Sometimes employment law cases throw us a gem. A recent UK Employment Appeal Tribunal decision in the United Kingdom is a Masterclass, showcasing the actions the employer did, and more importantly did not do, which cumulatively lead to the decision that the employee was unfairly dismissed.

Redundancy is known as a “no fault” dismissal because the employee is dismissed because their position is no longer needed by the employer, and not due to any fault or performance issue of the employee. As a result, it is a well-established principle in New Zealand employment law that an employer should offer an alternative position, where possible, to an employee in a redundancy situation. Similar obligations apply in the United Kingdom.

Hendy Group is a well-known car dealership in the UK operating over several brands. After a long career in car sales, Daniel Kennedy started work with Hendy Group in 2013 in used cars. He then managed a new distributorship for Kia cars (a brand which was new to him). Then in 2015 he took on a role as a trainer within the company’s Training Academy; a role in which he was required to provide training for all of the company’s sales teams across its workforce.

Unfortunately, due to the COVID pandemic, Mr Kennedy was made redundant in 2020. Mr Kennedy accepted that it was a genuine redundancy situation, and he accepted that within his team he was fairly selected for redundancy. But his complaint was that he was not provided with adequate or fair consideration for the possibility of him continuing to work for the Hendy Group in another role.

Mr Kennedy was told that he could apply for available jobs listed on the company’s intranet. The Human Resource Department took no steps to assist Mr Kennedy. The Judge was critical of this, noting that simply advising Mr Kennedy that he could apply for open positions advertised to the world on the same basis as every other applicant was not “help”. It appears that the most assistance that was offered Mr Kennedy was from his line manager who offered to speak to anyone who wanted to phone him, but the Judge noted that he would be treated as any other applicant, internal or external.

Mr Kennedy was provided with seven weeks’ notice of his dismissal, but a week after that notice he was required to return his laptop. He no longer had access to internal email or the intranet. The Judge noted that Mr Kennedy only had the same access as any member of the public to jobs notified on the website and that there were multiple sales positions available within that notice period.

Despite a lack of any proactive assistance, Mr Kennedy applied for a number of jobs with Hendy Group. He was interviewed for a sales manager position at Bournemouth Toyota. The Area Sales Manager noted that Mr Kennedy was very personable, interviewed well and had previous sales management experience; but he wanted someone with recent management experience and a proven track record of building a team. Without raising it with Mr Kennedy the Area Manager had concerns over the long commute for the potential position, and he felt that Mr Kennedy was simply keen on remaining employed.

Mr Kennedy applied for a sales advisor position at Christchurch Land Rover. He was not interviewed, and the role was offered to an external candidate. Mr Kennedy applied for another sales manager role at Salisbury Toyota; he did not hear back about that application. Mr Kennedy asked if could be “furloughed”, so that he could continue looking for alternative employment within the Hendy Group, but this was refused.

Finally, on his last day of employment, Mr Kennedy heard from HR. It included an email from HR a few days before (to an internal email address Mr Kennedy no longer had access to because his laptop had been returned). It updated him on his applications and informed him that his “applications are not going to be progressed” and while he was advised that they were not trying to “deter [him] from applying for alternative roles within the group…. the response will be consistent for other Sales related roles”.

Unsurprisingly, the Judge was highly critical of this: ‘‘This was the human resources department, which should have been supporting Mr Kennedy in a search for an alternative to dismissal, instead saying that they would not give him any sales role anywhere. This to a man who had spent 35 years selling cars, or training people how to sell cars. It is hard to imagine anything less helpful.”

Even after this, Mr Kennedy applied for a further role with the Hendy Group at Bournemouth Skoda. He did not receive any reply. Again, the Judge was critical: “I observe that the basic premise put by the Respondent’s witnesses is fundamentally unsound. It is that someone so good that he trains sales managers is not able to do the job he is training others to do.”

In New Zealand the obligation to seriously consider redeployment opportunities in redundancy situations arises out of the requirement to act in good faith, which amongst other matters, requires an employer to be active and constructive in maintaining a productive employment relationship. Ultimately the test is whether the employer’s actions, and how the employer acted, were what a fair and reasonable employer could have done in all the circumstances at the time the dismissal occurred.

Unsurprisingly, Mr Kennedy’s dismissal was found to be unfair by the Employment Appeal Tribunal in the UK. A similar outcome would be the likely result in New Zealand. Read more...

