Cases of interest 2017

A summary of interesting or topical employment cases.

January 2017

Employment Court – Meaning of “premium”

A Full Court of the Employment Court discussed the meaning of “premium” as in s 12A of the Wages Protection Act 1983. The employment agreements in question contained a clause allowing the employer to recover the cost of trade testing. This money was deducted from each employee’s wages.

The Court held that a premium involves a situation where “a price is paid either by an employee, or potential employee, or is paid on that person’s behalf to secure employment” (see para 54). However, it could also include situations where an employer recouped, or attempted to recoup “recruitment-related costs or other expenses that would ordinarily be borne by an employer” (see para 54). The Court did note that there would be situations where employers and employees could arrange for the employee to reimburse the employer for “appropriate costs incurred” without it constituting a premium (see para 57).

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Employment Relations Authority – Matter removed to Employment Court

The Employment Relations Authority removed the matter to the Employment Court as it raised two important questions of law:

whether provisions of the Minimum Wage Act 1983 apply to fishers at sea for extended periods when not working actively on board; and
whether the Authority and Court have jurisdiction over claims for personal grievances and holiday pay when the workers have been deemed to be employees for the purpose of the Minimum Wage Act 1983 and the Wages Protection Act 1983 under the Fisheries Act 1996.
The Authority also considered that it was likely to be a matter of significant public interest due to the potential to affect other employers in the fishing industry.

Link to case(external link)

February 2017

Supreme Court - Leave to appeal granted

The Supreme Court granted leave to appeal on the question of whether the Court of Appeal was correct to conclude that age discrimination provisions of the Employment Relations Act 2000 did not apply to New Zealand based employees where the employment agreement stipulated that the relationship was subject to the laws of Hong Kong.

Link to case

Employment Court - Whether costs should include GST - Assessment based on actual costs

The Employment Court considered whether the costs award should include GST. It cited the recent Court of Appeal judgment of New Zealand Venue and Event Management Ltd v Worldwide NZ LLC [2016] NZCA 282(external link), which set out when costs should include GST (see para 42).

The Court found that the particular facts called for an approach that required an assessment based on the defendant’s actual costs, rather than a scale approach (see para 32). In these circumstances, the Court should consider whether or not the successful party is able to recover GST. If GST is recoverable, costs should not include GST. If GST is not recoverable, then costs should include GST. Note that the position differs for scaled costs (see New Zealand Venue and Event Management Ltd v Worldwide NZ LLC [2016] NZCA 282(external link) at para 7-10).

On the facts, the defendant was not GST registered and was unable to recover GST. Accordingly, the costs award included GST (see para 45).

Link to case(external link)

Employment Court - Scope of s 122 of the Employment Relations Act 2000 - Power to consider different type of personal grievance from that alleged

The Employment Relations Authority had previously found that the employee had been constructively dismissed. The employer brought a non de novo challenge to the Employment Court, which held that the employee was not constructively dismissed. However, the Employment Court invited submissions as to whether it should consider the possibility that there was a disadvantage grievance.

At issue was the scope of s 122(external link) of the Employment Relations Act 2000. This section provides that the Court or Authority can find a different type of personal grievance from that alleged. The employer argued that its challenge was limited to a single incident and to allow a disadvantage claim would effectively permit a new wider claim.

The Employment Court held a liberal or broad approach to s 122 was appropriate (see para 45). The possibility of a disadvantage grievance arose from the matters that were put in issue by the non de novo challenge (see para 47). Although the employer’s statement of claim referred to one incident, that incident could only be understood by reference to preceding events which were clearly at issue in the challenge (see para 55).

Accordingly, the Court had jurisdiction under s 122 to consider whether the employee was unjustifiably disadvantaged.

Link to case(external link)

March 2017

Employment Court – Interaction between ss 238 and 149

The Employment Court was required to consider whether a settlement agreement signed by a mediator under s 149 that purported to prevent the employee from pursuing a personal grievance breached s 238 of the Employment Relations Act 2000.

The Employment Court held that s 149 had to be read alongside other provisions of the Act, particularly Part 9, which deals with personal grievances (para 19). Section 149 links back to Part 9, thereby providing for the ability of parties to enter into settlement agreements regarding personal grievances. Section 149 also provides safeguards by requiring mediators to explain the impact of making such an agreement. It was not appropriate to make an exception to s 149 as argued for by the plaintiff. The Court concluded that parties are able to enter into settlement agreements under s 149 that restrict an employee’s right to pursue a personal grievance (para 21).

However, the Court reiterated earlier comments that s 149 may not be a blanket exception, as shown by the specific exclusion of some causes of action but not others. Such issues were not necessary to be decided in this case (para 22).

