New Zealand’s highest court, the aptly named Supreme Court, has had the final say on whether the Uber drivers are employees or contractors. Importantly, but not surprisingly, the Supreme Court has declared them employees (as was the case in the Employment Court and the Court of Appeal).

The Government has proposed a law change that is currently before Parliament that it says is designed to clarify the distinction between employees and contractors. Workplace Relations and Safety Minister Brooke van Velden in commenting on the latest decision said she respected the court ruling but she said it highlighted a “grey area in employment and contract law” that her law reform aims to address.  It does no such thing. All the courts that Uber has litigated this issue in have conclusively found that the Uber drivers are employees using the current and well established common law tests.

Most of us know how Uber works. Passengers download the Uber App; they advise Uber (via the App) of where they want to travel to; Uber (via the App) offers the trip to available drivers; an available driver accepts the offer, collects the passenger and drives them to their chosen location. Passengers make payment to Uber; Uber makes payment to the drivers.

Uber has argued that it only supplies the digital platform that then enables drivers and passengers to connect and form their own business relationships. Uber says that it does not itself provide passenger transport services. Uber says that it does not control the drivers. It says the drivers choose their working hours and may work for competitors, and that the drivers operate their own businesses.

As the law currently stands, the starting point is the Employment Relations Act. In deciding whether or not a worker is an employee or a contractor the Court “must determine the real nature of the relationship”. In doing so, the Court must consider “all relevant matters, including any matters that indicate the intention of the persons” and “not to treat as a determining matter any statement by the persons that describes the nature of their relationship”.

Well understood common law legal tests have then been used to determine if the worker is an employee or contractor. Briefly, they are:

·        The intention test - what did the parties intend. Written agreements may point to this if they exist.

·        The control test - the greater the control exercised over the work undertaken including when and how it is done may point to the worker being an employee.

·        The integration test - this looks at how integrated and important the work undertaken is to the employer’s business.

·        The fundamental or economic reality test - this looks at whether the worker is in business on their own account. They should invoice, pay their own tax, and be able to work for multiple entities.

In coming to their decision that the Uber drivers were employees the Supreme Court justices commented that “a passenger could not reasonably be expected to think they were contracting with the driver when they got into the car”.

In balancing the tests the court said that the factors pointing away from employee status (such as intention in the written agreements, the drivers’ ability to choose their hours of work and to work for others, plus vehicle ownership) were outweighed by those pointing towards it (including their integration into the Uber business, Uber’s control over the drivers and the inability of the drivers to develop their own Uber businesses).

The decision is important as the Chief Judge in the earlier Employment Court decision commented that "employment status is the gate through which a worker must pass before they can access a suite of statutory minimum employment entitlements, such as the minimum wage, minimum hours of work, rest and meal breaks, holidays, parental leave, domestic violence leave, bereavement leave and the ability to pursue a personal grievance."

The Workplace Relations and Safety Minister Brooke van Velden has tried to “sell” the proposed changes to employee/contractor laws saying that it will make it easier to clarify whether a worker is an employee or a contractor. The laws as they currently stand have certainly provided that clarity in the Uber cases. The reality is that the proposed changes will make it easier for more cost conscious businesses and big multinational companies such as Uber to avoid even the minimal level of employment entitlements that employees are protected with. Read more....

In the United States, many federal government workers have been left without paychecks over the last month as their politicians struggle to agree on a budget. While shutdowns are a fairly regular feature of US politics, this shutdown is now the longest in their history.

Services which are deemed essential continue as normal but a lot of these workers will not be paid until the budget is passed and the federal government has funds again to operate. The impact can be significant. Families need to be fed, rents and mortgages need to be paid. Other disruptions are being felt; many flights have been cancelled or delayed due to a shortage of air traffic controllers who are calling in sick as they continue to be expected to work without pay. The shutdown has many features in common with “lock outs” in New Zealand’s collective bargaining system.

The waterfront dispute of 1951 was the biggest industrial confrontation in New Zealand’s history. It lasted 151 days and at its peak, 22,000 wharfies and other unionists did not work. The parties involved could not even agree on what to call the dispute – the employers and government described it as a strike, to the wharfies it was a lockout.

After World War II with its years of restrictions and shortages the New Zealand economy was booming. Workers demanded higher wage increases due to the cost of living increasing substantially. Under the old industrial arbitration system in 1951 the Arbitration Court awarded a 15% wage increase to all workers covered by an award. The wharfies were not covered. Their employment was controlled by the Waterfront Industry Commission (largely controlled by British shipping companies). They were offered a 9% wage increase, the companies claiming that earlier wage increases should be taken into account. The Waterside Workers’ Union protested by refusing to work overtime. The shipping companies in turn refused to hire the wharfies unless they agreed to work extra hours. When no agreement could be reached, union members were locked out.

