Cases of Interest: April 2025

Bread of Life Christian Church in Auckland v Chen [2025] NZEmpC 69

Employment Court – Employment status – Church pastor
Employment Court – Unjustified dismissal – Remedies

At issue was:

• Whether a church pastor was an employee.
• If so:
  • Whether he was unjustifiably dismissed.
  • Whether he should be reinstated.

A church pastor was employed by a church charitable trust board (the Trust) on a fixed term agreement (the agreement). At the end of the fixed term, three of six trustees decided that the pastor’s salary should be suspended; two trustees objected; the sixth trustee was the pastor, who abstained from the decision. From that time the pastor was not paid, even though the “Mother Church” in Taiwan confirmed his reappointment. The trustees who suspended the pastor’s salary considered his appointment was terminated.

The Employment Relations Authority (Authority) found the pastor was an employee and was unjustifiably dismissed. The Authority ordered his interim and then permanent reinstatement. Five days after he was permanently reinstated the pastor was dismissed for redundancy.

In this proceeding:

• The church challenged the Authority’s substantive determination
  (Chen v Bread of Life Christian Church in Auckland [2024] NZERA 198(external link)).
• The pastor claimed that he was unjustifiably dismissed a second time and sought permanent reinstatement again.

The church challenged the Authority’s finding that the pastor was an employee. It argued that the role was a spiritual contract or calling and any relationship between the church and the pastor was simply functional for the purpose of paying his salary and deducting PAYE. It also said the Trust was responsible for the church property and was not the pastor’s employer. The church cautioned against relying on any labels in the agreement because of translation difficulties.

The Employment Court (Court) said there was no presumption against a minister of religion intending to enter legal relations (see paragraphs 66 to 68). The spiritual nature of a role is not determinative but is relevant (see paragraphs 73, 77). Each case needs to be considered “on its merits with a focus on the real nature of the relationship between the parties” (see paragraph 76, also paragraphs 75 to 83).

The Court found the pastor was an employee (see paragraph 130). It took into account:

• evidence of the objective intention of the parties:
  • The agreement showed an intention to form legal relations and did not preclude employment (see paragraphs 112, 113).
  • The agreement showed an intention to comply with employment law by (see paragraph 119):
    • basing the salary on the minimum wage
    • having leave provisions that reflected requirements of the Holidays Act 2003.
  • If the parties did not intend an employment relationship, the minimum standards legislation would be irrelevant (see paragraph 119).
  • Deductions were made from the pastor’s salary for KiwiSaver, indicating an employment relationship (see paragraphs 123, 133).
• the level of control exercised by the Trust:
• While the pastor had some freedom in his work, the Trust exercised control by undertaking performance reviews, reviewing and changing his salary, taking disciplinary actions, dismissing him and making decisions about whether to renew his contract (see paragraphs 126 to 128).
• The pastor was required under the agreement to work 40 hours a week and was required to carry out specific tasks on specific days (see paragraph 129).
• the integration of the pastor into the life of the church:
  • The pastor was clearly the face of the church to the outside world (see paragraph 130).
• the fact the pastor was clearly not in business on his own account:
  • He did not bear any risk of loss and had no way of making a profit from any task (see paragraph 131).
  • He was not prohibited from contracting out or delegating, in the agreement or elsewhere, but it was clear he could not contract out. Though the church engaged other pastors to preach on occasion, the pastor did not personally subcontract his role (see paragraph 132).

The Court found the Trust, as the pastor’s employer, unjustifiably dismissed him. The Court took into account that:

• The fixed term agreement the pastor was employed on did not comply with section 66 of the Employment Relations Act 2000(external link), as it did not state in writing the reasons for the agreement being for a fixed term; therefore, the pastor was a permanent employee (see paragraphs 154 to 156).
• The process used to dismiss the pastor was unfair, as he was given no notice; three of the trustees simply determined the Trust would stop paying him.
• While the plaintiffs submitted the pastor was dismissed for redundancy due to a lack of money, there was no consultation before the termination (see paragraphs 164 to 168).
• There was evidence money was there to pay the pastor as the audited accounts did not show a reduction in income and donations were enough to cover his salary (see paragraphs 171 to 173).
• The Trust needed approval from the Mother Church to dismiss the pastor and no approval was obtained (see paragraph 174).