Last week Maritime NZ filed two health and safety charges under the Health and Safety at Work Act against KiwiRail over its grounding of the Interislander ferry Aratere nearly a year ago. Maritime NZ chief executive Kirstie Hewlett said the two charges related to failures by KiwiRail to keep crew and passengers safe while on board the ferry.

Only two weeks ago the Aratere was in the news over a power outage that caused it to anchor for nearly four hours near Picton while the problem was fixed. Another of its ferries, the Kaiārahi, recently suffered damage in large waves off Wellington’s south coast requiring its bow doors to be welded shut.

Not too long ago the Kaitaki, suffered a complete failure of its engines, causing it to drift dangerously close to rocks near Wellington harbour. According to the Transport Accident Investigation Commission’s report it was caused in part by KiwiRail's failure to replace safety-critical parts, which were years past their use-by dates.  Are the ferries accidents waiting to happen before they are replaced?

A report by the Forest Industry Safety Council in December 2024 concluded that forestry fatality data over the last decade shows that manual tree-fallers are estimated to be 300 times more likely to die at work than the rest of the New Zealand workforce; 51 forestry workers died on the job between 2013 and 2023.

In the past decade, New Zealand had 18 deaths and 397 reported injuries in its ports. The Ports of Auckland former chief executive, Tony Gibson, was convicted under the Health and Safety at Work Act earlier this year after being found guilty in the relation to the death in 2020 of a father-of-seven who was killed by a falling container. He was fined $130,000 and ordered to pay $60,000 in costs to Maritime New Zealand.

A further 26 year old stevedore at Ports of Auckland died in April 2022 after being crushed by a container. That accident, and a further one at Lyttleton Port, were separately investigated by the Transport Accident Investigation Commission which released its findings in a joint report.

The Chief Investigator of Accidents, Naveen Kozhuppakalam, said the report identified broad safety issues for the whole stevedoring sector. He said that neither company monitored how well its employees were using rules and guidelines to manage workplace risks. "People become desensitised to risk, they take shortcuts or drift away from following rules, some of which are thought to be impracticable. Administrative risk controls only work with ongoing active safety leadership, good supervision, and a culture of safe working behaviour." TAIC Chief Commissioner Jane Meares said stevedoring has the second highest rate of fatalities of any industry in New Zealand.

One of our most awful workplace tolls was at Whakaari/White Island. Twenty-two people died from extreme burns and blast injuries when Whakaari erupted in 2019, and many of the 25 survivors were seriously injured. WorkSafe was not without criticism in that disaster. The Ministry of Business, Innovation and Employment (WorkSafe sits under its umbrella) commissioned an independent review that found that it knew that unregistered operators were taking tourists onto the island for five years leading up to the eruption and did nothing about it. More alarmingly, WorkSafe’s safety audits of registered operators did not assess volcanic risk, only walking hazards.

In 2023 the NZ Business Leaders’ Health and Safety Forum produced a report on workplace safety and the toll on New Zealand workers. It reported that our fatality rates are where the United Kingdom was in the 1980s. Our fatality rate is twice that it is in Australia.

The National lead government’s commitment to the safety of New Zealand workers speaks volumes. Without factoring the impact of inflation, WorkSafe’s funding has been cut by $2.2 million (a 1.6 percent cut) since 2023 - from $141.1million to $138.9 million. WorkSafe’s staff have been cut from 724 to 600 since 2023 (a 17 percent trim), although it has been reported that it is planning to increase to 675 staff.

WorkSafe reports that our workplace fatalities remain stubbornly high - there were 70 deaths in 2024 as a result of injuries from work. The latest reported data from WorkSafe shows 35,805 workplace injuries requiring more than a week away from work in 2022 (up from 24,480 in 2014). It is easy to imagine the awful impact this has on New Zealand families.

The frightening statistics in New Zealand go even further, WorkSafe has revised its work-related health estimates; work-related health deaths are estimated at 750 to 900 a year; there are estimated to be 5,000 to 6,000 hospitalisations each year due to work-related ill-health; and a worker is 15 times more likely to die from a work-related disease than an actual workplace accident!

Yet at the core of New Zealand’s Health and Safety at Work Act is the pretty simple concept of requiring all duty holders, so far as reasonably practicable, to eliminate risks to health and safety. Risks that cannot be eliminated must be minimised. They must also quite reasonably ensure that there is, amongst other matters, safe plant and safe systems of work. Whatever workers and their employers have being doing, it has not brought any meaningful change.