While not common in New Zealand, lockouts are usually seen as industrial action taken by employers in retaliation for strike action over the negotiation of a collective employment agreement. Essentially, employers deny employees work, and as result do not pay the locked out workers.

Recently, New Zealand’s toilet paper supply came under threat in 2022. After a series of strikes, around 150 staff were locked out for weeks by the owner of the Essity mill in Kawerau. The company drastically ramped up the pressure on the union and the union members by filing an application seeking substantial damages of over $500,000 from the union and individual union members over the employer’s claim that the strike was unlawful because it commenced an hour before the date and time specified in the strike notice.

If a strike or lockout is lawful, the Employment Relations Act provides legal protection from civil action (often monetary damages) for those engaged in the strike or lockout. For the strike or lockout to be lawful it must comply with some notice requirements, such as when the strike or lockout will take place, when it will begin and when the strike will end. An error may not effect the validity of the notice if it is minor and technical only. As the then Chief Judge wisely said in SFWU v OCS Ltd “strict compliance is expected with those statutory requirements of content and timeliness. But that said, the Court should take a pragmatic, rather than a pedantic, approach…. Strike and lockout notices are powerful practical bargaining weapons where recipients of such notices have a strong incentive to have these events delayed or even nullified by reliance on legal technicalities that may have little or nothing to do with the merits of the bargaining”.

The effects of a government shut down or industrial action on the wider public can be unsettling or even distressing. Due to the length of the shutdown in the US, money has run out for the food assistance programme, commonly known as "food stamps". There are 41 million people enrolled in the programme and they were warned late last month that they would lose their food assistance. In a temporary measure, President Trump’s administration has recently said it would partially fund the programme for this month using emergency funds.

Nobody likes to see their doctors, nurses, teachers and emergency workers out on strike. However, there appears to be widespread support for their positions. Others will think of the disruption or risk to their personal position and take a different view. Whatever view one takes, taking industrial action is likely to have a significant impact on both the workers and the employers and usually is not taken lightly. But the impact is usually much wider than the parties involved. The 1951 waterfront dispute continues to hold a central place in the history and mythology of the New Zealand labour movement. Read more...

Air New Zealand’s new Chief Executive Nikhil Ravishankar started in his role this month. In reflecting on the “complicated” times that the airline is operating in, he commented that it was more cost effective to keep employees on the payroll than to make people redundant. He said that the airline had learnt a very bitter lessen through Covid. He said that in "some of these workforces, it takes years to retrain. In the case of, say, an aircraft engineer, that's a six-year apprenticeship program. And so, yeah, we are carrying more labour than we might require."

On an everyday level, Air New Zealand is used to operating in a “complicated” environment. The recent decision on an unlawful discrimination claim by Captain Garth McGearty shows how difficult it is to navigate the “air bumps” of lawful and unlawful age discrimination.

McGearty had a distinguished flying career, reaching the most senior rank as a captain in Air New Zealand’s Boeing 777 fleet. He turned 65 in July 2017. When pilots reach that age their options for international commercial flying are restricted by international law, whereas they are not restricted in the same way in New Zealand and some other countries that Air New Zealand flies to.

Air New Zealand and two pilot unions have tried to navigate these complexities, balancing international legal restrictions, New Zealand’s anti-discrimination laws and  conflicting interests between pilots aged over 65 (ARPs – age restricted pilots) and their younger counterparts; the ARPs wishing to continue their flying careers and keeping their higher salaries, while the younger pilots being keen to keep progressing their careers as senior pilots retire or opportunities arise because of the international legal restrictions.

This has evolved over time in the applicable collective employment agreements (CEA) that cover the parties. In practical terms it usually means moving to the A320 fleet, with a reduction in base pay of about $80,000 a year.

Air New Zealand wrote to Captain McGearty one year before he turned 65, regarding the options available to him under the CEA. McGearty seems to have taken a long time to respond before it became formally known that his preference was to continue flying on the B777 fleet as he did not believe that the international restrictions were such that he needed to make a choice under the CEA.

While Captain McGearty took some extended leave when he reached 65 Air New Zealand set up a modelling trial with the various unions and rostering committees to ascertain whether it would be possible to accommodate ARPs on the B777 and B787 fleets. It concluded that it was possible but there would be an effect on other pilots. With that finding Air New Zealand commenced a consultation process with the two unions with a view to attempting to agree the terms of a trial. Her Honour Kathyrn Beck, the Employment Court Judge, commented "it is fair to say that discussions were not easy".

When Captain McGearty returned back to work in May 2018, he was not rostered back on in his normal role. He continued to be paid, but without incentive pay, until he went on unpaid leave later that year. Captain McGearty then raised personal grievances for disadvantage and discrimination on the grounds of age.

Captain McGearty had several years experience on the international pilots rostering committee and had assisted on projects involving the development of new rostering systems. He believed he could continue to be rostered on the B777. He said Air New Zealand does make individual allowances when rostering for pilots, for example those pilots that were pregnant or with young families when the Zika virus was a concern.