Link to case(external link)

Employment Court – Fine for failure to comply with Authority determination

The Employment Court found it appropriate to impose a fine for the defendant’s failure to comply with the Employment Relations Authority’s substantive determination in relation to the plaintiff, and the follow-up compliance order. In doing so, the Court made it clear that plaintiffs do not have to seek enforcement in the District Court before seeking a sanction for failure to comply from the Employment Court (para 20). The Court held that an $11,000 fine was appropriate in the circumstances.

Link to case(external link)

Employment Relations Authority – Whether requirement to be on call “work” for purposes of Minimum Wage Act 1983

The applicants were required to report to work within 10 minutes if required while on call. Any employees who did not live within a 10 minute trip could use accommodation provided on site or find alternative accommodation. They were not required to stay on site while on call. The applicants claimed that they were “working” while on call due to the requirement to report within 10 minutes and should be paid minimum wage.

The Employment Relations Authority applied the three factors from Idea Services Ltd v Dixon [2011] NZCA 14. It found that being required to report within 10 minutes placed “substantial and significant” constraints on the applicant’s freedom and that the nature and extent of the responsibilities placed on the applicants to be ready to report for work within 10 minutes were significant. The respondent benefitted from the 10 minute report time because it could provide a 24/7 service without having to roster staff on all the time. The applicants were working for purposes of the Minimum Wage Act 1983 while on call (para 98).

Link to case(external link)

Supreme Court - Leave to appeal granted

The Supreme Court granted leave to appeal on the question of whether the Court of Appeal was correct to conclude that the appellant had breached s 82 of the Employment Relations Act 2000 by requiring employees to enter into new individual employment agreements before commencing work for the new season.

Link to case

April 2017

Court of Appeal - Application for judicial review

The employer sought a judicial review of an Employment Court decision on the grounds there had been a breach of natural justice.

The leading precedent provided that the Court of Appeal’s jurisdiction for judicial review of Employment Court decisions was limited and did not include the grounds of natural justice (see para 21-23). The Court rejected the employer’s argument that the New Zealand Bill of Rights Act 1990 required for this precedent to be revisited (see para 35-37). It was a deliberate and rational policy decision for the Employment Relations Act 2000 to limit appeals from the Employment Court to the Court of Appeal (see para 38-39). The application was struck out.

Link to case(external link)

Employment Court - Application for non-publication order

The employee filed a personal grievance after she was suspended by the employer. The employee applied for an interim non-publication order to protect her personal identity. The Employment Relations Authority had declined interim relief and the employer brought a challenge to the Employment Court.

The Employment Court held that the Supreme Court’s decision Erceg v Erceg [2016] NZSC 135 prompted a revaluation of the previous precedent on non-publication orders in the employment jurisdiction (see para 65). Erceg v Erceg represented a stricter approach than the leading precedent H v A Ltd [2014] NZEmpC 92 (see para 63-65). While the Employment Court applied Erceg v Erceg, it noted that, for completeness, the H v A approach was also considered. Application of either case led to the same result (see para 72 and 82).

On the facts, the fundamental principle of open justice applied with strong force, as the employer was a public organisation and the employee held a senior role involving the allocation of public funds (see para 73). Conversely, publication would exacerbate the employee’s pre-existing medical condition and personal difficulties with her ex-partner. The issues with the ex-partner posed a threat to the employee’s safety (see para 75-77). Consequently, the employee had demonstrated to the requisite high standard that the interests of justice required a departure from the usual principle of open justice (see para 81).

The application for an interim non-publication order was granted.

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Employment Court - Whether breach of compliance order justified - Confidentiality obligations

The employer argued that the employee had breached a compliance order which reinforced confidentiality obligations arising from a settlement agreement. Confidentiality was alleged to have been breached in three ways.

The first related to submissions filed in the High Court by the employee when defending bankruptcy proceedings brought by the employer. The Employment Court held that the submissions were a breach of the compliance order (see para 50). However, the breach was justified on the grounds of public interest. The interests of the administration of justice outweighed the interest in confidentiality (see para 73). If necessary, the High Court could exercise its discretion as to admissibility in order to protect confidential information (see para 75).

The second related to a complaint which the employee filed with the New Zealand Psychologists Board regarding a psychologist who gave evidence for the employer. The Court held that the complaint was in breach of the compliance order (see para 51). However, again, there were countervailing public interest factors justifying the breach. The Board was the proper authority for the consideration of professional disciplinary complaint and the principles of comity meant that it had the responsibility to resolve the issues around confidentiality raised by the employer (see para 99).

The third related to an email that the employee sent to newly elected members of the employer (the employer was a local council). The Court held that these emails had breached the compliance order (see para 52). The breach was not justified on statutory grounds or on public interest grounds (see 108-132). The breach was a deliberate and flagrant disregard of the Court’s order. A fine of $7,500 was imposed.

