Dec 2007

Since the introduction of section 103A of the Employment Relations Act, the Courts, in determining whether a dismissal (or other disciplinary action) is justified, have placed increasing emphasis on the process an employer follows.

However in a recent decision the Employment Court found that while a bad process may prove fatal with regard to the question of whether the dismissal was justified, it may not prove costly.

In Pixie Eruera-Morrison v New Zealand Post (July 2007) the employee, a postie called Pixie, was accused of taking a mobile phone that was sitting on the counter of one of the stores she delivered mail to.

New Zealand Post conducted a disciplinary process which the Court held to be unfair in a number of aspects.  To start with, Pixie was not advised of the detail of the allegations against her and was not given any time to prepare – she was called straight from her duties into a meeting.  Pixie's support person, who later joined the meeting, was told he was to observe procedures and not say anything unless he was asked direct questions.  In line with earlier decisions, the Court found that this prevented Pixie from using her support person in a true support and advice role.

The Court held that these procedural flaws were also in breach of New Zealand Post's own disciplinary policy, as set out in its collective agreement, and went to the substance of its enquiry into the allegation of serious misconduct.  Accordingly New Zealand Post's actions were not what a fair and reasonable employer would have done in the circumstances and Pixie's dismissal was unjustified.

The Court then considered remedies and whether Pixie's contribution to the situation was such that it should deprive her of the remedies she sought (reinstatement and compensation).  The Court found that, even taking into account Pixie's 30 years of unblemished service with New Zealand Post, her conduct in either deliberately taking the mobile phone, or not returning it, was seriously blameworthy and would have justified her dismissal.  The Court accepted that if a fair process had been followed it was "highly likely, if not completely certain" that Pixie would have been justifiably dismissed.

Pixie was therefore deprived of any monetary remedies, although the Court noted she may be entitled to costs.

This decision should give employers some comfort that a truly unmeritorious claim by an employee may not succeed in being granted remedies, even where there have been  flaws in the process.

Breaking Strikes – what action can an employer take to limit the impact of strikes?

The use of other employees or third parties to perform the work of striking employees has been a source of contention over recent years.

Section 97 provides that the work of striking employees can only be performed by others in limited circumstances.  An employer can:

• use existing non-striking employees to perform the work, if they agree; or
• employ new employees where necessary on health and safety grounds.

In recent months there have been two interesting decisions from the Employment Court in relation to an employer's ability to curtail strike action.

Engaging third parties to perform the work of striking employees

In June, the Court considered an interim injunction application and made an order to restrain an employer from using alternative means for performing the work of striking employees until the substantive question of whether such alternative means were lawful (pursuant to section 97)could be determined (EPMU v Air Nelson Ltd).  On 8 November 2007, the Employment Court issued its substantive decision. 

In this case, Air Nelson advised Air New Zealand that, due to strike action by traffic and tarmac employees, it would be unable to fulfil its contractual obligations in relation to cargo going out of Nelson.  In an email it asked Air New Zealand to "make the necessary arrangements".  Air New Zealand employees then carried out the work of striking Air Nelson employees.

At the interim stage, the Court distinguished this scenario from its 2006 decision in relation to supermarket workers (National Distribution Union v General Distributors Ltd).  In that case, an independent logistics company was used to deliver goods to supermarkets directly and thereby circumvent the supermarket distribution warehouses, where employees were on strike.  There was no (or little) evidence that the logistics company had been engaged by the employer - it appeared that the producers and suppliers of the goods had made the alternative arrangements.

However, at the substantive hearing it became apparent (and important in the Court's view) that the commercial contract between Air Nelson and Air New Zealand (to load and carry consignments of salmon out of Nelson) expressly gave Air New Zealand the power to "provide or procure the provision of the services" itself, if Air Nelson could not provide the services in accordance with the contract.

In its substantive decision, the Court acknowledged that the Air Nelson email, viewed in isolation, might appear to be Air Nelson engaging Air New Zealand to perform the work of striking employees (in breach of section 97).  However, the Court found that the commercial contract between the parties (as well as other evidence) was important evidence to the contrary.  It held that the email from Air Nelson to Air New Zealand established that Air Nelson was unable to perform its obligations under its contract and that triggered Air New Zealand's right to carry out the work itself.  This case was, like NDU v GDL, another example of a third party making alternative arrangements.

The Court was at pains to emphasise that, like in Finau (see below), the decision should not be interpreted as support for taking on new staff for the purpose of doing the work of existing employees about to strike.  As a result, employers need to be careful they are not seen to be advising or encouraging third parties to make arrangements to ensure the work of striking employees is carried out.

Using existing employees to perform the work of striking employees

In Finau v Southward Engineering Company Ltd (July 2007) the Court considered legal issues which arose from union employees refusing to perform the work of striking employees. 

Two employees were asked to perform the work of striking employees and operate a coil slitter.  The employees asked to perform the work were trained to operate the machine and did so from time to time when the usual operators were unavailable.  Their employment agreements provided that the employer could require them to transfer to other jobs within the scope of its operations.  The employees refused to operate the machines and Southward Engineering suspended them on the grounds that they were party to the strike.