The Court ordered the Trust to:

• pay the pastor lost wages that the Authority had awarded and also any lost wages incurred since then (see paragraphs 177, 178)
• reinstate the pastor within six weeks of the decision, on the terms that would have applied if the fixed term had not ended (see paragraphs 198, 208)
• arrange mediation or facilitation with the Mother Church and its representatives to help with identifying and implementing steps for the pastor’s return (see paragraphs 204, 205, 208).

Bread of Life Christian Church in Auckland v Chen [2024] NZEmpC 69(external link)

Vegepod NZ Ltd v Lowe [2025] NZEmpC 76

Employment Court – Interim reinstatement – General managers – International retail business – Challenge to Employment Relations Authority determination

At issue was whether two employees should be reinstated on an interim basis, while waiting for an Employment Relations Authority (Authority) investigation into their unjustified dismissal claim. The Authority ordered interim reinstatement in earlier proceedings. The employer challenged that determination.

Two employees, who were husband and wife, were employed as general managers in an international business selling “Vegepod” products. They were also shareholders in the same business. The wife was a director of the New Zealand arm of the business (the employer).

After the employees filed a shareholder dispute in the High Court, to do with certain costs being invoiced to the employer company, the employer proposed disestablishing their positions. Subsequently the employer dismissed the employees for redundancy, due to a claimed downturn in revenue in New Zealand.

The Employment Court (the Court) held that the employees should be reinstated to their previous positions within three weeks of the decision, pending the outcome of the Authority’s investigation into their dismissal (see paragraphs 119 to 121). It directed the parties to attend mediation “to identify and implement the necessary steps to ensure a managed transition” (see paragraph 119).

In coming to the decision to reinstate the employees, the Court took into account:

• The employees had an arguable case that (see paragraphs 61, 84, 98):
  • Their dismissal was unjustified due to procedural deficiencies in the process that led to their dismissal.
  • They would be permanently reinstated.
• While there had clearly been a deterioration in the relationship between the employees and the employer, much of the ill-will the employer pointed to was generated by the employer (see paragraph 74). The company was well-resourced and had access to specialist human resources support and assistance as well as access to free Mediation Services, to assist with transitioning the employees back to work (see paragraph 75, 84).
• The need for the employees to have frequent contact with other directors of the employer and related companies appeared to be exaggerated (see paragraph 76).
• The employees had a financial interest in the fortunes of the company (see paragraph 77).
• The work the employees did still needed to be done (see paragraph 82).
• While the employer was considering disciplinary action against the employees if they were reinstated, the employees had plausible explanations for the issues raised by the employer (see paragraph 89).
• The employees had made undertakings as to damages if they were not successful in their substantive claim (see paragraphs 91 to 95).

Vegepod NZ Ltd v Lowe [2025] NZEmpC 76(external link)

Lowings v Vice-Chancellor of the University of Canterbury [2025] NZERA 189

Employment Relations Authority – Unjustified dismissal – Poor performance

At issue was whether the employee was:

• unjustifiably dismissed for poor performance
• unjustifiably disadvantaged by the employer:
  • filling a manager position without it being advertised
  • changing the employee’s reporting line without consulting him
  • bullying him and putting him on a performance improvement plan (PIP).

The employee was employed at a university as an electronics software and design technician, in a team of three people in an electronics workshop. In his application letter the employee said he had over 20 years’ experience as an embedded software engineer, designing and manufacturing scientific and medical products in the commercial and public healthcare sectors. He claimed he would be an excellent match for the role.

