Cases of interest: June 2026

Alliance Group Ltd v Brown [2026] NZEmpC 128

Employment Court – Application for special leave to remove – Removal on grounds that important questions likely to arise – Questions to do with use of medicinal cannabis in safety-sensitive work environment

At issue was whether the proceedings should be removed from the Employment Relations Authority (the Authority) because they were likely to raise important questions of law.

The employee had a prescription for medicinal cannabis and disclosed that fact to the employer. Two years later the employer dismissed the employee after he had two non-negative test results for THC (cannabis). The employee brought proceedings in the Authority for unjustified dismissal. The employer sought to have the proceedings removed to the Employment Court (the Court) on the grounds the case involved important questions of law. The Authority declined the removal application.

The employer sought special leave to remove the matter to the Court. It claimed the proceeding was likely to give rise to the following questions of law (see paragraph 8):

1. 1. Can employers terminate safety-sensitive workers for medicinal cannabis use?
   2. Can employers determine a cut-off level of THC for the purposes of maintaining a drug-free safety-sensitive workplace?
   3.  Is an employer entitled to rely on a non-negative oral saliva test to take disciplinary action against an employee in circumstances where that test result may not be able to determine impairment?
   4. Can an employer terminate an employee’s employment from a safety-sensitive role for breaching a drug and alcohol policy where the employee is taking medicinal cannabis and disclosed that prescription?

The employer said the issue of medicinal cannabis in safety-sensitive roles has not been considered by the Court previously and the questions would be "important to its business in the future and to other New Zealand businesses where there are employees in safety-sensitive roles" (see paragraph 21).

The Court said it accepted that the questions were likely to arise and may have an effect on the outcome (see paragraph 19). Nevertheless, it declined the application (see paragraph 26). In coming to that decision, the Court took into account the following:

• While the employer's submissions focused on the increasing prevalence of medicinal cannabis as a prescribed medication, the questions equally applied to other prescribed medication in a safety-sensitive environment (see paragraph 22).
• The employee had been out of work since the end of January. He had forgone an interim reinstatement application after the Authority proposed dealing with the substantive proceedings expeditiously. The substantive investigation in the Authority was scheduled to take place in a less than a week's time. Both parties had filed their evidence and were ready to proceed (see paragraph 23).
• It was "not uncommon for the process in the Authority to have the effect of refining or clarifying the case for the Court" in the event of a challenge (see paragraph 25).
• It was not in the interests of justice for the employee to lose the opportunity to have the proceeding dealt with quickly (see paragraph 26).
• There was no suggestion the proceeding was outside the Authority’s area of expertise or that there was any reason why the Court would be more suited to dealing with the issues in the first instance (see paragraph 26).

Alliance Group Ltd v Brown [2026] NZEmpC 128(external link)

Jin v Precision NZ Ltd [2026] NZEmpC 121

Employment Court – Without prejudice communications – Privilege – Draft settlement agreement and related communications

Employment Court – Raising personal grievance – What constitutes raising personal grievance – Leave to raise a personal grievance out of time

Employment Court – Personal grievance – Constructive dismissal – Remedies

Issues in this case were:

• Whether the following were privileged and so inadmissible:
  • a draft settlement agreement which the employee rejected
  • communications and discussions that were part of negotiations for a settlement.
• Whether the employee raised a personal grievance in time
• If not, whether the Employment Court (the Court) should grant the employee leave to raise a personal grievance out of time
• Whether the employee was constructively dismissed.

After the employee resigned, the employee and employer were engaged in mediation and settlement negotiations for close to two years. Near the end of that period, the employee filed proceedings in the Employment Relations Authority (the Authority) and joined the sole director as a party.

In the following weeks, the director visited the employee and his wife 5 times at their home, to discuss a proposed settlement. After the 2nd meeting, the director prepared and signed a draft record of settlement. The document was marked “Without prejudice until signed by both parties”. The document recorded that the settlement terms and the negotiations leading up to the preparation of the draft settlement were “strictly confidential”. The director said he provided a Chinese translation of the document and gave the employee time to seek advice on it before signing it.

