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How certain are fixed term employment agreements?

TrawlerThe 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....


Should judicial appointments be political?

Scales of JusticeWorkplace Relations Minister Brooke van Velden has rightly been criticised over her claims that the Employment Relations Authority members believed “money grows on trees”. It is reported that Attorney-General Judith Collins has stepped in and spoken with Minister van Velden. Subsequently van Velden confirmed that she and the Attorney-General had “briefly discussed” how they both agreed an independent Employment Relations Authority is important.

A recent decision of the Employment Relations Authority demonstrates that it is prepared to hold employees accountable when they are in the wrong and have cost the employer money.

WVS is a real estate and property management company. It, and most of it’s witnesses, cannot be identified due to an order preventing publication of their names. Joanne Adlam began employment as an office administrator 2003. She was a long serving and trusted employee who held significant responsibilities, including handling bond payments from tenants.

Concerns were first raised about Ms Adlam when the Property Manager became aware in August 2020 that the Bond Centre claimed it did not hold a bond for a tenant even though the bond should have been lodged by Ms Adlam. The tenant contacted the Property Manager about the problem with the bond by text message and email, but it was deleted from the Property Manager’s inbox by Ms Adlam in an apparent attempt to prevent her actions being discovered. However, Ms Adlam did not realise that the Property Manager had been working late and had already seen the email.

The General Manager called Ms Adlam and told her that she and the CFO needed to speak to her about the reconciliation. The General Manager’s said in evidence that Ms Adlam said words to the effect of “it is what you think it is”, cried, and “said that she has been stealing money and that she was going to prison”. The General Manager said when asked how much she had stolen, Ms Adlam either said $60,000 or $90,000.

After an investigation meeting Ms Adlam’s employment was terminated in late August, and she agreed to offset her holiday pay against the amount owing and said she was looking to sell a jet ski for $14,000.

A subsequent independent financial investigation revealed that the figure was far higher - $881,240.96.

WVS sought to recover damages from Ms Adlam in the sum of $869,112 in the Employment Relations Authority, being the actual loss minus the holiday pay withheld.

Authority Member Rowan Anderson found that the loss claimed in relation to each category was proven and was attributable to the unauthorised misappropriation of funds by Ms Adlam for her personal use. The Authority found that Ms Adlam’s actions fundamentally breached her duty of good faith and an implied term to act with honesty and integrity in relation to WVS’s assets and property. The Authority awarded WVS damages in the sum of $869,112 and interest until the judgment is paid.

Yet in August this year Minister van Velden announced four new appointments to the ERA, saying she welcomed a “better balance” of public and private experience among members. In an interview she said that she was concerned too many ERA members had solely public sector experience. “They may believe that money grows on trees, because they’re used to union bargaining and those sorts of employment contracts, or [expect an] excellence of knowledge from the perspective of the employer in a situation too”.

The CTU and the PSA have called for van Velden to apologise. The PSA national Secretary, Fleur Fitzsimons, saying “these comments from the Minister are improper and amount to an inappropriate interference with the independence of the Employment Relations Authority. CTU President, Richard Wagstaff, went further “We are calling on the Prime Minister to show leadership by removing Brooke van Velden as Minister for Workplace Relations and Safety” and saying “it is of the upmost importance that ministers respect the independence of judicial bodies and not politicise them by saying they expect members they’ve appointed to deliver outcomes that suit their political agenda”.

It certainly would be a shame if appointments to New Zealand’s judiciary became political appointments like the Supreme Court is in the United States, and the public become used to and accept that appointees to the judiciary are simply an extension of the government of the day. Read more...

 

 


How widely should an employer consider redeployment opportunities?

MiningANZ Bank Australia recently announced plans to cut 3500 staff and 1000 contractors in the next 12 months as part of major changes intended to ‘simplify the bank’. In formally announcing the plan CEO, Nuno Matos, acknowledged this would be “difficult news for some of our staff”.

Unfortunately, ANZ also had to apologise to some staff who found out they had been fired through an automated email asking them to hand back their laptops. ANZ said the emails were sent in error to some staff ahead of schedule.  ANZ's retail banking executive Bruce Rush said it was "not our intention to share such sensitive news with you in this way". It said it has since stopped sending the emails and that staff have been spoken to personally.

The Financial Sector Union president Wendy Streets said "speed and cost-cutting cannot come at the expense of dignity and respect for workers," describing the "botched" episode as "disgusting".

However, the timing of the Bank’s announcement comes shortly after a significant ruling on redundancy and the option of redeployment from Australia’s highest court – modestly named the High Court.

The starting point under Australian employment law is that a “genuine redundancy” is a complete defence to an unfair dismissal claim. But it requires the employer to show that the affected employee’s role is no longer required to be performed by anyone, that it has consulted with the employee in accordance with any obligations under an applicable industrial instrument, and it would not have been reasonable in all the circumstances for the employee to be redeployed within the employer’s business. Prior to the new ruling, it was considered that employers were only required to consider suitable vacant roles as redeployment options for employees who they intended to make redundant.

In Helensburgh Coal Pty Ltd v Bartley & Ors the company contended that the Fair Work Commission is not permitted to consider possible changes to the ways in which an employer conducts its enterprise, including the option of replacing contractors with employees. It claimed that the Fair Work Commission cannot substitute its own view in place of the employer’s view on the matter, which it said is consistent with other aspects of Australia’s unfair dismissal regime where the Commission does not “stand in the shoes” of the employer to determine what it would have done if it were in the employer’s position.