The real issue before the Employment Court was whether the discrimination was unlawful, or lawful based on an exception in the Acts relating to a “genuine occupational qualification” – a term that is not defined. That term in itself is subject to another exception, that an employer must make some adjustment to the activities of the employer provided that they do not involve an unreasonable disruption to the activities to the employer.

Air New Zealand claimed that the international restrictions were a genuine occupational qualification which entitled it to treat Captain McGearty differently on the basis of age. It said that it had implemented reasonable accommodations which had been operating, with agreement with the union, for over a decade prior to Captain McGearty's claim.

Judge Beck commented that "I am alive to the fact that the problem was bigger than Captain McGearty. Air NZ needed to take steps to address those issues with the unions and its employees with a view to finding a more permanent solution, particularly given the strength of feeling around the issue. However, that did not preclude it from resolving Captain McGearty's individual situation in the interim when it had clearly been put on notice of his claim of discrimination".

Her Honour held that Captain McGearty had been disadvantaged and unlawfully discriminated against on the basis of his age by the unjustified actions of Air New Zealand.

While the Employment Court ultimately decided the case in Captain McGearty’s favour, it should be commended for its efforts with the unions to navigate the complex legal framework it operates in. Similarly, it should be commended for recognising the value of its staff while in navigates “complicated times” at present. Read more...

The Prime Minister said that the Government's job this year was about “growth, growth, growth”. On top of all the many public service job losses, there have been some big factory closures around the country recently. At the start of this month Carter Holt Harvey’s confirmed that its plywood plant is closing in Tokoroa with 119 jobs going, and its Eves Valley Sawmill in Tasman will see another 142 jobs go. Tokoroa’s Kinleith Mill paper manufacturing and packaging site has also stopped producing paper in June with a loss of over 150 jobs. The Ravensdown fertiliser plant in Dunedin has closed with around 30 people losing their jobs. Last year the Alliance Group closed its Timaru plant with around 600 jobs being lost.

Sealord is also proposing to close its coated fish factory in Nelson, looking to cut 79 permanent jobs - 57 factory roles and 22 management or office-based roles. This is on top of the many fixed term employment employees that Sealord uses in its wetfish factory in Nelson.

But Sealord has had a win in the Employment Relations Authority over its use of fixed term employment agreements even though the ERA accepted that their use is partly because Sealord does not want to incur redundancy costs.

Sealord employs a base of permanent employees to process fish at its wetfish factory. It also employs additional employees depending on the amount of fish it processes at the wet fish factory. This varies between years depending on the amount of fish to be processed. To manage this fluctuation, Sealord uses additional employees on fixed term employment agreements for a particular fishing season or catch amount. So, employees may have been employed on a fixed term employment agreement for the hoki season and then employed on a fixed term agreement for the processing of another fish catch for an external business under contract.

Fifty-six employees employed on a series of fixed term employment agreements challenged this, arguing that their employment has been continuous and that they are permanent employees.

The Employment Relations Act permits the use of fixed term employment agreements provided that the employee and the employer agree that employment will end at the close of a specified date or period; or on the occurrence of a specified event; or at the conclusion of a specified project. However, the employer must have genuine reasons based on reasonable grounds. The Act says that the reasons are not genuine reasons if they are used to exclude or limit the rights of the employee under the Act; or to establish the suitability of the employee for permanent employment; or to exclude or limit the rights of an employee under the Holidays Act.

The Authority Member, Peter van Keulen, was satisfied on the evidence that Sealord has genuine reasons for using fixed term employment agreements. He found the variability of Sealord’s processing requirements from the high volume hoki season to the much lower volumes for particular supply or processing agreements made commercial sense to use fixed term employment agreements. He accepted the evidence of Mr Doug Paulin, the Chief Executive, that if Sealord could not control its employment costs to the processing demand, then Sealord would have to close its factory.

This decision is somewhat hard to reconcile with the fairly recent Employment Court decision of Morgan v Tranzit Coachlines Wairarapa where a school bus driver was employed on a series of fixed-term agreements. The employer argued that its funding for the school bus services came from the Ministry of Education, and it was reasonable to link Mr Morgan’s employment to the MoE contracts as there was no certainty that the employer would retain that funding. The Chief Judge held that the MoE contracts had been consistently renewed, and that such contingencies could be dealt with under the redundancy provisions of the employment agreement.

Both the Sealord and the Tranzit cases were somewhat dependent on external contracts being secured. Both the Sealord employees and the Tranzit employee were consistently employed, notwithstanding this uncertainty of securing external contracts to provide services.

Employment law is very fact dependent, and also depends on how those facts are interpreted. It will be interesting to see if the Sealord employees appeal the decision and take the case to the Employment Court. Read more....