And the government is now proposing to alter WorkSafe’s priorities from enforcement to advice, saying this will help address concerns about underfunding and a "culture of fear". No doubt we will see these awful statistics continue! Read more...

Death by a thousand cuts is historically a form of torture and execution originating from Imperial China. More recently in psychology death by a thousand cuts is a way in which negative change happens slowly in many unnoticed increments that it is not perceived to be objectionable. Workplace Relations and Safety Minister Brooke van Velden continues to push this Government’s programme of reducing employment protections and entitlements incrementally.

In case it has been missed, these are some of the latest cuts affecting New Zealand workers.

Minister van Velden raised New Zealand’s minimum wage in April this year by 1.5% to $23.50 in a year when inflation is rising at the rate of 2.2%. Commenting on this NZCTU Acting President Rachel Mackintosh said “the new minimum wage rate is an effective cut in real terms and will leave workers worse off. This is the second year in a row where this Government has made the decision to cut the minimum wage in real terms”. The minimum wage has serious implications for New Zealand’s lowest paid and most vulnerable workers.

In addition, many government contracts use the living wage as the lowest wage paid to workers (such as cleaners and security guards). From 1 September 2025, the Living Wage hourly rate will increase to $28.95. Yet this government intends to remove that requirement.

By contrast, Australia is running at a slightly lower rate of inflation of about 2%, but it increased its minimum wage by 3.5% to AUS$24.95 (NZ$26.90). In commenting on the independently assessed raise, the Australian Fair Work Commission said a 3.5% above-inflation increase to the minimum wage was necessary to avoid “entrenched” lower living standards among the millions of Australia’s lowest-paid workers. The Commission’s president, Justice Adam Hatcher, said the decision would help claw back the loss of real incomes over the past few years.

The recent Budget announced that the default employer and employee contribution rates to KiwiSaver will be increased to 4%. Looking far into the future, that is likely to be a positive move for most New Zealander’s retirements. But given the huge cost of living increases that New Zealander’s have experienced, and our lowest paid workers continuing to go backwards, this is going to be a further cost to the many workers that struggle to meet day to day living expenses.

These changes will have an even higher impact on lower paid workers. In growth forecasts, alarmingly, Treasury has assumed the higher 4% contribution rates will be offset by employers through lower-than-otherwise wage increases.

Recently, this government made sudden and controversial changes to how pay equity claims can be made. Dozens of existing claims have been blocked from female-dominated workforces which are generally considered to be underpaid in comparison to those dominated by men. Those claims are in some of our most valued occupations - Plunket nurses, community midwives, hospice nurses and health care assistants, primary care nurses, nurses in residential care. Not only that, this government has raised the bar for future claims to be successful.

While the Prime Minister has admitted that the changes to pay equity laws will save the government “billions of dollars”, he now says that this was not the motivation for changing the legislation. The new Deputy Prime Minister was more forthright "I actually think that Brooke van Velden has saved the taxpayer billions, she's saved the Budget for the government and she has made pay equity workable for New Zealand women, men and everyone who wants a fair go in this country," he said.

Shame that those savings are at the expense of lower paid women in some of our most valued occupations.

The most recent attack on worker protection is now in relation to health and safety. In 2023 the NZ Business Leaders’ Health and Safety Forum produced a report on workplace safety and the toll on New Zealand workers. It reported that our fatality rates are where the United Kingdom was in the 1980s. Our fatality rate is twice that it is in Australia. But the government is now proposing to alter WorkSafe’s priorities from enforcement to advice, saying this will help address concerns about underfunding and a "culture of fear". What about continuing to improve worker safety and reduce the death toll?

New Zealand does not have to look too far back to one of our most awful workplace tolls - Whakaari/White Island. Twenty-two people died from extreme burns and blast injuries when Whakaari erupted in 2019, and many of the 25 survivors were seriously injured. WorkSafe was not without criticism in that disaster. The Ministry of Business, Innovation and Employment (WorkSafe sits under its umbrella) commissioned an independent review that found that it knew that unregistered operators were taking tourists onto the island for five years leading up to the eruption and did nothing about it. More alarmingly, WorkSafe’s safety audits of registered operators did not assess volcanic risk, only walking hazards.

The National Party’s slogan for Budget25 was “Growing the economy to help Kiwis get ahead”. Probably a more accurate description is “At what cost to Kiwi’s, particularly our more vulnerable, is the economy growing”. Read more...

