New Zealand: Employment Law: Case law and legislation updates

Last Updated: 26 March 2015
Article by John Hannan, Sean O’Sullivan and Laura Scampion

Over the December and January period a number of interesting decisions were handed down by the Employment Relations Authority (ERA), the Employment Court (EC) and the Supreme Court (SC). We look at three of these decisions and provide noteworthy points below.

Not considered for redundancy? That's a constructive dismissal

In Wills v Goodman Fielder New Zealand Limited 1 the EC held that an employer breached an employee's agreement (and in particular the redundancy clause) when it failed to consider disestablishment of the employee's position at the same time it undertook a redundancy process for other staff. The EC also held that the employer failed to provide the employee with information when he raised frustration and concern over the process, which was also a contractual breach.

Background

Mr Wills was a plant manager for Goodman Fielder's two Christchurch plants. Following the 2011 earthquakes, the plants became damaged and production was significantly reduced. Although his staff were made redundant, Mr Wills' role was not because Goodman Fielder hoped to retain his skills. Goodman Fielder provided him with temporary roles. However, by late 2011 the future of the plant was unknown and Mr Wills resigned. He claimed he had been constructively dismissed because Goodman Fielder had breached duties owed to him in his employment agreement regarding redundancy. Mr Wills claimed that his position should have been disestablished and that he should have been offered redundancy compensation.

Decision

The EC concluded that Goodman Fielder breached its duty under the redundancy clause in Mr Wills individual employment agreement, as it failed to consider disestablishment of the position at the same time it undertook a redundancy process for other staff. The EC considered that Goodman Fielder had an incorrect focus on wishing to retain Mr Wills' skills, rather than considering whether his position was surplus to requirements. The EC also concluded that Goodman Fielder failed to undertake a fair and reasonable process with regard to redundancy by failing to respond to requests for information from Mr Wills about Goodman Fielder's future.

Noteworthy Points

  • Redundancy selection - analyse the entire workforce carefully prior to commencing redundancy consultation in order to determine which employees should be included in the pool of employees being considered for redundancy. Determine which roles will actually be surplus to requirements.
  • Keep staff informed - ensure employees are made aware of any changes and updates as they occur throughout a redundancy process and/or a business that is being restructured.
  • Seek legal assistance - incorrect redundancy decisions and processes can result in costly personal grievances. If you are in any doubt about the process or the employees who should be involved, speak to an employment lawyer.

Shot in the chest at work? That's not a constructive dismissal

In Lyndon Fredericks v VIP Frames and Trusses Limited 2 the ERA held that an employee who was shot in the chest with a nail gun while at work was not constructively dismissed.

Background

Mr Fredericks first raised the issue of safety with his employer when it became apparent to him that a new colleague was unable to safely operate a nail gun. Following this, training was provided to the new colleague (that the ERA later held to be inadequate). Mr Fredericks raised the issue of safety again with his employer, voicing his concerns about his colleague's lack of experience. Mr Fredericks was told to carry on working. On the same day he raised the safety issues, Mr Fredericks was accidentally shot in the chest by his colleague. Approximately three weeks later, Mr Fredericks resigned saying he had lost trust and confidence in his employer.

Mr Fredericks claimed that his employer failed to provide a safe workplace and as such he had been constructively dismissed.

Decision

The ERA found that the employer failed to provide a safe workplace prior to the nail gun incident. However, the ERA also said that this breach did not amount to constructive dismissal because in this case the single breach of health and safety was not sufficient to meet the strict test of constructive dismissal. The ERA drew attention to the fact that the failure was quickly addressed and, notwithstanding its importance, Mr Fredericks sought a return to work after the incident.

Noteworthy Points

  • Take proactive steps when it comes to safety - once aware of a safety hazard, an employer is under a duty to take proactive steps to minimize or remove the hazard.
  • Consider the unjustified disadvantage risk - although Mr Fredericks lost his constructive dismissal claim, the ERA held that he had a personal grievance in that he was unjustifiably disadvantaged by virtue of his employers failure to provide a safe workplace. He was awarded lost wages for the period in which he was not at work, together with $6,000 compensation under section 123(1)(c)(i) of the Employment Relations Act 2000.

No leave to appeal to Supreme Court

In Terranova Homes and Care Limited v Service and Foodworkers union Nga Ringa Tota Incorporated 3 the Court of Appeal determined that female caregivers in the aged care industry should be paid the equivalent to their male counterparts in different workplaces who have similar skill sets and responsibilities (other industries can be looked to in order to find comparators). Terranova appealed this decision on the basis of the Court of Appeal's interpretation of the Equal Pay Act 1972 (Act). However, the SC have declined leave to appeal concluding that the next step is to set the principles under section 9 of the Act (those principles to be observed for implementation of the Act) and until this can be done, any consideration by the SC is premature.

The case now returns to the EC, where principles will be determined that will set the process for determining pay equity rate for work in aged care.

Legislative updates

Parental Leave

Currently, under the current parental leave provisions, eligible working mothers and adoptive parents are entitled to 14 weeks paid parental leave. Under the Parental Leave and Employment Protection Amendment Act 2014, paid parental leave will increase to 16 weeks from 1 April 2015 and then to 18 weeks from 1 April 2016. If an employee has a child on or after 1 April 2015, they are entitled to 16 weeks paid parental leave. If the child is born on or after 1 April 2016, they will be entitled to 18 weeks paid parental leave.

Employment Relations Amendment Act

The Employment Relations Amendment Act 2014 (Act) took effect from 6 March 2015. The Act targets six main areas, namely:

  • Flexible working arrangements
  • Rest and meal break rules
  • Continuity of employment provisions
  • Good faith obligations
  • The collective bargaining framework
  • Operative changes within the ERA

For a more detailed overview of the Act, please refer to our November 2014 publication.

Health and Safety Reform Bill

If passed, the Health and Safety Reform Bill (Reform Bill) will create the Health and Safety at Work Act, which is currently before the Transport and Industrial Relations Select Committee. Originally scheduled to take effect during April 2015, the likely date is now October 2015. Despite the delay, we recommend that all employers commence preparation with regard to the new obligations under the Reform Bill in plenty of time to allow implementation towards year end. We are happy to assist with any such preparation.

Footnotes

1 Keith Wills v Fielder New Zealand Limited [2014] NZ EmpC 233 CRC 3/14

2 Lyndon Fredericks v VIP Frames and Trusses Limited [2015] NZERA Christchurch 2

3 Terranova Homes and Care Limited v Service and Foodworkers union Nga Ringa Tota Incorporated [2014] NZSC 196

© DLA Piper

This publication is intended as a general overview and discussion of the subjects dealt with. It is not intended to be, and should not used as, a substitute for taking legal advice in any specific situation. DLA Piper Australia will accept no responsibility for any actions taken or not taken on the basis of this publication.


DLA Piper Australia is part of DLA Piper, a global law firm, operating through various separate and distinct legal entities. For further information, please refer to www.dlapiper.com

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