Link to case(external link)

May 2017

Supreme Court – Whether respondent breached name suppression order

The Supreme Court was asked to consider whether the respondent had breached a name suppression order made under s 200 of the Criminal Procedure Act 2011. The appellant had been discharged without conviction. The District Court had made an order suppressing publication of his name and other details, but an employee of the respondent who was present at the hearing disclosed the details to the respondent.

The Supreme Court held that s 200 generally covers word of mouth communications, as well as media publications (see para 66). However, “it is necessary for the courts to work out the scope of the prohibition on a case-by-case basis” (see para 69). In this case, the Court held that disclosure to the respondent did not breach s 200 because the respondent had a genuine interest in knowing about the charges at hand (see para 82-87).

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Court of Appeal – Interpretation of s 234 of the Employment Relations Act 2000

The Court of Appeal was asked to consider the now repealed s 234 of the Employment Relations Act 2000. The questions for the appeal were:

What threshold must be established before a Labour Inspector can be authorised to recover a default against any officer, director or agent of a company who had directed or authorised that default; and
What does a Labour Inspector have to prove to establish that an officer, director or agent directed or authorised the default?
The Court held that a Labour Inspector must prove, on the balance of probabilities, that the company in question cannot pay the amount owed, and there that there is “a tenable cause of action” against the officer, director or agent of the company (see para 17).

With regards to the second question, the Court held that the Labour Inspector must prove that the person had actual knowledge of the default (see para 20). The Court considered that directing or authorising a default “requires the taking of some positive action and that mere passivity is not enough” (see para 23). This knowledge can often be inferred from conduct.

Link to case(external link)

June 2017

Employment Court - Order for rehearing - Recalling judgment - Failure to consider issue

The employee claimed a retirement gratuity under the collective agreement. At issue was whether the employee had in fact retired and whether she had undertaken the continuous service required to qualify for the gratuity.

The matter reached the Employment Court. Judge Ford held that the employee did not undertake the required continuous service. On the basis of this finding, Judge Ford held that it was not necessary to determine whether or not the employee had in fact retired. The union applied for a recall of Judge Ford’s decision, or alternatively a rehearing, on the basis that he had not determined its independent challenge to the Authority’s determination on whether retirement occurred.

Chief Judge Colgan declined a recall, but granted a rehearing because Judge Ford’s dismissal of the union’s application without considering or deciding the retirement issue had brought about a real possibility of a miscarriage of justice. The employer appealed the Chief Judge’s decision to grant a rehearing.

The Court of Appeal held that the decision to grant a rehearing did not reflect any error of law or principle (see para 51). The role of the Employment Court is to act to minimise future employment conflicts (see para 43). Multiple challenges to Authority determinations are procedurally independent of each other, in a way that appeals and cross-appeals in general civil jurisdiction are not: (see para 46). The retirement issue brought by the union and employee raised issues of broad application (see para 49). This issue was not a hypothetical one but had arisen between an individual employee and her employer: (see para 50).

In addition, the Court of Appeal held that the Employment Court does have the power to recall judgments. Although, there is no express provision in the Employment Relations Act 2000 or its regulations, the Employment Court can have recourse to the High Court Rules where there is no applicable procedural rule in the Employment Court (see para 54). Failure to decide an issue (as happened here) is a recognised ground for recall (see para 55).

The appeal was dismissed.

Link to case(external link)

Employment Court - Section 149 settlement agreement - Penalty clause

The Employment Court assessed whether s 149(3) of the Employment Relations Act 2000 (“Act”) precluded it from examining whether a mediator-signed settlement agreement included an unlawful penalty clause.

The Employment Court held the reference to “enforcement purposes” in s 149(3)(b) meant that terms may be brought before the Court to determine whether they are enforceable (see para 22). Section 149(3)(b) is akin to a privative provision which requires narrow construction (see para 24-25). Allowing a penalty clause to be enforceable could lead to extreme consequences (see para 28-29). The lawfulness or otherwise of a term of an agreement will be relevant to the question of enforceability (see para 32). Had Parliament intended to override the common law position on penalty clauses it would have done so expressly (see para 37). The Court concluded that s 148(3) did not prevent it from assessing whether a settlement agreement contained an unlawful penalty clause (see para 48).

The Court also examined whether there were limits to what a mediator could certify. The Court concluded that it is not within the scope of a mediator’s discretionary power to certify a s 149 settlement agreement which contained a penalty clause and, if that had been done, the certification would be ineffective (see para 49).

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Employment Court - Special damages for costs

The employee brought two successful claims. First, a personal grievance for unjustified dismissal by way of redundancy. Second, a breach of good faith where the employer had failed to apply the correct methodology for calculating the employee’s bonus (see para 50).

