Cases of Interest: February 2026

Breen v Prime Resources Co Ltd [2026] NZCA 33

Court of Appeal – Personal grievances – Employment Relations Act 2000, section 103(3) – Statutory bar on bringing a grievance claim

Court of Appeal – Statutory interpretation – Employment Relations Act 2000, section 103(3) – Meaning of "deriving solely from"

At issue was whether the Employment Court’s construction and application of  the Employment Relations Act 2000, section 101(3)(external link) was correct.

The employer told the employee by email that he believed the employee had not been working his full hours during a government COVID-19 lockdown and for that reason he would deduct pay for 75 hours from his wages. The employer arrived at the 75 hours as a best guess, based on the number of emails the employee responded to. He did not consult with the employee about the figure. The employee responded immediately, disputing that he had not been working his full hours, but the employer went ahead and made the deduction.

The employer believed he was entitled to not pay full wages based on the deductions clause in the employment agreement. Following mediation the employer paid the wages in full, albeit late. The employee claimed he was unjustifiably disadvantaged by the late payment of his wages. The Employment Relations Authority accepted the employee was unjustifiably disadvantaged and awarded the employee $2,000 compensation for distress. The employer challenged the determination in the Employment Court (the Court).

In the Court, the employer claimed, for the first time, that because the late payment derived solely from his genuine belief that the employment agreement allowed him to withhold the wages, section 103(3) of the Employment Relations Act 2000(external link) barred the employee from bringing an unjustified disadvantage claim. Section 103(3) provides that for the purposes of a disadvantage grievance:

…unjustifiable action by the employer does not include an action deriving solely from the interpretation, application, or operation, or disputed interpretation, application, or operation, of any provision of any employment agreement.

The  Court held under section 103(3) that it had no jurisdiction to consider an unjustified disadvantage claim. It said the employee was only able to follow the process for a dispute. The Court’s finding meant the employee was not entitled to monetary compensation, as compensation was not available for a dispute (see paragraph 8).

The employee appealed the Court’s decision in the Court of Appeal on the basis the Court “failed to give proper effect to the word ‘solely’, and as a result reached the wrong outcome” (see paragraph 10). The employee and the New Zealand Council of Trade Unions, as intervenor, contended that (see paragraph 14):

• The Court’s decision represented a departure from existing case law.
• The jurisdictional bar created by section 103(3) must be construed narrowly. Otherwise, it would “create a perverse incentive on the part of employers to create a dispute in order to avoid a personal grievance”.

The Court of Appeal considered whether the Court “erred in its construction and application of” section 103(3) (see paragraph 11).

The Court of Appeal noted that when the legislature inserted the word “solely” in section 103(3), it was silent as to why this was done (see paragraph 122). The Court of Appeal said the guiding principle must be (see paragraph 124):

… to interpret and apply s 103(3) in a way that both gives effect to the word “solely” and which also renders the distinction between disputes and disadvantage grievances meaningful. After all, Parliament has chosen to continue with a jurisdictional bar, thereby clearly signalling that it views a discrete disputes procedure as important, and that it wishes to avoid it being swallowed up by the disadvantage grievance jurisdiction.

The Court of Appeal’s findings on the interpretation and application of section 103(3) included the following (see paragraph 124):

• The descriptive label a party puts on their proceeding is not determinative.
• The fact that the interpretation of a contractual provision is an issue does not on its own trigger the jurisdictional bar.
• Disadvantage grievances and disputes can be concurrent actions, but “for a disadvantage grievance to be available, there must be something more than a disputed interpretation, application or operation of a provision in the employment agreement”.
• For the action complained of to “derive from” the interpretation, application or operation of the provision in the employment agreement, there “must be a causal link or connection between the action complained of and the interpretation, application or operation of the provision in the employment agreement”.
• A dispute must be “more than an employer persisting with what is (unbeknown to the employer at the time) a wrong interpretation and taking action in reliance on it”.
• Whether an action derives from the interpretation, application or operation of a provision must be viewed objectively. If the employer’s belief in its interpretation of the employment agreement was not genuine; or if its motivation was improper, then its actions were not derived from the interpretation, application or operation of the provision within the meaning of section 103(3).
• To “give effect to Parliament’s intention…the words ‘application’ and ‘operation’ … must bear a limited meaning closely allied to ‘interpretation’” and must not be construed too broadly. The words will not cover issues about the implementation of the provision, once interpreted, so as to preclude a personal grievance if the way in which it is implemented otherwise meets the prerequisites of a disadvantage grievance”.

Drawing those points together, the Court of Appeal said the correct approach when applying the jurisdictional bar was (see paragraph 126):

… to ask whether resolution of the claim turns entirely on a finding about the correctness or otherwise of the employer’s genuine interpretation of the provision or provisions in question. If it does, then the jurisdictional bar applies. If it does not, because apart from a wrong interpretation, there is something else capable of satisfying the key elements of a disadvantage grievance (namely an unjustified action, causing disadvantage), then the claim may proceed as a personal grievance.

