In an extraordinary move, the nine councillors of the South Wairarapa District Council took out full page adverts in their local newspapers reassuring the community that they are continuing with the work of safeguarding the interests of their region. This follows a unanimous vote of no confidence of the councillors in October last year. What has been going on?

After the no confidence vote, the mayor pointed out that the vote has no legal effect; he is elected by the community so the councillors have no power to demand his resignation. “I haven’t contemplated resigning. You’ll be the first to know if I do, I promise” he said.

The Council has been in trouble for some time. In May last year the then chief executive departed suddenly, with a confidential legal settlement in which he is understood to have been paid out about $80,000 in notice.

There was a code of conduct complaint made against the mayor over his public criticism of officials. At the small council a significant number of staff have left.

After the Christmas period the council held an extraordinary meeting in February and the council approved a request from the mayor for a two month leave of absence to allow him to focus on wellbeing issues. Under the protocols of the Local Government Act the Deputy Mayor Melissa Sadler-Futter assumed full delegation to act as mayor for the duration of Mr Connelly’s absence.

In speaking of his health issues, the mayor said that he had two failed operations last year and a successful one earlier this year. "There is no doubt that for a sizeable chunk of last year, I was not fit enough to do everything that I was expected to do or would have liked to have done," he said. Now, he felt "vastly healthier than what I have done probably for two or three years".

Yet at the end of April, a further extraordinary meeting was held the day before the mayor was scheduled to return from his leave of absence. This time the councillors voted to remove the mayor from a number of forums, groups, and committees.

The mayor said he was surprised by the action, and that despite a lack of support from the council he had no intention of stepping down “I intend to carry on doing what I have been doing.”

The councillors disputed the mayor’s claim that he was unaware of the review of committee appointments saying that an independent advisor had told the mayor about the council’s intended action before the meeting.

It is understood that the parties have over the preceding months engaged in mediation and facilitation, and that Local Government NZ has been working with the parties.

The council finds itself in an extraordinary situation. All the councillors have voted unanimously that they have no confidence in the mayor. The mayor and the councillors are all elected by the community.

Trust and confidence is often at the core of relationships. It is considered an essential part of an employment relationship. When either an employer or an employee expresses that they no longer have confidence in the other then inevitably the employment relationship ends.

If a Board of a company expresses that its trust and confidence has been lost in its Chief Executive, it is inevitable that the Chief Executive’s employment would be terminated for cause, or would otherwise be “exited” from the company.

If the District Council was a company and all the Board members had voted that they had no confidence in the Chairperson, it seems inconceivable that the Chair would not resign. In that unlikely event, the directors would request that the shareholders hold a shareholders meeting to remove the Chair and appoint a new Chair.

Where to for the South Wairarapa District Council? The Local Government Act provides that the role of a mayor is to provide leadership to the other members of the territorial authority and the people in the district of the territorial authority. As matters stand, clearly the mayor cannot provide this given that the councillors have unanimously and publicly said that they have no confidence in him. Given that the councillors cannot “fire” the mayor, should the mayor resign? The alternative appears to be that the community will have to pay a lame duck mayor for the rest of his term. Read more.....

In the United States the Federal Trade Commission has voted to ban employers getting their employees to sign agreements with non-compete clauses (often also called restraint of trade clauses). The Commission estimates that the ban would increase wages and benefits by up to $US488 billion over a decade and will lead to the creation of more than 8,500 new businesses each year.

The Commission estimates that around 30 million US workers are bound by a non-compete clause in their current jobs. The Commission asserts that such clauses restrict workers from freely switching jobs, it lowers wages, stifles innovation, blocks entrepreneurs from starting new businesses and undermines fair competition.

Currently three US states, plus Washington DC, already have nearly complete bans on such clauses, while some other states have restrictions on their use within certain parameters, such as limiting them to high-wage earners.

After the Commission made the announcement, President Joe Biden said “the FTC is cracking down on ‘non-compete agreements,’ contracts that employers use to prevent their workers from changing jobs even if that job will pay a few dollars more, or provide better working conditions. Workers ought to have the right to choose who they want to work for.”

There is likely to be legal pushback from US employers and business groups that may delay enforcement of the rule while it is challenged in court. Major business groups such as the US Chamber of Commerce have said they will challenge the Commission’s ruling. Unions are of course backing the ruling.

Across the Tasman, the Australian Government in September 2023 released an Employment “White Paper Roadmap” which noted that non-compete clauses effectively deter employees from switching jobs, which in turn inhibits wage growth, even when there could be uncertainty around their enforceability. With that finding, the Australian Government committed to investigate the use of non-compete clauses as part of a review on competition, productivity and wage movement. The public and stakeholders had until the end of May 2024 to make submissions about whether reform is needed to control the use of non-compete and restraint related clauses.

Because non-compete clauses can impose restrictions on the freedom and mobility of workers, they could be considered a form of indentured servitude. Master and Servant Acts were laws designed to regulate relations between employers and employees. Countries such as the United States, the United Kingdom, Australia, Canada, New Zealand (an 1856 Act) and South Africa used them to require obedience and loyalty from servants to their contracted employer. Infringements were punishable by courts, and could involve a jail sentence of hard labour.