The Employment Court considered whether to award special damages for legal costs. The Court noted that the Court of Appeal’s obiter endorsement of special damages in Binnie v Pacific Health Ltd [2002] 1 ERNZ 438 (see para 94). On the facts, a bright line could be drawn between the legal costs associated with the redundancy process and the efforts to recover the bonus. The bonus costs were appropriately dealt with under cl 19 of schedule 3 of the Act. It was appropriate to deal with the redundancy costs as special damages. The Court noted that its powers allowed the awarding of special damages but that care must be taken to ensure that such costs have not already been incorporated within another head of relief (see para 96).

The Court awarded special damages for costs.

Link to case(external link)

July 2017

Supreme Court – Interpretation of s 214(1) - Jurisdiction of Court of Appeal to hear case

New Zealand Air Line Pilots’ Association Incorporated (NZALP) sought to enforce a clause in their collective agreement with Air New Zealand Limited. At issue was whether s 214(1) of the Employment Relations Act 2000 precluded a review by the Court of Appeal of the interpretation adopted by the Employment Court.

The Supreme Court were unanimous in concluding that the construction of collective agreements was not off limits all together (see para 47). Jurisdiction exists where the Employment Court has not applied correct principles of interpretation (see para 105). However, as Justice William Young warned, care must be taken as to the distinction between construction based on incorrect principles of interpretation, which is reviewable, and incorrect application of the principles of interpretation, which is not (see para 106).

The majority concluded that jurisdiction had existed and thus the appeal to the Supreme Court should be dismissed (see paras 102 and 147). Justice Glazebrook dissented on the basis that he did not consider the Court of Appeal to have identified any error of principle of contractual interpretation and any errors that did exist were errors of application not interpretation (see para 153).

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Employment Court – Whether access should be granted to a protected court file

The Employment Court was asked to consider whether AFT should be granted access to another court file. The file was unrelated to his earlier proceedings before the Employment Court. However, he claimed the file was relevant to proceedings pending under the Human Rights Act 1993. AFT already had access to the Employment Relations Authority decisions and the Employment Court judgement in relation to the matter. However, he sought access to all filings connected with the case, witness lists, transcripts of evidence and recordings of hearings.

The Court noted that access to documents held on file in the Employment Court is not provided for in the Employment Court Regulations 2000 (see para 10). Thus, per regulation 6, the Court may have regard to the provisions of the High Court Rules 2016 when determining whether to grant access (see para 10). In this case, Part 3, Subpart 2 of the High Court Rules was relevant.

The Court declined the application on the basis that the need to protect confidentiality and privacy outweighed the wider principle of open justice (see para 19).

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Employment Court – Refusal to comply with search order

The Employer was concerned that a previous employee may have removed confidential information when he resigned to work for another company. The employer obtained search orders on a without notice basis but the previous employee refused to co-operate. At issue was whether the Court had jurisdiction to find the previous employee in contempt of a search order.

The Court held that jurisdiction existed to punish contempt for breach of a search order made by the Court (see para 74). It was held that this power was reinforced by the nature and scope of the Court’s statutorily conferred jurisdiction and, in the alternative, existed as an inherent power to enable the Court to effectively manage and dispose of matters before it and to prevent abuse of its processes (see para 74).

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August 2017

Supreme Court - Whether relief carer meets definition of ‘homeworker’

The Ministry of Health and District Health Boards (DHB) ran a scheme called Carer Support. The scheme provided respite for primary carers of disabled or elderly people by enabling them to obtain the services of relief carers. The Ministry and DHB would either reimburse or subsidise the primary carer for the amount paid to the relief carer or, alternatively, pay the relief carer directly.

At issue was the employment status of the appellant, a relief carer. In particular, whether she came within the definition of “homeworker” in s 5(external link) of the Employment Relations Act 2000 (ERA). If she did, then she would be classed as an employee of the Ministry or the DHB under s 6(1)(b)(external link) of the ERA.

The majority held that the appellant was not a homeworker and therefore not an employee. The majority’s reasons varied.

Arnold and O’Regan JJ held that the appellant was not a homeworker because the Ministry and DHB did not directly engage her to do work for them (see para 71). They held that engagement requires an event to occur which creates a relationship between the hirer and the person being engaged (see para 63). This was lacking because neither the Ministry nor the DHB had a role in selecting relief carers (see para 65).

Young J held that the appellant was not a homeworker because her provision of relief care was not in the course of the Ministry or the DHB’s “trade or business” and the relief care she carried out was not “for” the Ministry or DHB (see para 85).

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Employment Court - Meaning of availability provision - Section 67D of Employment Relations Act 2000

At issue was whether the individual employment agreements in question contained an availability provision per s 67D of the Employment Relations Act.

Under the roster arrangements, the employees nominated their availability rather than being asked to meet the employer’s unilaterally stated expectations as to when the employees should be available. The employment agreement stated that employees would be rostered according to their availability but from time to they may be “requested” to work additional hours (see para 20-21).

The employees had been offered hours in addition to their nominated hours and turned them down. The employer did not penalise the employees for refusing to work additional hours (see para 25-26).

