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....

Workplace 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...

ANZ 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....