The Court of Appeal:

• was satisfied that section 103(3), when correctly interpreted, did not preclude the Court from proceeding to determine the employee’s disadvantage grievance (See paragraph 132)
• concluded that the Court did err in its construction and application of section 103(3) by (see paragraphs 132, 146):
  • limiting the inquiry to whether the employer’s actions were based on a genuine interpretation of the employment agreement
  • failing to give proper effect to the word “solely”
• set aside the Court’s decision declining jurisdiction to hear the employee’s disadvantage claim (see paragraph 147).

 In coming to that decision the Court of Appeal took into account that:

• In addition to the dispute over the interpretation of the employment agreement there was “something else” that gave rise to the employee’s complaint, namely:
  • the factual dispute over what hours the employee worked (see paragraph 133)
  • the fact the employer “sprung on” the employee the decision not to pay him his full wages, without warning, at a stressful time (see paragraph 134)
• It was reasonably arguable that the employer’s actions were not those of a fair and reasonable employer (see paragraph 135).

The Court of Appeal noted that a genuine belief that the wording of the employment agreement permitted the employer to make a deduction did not preclude a finding that the employer used the provision “in bad faith as a pretext for some ulterior purpose” (see paragraph 138).

Breen v Prime Resources Co Ltd [2026] NZCA 33(external link)

Johnston v Te Whatu Ora – Health New Zealand [2026] NZEmpC 27

Employment Court – Raising personal grievance – Requirements for raising a discrimination grievance

Employment Court – Report under the Health Practitioners Competence Act 2003, section 45 – Obligations on employer making a report – Report on competence of occupational therapist

At issue was:

• whether the employer raised a discrimination grievance in time
• whether an employer, such as a healthcare provider, is required to comply with employment obligations before making notifications under the Health Practitioners Competence Assurance Act 2003(external link) (HPCAA).

The employee was employed as a community occupational therapist under a collective agreement between the employer and the relevant union (the union). Within the employee’s first three months in the role, concerns arose about his performance. In his fourth month, the employee contracted COVID-19 and experienced brain-fog on his return to work.

Over the following months the employee was subject to a preceptorship and then subject to performance support plans. The employer considered that despite this support, the employee’s performance did not significantly improve.

During this period, the employee raised with the employer health concerns that he had and the prospect that he would be diagnosed with ADHD. The employee agreed to undertake an occupational health assessment.

Section 45 of the HPCAA (external link) required an employer to promptly report to the Occupational Therapy Board of New Zealand (the OTBNZ) any person they believed was “unable to perform the functions required for the practice of his or her profession because of some mental or physical condition”. The person making such a notification was protected from civil and disciplinary proceedings in relation to the notification, providing they did not make the notification in bad faith (see paragraphs 56–58). The employee’s line manager discussed his concerns about the employee with the OTBNZ and came to the conclusion that he needed to make a formal notification.

At a weekly meeting with the employee, the line manager noted that the employee was still requiring significant one-on-one support and informed the employee he considered he was required to report his concerns to the OTBNZ.

A report from the employee’s occupational health assessment came back, stating that until the employee had been assessed and an appropriate management plan implemented, he would need a high level of support to remain in the workplace. It said that currently he was not able to perform all of his role.

The employer notified the OTBNZ that the employee was unable to work as an occupational therapist without one-on-one supervision and support at all times. The OTBNZ responded by suspending the employee’s licence.

Subsequently the employer held a meeting with the employee saying it was terminating his employment with notice, on the basis he did not currently hold registration as an occupational therapist and his suspension appeared to be indefinite. The next day, the union raised a personal grievance for unjustified dismissal. The union commented:

It is really disappointing to see an organisation take this punitive approach rather than being supportive of someone with a genuine disability to help him perform his role.

Shortly afterwards the employer confirmed the dismissal by letter.

The union, without reading the employer’s letter, sent the employer a second letter, saying the employee had been diagnosed with some conditions that affected his ability to do his job. It said a fair and reasonable employer “cannot discriminate [against] someone with a disability and has an obligation to support them and remove barriers in order for them to carry out their role” (see paragraph 26).

The employer responded by denying that it had dismissed the employee for medical incapacity. It said it dismissed the employee because his registration was suspended.

Nearly a year later, an advocate advised the employer she was instructed to progress the personal grievance for discrimination that the union “impliedly” raised on the employee’s behalf. The employer claimed that the employee only raised a grievance for unjustified dismissal and a grievance for discrimination was now out of time.

The advocate also claimed the employer was wrong to make a notification under section 45 of the HPCAA, without following an employment process first. She said (see paragraph 64):

… when an employer refers an employee to a professional body in a way that may lead to suspension, investigation or reputational damage, the employer cannot disclaim responsibility for the consequences. The duty of good faith requires the employer to ensure that referrals are made only after a fair and reasonable process has been followed.