The director said the visits were cordial and intended to achieve settlement. The employee said they were uninvited, made him feel uncomfortable and unsafe, and that the director did not explain that the document and settlement negotiations were confidential. The employee said the director pressured him for 6 hours on his last visit to try and get the employee to sign. Ultimately the parties did not reach agreement and the employee did not sign.

The Authority found that the employee was out of time to raise personal grievance and penalty claims, but awarded unpaid wages and holiday pay. The employee challenged the determination in the Court.

The employee sought to use the draft agreement and related discussions as evidence in the Court. The employer claimed they were privileged and inadmissible.

Privilege attaching to draft settlement agreement and related negotiations

The Court found the settlement draft and discussions around it were inadmissible. It took into account the following principles:

• While the Court is not bound by the Evidence Act, the Act and common law principles provide guidance (see paragraph 18).
• As a matter of public policy, the rule protecting without prejudice communications from admission in Court is designed to encourage parties to negotiate settlements of disputes, knowing that what is said openly and honestly will remain confidential (see paragraph 19).
• The Employment Relations Act 2000 (the Act) emphasises the importance of parties trying to resolve employment relationship problems quickly between themselves (see paragraph 20).

The Court said that in this case:

• The draft record of settlement and related communications were made in connection with attempts by the parties to resolve a dispute, making them privileged communications within section 57 of the Evidence Act 2006 and common law principles (see paragraphs 18, 23).
• It preferred the evidence of the director that there was a common intention for the communications to be confidential (see paragraph 22).
• While the employee was entitled to reject the offer of settlement, which he did, the privilege attached to the settlement negotiations remained (see paragraph 24).
• It did not consider the director waived privilege (see paragraph 24).

Whether a personal grievance was raised in time

The employee resigned after the employer did not pay him all his wages. Shortly after his resignation the employee sent the employer 2 WeChat messages and an email asking the employer to pay him an underpayment of $77 and an additional unpaid 3 weeks' pay. The employee claimed his resignation was a constructive dismissal and that the messages and email raised a personal grievance. The employer said it was not aware of a personal grievance claim until it received the employee's statement of claim for proceedings in the Authority.

The Court found neither the messages and email, nor the statement of claim, succeeded in raising a personal grievance. It said:

• From an objective standpoint, the employee's communications, individually or collectively, did not inform the employer that he was raising a personal grievance, for either a disadvantage or for constructive dismissal. (See paragraph 33).
• The employee's statement of claim was outside of the prescribed time-frame (see paragraph 34).
• The employer did not consent to the employee raising a personal grievance out of time (see paragraphs 36 to 43).

Whether the Court should grant the employee leave to raise a personal grievance out of time

The Court granted the employee leave to raise a personal grievance out of time. The Court said the following were exceptional circumstances that made it just to grant the employee leave (see paragraphs 53, 54):

• the fact the employee did not have an employment agreement that explained his rights around raising a personal grievance
• the employee's lack of familiarity with New Zealand law
• his language barriers.

Whether the employee was constructively dismissed

The Court found the employee was constructively dismissed, as his resignation in the face of breaches by the employer was foreseeable (see paragraphs 79, 82, 83). The relevant breaches were (see paragraphs 74, 75):

• not providing him with an employment agreement
• making him invoice his hours before paying him
• not providing him with minimum employee entitlements
• not complying with obligations under section 130 of the Act(external link) and section 81 of the Holidays Act 2003(external link) to keep employment records.

Remedies

The Court ordered the employer to pay the employee:

• $10,000 compensation under section 123(1)(c)(i) of the Act(external link) (see paragraph 100)
• 12 weeks’ lost wages under section 128(2) of the Act(external link) (see paragraph 92).

In setting compensation at $10,000 the Court said:

• Though the employee did not present evidence of distress from independent medical records or from statements from family or friend, having seen and the heard the employee's evidence, it was satisfied the employer's actions caused him considerable distress (see paragraph 98).
• It considered the level of hurt and humiliation fell in band 1 of the bands set in GF v Comptroller of the New Zealand Customs Service [2023] NZEmpC 101, [2023] ERNZ 409(external link) at [162] ($0–$12,000; see paragraph 100).