The Court held that the employees’ shifts were to be “negotiated under a genuine consensus process”. The word “request” in the employment agreement meant the employees could be asked, but not compelled, to be available for hours beyond their guaranteed hours (see para 58).

The Court held that the possibility of employees being able to arrange substitutes to work their shifts benefited the employees as much as it did the employers. There was no disproportionate advantage to the employers (see para 59).

The Court concluded that there was no availability provision.

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Employment Court - What constitutes disparity of treatment

The employee claimed unjustified dismissal on various grounds including disparity of treatment. The employee was dismissed after making romantic advances towards a subordinate colleague. The employee alleged the working environment was “generally relatively smutty” and highlighted previous incidents of drug-taking, bullying and crude sexual remarks to a customer where no disciplinary action was taken.

The employer sought to strike out the employee’s disparity of treatment pleadings. It claimed the examples of disparity provided were not “truly parallel” or “substantially similar” to the employee’s circumstances. This was the standard used in United Kingdom Employment Appeal Tribunal case Hadjioannou v Coral Casinos Ltd [1981] IRLR 352, an extract of which was cited in by the New Zealand Court of Appeal in Chief Executive of the Department of Inland Revenue v Buchanan [2005] ERNZ 767.

The Employment Court held that it was unlikely that the Court of Appeal in Buchanan intended to implicitly approve the descriptors of “truly parallel” and “substantially similar”: (see para 37).

The Court held that an analysis of parity of treatment is necessarily case-specific involving questions of fact and degree (see para 40). Because of this the Court held it was not necessary or desirable to define what constitutes disparity: (see para 47).

However, the Court provided the following guidance: (para 52).

“[W]hen making a disparity assessment, it will be necessary to consider whether the comparative conduct is sufficiently similar. Consideration should be given to all relevant circumstances, including context. The assessment will be case-specific. The analysis is for the purpose of determining whether the dismissal or other steps taken meets the statutory test of justification under s 103A of the Act.”

The Court went on to dismiss the strike out application on the grounds it could not be certain the allegations could not possibly succeed.

Link to case(external link)

September 2017

Supreme Court – Whether seasonal workers presenting themselves for work at the beginning of a new season were employees for the purpose of the lockout provisions in the Employment Relations Act 2000 (ERA)

The dispute arose from a claim that AFFCO had unlawfully locked out workers when they presented themselves for work at the beginning of the new season by requiring them to sign new individual employment agreements with substantially less favourable terms than those of the former collective agreement. At issue was whether the workers were “employees” for the purposes of a lockout under s 82 ERA(external link).

The Supreme Court concluded that employment was discontinuous meaning employees were not employed during the off season (see para 47). Consequently, the workers that presented themselves at the beginning of the season did not fit within the definition of “employee” under s 6(external link) of the Act (see para 7).  However, it was held that in the context of s 82(1)(b),  “employees” should be interpreted as having a wider meaning thereby covering the workers in issue (see para 7).  The Supreme Court therefore agreed with the lower courts that AFFCO locked the workers out unlawfully.

The Court noted that, where there is a defined meaning of a statutory term that is subject to a context qualification, strong contextual reasons will be required to depart from the defined meaning (see para 65). Departure was justified in this case for three reasons. Firstly, in the context of s 82(1)(a)(iv) “refusing or failing to engage employees” the word “employees” was considered to cover persons who are not employees but rather are seeking employment (see para 67).  Secondly, s 82(1)(a)(iii) refers to the act of an employer “in breaking some or all of the employer’s agreements”. Terms of employment in seasonal arrangements can carry over beyond termination, as occurred in this case. If a continuing obligation owed by the employer is breached with the intention of compelling the worker to accept new and less advantageous terms of employment, s 82(1)(b) should apply (see para 76).  Finally, it was considered influential that a strike may involve persons who are no longer employees (see para 77). It was held that there was no reason the lockout provisions should not apply to acts committed by an employer for the purpose of making a person accept particular terms of employment, in circumstances where the person is owed employment obligations by the employer, although they may not be employed at the time (see para 77).

The Court expressly limited the application of its findings by highlighting the ongoing obligations owed by the parties in this case arising from earlier employment. An employer who refuses to hire a new employee because the two are unable to agree on terms of employment will not, for that reason alone, have locked out the potential employee (see para 78).

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Supreme Court – Whether rights protected by New Zealand law apply to employment agreements governed by foreign law

Two pilots challenged the legality of their employer’s attempt to exercise a clause under their employment agreement requiring them to retire at the age of 55. While their working activities took place largely outside of New Zealand, both pilots started and finished their tours of duty from Auckland where they lived. The employment agreement between the parties stated the employment relationship was governed by the law of Hong Kong, which does not prohibit discrimination by reason of age. At issue was whether the protection from discrimination under the under s 103(1)(c)(external link) Employment Relations Act 2000 (ERA) applied.

