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FYI
Employment Law
21 Mar 2011
Strike-Breaking and Lockouts – An Industrial Law Update
Dairy Workers Union v Open Country Cheese - Unlawful Strike-Breaking
The Court of Appeal has recently ruled on the difficult question of whether an employer can employ or engage replacement labour ("strike-breakers") when its employees are on strike.
In Dairy Workers Union v Open Country Cheese Company Ltd the Court of Appeal held that the replacement labour (from a related company) was used to perform the work of the striking cheese workers and this was unlawful.
Background facts
The Open Country Cheese Company Limited (Cheese Company) is a subsidiary of Open Country Dairy Limited (Dairy Company). While the Cheese Company is involved in manufacturing at its plant in Waharoa, the Dairy Company has responsibility for selling and marketing the Cheese Company's products.
In August 2009 the Dairy Workers Union gave notice of a strike by members working at the Cheese Company's Waharoa site. The strike was timed to coincide with the Cheese Company's peak production season.
The Dairy Company Chief Executive decided that Dairy Company employees should staff the plant during the strike. Dairy Company employees then came in from various other sites, and worked at the Cheese Company plant under the direction of the Dairy Company Chief Executive.
The union challenged the use of Dairy Company employees on the basis that this was unlawful "strike-breaking". This claim focussed on section 97, Employment Relations Act, which prevents employers from employing or engaging other persons to perform the work of striking employees (except in certain limited circumstances).
Employment Court judgment
The union's claim was dismissed by the Employment Court, which found it was significant that the Dairy Company Chief Executive had directed the replacement labour (ie Dairy Company employees) during the strike. It noted that the Cheese Company was not given an option as to whether the Dairy Company employees would work in its plant during the strike - this was a decision by the Dairy Company.
Court of Appeal judgment - emphasis on benefit to employer
On appeal from the Employment Court, the question was whether, by allowing the Dairy Company employees to come onto its site during the strike for the purpose of continuing production, the Cheese Company had employed or engaged replacement labour in breach of section 97.
The Court of Appeal accepted the Employment Court's analysis that the words employ and engage have a wide meaning and confirmed that these words include any "use" of other persons to do the job of striking workers (even if there is no legal relationship of employer/employee or principal/contractor between the "strike-breakers" and the employer).
In light of this, the Court of Appeal held that the Cheese Company had used other persons to perform the work of striking workers in this case:
- The work Dairy Company employees performed during the strike was Cheese Company work;
- It was also work that striking workers normally did;
- The Cheese Company did not refuse access to the Dairy Company employees, but allowed them to come on site and continue production; and
- The work of the Dairy Company employees during the strike enabled the Cheese Company to continue production and therefore satisfy its contractual obligations.
Implications for employers
In light of this case, even where an employer has not directly controlled replacement labour, if the employer has benefited from the work, there will be a real risk of a breach of section 97. The judgment is a timely reminder of the very real limits on using replacement labour during strikes.
Unite Union v SkyCity - A Lawful Lockout
A recent Employment Court decision involving SkyCity, considered the lawfulness of a lockout which the union claimed was motivated by reasons not relating to bargaining. The union argued that SkyCity's motive for the lockouts was to eliminate the disruptive effects that short duration strike action by Table Games employees was having on its business.
Background facts
Since 1 January 2011 union members, predominantly in the Table Games department, had been taking strike action of short duration during their shifts. Sometimes the strike lasted a few hours, at other times 15 minutes. SkyCity subsequently locked out the striking Table Games employees for the remainder of their shifts.
The lockout notices prepared by SkyCity and handed to Table Games employees referred to SkyCity's pay offer made during the bargaining, and demanded the union accept it. However, a separate communication issued by Human Resources discussed the reason for the lockouts and referred to the "disruptive" industrial action which meant other employees were working additional hours, delaying breaks and dealing with frustrated customers.
Based on this communication, the union challenged the lawfulness of SkyCity's lockouts, claiming the real reason behind them was that the short duration strikes were causing difficulties for the business.
Employment Court decision
The Employment Court applied the "dominant motive" test to determine whether the union's claim about the real motive for the lockouts was correct. The Court concluded that the real intention of the lockouts was to further the bargaining and to persuade employees to accept SkyCity's pay offer.
While the Court accepted the union's submission that SkyCity also hoped the lockouts would reduce disruption in Table Games, it held that this was not the dominant motive and did not make the lockouts unlawful. SkyCity was able to establish a lawful reason for its lockouts which met the test in the Employment Relations Act.
Implications for employers
This decision illustrates that so long as the employer's main reason for the lockout is lawful, the industrial action will not be illegal just because the lockout also has the desired effect of minimising disruption caused by strike action in the workplace.
However, this case also highlights the importance of ensuring consistent messages are provided about the reasons for lockouts.
Authors
Charlotte Bates
Senior Associate - Employment
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Carl Blake
Senior Associate - Dispute Resolution
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Katherine Burson
Senior Associate - Employment
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In This Article:
In this FYI we consider two important Court decisions on the use of "strike-breakers" and the lawfulness of lockouts which minimise disruptive action.