Jin v Precision NZ Ltd [2026] NZEmpC 121(external link)

NZEI Te Riu Roa Inc v Secretary for Education [2026] NZEmpC 135

Employment Court – Collective bargaining – Partial strike – Deductions from employee pay – Compliance with Employment Relations Act 2000, sections 95B, 95F – Lawfulness of deductions

Employment Court – Statutory interpretation – Employment Relations Act 2000, section 95B – Requirement to notify specified pay deduction – Notice requirements

At issue was:

• Whether the employer complied with notice requirements under the section 95B of the Employment Relations Act 2000(external link) (the Act) before making deductions from employee's pay for being parties to a partial strike, when:
  • it notified the union of an intention to make pay deductions
  • it did not notify individual employees
  • it gave such notice before the partial strike began.
• Whether the employer needed to establish which employees were participating in the strike before making deductions under section 95C of the Act(external link).
• Whether information the employer gave to the union after it requested information under section 95E of the Act(external link) complied with section 95F of the Act(external link).

This was a decision of the Employment Court (the Court) bench. The bench sat as this was the first time the Court considered the lawfulness of pay deductions for partial strike action (see paragraph 5).

During bargaining for a new collective agreement covering service managers and field staff, the union served notice of a 3-day partial strike by members in those roles. The partial strikes were to involve:

• a ban on working more than a certain number of hours per day
• a ban on working more than a certain number of hours per week
• a ban on any work on new cases.

In response, the Secretary for Education (the Secretary) provided the union with two notices of specified pay deduction, one for each group of staff. The notices provided that the employer would deduct 10 per cent from the salary or wages of all staff who were party to the strike.

Interpretation of section 95B

The union claimed the Secretary breached the notice requirements in section 95B of the (external link) Act, because it gave the notices of specified pay deductions to the union, instead of to each of the employees who were party to the strike. The union said that giving notice only to the union was only permitted under section 95B(4) only if a partial strike had already begun. In this case the employer gave notice to the union only, before the partial strike. In coming to this conclusion, the union relied on the different wording in section 95B(1) and 95B(4):

Judges Smith and Holden in the majority found that section 95B(4) provided alternatives that could apply an actual or intended strike (see paragraph 45). They concluded that the Secretary complied with section 95B when it gave notice of pay deductions only to the union, before the partial strike began (see paragraph 46).

Judge Doyle in the minority disagreed that section 95B(4) provided alternatives to giving notice in section 95B(1) (see paragraph 110). She said she would have found that (see paragraphs 84, 116):

• Notice of pay deductions can be given to each employee under section 95B(1) either before or during a partial strike.
• Notice to unions under section 94B(4) is limited to a time when a strike involving 2 or more employees has begun.
• The pay deductions were unlawful because the employer did not comply with the notice requirements in section 95B.

Judge Doyle dissented from the majority on this finding only (see paragraph 60).

Lawfulness of the deductions

The Secretary made a 10 per cent deduction for the partial strike from the wages of all employees covered by the union's notice of partial strike action. The union asked the employer for the information the employer relied on to calculate the specified pay deduction. It did not say on whose behalf it was making its request. The Secretary, in response, provided a description of the information relied on, an explanation of her calculations, and examples showing how those calculations worked.

The union then asked for the name of each person for whom deductions were made, the amount deducted, their hours of work during the pay period, the date(s) of any leave and any specific advice from field staff and service managers as to whether they were participating in the partial strike. Again, the union did not identify the members on behalf of whom it was making its request.

The Secretary declined to provide individualised information without the express consent of each individual concerned but noted that the payroll information was available to members on their pay slips. The union claimed that the Secretary needed to establish evidence of each employee's participation in the strike action before making a deduction from their salary or wages.

