of the employer for the purpose of claiming costs for the Court challenge (see paragraph 7). The sister company:

  • was directed by the husband of the employer's director
  • funded the employer's challenge to the Authority's determination
  • operated the business formerly operated by the employer.

Prior to the challenge, the director of the sister company made assurances to the Court that future costs orders were adequately provided for. The Court found those assurances were intended to enable the employer "to continue with the litigation it could not otherwise support" (see paragraph 36). The Court indicated that without that commitment it was highly likely the employer would have been ordered to pay security for costs, which could have stymied the challenge (see paragraph 37).

The Court found the circumstances met the test in the Court of Appeal decision Kidd v Equity Realty (1995) Ltd [2010] NZCA 452(external link) which required that before a third party could be liable for costs, "something more" than having funded the litigation was needed, (see paragraphs 11, 17–19, 36, 37). The Court said the commitments of the sister company's director meant the employer (see paragraph 37):

enjoyed what the Court of Appeal referred to as a “heads I win, tails you lose” approach by seeking to overturn the Authority’s decision with little, or no real, downside if the decision was adverse to it.

The Court found it was in the interests of justice to join the sister company to proceedings for the purpose of costs (see paragraphs 15, 38).

Henderson Travels Ltd (in liq) v Kaur [2024] NZEmpC 88(external link)

Television New Zealand v E Tū Inc [2024] NZEmpC 93

Employment Court – Collective employment agreement – Dispute over interpretation – Restructure process – Requirement to involve employees

Employment Court – Crown entity employer – Application of collective employment agreement – Significance of commercial considerations

At issue was the meaning of a provision in the collective employment agreement (CEA). The provision (clause 10) required the employer to:

…support active participation in the development of the organisation and change in workplace practices… assist staff to be involved in the developmental stages of decision making processes and in the business planning of the organisation.

… enter … discussions with an open mind and …fully consider options and proposals put forward by staff [and] take any recommendations fully into account as far as possible when making final decisions

Clause 10 further provided that when the employer identified a "surplus staffing situation" it would "advise employees concerned and the Union" and allow "up to 28 days" for consultation (see paragraph 7).

At issue was whether the employer could be held to the precise wording of the provision when it was acting under "significant operational challenges"; or whether a broader interpretation should be allowed in the circumstances.

The employer was a television network. The employer was under financial pressure. The employer considered several options to deal with the situation and then put forward one of the options to staff and the union. The proposed option was to cancel certain shows to save money. The employer did not engage with staff or the union prior to announcing the proposal it selected.

The employer claimed clause 10 was not prescriptive and allowed it to come up with a restructure proposal and then engage with staff, especially when the employer was facing "significant operational challenges". The union claimed that by identifying restructure options "behind closed doors" and then proceeding to consult on one, the employer "bypassed the roundtable requirements" (see paragraph 9). The union sought a compliance order to compel the employer to comply with clause 10.

The Employment Court (the Court) accepted that:

  • The employer breached clause 10 when it put forward for consultation a "well advanced" restructure proposal, focusing on one option (cancelling shows) when the executive team had considered initially several options (see paragraph 78).
  • The employer had not attempted to consider other options and proposals by staff prior to the decision to cancel shows (see paragraph 81).
  • The employer had not shared information on the financial reasons behind the proposal with staff or the union (see paragraph 81).

The Court ordered the employer to comply with clause 10 within 20 days of the judgment (see paragraph 106). The Court held that compliance would not require the employer to immediately reinstate cancelled shows; rather it would " require good faith participation and the development of proposals, through agreement if possible, to refer to management for good faith consideration and decision" (see paragraph 99).

In ordering compliance, the Court took into account:

  • While the employer had "statutory obligations to maintain commercial performance"; it also had " a statutory obligation to be a good employer, and heightened obligations" as a Crown Entity employer (see paragraph 100).
  • Where the employer entered into a CEA "which placed extended obligations on it … there is a broader interest in holding parties to their bargain, including in circumstances in which it would make commercial sense that they not be required to do so" (see paragraph 101).
  • It could "create perverse incentives" and undermine the statutory object of promoting collective bargaining, "if factors such as cost and inconvenience were given too much weight" (see paragraph 101).

Television New Zealand v E Tū Inc [2024] NZEmpC 93(external link)

Zhang v Panda Restaurant Ltd [2024] NZERA 313

Employment Relations Authority – Minimum employment standards breaches – Migrant exploitation – Hospitality industry

Employment Relations Authority – Premium for employment – Wages arrears – Personal grievance – Remedies

The employee was a migrant chef whose visa was tied to the employer. The Employment Relations Authority (the Authority) found the employer:

  • owed the employee approximately $106,000 in unpaid wages and holiday pay (see paragraphs 151–158, 208)
  • breached its obligation to provide time, wage and holiday pay records on request (see paragraph 182)
  • breached the employee's employment agreement by not paying for additional hours and not paying for holiday and leave entitlements (see paragraph 169)
  • constructively dismissed the employee when the employee resigned due to the breaches (see paragraphs 202, 203).

The Authority also found that the employee paid the employer's director almost $117,000 in unlawful premiums (see paragraph 132).

An issue was what remedies the Authority should award as a consequence.

The Authority determined the employer should:

  • repay the full amount of the premium ($116,854) to the employee, with interest (see paragraphs 132 , 166 to 168 and 208)
  • pay the outstanding wages and holiday pay in full ($105,816.45) to the employee with interest (see paragraphs 151, 158, 166 to 168 and 208)
  • pay a penalty of $47,200 for breaches of the Employment Relations Act 2000, the Holidays Act 2003 and the Wages Protection Act 1983 (see paragraphs 179, 193 and 208)
  • pay the employee $18,000 as compensation for distress caused by his unjustified constructive dismissal (see paragraphs 203 and 205).

The Authority determined that the director should pay a penalty of $8,000 for her involvement in the breaches (see paragraph 195).

In awarding penalties, the Authority took into account that:

  • The employer's failure to provide records hampered the employee's ability to understand and calculate what was owing to him; it also hampered the Authority's investigation (see paragraph 188).
  • The employer was a vulnerable migrant, with limited English, whose visa was tied to his employer (see paragraphs 188, 191).
  • The employee paid a significant premium to the employer (see paragraphs 188, 191).
  • The employer was no longer trading (see paragraph 193).

The Authority determined that if the employer was unable to pay the amounts owing:

  • The employee could recover the premium, with interest, from the director and/or her former husband (see paragraphs 163 to 168).
  • The employee could recover unpaid wages and holiday pay with interest from the director (see paragraphs 163, 169, 211).

Zhang v Panda Restaurant Ltd [2024] NZERA 313(external link)

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