Businesses use all sorts of arrangements to conduct their affairs, usually to manage tax issues or to operate in different jurisdictions. Usually there is no issue about who the employer is, but this may be difficult to determine in some situations. Dr Michael Johnston found this out to his detriment when his alleged employer used a novel legal defence in employment law.

Dr Johnston moved to New Zealand from the United Kingdom in around 1989 focussing his career on developing software, technical strategy, and developing digital mobile payment solutions in the startup context. Dr Johnston met Chris Jones and started working with him in various companies that he had an interest in. In 2007 Mr Jones started a new company, Youtap Ltd, and Dr Johnston was employed as the chief technical officer.

YMMA was incorporated in Singapore in 2015 to assist Youtap expand into the Asian market. It is wholly owned by Youtap Mobile Money Ltd, a New Zealand-registered company, which itself is wholly owned by Youtap Ltd (also registered in New Zealand). Mr Jones was the chief executive and director of YMMA as well as of Youtap Mobile Money Ltd and Youtap Ltd. Dr Johnston agreed to relocate to Singapore to spearhead the expansion of the Youtap Group through YMMA. Employment arrangements for Dr Johnston were put in place to make this work. He needed to be employed by a Singaporean company to obtain an employment pass (an “E-pass”) so that he could work in Singapore. Dr Johnston also became a director of YMMA because Singapore law requires that at least one director of a company registered in Singapore needs to reside there.

The businesses of Youtap Ltd, YMMA and other Youtap entities were intertwined. Dr Johnston was paid in Singaporean dollars by YMMA into his Singaporean bank account but YMMA would receive the funds from Youtap Ltd (or one of the other New Zealand Youtap entities) because it otherwise would not have had the funds to pay Dr Johnston. But Dr Johnston accrued annual leave in YMMA’s books.

Dr Johnston said that he agreed to being employed by YMMA because he was quite prepared to do whatever was required. He said he continued to assume that he remained employed by Youtap Ltd because “nothing really changed”.

Mr Jones did not agree. While he agreed that Dr Johnston retained the responsibility of being the Youtap Group’s chief technical officer and that he was still part of the Youtap Group senior management team, Mr Jones said that the focus of Dr Johnston’s work was growing YMMA’s business in the wider Asian market.

Dr Johnston’s employment was terminated by letter dated 8 February 2022. He was given one month’s notice in accordance with his YMMA employment agreement. The termination was based on YMMA’s understanding of Singaporean employment law.

Although Dr Johnston made a claim in Singapore against YMMA in May 2022 he engaged lawyers in New Zealand who claimed that Dr Johnston was unjustifiably dismissed under New Zealand law as he was in reality employed by the New Zealand company Youtap Ltd. This argument was accepted in a preliminary decision of the Employment Relations Authority. Dr Johnston was held to be an employee of the New Zealand company Youtap Ltd.

Youtap Ltd appealed to the Employment Court. Youtap Ltd argued that when Dr Johnston commenced work for YMMA in Singapore there was a change to the identity of his employer by the legal concept of “novation”.

In a novation, an original party to a contract is replaced by a new party, with all the rights and obligations of the original party being transferred to the new party and the original party ceasing to be a party to the contract. In considering whether there has been a novation the Court needs to decide whether it has been agreed that a new contract is to be substituted for the old and the obligations of the party under the old agreement are to be discharged. Agreement to a novation may be inferred from conduct and does not need to be expressly agreed.

The Employment Court accepted that the change in employer from Youtap Ltd in New Zealand to YMMA in Singapore was mutually beneficial to both parties. The Youtap Group wished to have a senior person resident and working from Singapore to provide service to key customers and access the markets nearby. The Court concluded that while Youtap Ltd did not appear to have been particularly concerned about which entity employed Dr Johnston both parties understood that Dr Johnston needed to be employed by a Singaporean-based employer to get the E-pass enabling him to work in Singapore. Being domiciled in Singapore and employed by a Singaporean company also gave Dr Johnston significant tax advantages.

Judge Holden concluded that there was a novation in 2015 when Dr Johnston started work in Singapore. This meant that Dr Johnston was not employed by the New Zealand company.

The concept of novation is an unusual argument in employment law in New Zealand. In theory it provides another useful tool in the toolbox to determine the “real nature of the employment relationship” – the usual legal test used for determining whether or not there is an employment relationship.  Read more...