When the employee began the role in mid-2017, the electronics workshop was managed by a senior technician. Both the employee and the senior technician reported to the technical services manager. However, in mid-2019 the senior technician’s role was re-banded and he became the electronics manager. In August 2021 the employee’s reporting line was changed so he reported to the electronics manager instead.

By late 2021 the electronics manager (the manager) noticed performance issues with the employee’s work. The employee said the manager’s attitude to him changed. In July 2022 the employee made a formal complaint about the manager and asked to change his reporting line back to the technical services manager.

The employer said the employee did not have sufficient evidence of bullying and said a formal investigation was not required. The employee responded asking that his complaint be investigated. From that time the employee started to work from home.

The employer proposed a temporary change in reporting lines back to the technical services manager while it discussed the employee’s concerns with the manager and arranged external mediation. In the alternative, it said the employee could return to work and the matter would not be discussed with his manager. The employee responded that he thought the employer was trying to disregard his complaint.

The employer engaged a law firm to review the employee’s complaint. The law firm advised the employee it was unlikely his complaints amounted to bullying. In November 2022, the employer advised the employee that he would revert back to reporting to his manager.

The employee was put on a four week review period. The manager said during the review period the employee produced very little output and got off-track with his tasks. The employee claimed he was made to do tasks for which he did not have the skills and although training was agreed it was not provided.

After continued issues with the employee’s performance, in May 2023 the employer put the employee on a performance improvement plan (PIP). The employer arranged for him to report to another manager (the new manager) for the purpose of the PIP. The new manager was someone technically skilled in the areas in which the employee needed to work. The employee was supported by a union representative at meetings to discuss the PIP, and during the PIP process.

The new manager said that during the first month of the PIP it became apparent the employee lacked basic skills and struggled with the set tasks; he needed a lot of assistance and completed only 10 of 29 tasks. The employee continued to not perform satisfactorily through the PIP process. There were concerns that his electronics skills did not match what he had said in his resume and what was required in the role.

After several review meetings and progressive written warnings, in November 2023 the employer dismissed the employee. The employee claimed the dismissal was unjustified. He claimed he was also disadvantaged by the employer:

• appointing the senior technician as manager without advertising the manager role
• changing the employee’s reporting line without consulting him
• bullying the employee and putting him on a PIP.

The Authority found:

• The employee was out of time to bring disadvantage claims in relation to the appointment of the senior technician as manager and the change in reporting lines, which concluded in 2021 (see paragraph 108).
• The employee was not disadvantaged by bullying. The employer had followed a fair process in investigating the employee’s complaint and had found insufficient evidence. This finding was supported by independent legal advice (see paragraphs 121 to 123).
• The employee was not unjustifiably disadvantaged by being put on a PIP. The employer was entitled to address performance concerns. It acted reasonably and followed a fair process (see paragraph 128, 129):
  • The employer appointed someone to manage the employee during the PIP process who was able to provide daily technical support and guidance.
  • It gave the employee and his representative the opportunity to have input into the PIP process.
  • The PIP document set out clearly the performance issues, identified standards, when targets were to be achieved, and the training and support that was to be provided.
  • The employer set up weekly review meetings and gave the employee a report after each meeting.
  • It set up monthly review meetings and notified the employee of any ongoing concerns.
  • It extended the PIP to take account of the employee’s leave and to give him a further opportunity to improve.
• The employee was not unjustifiably dismissed as the employer acted as a fair and reasonable employer throughout (see paragraph 140, 141):
  • The employer discussed the employee’s performance and its dissatisfaction with the employee.
  • It provided a clear statement of the expected performance.
  • It warned the employee of the consequences if the employee did not improve to the required level.
  • It provided the employee with training and supervision and other assistance and gave them a reasonable opportunity to improve.
  • It discussed the employee’s progress and whether it met the employer’s requirements.
  • It considered alternatives to dismissal.

Lowings v Vice-Chancellor of the University of Canterbury [2025] NZERA 189(external link)