Discrimination grievance raised in time

The Employment Court (the Court) noted that (see paragraphs 42–45):

• The issue in determining whether someone has raised a grievance is “whether the employer has been provided with sufficient detail of the complaint for it to respond to it”.
• It did not matter “what the employee intended their complaint to be or whether the employer recognised the complaint as a personal grievance”.
• The “framing and language of a personal grievance for discrimination, or any personal grievance, is not required to correspond with the statutory language of the Act”.

The Court said that when viewed objectively, the union’s second letter put the employer on notice that it had a positive obligation to support the employee as someone with a disability and that the employee believed that its failure to do so constituted discrimination (see paragraph 45). It found that, taking into account the totality of correspondence, the employee had sufficiently raised a discrimination grievance in time (see paragraph 46).

No requirement to follow a formal process before making a report under the HPCAA, section 45

The Court found that:

• Once “an employer has reason to believe that a health practitioner is unable to perform the functions required for the practice of their profession because of some mental or physical condition”, then (see paragraph 95):
  • There is no requirement to undergo a formal process before notifying the OTBNZ.
  • Prompt notification is mandatory.
• Forming a reason to believe under section 45(2) is a threshold requirement which is partly subjective, focusing on the notifier’s state of mind (see paragraphs 95 and 107(i)).
• The “employer’s conduct surrounding notification remains governed by the obligations of good faith and any other obligations arising under the applicable employment agreements” (see paragraph 97).
• Where the decision to notify may have an adverse effect on continuation of employment, the employer is required to comply with section 4(1A)(c) of the Employment Relations Act 2000(external link) (the Act) in making a decision about whether to notify (see paragraph 94).

Court has jurisdiction to consider whether a decision to notify was made in bad faith

The employer claimed that the Court did not have jurisdiction to consider whether an employer making a report acted in good faith under section 4 of the Act(external link), as:

• Notifications under the HPCAA could only be appealed in the District Court.
• Jurisdiction to determine whether there was bad faith in making a notification rested with the District Court.

The Court said it considered that it had “jurisdiction to determine bad faith for the purposes of whether statutory immunity is engaged” (see paragraphs 103 and 107). In reaching that conclusion it took into account that:

• “[N]othing in the wording of the HPCAA that expressly or impliedly displaces the jurisdiction of the Court in relation to employment relationship problems” (see paragraph 100)
• There was “nothing to suggest that establishing whether a notification was made in bad faith, where there is an employment relationship, rests with the District Court” (see paragraph 102).
• The issue of immunity was likely to arise in proceedings where there were multiple claims and it would be “be nonsensical to split proceedings between different jurisdictions, and entirely inconsistent with the approach of the Supreme Court in FMV v TZB”(see paragraph 105).

Johnston v Te Whatu Ora – Health New Zealand [2026] NZEmpC 27(external link)

Kazimi v Ministry of Business Innovation and Employment [2026] NZERA 101

Employment Relations Authority – Recusal – Recusal of Employment Relations Authority Member

At issue was whether an Employment Relations Authority Member (the Member) should recuse himself from investigating the employee’s claims.

The employee raised a number of claims against his employer, a government ministry. The employee’s advocate lodged an application for recusal on the employee’s behalf, seeking for the Member assigned to the investigation to recuse himself. The grounds for recusal was that “a fair-minded observer could reasonably apprehend that [the Member] would not be impartial” (see paragraph 2). The application was based on the following:

• The advocate had complained to the Minister for Workplace Relations and Safety about the appointment of the Member.
• The advocate and the Member had previously had “adversarial dealings”.
• The Member had previously worked for a law firm where he would have been a colleague of a current counsel for the employer.

The Member said the employee seemed to also be saying that the actions of a former client the Member represented as an employment lawyer created an additional perception he was not capable of deciding the employee’s case (see paragraph 25).

The Member declined to recuse himself (see paragraph 34). In coming to that determination, the Member relied on the following:

• “Members do not choose the cases they are allocated and parties cannot select which Member will be allocated to investigate” (see paragraph 5).
• “Members of the Authority swear an oath to investigate cases impartially and independently. This concept is a cornerstone of appointment to any judicial office…” (see paragraph 6).
• The advocate’s letter criticising the Member’s appointment “was a comment by a member of the public to a Minister regarding a discretion she had exercised… The notional fair-minded lay observer would presume Members, as judicial officers, are able to appropriately digest any criticism made of them” (see paragraphs 20, 21).
•  There was no factual connection between the actions of the Member’s former client and the employee in this case.
• The Member and the advocate having had “adversarial dealings” while the advocate was representing employees and the Member was representing employers was irrelevant, irrespective of whether or not it was true or fair. It was common for lawyers and Authority Members to know or to have worked with one another (see paragraph 29).
• The Member’s employment with the specified law firm was more than 8 years ago and did not involve work for the respondent employer; or work with their current counsel. A fair-minded observer would recognise there was no “real possibility” that the Member might not bring an impartial mind to the question he was called on to decide because of previously working for the law firm (see paragraph 28).

Kazimi v Ministry of Business Innovation and Employment [2026] NZERA 101(external link)