Over the last 18+ months, the Employment Relations Authority and Employment Court have made an increasing number of employment law decisions related to Covid-19. With the recent change to the traffic light system, it is now more important than ever for employers to reflect on these decisions, and to remain mindful of the key learnings. To make it easy, we have summarised key decisions in the table below, and will continue to update this as the situation develops.
Importantly, we are yet to see a decision as to whether requiring employees to be vaccinated is justified in workplaces not covered by a government Order. However, we expect that this area will be addressed by the Authority in the near future.
Raggett v Eastern Bays Hospice Trust [2020] NZERA 266.
June 2020
Changes to wages
During the 2020 Alert Level 4 lockdown, the employer advised retail employees that they would be paid 80% of their wages until its stores could reopen. The employer subsequently conducted a restructure, and the employees' roles were disestablished. The employer advised that the first half of their notice period would be paid at 80% of their wages, and the second half would be the wage subsidy only.
The Authority found that employers cannot reduce an employee's pay rate or notice period unless the employee has been consulted with and / or agreed to that change. In the absence of consultation and agreement to vary the terms of the notice period, the employer did not have a legal basis to reduce normal wages or salary under the employment agreement during the notice period.
Further, any arrangements in place around wages while employed, does not necessarily extend to payment of the notice period.
De Sousa v Bayside Fine Foods [2021] NZERA 27.
January 2021
Frustration / Force Majeure
The employer terminated the employees' employment relying on a force majeure / frustration clause in their employment agreements. The employees were not consulted with on the decision and were simply provided with two weeks' notice of termination.
The Authority considered two factors:
- Did circumstances exist at the relevant time to invoke the clause; and
- If so, in invoking the clause did the employer comply with its legal obligations.
Here, it was found that circumstances did not exist at the time that the employer relied on the clause, and the employer ignored its obligation to consult in circumstances where it was possible and reasonable to do so. Therefore, the employees were found to be unjustifiably dismissed.
In summary, employers cannot simply rely on the fact that there is a pandemic to dismiss employees under a force majeure or frustration clause. In order to rely on such a clause, an employer must first follow a robust consultation process, which must include an obligation to consider alternatives to dismissal (such as reducing wages). These types of clauses have become quite popular since the pandemic, however, the level for frustration is high and it is not necessarily an easy 'out' for employers.
GF v New Zealand Customs Service [2021] NZERA 382.
September 2021
Vaccination
This was the first case considering the termination of an employee as a result of the COVID-19 Public Health Response (Vaccinations) Order 2021 (the Order).
Here, the Employment Relations Authority held that a border worker who refused the vaccine was justifiably dismissed. In making its decision, the Authority carefully considered and placed significant weight on the robust process undertaken by the employer leading to dismissal. The Authority found that the employee's role had to be performed by a vaccinated person under the Order, and that the employer's decision to dismiss the employee was thoroughly considered.
Importantly, the Authority noted that the duty of good faith "runs both ways". In other words, employers must provide employees with numerous opportunities to engage about any concerns with the vaccination process and the health and safety assessment being relied on. However, employees must also engage and properly inform employers of any practical objections they hold to receiving the vaccine (which the employee had failed to do in this case).
GF v Minister of Covid-19 Response [2021] NZHC 2526.
September 2021
Judicial review
This was the first judicial review of the Order seeking that the Order be declared unauthorised or otherwise invalid on various grounds. The Applicant was the same person as in the case above.
The High Court rejected the challenge and found the Order to be legally valid and rational. The Court also found that the Order does not itself force people to be vaccinated, and, rather, people remain free to make the choice themselves.
Sandhu v Gate Gourmet New Zealand Limited [2021] NZCA 591.
November 2021
Minimum wage / Changes to wages
During the 2020 Alert Level 4 lockdown, the employer decided to partially shut down its operations due to limited work being available. For those employees who did not have any work to perform, the employer said it would pay them 80% of their normal wage, conditional on the employer's wage subsidy application being approved.
At the time of the lockdown, some employees were paid the minimum wage with 40 hours of guaranteed work per week under their employment agreements. Accordingly, paying only 80% of their normal pay meant that those employees would be paid less than the minimum wage. At issue was whether, in the absence of sickness, default, or accident, the minimum wage is payable for all of an employee's agreed contracted hours of work (despite not actually working those hours); or whether it is lawful to make deductions from wages for lost time not worked at the employer's direction.
This matter was appealed all the way to the Court of Appeal where it was ultimately found that it is not lawful to make deductions from wages for lost time not worked as a result of the employer's direction. Essentially, the minimum wage is payable for the hours of work that an employee has agreed to perform, but does not perform because of such a direction by the employer.
In summary, if employees have agreed to work, they are entitled to be paid the minimum wage for the whole of the hours prescribed in their employment agreements, regardless of whether the employer is able to provide the work or not. Of course, this situation could have been different if the employer carried out a restructure or other consultation process with employees.
Four Aviation Security Employees v Minister of Covid-19 Response [2021] NZHC 3012.
November 2021
Judicial review
This was a further judicial review of the Order and, again, the High Court rejected the challenge.
This challenge involved aviation security workers who worked nearby international travellers. The Court recognised that vaccinations are likely to contribute to preventing the risk of another Covid-19 outbreak or spread, and that the Order is a justified measure under the New Zealand Bill of Rights Act 1990.
Four Midwives, NZDSOS and NZTSOS v Minister for Covid-19 Response [2021] NZHC 3064.
November 2021
Judicial review
This was a further judicial review of the Order.
In this challenge, four midwives argued that the Order was not legally valid because it was not consistent with the right to refuse to undergo medical treatment under the New Zealand Bill of Rights Act 1990.
The challenge was declined, and it was noted that the text of the Bill of Rights Act specifically indicates that orders may be made which limit the Bill of Rights Act, so long as those limits are justified.
WXN v Auckland International Airport Ltd [2021] NZEmpC 205.
November 2021
Interim reinstatement / Vaccination
At issue was whether the Employment Court would reinstate an airport employee on an interim basis after he declined to be vaccinated against COVID-19, contrary to a vaccine mandate and the employer's policy.
The Employment Court granted interim reinstatement to the employee's role at Auckland Airport until the substantive hearing could occur. However, the reason for this decision was mainly due to procedural issues with the process undertaken by Auckland Airport, and less to do with the Order itself. For example, Auckland Airport was lacking evidence for some of what it was relying on to terminate the employee's employment. The Court also saw merit in the substantive hearing taking place with the parties being employer/employee, as opposed to ex-employer/ex-employee.
In any event, the employee was put on leave without pay and was not able to physically attend the workplace given the employers policy and Order requiring that employees be vaccinated.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