The High Court of Australia disagreed and unanimously held, that the Commission is permitted to engage in a broad inquiry when determining whether an employer could have made changes to the way in which the employer used its workforce when determining whether a redundancy is genuine for the purposes of Fair Work Act. Before making a decision to dismiss employees on grounds of redundancy, employers must now consider all possible redeployment options, including whether redeployment in roles currently occupied by other workers, including contractors or workers engaged through labour hire and other outsourcing arrangements, would have been reasonable.

Traditionally, New Zealand courts have taken the view that whether a position is truly redundant is a matter of business judgment for the employer. The courts have been careful not to substitute their own opinions for that of the employer. That position has changed somewhat since the statutory test for justification was introduced by the Employment Relations Act.

Since 2010 it is accepted that, where possible, an employer should offer alternative employment to an employee whose position might be redundant. For example, in Wang v Hamilton Multicultural Services Trust the Employment Court held that the employer had a duty to offer appointment to an alternative position if the employee was capable of performing the role, even though that employee might not have been the best person for the job.

Redeployment may also need to look at other options in appropriate circumstance. For example with international entities, consideration may need to be given to work available outside of New Zealand. In Stellar Elements NZ v Annesbury, the Employment Court granted interim reinstatement when it considered that the interconnectedness of staff was demonstrated by the assortment of New Zealand and Australian staff with relevant reporting lines and the employee’s work was not confined to New Zealand.

It will be interesting to see if our employment institutions take notice of the High Court of Australia’s ruling including whether employers should reasonably consider redeployment into roles currently filled by other workers such as contractors or workers engaged through labour hire and other outsourcing arrangements.

And while ANZ Bank Australia plans to cut staff includes contractors, it may have a harder time justifying resulting dismissals as these multi-national banks operate in various jurisdictions with region wide reporting lines with complex resourcing arrangements including contracting, secondments and use of labour hire companies. Read more....

 

 

 


Lying – is it still a big no-no?

ParliamentTo tell a lie means to say something that is not true with the intention to deceive or mislead someone. A lie involves communicating a statement that the narrator believes to be false, with the goal of causing the listener to accept it as true. 

In employment law, employees are expected to comply with their implied common law duty of fidelity, which has been interpreted in terms of the employee’s duty to avoid any conduct a person of ordinary honesty would look upon as being dishonest. Parties must act and have trust and confidence in each other.

Parliament has rules about telling lies. It has decades of collected interpretation of those rules. Generally, Parliament’s rules say that mistakes are understandable but need to be corrected as soon as possible. Differences of opinion or interpretation are matters for debate. Intentional lies are one of Parliament's biggest offences, described as "misleading the House". Without correcting the lie, it is considered to be a contempt (like a contempt of court) and may be referred to the powerful Privileges Committee for adjudication (which of course is stacked on the lines of the party or parties in power).

Lies are taken seriously because debate is pointless if MPs make things up. This is particularly important for government ministers, who are responsible to Parliament. Accusing another Member of Parliament of lying is also a serious matter.

Speaker's Ruling 48/3 says that "The offence of calling another member a liar, or implying that another member of the House is a liar, is an offence against the House not an offence against the other person; it is an offence against the dignity of the House and the assumption that its members behave truthfully and honourably. For the Chair to allow that accusation to go unchecked would not be an injustice to the member accused but an injustice to the whole House."

Last month in Parliament the former Deputy Prime Minister, Winston Peters, complained about the Labour Leader, Chris Hipkins', description of tobacco tax changes. Mr Peters claimed "Point of order, Mr Speaker. We have sat here for month after month after month while those members have repeated that lie in this House. I am seeking to correct it”. Mr Hipkins responded "Point of order, Mr Speaker. Last week you ejected a member and named them for saying that they were struggling to find members with a backbone. How is accusing other members of repeatedly lying in the House any different?"

Instead of stamping on that serious allegation immediately the Speaker advised Mr Hipkins that his remedy was by way of the Standing Orders to have that corrected (making a formal written complaint). That ruling by the Speaker quickly lead to a degeneration of behaviour in the House. A few minutes later, Mr Hipkins tested the Speaker's new interpretation by interjecting "nah, it's just a lie" when Mr Peters was talking about the scrapped ferry project.

Lying can be grounds for an employer to dismiss an employee. It is usually classified as serious misconduct that undermines the trust and confidence essential to an employment relationship. Of course, the employer must follow a fair process, including investigating the allegation and providing the employee with an opportunity to explain their actions. The severity of the lie, the employee's disciplinary history, and the level of trust in the role all play a role in determining if the dismissal is fair. 

In an older case, Restaurant Brands v Bond, Mr Bond was employed in a KFC store as a general manager. After discovering monetary discrepancies, a covert investigation caught Mr Bond taking $80 from the till. During the disciplinary investigation Mr Bond gave an implausible explanation which was not believed. He was dismissed. Restaurant Brands claimed special damages against Mr Bond. The Employment Relations Authority held that Mr Bonds action of taking $80 was a breach of his duty of fidelity in his employment and as a senior employee Restaurant Brands placed a high degree of trust and confidence in him as a senior employee and awarded Restaurant Brands over $8,900 in damages (far more than the $80 he was caught stealing).

But like the recent exchange in Parliament, even in employment law, it is a question of degree. For example, it may be that a one-off incident of an employee claiming an extra 15 minutes on their timesheet, or an employee claiming a sick day while being caught playing golf, may not justify dismissal. At the end of the day, it will be for the employer to justify why the employer dismissed the employee for lying about what the employee was doing. Likewise, the employee will need to persuade the employer (or the Employment Relations Authority) why the lie was not sufficiently serious to warrant dismissal.

It would seem that the Speaker has recently lowered the bar on the high expectations the House has of it’s Members. Is lying, or accusing someone of lying, not as serious as it was once considered? Read more...