The Supreme Court rejected the approach of the Court of Appeal that the right invoked was contractual and not applicable (see para 50). The ERA is founded on the view that employment involves a relationship and not just a contract (see para 56). It held that the right not to be discriminated against by reason of age cannot be excluded even by a bona fide choice of another system of law as the proper law of the employment agreement(see para 68). Instead, the right to bring a personal grievance for discrimination under s 103(1)(c)(external link) ERA applied to any conduct which occurs within New Zealand (see para 69). It was noted that ss 24(external link) and 26(external link) of the Human Rights Act 1993 (HRA) explicitly deal with the application of the HRA in circumstances such as those of this case but do not provide an exclusion (see para 70). A person who works both in and outside of New Zealand is protected by the right to not be discriminated against, at least on the grounds of age (see para 72).  The pilots could not be required to retire by reason of attaining the age of 55.

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Employment Court – Whether commission should be included when calculating holiday pay entitlements

The employees sought to recover holiday pay considered not have been properly paid. The employment agreements provided for a base salary with additional commission paid as a percentage of the gross margin on sales under the employees “rep code” at the end of each month. Despite the commission forming a significant part of their remuneration, the employee’s holiday pay was calculated using only their base salary.  In determining the employees gross earnings for the purposes of calculating holiday pay under s 21(external link) of the Holidays Act 2003 (HA), it was considered that a plain reading of the reference to “all payments” under s 14(a)(external link) HA meant that the combined total of salary and commission was to be used (see para 32). However, Corporate Consumables argued that the qualifier “unless the context otherwise requires” under s 14 was applicable and meant that in the present case it was appropriate for gross earnings to exclude commission when calculating holiday pay (see para 33). Corporate Consumables submitted that it was Parliament’s intention that employees be paid holiday pay at a rate equivalent to what they would normally have received had they worked instead of taking holidays. Furthermore, without excluding commission in the present case the employees would receive a windfall benefit by receiving the value of commission twice (see para 36).

The Employment Court held Corporate Consumables interpretation of gross earnings to be inconsistent with s 6(3)(external link) HA because it would exclude, restrict or reduce an employee’s entitlement under the Act (see para 82).  The method of payment under s 21(external link) does not restrict holiday pay to what an employee may have earned instead of taking a holiday (see para 33).  The employment agreements made no allowance for adjustment to the commission paid for any period when the employee was on annual leave and required holiday pay to be paid taking into account commission (see para 84). The same findings were made in relation to underpaid holiday pay for the earlier period of employment governed by the Holidays Act 1981(external link).

The Employment Court found the employer agreed to back pay underpaid holiday entitlements beyond the statutory limitation and this agreement to be enforceable on the basis that the employer received consideration in the form of not being required to find new workers (see paras 103, 152 and 165).

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October 2017

Court of Appeal – Refusal to grant stay of proceedings or stay of execution

The Court of Appeal refused to grant a stay of proceedings or a stay of execution in relation to the Employment Court’s findings that the employer was in contempt of that Court’s compliance orders. 

The Court held that a party to litigation must raise every point that is relevant to the issues before the Court (see para 49). It can amount to an abuse of process if a party to litigation does not raise an aspect of its case in litigation, but seeks to introduce it as relevant to the same issue in a later proceeding (see para 50). 

The employee’s competency was at issue in the initial proceeding before the Employment Relations Authority. The employer effectively withdrew its concerns regarding the issue when it proposed the employee be reinstated during the initial proceedings (see para 47). The Court held that any ongoing concerns as to deficiencies in the employee’s knowledge could be addressed by on-the-job training (see para 43). Furthermore, the Court did not consider that a refusal of a stay would render the results of a successful appeal futile (see para 37).

Link to case [PDF 330KB](external link)

Court of Appeal – Leave to appeal granted

The Court of Appeal granted leave to appeal on the question of whether any of the entitlements of union members arising from AFFCO’s unlawful lockout were entitlements to wages under the Wages Protection Act 1983(external link) (see para 13). 

Link to case [PDF 95KB](external link)

Court of Appeal – Leave to appeal granted

The Court of Appeal granted leave to appeal on the question of whether the Employment Court erred in holding that the Chief Executive of the Department of Corrections’ removal of a work category from the collective agreement did not amount to a variation itself requiring further agreement (see para 5).

Link to case [PDF 298KB]

Employment Court – Sentenced to 21 days imprisonment for breaches of Court orders

The employee breached the Court’s compliance orders on multiple occasions by publishing confidential information and declined to remedy the breaches (see paras 4, 28, 29).

Two previous financial orders had not acted as a deterrent (see para 36). Consequently, the imposition of a fine was not considered an adequate response to the deliberate and continued breaches (see para 36). Instead, the employee was sentenced to a 21 day term of imprisonment under s 37(4)(external link) of the Corrections Act 2004 (see para 55). 