First the Court considered whether the employees had been asked to perform the work of striking employees, in which case section 97 would apply, or whether they were simply being asked to do their own work.  The Court found that for the purpose of determining the work of an employee it is necessary to look at the "type of work" performed, rather than the particular task.  This enables employers to direct non-striking employees to do tasks within the range of work they normally perform.

However the Court held that the employee directed to perform the work must regularly or routinely perform such tasks in the course of their employment.  An employee cannot be required to perform tasks that they are only occasionally required to perform as part of a "catch all" phrase in an employment agreement (such as "… and such other duties as the employer may require from time to time").

The next issue the Court considered was whether an employee, who does not agree to perform the work of a striking employee, is a party to the strike (and therefore can be suspended).  Somewhat surprisingly, the Court found that where it is not their normal work, an employee has the right under section 97 to choose whether or not they are willing to perform the work of a striking employee. 

Even where an employment agreement provides a "catch all" phrase in relation to duties, an employee has a statutory right to refuse to do the work of a striking employee.  The Court held that such refusal does not amount to a strike and the employee cannot be suspended for doing so.  Therefore, the employer's actions were held to breach section 97.

Five weeks of holidays?

With the introduction of four weeks annual leave in April this year, many employers have struggled with the question of whether employees already receiving four weeks' annual leave (ie a week more than the statutory minimum) could claim that they are now automatically entitled to five weeks' leave.

The Employment Relations Authority recently considered the issue in New Zealand Dairy Workers Union v Fonterra Brands (Tip Top) Ltd (June 2007).  The Authority considered a clause in the Tip Top employees' employment agreement which provided that after completing five years service employees "shall be entitled to four weeks' holiday per year."  The Dairy Workers Union argued that with the introduction of four weeks' minimum annual leave under the Holidays Act 2003, employees would now be entitled to five weeks' leave after completing five years' service.

The Authority did not agree and found for Fonterra in holding that the clause provided an enhancement of employees minimum statutory entitlement, and therefore should be treated as annual leave under the Holidays Act 2003, rather than providing an additional benefit of an extra week's leave regardless of minimum entitlements.  Therefore, the collective agreement already complied with the 2003 Act and there was no agreement, or reason for holding, that the employees were entitled to a fifth week of leave from 1 April 2007.

In each case, the particular wording of the relevant employment agreement needs to be considered to determine whether it was the parties intention to merely enhance the existing minimum entitlement, say to recognise service, or provide a benefit in addition to, and regardless of, any minimum entitlements.

Adult wage for youth workers

The Minimum Wage (New Entrants) Amendment Act 2007 has just been passed and is due to come into force on 1 April 2008. 

The Amendment Act provides that 16 and 17 year olds, who are currently paid youth rates, will be entitled to the minimum adult wage after completing a probationary period of 200 hours or three months in the job (whichever is the lesser).  Teen workers will also be entitled to the minimum adult wage where they are supervising or training other employees.

The current youth rate of a minimum of $9.00 gross per hour will also be replaced with a "new entrants" minimum wage, which the Government intends to remain at 80% of the adult minimum wage.  The actual rate will depend on the outcome of a minimum wage review which is currently underway.

Flexible Working

The Employment Relations (Flexible Working Arrangements) Amendment Bill has now passed and is set to come into force on 1 July 2008.  The key aspects of the legislation are as follows:

• Employees will have a statutory right to make a request for flexible working arrangements where they have the "care" of "any person". 
• Flexible working arrangements include changes to an employee's location (for example, work from home), hours and days of work.
• The grounds for refusing a request for flexible working  are:
  • Inability to reorganise work among existing staff;
  • Inability to recruit additional staff;
  • Detrimental impact on quality;
  • Detrimental impact on performance;
  • Insufficiency of work during the periods the employee proposes to work;
  • Planned structural changes;
  • Burden of additional costs;
  • Detrimental effect on ability to meet customer demand.

An employer must refuse a request for flexible working if:

• the employee is bound by a collective agreement; and
• the request relates to working arrangements to which the collective agreement applies; and
• the employee's working arrangements would be inconsistent with the collective agreement.
• Employees will have 12 months to submit a claim if they believe their employer has failed to comply with the flexible working provisions.  Failure to comply will result in a penalty of up to $2,000 (payable to the employee).

The word "care" is not defined in the legislation.  In the UK, where similar legislation is in place, a Government Department has issued a guidance note which lists some common caring activities where requests have been accepted.  These include:

• Help with personal care (eg, dressing, bathing, toileting).
• Assistance with mobility (eg, walking, getting in and out of bed).
• Nursing tasks (eg, daily blood checking, changing dressings).
• Giving/supervising medicines.
• Escorting to appointments (eg, GP, hospital).
• Supervision of the person being looked after.
• Emotional support.
• Keeping the care recipient company.
• Practical household tasks (eg, preparing meals, doing shopping, domestic labour).
• Assistance with financial matters or paperwork.

The immediate workability of this legislation may be tested as it is very open-ended. Not only have the legislators failed to define "care" and "any person", but employers could potentially also rely on numerous grounds to decline requests for flexible working. 

Similar legislation in the UK started with a narrow focus – applying only to care of a child under 5 or a disabled person under 18.  From July next year, New Zealand employers could receive a far wider range of potential requests.  It is hoped that the Department of Labour will issue some practical guidance before then on the terms "care" and "any person".  Otherwise employers and employees alike may struggle with how to progress anything more than a straightforward request.