Quarterly Bulletin
This Quarterly Bulletin provides a brief update on employment law in New Zealand over the last three months.
POST ELECTION
In its first term in Government, National implemented several key changes to employment law. These included:
- voluntary 90-day trial period for new employees in small businesses;
- increased flexibility in the Holidays Act 2003;
- the review of the personal grievance system;
- minimum wage increases each year; and
- High Hazards Unit with an inspector for each industry established.
The 2011 election saw National propose new employment policy. These included:
- reducing youth unemployment by instituting a starting wage where 16 and 17 year olds receive 80 percent of the minimum wage for the first six months of employment;
- flexible working arrangements to be invoked without a formal process at the request of employees;
- removal of the requirement to conclude a collective agreement;
- reform law to allow employers to opt out of Multi Employer Collective Agreements;
- partial strike/partial payment agreement which would see striking employees' wages reflect their actual working time; and
- review of the application of constructive dismissal.
Whether these policies make it onto the statute books in the next three years will depend on several of National's coalition partners (the Maori Party, the Act Party and United Future). Given the need for its support, the Maori Party have the potential to make gains with regards to their employment policy.
The Maori Party has proposed a $16 minimum wage, a short term subsidy to business owners who create new jobs for the unemployed, and promotion of collaborative arrangements between Work and Income New Zealand, local iwi and education providers for training opportunities.
CASE UPDATE
New Zealand Professional Firefighters Union v New Zealand Fire Service Commission [2011] NZCA 595
This was an appeal by the New Zealand Professional Firefighters Union ('the Union') of a decision in the Employment Court where the Court had issued a compliance order to restrain the Union's strike action before they entered into mediation.
On appeal, the ability to grant such an order was challenged by the Union. The scheme of the Employment Relations Act 2000 ('Act') provides to what extent strikes and lockouts will be both lawful and unlawful. Where a strike is lawful, in accordance with section 85, a compliance order restricting the strike is unavailable to the Court.
The Court of Appeal considered that any attempt to truncate or expand the time limits in the strike and lockout provisions of the Act was an attempt to contract out of the Act. The Employment Court's compliance order was held to be contrary to the Act as it purported to delay the giving of notice.
Finally, it was noted that the Employment Court has exclusive jurisdiction to grant injunctions with respect to strikes and lockouts. It was held to be an odd result if exactly the same effect as an injunction could be achieved by the Authority issuing a compliance order. Therefore, the Employment Court was not right to hold it had the power to issue a compliance order requiring the Union not to undertake strike action. No other statutory powers existed other than those prescribed by the Act.
The case highlights the secondary nature of the requirement to negotiate in the Bargaining Process Agreement when viewed with the fundamental right to strike.
Mana Coach Services Limited v NZ Tramways & Public Passenger Transport Union Inc [2011] NZCA 571
The question before the Court in this case was whether the Employment Court had correctly decided that Mana Coach Services Ltd ("MCSL") was not obliged to pay wages to employees who had given notice of an intention to strike, but had then subsequently withdrawn that notice eight minutes before the strike was scheduled to start. In preparation for the strike period MCSL had employed casual drivers and rearranged rosters.
Section 97 of the Act only permits the employer to engage another person to perform the work of a striking employee in limited circumstances (where employees volunteer or there are reasonable health and safety grounds). Even when these criteria are met, that person may only perform a striker's work during the strike. The Court held that a strike does not commence upon the issuing of a strike notice and that the Union was entitled to withdraw such a notice at any time before the strike was to take effect. This meant that MCSL was not lawfully entitled to roster off the workers intending to strike because no strike had taken place.
It was also found that the Court's equity and good conscience jurisdiction could not be exercised to deprive the employees of their wages simply because the Union had acted in a misleading and deceptive way, which was a breach of the obligation of good faith the union owed to the employer. The case was remitted to the Employment Court to determine whether there was a way, other than the Court's equity and good conscience jurisdiction, to disentitle the employees from their wages for those hours that they intended to strike due to their acting in bad faith.