Link to case [PDF 120KB]

Employment Court – The role of GST when calculating an award of costs

The employee, being the successful party, sought an award of costs plus GST.

The Court considered that costs awards do not engage the Goods and Services Tax Act 1989 (see para 5). There is no GST component for which the successful party must account to the Commissioner of Inland Revenue and, conversely, no GST component which the losing party can claim back (see para 5). Instead, GST has a potential role in establishing the quantum of costs to be awarded (see para 7). The GST registration status of the successful party is a material factor in determining whether or not an uplift in the costs to be awarded is appropriate (see para 12).

In this case, the employee was entitled to costs of $7,500 plus an uplift of $1,125 in recognition that she was not GST registered (see para 12). The same approach was adopted when considering entitlement to costs arising from earlier proceedings before the Employment Relations Authority (see para 20). 

Link to case [PDF 550KB](external link)

November 2017

Employment Court - Redeployment to same or similar position - Travel requirements

The employee’s role was disestablished during restructuring. The employee was dismissed after she declined to take up an alternative role which would have required her to travel for two hours and 45 minutes (202 km) each day for a period of up to nine months.

At issue was whether the employee was entitled to a severance payment under the applicable collective agreement. To qualify for a severance payment, the collective agreement stipulated that the redeployment offer must be for a position on terms that are the same or no less favourable than the employee’s current positon.

The Employment Court held that the fact other employees were prepared to undertake the new role did not assist the employer’s position. The assessment was fact-specific to the employee (see para 41). The Court cautioned against arguments involving assumptions about the employee’s ability to travel based on the employees age (see para 46).

The Court concluded that the employee had put the employer on notice around her health concerns relating to the extent of travel and the employer should have made further inquiries before reaching a conclusion (see para 47). The extensive travel was not ameliorated by its limited duration (up to nine months) or that travel would be undertaken during work hours. The enhanced travel component made the role one which was plainly on less favourable terms (see para 50).

The employee was entitled to severance pay. 

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Employment Court - Triangular employment relationship

LSG Sky Chefs Ltd (‘LSG’) engaged the plaintiffs to work for it through Solutions Personnel Ltd, a labour hire company. At issue was whether the plaintiffs were employed by LSG.

The Court held that it was appropriate to apply the traditional s 6 ERA 2000 tests in order to ascertain the employment status of workers involved in labour hire arrangements (see para 31). The underlying policy objective of s 6, to prevent employers from avoiding responsibilities for employee rights, had particular relevance in labour hire agreements (see para 35).

The Court noted complex employment models, like labour hire agreements, make it uncertain who bears responsibility for working conditions. It held that section 6 is sufficiently flexible to deal with these difficulties (see para 91).

The Court set out a spectrum. Where the rights and obligations of each party are well documented and understood at the outset, it is less likely that the host organisation will be found to be in an employment relationship with the labour hire worker. Conversely, it will become increasingly likely that an employment relationship will be found to exist where the documentation is unclear, the work is of indefinite duration and the host exercises a significant degree of control (see para 92).

A labour-hire agreement does not represent an impenetrable shield to a claim that the “host” is engaging the working under contract of service. Employment status depends on the facts and an analysis of the real nature of the relationship (see para 98).

On the facts, the Court held that the plaintiffs did not have any real idea about the precise nature and scope of their legal relationship with LSG or Solution Personnel Ltd (see para 94). Application of the section 6 tests suggested that the plaintiffs were employed by LSG (see para 96-98).

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Employment Relationship Authority - Determining otherwise working day - Three week rule

The Labour Inspector challenged the employer’s method of determining whether employees were entitled to an alternative holiday after working on a public holiday. The employees worked variable rosters. At issue was how to determine whether a public holiday would otherwise have been a working day for the employees. 

The employer used the ‘three week rule’ to determine employee’s otherwise working days. This looked at an employee’s pattern of work over the three weeks prior to the public holiday worked. If the employee had worked at any time on the same day in the preceding three weeks, the employer considered the public holiday to be an otherwise working day.

The Employment Relations Authority found that in some cases the three week rule will restrict an employees’ entitlement to an alternative day after working on a public holiday (see para 59). Further, the three week rule will exclude other factors required in the assessment under section 12 of the Holidays Act 2003 (see para 72-73).

Consequently, section 6 of the Holidays Act 2003 prohibits the three week rule to the extent it restricts employee rights (see para 63-64). For the purposes of examining the employee’s working patterns under section 12 of the Holidays Act 2003, a period of at least three months should be used (see para 67).

The Authority concluded that the employer could not apply a blanket three week rule approach to employees on variable rosters (see para 71). A more individualised approach which takes into consideration all the factors under section 12 was required (see para 76-77).