The Court accepted that whether deductions were lawful would "turn on whether the employees from whom pay was deducted were, in fact, a party to the strike action, done in concert with others" (see paragraph 47). The Court said the starting point for determining who was on strike was the notices of intention to strike. In this case, the union could have specified names or locations of covered employees, but instead it gave notice on behalf of all members covered by bargaining (see paragraph 50). In the end, the Secretary had to determine whether each employee was participating in the strike or not, based on the information she had (see paragraph 52).

Once the Secretary decided to impose a 10 per cent deduction on all covered employees, then under section 95C(3) of the Act(external link) she was required to determine the length of the strike by reference to information on the relevant strike notice (see paragraph 54).

The Court found the Secretary's responses were lawful (see paragraph 57). It said that if union members continued to consider deductions were made incorrectly they should follow the processes in section 95G(5) of the Act(external link) (see paragraph 59).

NZEI Te Riu Roa Inc v Secretary for Education [2026] NZEmpC 135(external link)

Labour Inspector v The Indian Taste Ltd [2026] NZERA 392

Employment Relations Authority – Migrant employees – Minimum employment standards breaches – Arrears – Penalties – Liability of former director

At issue was:

• Whether the Employment Relations Authority (the Authority) should order the employer to pay 7 migrant employees:
  • outstanding wages and Holidays Act 2003(external link) entitlements
  • refunds of unlawful premiums for employment
  • interest on the above.
• Whether the Authority should order a former director pay:
  • any amounts above that the employer did not pay
  • penalties for his involvement in minimum employment standards breaches.

The Labour Inspector investigated the employer after receiving multiple complaints from employees. Soon after the investigation began, the then director sold the employer to another person.

The Labour Inspector claimed the employer committed the following breaches:

1. 1. breach of section 65(external link) of the Employment Relations Act 2000 (the Act), by describing a kitchen manager as a kitchenhand in his job description
   2. breach of section 130(external link) of the Act by keeping inaccurate or incomplete time and wage records, underreporting hours and failing to record overtime correctly
   3. various Holidays Act 2003 breaches
   4. breach of section 6(external link) of the Minimum Wage Act 1983, by not paying the minimum wage for all hours worked
   5. breach of section 4(external link) of the Wages Protection Act 1983 by making deductions from employee's wages without their consent
   6. breach of section 12A(external link) of the Wages Protection Act by requiring employees to pay unlawful premiums to secure their jobs.

The Labour Inspector sought orders against the employer for payment of all arrears and premiums, with interest. It sought to make the former director liable for any payments or penalties, as a "person-involved" in the breaches. The former director filed a statement of reply in which he said he did not accept the findings in the Labour Inspector's report; however he did not appear at the investigation.

The Authority ordered the employer to pay:

•  $199,529.15 in order to refund the unlawful premiums ($60,245.63) and pay outstanding wages and Holidays Act entitlements ($139,283.52)
• interest on the above.

The Authority ordered the former director to pay (see paragraph 96):

• any payments above that the employer was unable to pay
• penalties of $177,300, for his involvement in minimum employment standards breaches.

In setting penalties at that amount, the Authority took into account that:

• The former director:
  •  received a financial benefit by underpaying workers and, in doing so, failed to compete fairly with other businesses who complied with the law (see paragraph 58)
  • used the inequality of power in the relationship to extract labour on unlawful terms (see paragraph 67).
• The breaches were "persistent, systemic and deliberate" (see paragraph 71).
• The employees:
  •  lost the use of money they were entitled to at the time it was due (see paragraph 72)
  • regularly worked 60–80 hours a week and were paid for only 30 and the financial harm was severe. They had to borrow money at high interest and take personal loans and were unable to support their families overseas (see paragraph 73).
• The harm was made worse by late and miscalculated final holiday pay, substandard living conditions, exhaustions, visa-related threats, intimidation and humiliation (see paragraph 73)
• Each employee was a vulnerable migrant whose employment was tied to the employer (see paragraphs 77–79).
• A meaningful penalty was needed to make it clear that deliberate exploitation, concealment, and avoidance behaviours would not be tolerated (see paragraph 83).

Labour Inspector v The Indian Taste Ltd [2026] NZERA 392(external link)