Muldoon v Nelson Marlborough District Health Board [2011] NZEmpC 103
Mr Muldoon, a registered nurse, was employed by the Nelson Marlborough District Health Board ("Board") as a casual employee in early 2008. This was on an "as and when required basis". Mr Muldoon's employment was subject to a Multi Employer Collective Agreement ("the Collective"). The Collective defined a casual employee as "an employee who has no set hours or days of work and who is normally asked to work as and when required". The nature of Mr Muldoon's employment changed when he was asked to work regular hours in place of a colleague on sick leave. This was offered to Mr Muldoon on a fixed term basis with an expiry in early 2009. When the contract expired, the employer did not re-offer Mr Muldoon a fixed term position and he continued to work regular hours in a full time position.
In May 2009 the Board emailed staff to advise them that there were 2.5 full time equivalent vacancies in the area where Mr Muldoon worked. The email included the statement "this will mean that all interim positions being covered by casuals will come to an end when these vacancies are filled". Mr Muldoon applied for one of the vacant positions and was advised in June that his application had not been successful.
The question the Court had to determine was whether Mr Muldoon was a casual, fixed term, or permanent employee, as this would determine his employment rights at the time he left his full time equivalent hours at the hospital.
The Court described the difficulty with casual and fixed term employment as that they are both temporary by definition, in the sense that at the conclusion of a specified period, the employment relationship will cease to exist, be it one day, or a one month project with termination occurring on completion. Based on the definitions in the Collective and legislation, the Court analysed which employment category Mr Muldoon was in at the time the relationship ended:
[50] Because of the Board's non-compliance with s 66 in respect of Mr Muldoon's employment for the period from 6 February to the end of July 2009, his employment was not fixed term as defined by the collective agreement. Nor was it casual employment as that term was also defined. By default, therefore, for that period and, in particular, at its end, Mr Muldoon's employment was "permanent employment" as defined by the collective agreement."
On this basis the Board could not unilaterally end Mr Muldoon's employment as it would a fixed term position, and the Court determined Mr Muldoon was dismissed unjustifiably.
For employers, this case gives a clear direction about how the Court would interpret employment status. This case demonstrates the importance of being vigilant with the expiry terms on fixed term agreements.
Blackmore v Honick Properties Limited [2011] NZEmpC 152
This year has seen the Courts offer some further guidance on what employers must do in order to engage an employee in a lawful trial period. This Employment Court decision found that Mr Blackmore was not barred from bringing a personal grievance for unjustified dismissal against his former employer, despite an apparent trial period provision in his signed individual employment agreement.
Mr Blackmore was offered a farm manager's position in a letter on 5 October 2010. This made no reference to a trial period of employment, and Mr Blackmore accepted the position by email on 10 October 2010. Mr Blackmore and his family moved to the farm and he began work at 7 am on Monday 15 November. At 8 am that day he was given a copy of the intended employment agreement, which included provision for a 90-day trial period. Mr Blackmore signed the agreement, acknowledging that he had the opportunity to take independent advice, despite this not being the case. In late January 2011 Mr Blackmore's employment was terminated pursuant to the trial period.
The Court held that that when Mr Blackmore signed his employment agreement he was actually an existing employee of Honick. He became an employee on acceptance of Honick's offer as a "person intending to work", or alternatively at the very latest when he began work at 7 am Monday 15 November. As trial periods are only available for new employees and not existing ones, Mr Blackmore was not barred from bringing a personal grievance.
In practice, employers wishing to utilise the trial period provisions need to ensure the correct procedures are followed:
- the terms of the trial need to be agreed in writing before the prospective employee becomes an employee;
- if the employee has already started working for the employer, then they are not a 'new' employee and a trial period of employment is not available; and
- both the employer and the employee need to sign the employment agreement before the commencement of work in order for the trial period provision to apply.
Please feel free to get in touch with a member of the team if you would like to discuss this bulletin, or any other employment related issue.