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December 2017

Employment Court - Good faith in collective bargaining - Union representation during individual bargaining

The union claimed the employer breached the duty of good faith during collective bargaining and duties relating to the right of representation set out in s 236 of the Employment Relations Act 2000.

During restructuring, union members had authorised the union to represent them. Despite this, the employer sent letters offering redeployment directly to union members and indicated a willingness to deal directly with the members. These letters were sent prior to the initiation of collective bargaining.

The Employment Court held that it could not be said that the initiating of bargaining placed all the issues relating to the employment relationship on the bargaining table (see para 99). The beginning of bargaining did not automatically veto the employer’s management prerogative (see para 100). The offers of redeployment were covered by the provisions relating to individual bargaining and operated in parallel to the collective bargaining provisions (see para 110).

The Court held that, on the facts, the employees did not have a realistic option to respond via the union (see para 164). It concluded that s 236 had been breached when the employer dealt directly with union members regarding the redeployment offers (see para 174).

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Employment Court - Special leave to remove to Employment Court - Sections 178 and 179 of Employment Relations Act 2000

The Employment Relations Authority had dismissed the employee’s application to remove the matter to the Employment Court. The employee sought special leave to remove proceedings to the Court under s 178(3). Alternatively, it sought leave to extend the time to challenge the Authority’s decision not to remove under s 179.

At issue was the inter-relationship between ss 178(3) and 179 and whether a party is entitled to pursue both options.  The Court applied the maxim generalia specialibus non derogant (the specific overrides the general). In this case, s 178(3) was the specific section overriding the more general s 179. It held in making a specific provision for an application for special leave when the Authority declines leave, Parliament clearly indicated that this was process that must be followed in such circumstances (see para 48).

The Court held that even where one or more grounds for removal are made out it still had residual discretion under s 178(3) to decide not to remove a matter (see para 33). In exercising this discretion the Court should have regard to the economic advantages of having the matter dealt with in one hearing rather than an investigation meeting and subsequent challenge (see para 36).

On the facts, the Court held that a number of questions of law did arise and special leave was granted. The Court noted that that the issues involved a mixed question of law but that this was not determinative in deciding whether there was an important question of law. The reality is that most cases involved issues of both law and fact and s 178(2)(a) is not restricted to cases which are devoid of factual dispute (see para 26).

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Employment Court – Determining entitlement to costs award

At issue was who was to be determined the successful party and therefore entitled to an award of costs. The Employment Relations Authority had found the employer to be the successful party as the majority of the investigation was taken up with the unsuccessful constructive dismissal claim (see para 20).

The Court considered that while the employee’s success was limited to a finding of unjustified disadvantage, this could not have been achieved without lodging a claim. Consequently, the Court considered the employee to be the successful party and entitled to an award of costs (see para 44).

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Employment Court – Application to strikeout claim – Whether claim frivolous and vexatious, an abuse of the court process or outside the jurisdiction of the Employment Relations Authority and Employment Court

The Court was required to consider whether to grant an application to strikeout an appeal relating to claims an employee had received monies to which she was not entitled and had breached the fiduciary and good faith obligations owed to her employer.

The Court noted that, given the clear findings of the Authority, the employer’s claim might be an ambitious claim to establish. However, it was not possible to conclude from affidavit evidence that the claim was incapable of success (see para 54). Furthermore, whether the circumstances of proceedings are to be characterised as an abuse of process is a question of fact and degree (see para 59).

The Court was not satisfied that the evidence was sufficiently persuasive to establish that the proceedings were brought for the ulterior purpose of harassing the employee following the breakdown of the de facto relationship (see para 61). Consequently, the application for strikeout on the first two grounds was dismissed.

The Court granted the application for strikeout for want of jurisdiction (see para 105). The Court considered the substance of each claim to be that the employee knowingly engaged in wrongful conduct and took advantage of her position to the point of acting dishonestly (see para 88). Consequently, each action was to be properly regarded as a claim in equity or tort (see para 91).

Adopting the language of BDM Grange Ltd v Parker [2006] 1 NZLR 353 (HC), the Court held that the claims were not particular to the employment relationship which instead “merely provides the factual setting for the cause of action” (see para 90). As the essence of the claims was not employment-related, they were not within the Authority or Court’s jurisdiction (see para 92). The Court rejected the employer’s submission that, because the Authority had proceeded to investigate the claim, jurisdiction was bestowed by consent or by failure to raise an objection (see paras 93 and 94).

The Court refused to allow the employer an opportunity to amend their claims. The employer was given the opportunity to provide further and better particulars but did not indicate what amendments might be made. The Court concluded it was not appropriate for the Court to speculate (see para 103). The Court considered it unlikely that any amendments would overcome the jurisdictional issue (see para 103). Furthermore, where dishonesty is alleged, a plaintiff must be able to show a prima facie case at the time of filing and not simply hope something might turn up in discovery or cross-examination (see para 104).

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