Today, in New Zealand, restrictions on economic activity after the end of employment are not illegal, but are often considered unlawful because they are anti-competitive and contrary to the public interest. In principle, New Zealand workers are regarded as being free to “sell” and use their skills to earn a living. Where an employer requires a worker to agree on a non-compete clause, if they wish to enforce the restriction the employer will need to establish to the courts satisfaction that it is reasonable. As a result, non-compete clauses often include a time and geographical limitation, or a restriction on working for an employer’s competitor for a limited period of time.

The Employment Relations (Restraint of Trade) Amendment Bill was introduced to Parliament in September 2022 as a Private Member’s Bill. The Bill provides that restraints of trade could no longer be used for low or middle-income employees.  For high income employees, employers would have to pay half of the employee’s average weekly earnings for the period of the restraint of no more than six months after employment ends.

The Bill passed its first reading in Parliament in July 2023 and has been sent off to a Select Committee where members of the public will have an opportunity to make submissions. The National and Act parties opposed the Bill at its first reading, so it is unlikely that it will progress further.

At least for the present, for those New Zealand employers that have non-compete provisions for their employees, they will still need to justify their reasonableness should they be challenged in court. Read more....

The UK Labour Party has proposed sweeping overhauls of workers’ rights, including maternity and sick pay, day-one protection against unfair dismissal, bans on zero-hours contracts, fair pay agreements and union access. In New Zealand, it is like looking at our present and back to our past.

After months of speculation, last week the British Prime Minister, Rishi Sunak, called a national election for 4 July. The opposition Labour Party is running about 20 percentage points ahead of the Conservative Party in the opinion polls.

What might UK employment law world look like if as expected the Labour Party leader, Keir Starmer, walks into Number 10 later this year? In January 2024 the UK Labour Party set out their proposals for change in a green paper “New deal for working people”.

What are these proposals (and how do they compare to New Zealand):

• Making unfair dismissal a day one protection, removing the qualifying period (currently two years continuous service for ordinary unfair dismissal claims). There is no qualifying period in New Zealand.

• Removing the limit on compensatory awards for unfair dismissal claims (although those likely to benefit most are high earners). There are no statutory limits in New Zealand, although our Employment Court has effectively imposed bands of compensation. For the most serious cases, this may be in excess of $50,000.

• Extending unfair dismissal protection to workers, not just employees (what may loosely be described as “dependent” contactors). New Zealand’s minimum employment entitlements, including unfair dismissal protections, do not extend to contractors.

• Extending the three-month time limit for claims of unfair dismissal in the UK Employment Tribunal (although it is not yet clear what that may be). In New Zealand employees have 90 days in which to raise a grievance.

• Introducing personal liability for directors of companies who fail to comply with Tribunal orders. In certain circumstances, directors and officers of a company may be held personally liable, or liable to penalties, in New Zealand’s employment jurisdiction.

New Zealander’s may be surprised that the UK Labour Party is planning to empower workers to act collectively through the roll-out of Fair Pay Agreements. Like New Zealand’s now abolished system, Fair Pay Agreements would be negotiated through sectoral collective bargaining. Worker representatives and employer representatives would negotiate Fair Pay Agreements to establish minimum terms and conditions, which would be binding on all employers and workers in the sector. They are proposed to cover a wide range of issues including pay and pensions, working time and holidays, training, work organisation, diversity and inclusion, health and safety, and the deployment of new technologies.

The green paper “New deal for working people” also sets out other proposals, including:

• Enhancing “Family Friendly Rights” including extending maternity/paternity leave, introducing a right to bereavement leave and strengthening protections for pregnant employees.

• Enhancing sick pay rights by removing qualifying period of continuous service for sick pay, raising the entitlements for sick pay making it available to all workers (including “dependent contractors”).

• Introducing a right to “switch off”. Such a right has recently been introduced in Australia, and has already been implemented in some European countries, which protect workers if they fail to answer emails and txts from their managers outside of working hours.

• Bolstering discrimination laws, including allowing equal pay claims based on ethnicity and disability (which like New Zealand are currently only based on sex).

• Abolishing “zero-hour” contracts and contracts without a minimum number of guaranteed hours. Such contracts are already banned in New Zealand, although employees may commit to working more than their guaranteed hours if they have an “availability provision” compensating them for being available to do extra hours if required.

Of course, sometimes not all pre-election commitments are stuck to. But given the UK Labour Party’s significant lead in the polls as it goes into the election, it is unlikely to have to seek compromises with coalition partners.

The United Kingdom, should they even consider our small island nation, may take comfort that some of what is being proposed has worked well in New Zealand under both Labour and National governments. Conversely, New Zealand may be able to look to the United Kingdom and consider some of their proposals; expanding equal pay claims to include ethnicity and disability; extending the time limit to bring a grievance claim; and providing enhanced protection for “dependent contractors”. Read more....

Leadership, particular in the public arena, comes with certain expectations of supporting values and leading by example. It is a concern when our senior leaders, both in governance and management, fail to uphold those expectations.

New Plymouth District Council chief executive Gareth Green recently posted on Facebook comments about his love of a certain part of the female anatomy. The public site has 145,000 followers and was visible to anyone who visited the social media page of the news website The Spinoff.

The post related to a satirical story on New Zealand tunnels, which featured a number of Taranaki landmarks. In the description of the Huinga Tunnel, in North Taranaki, the story said it was hard to ignore the “vulvic shape” of the entrance thanks to its pointed crown.

Green posted “I do love a good tunnel. Almost half of these tunnels are in Taranaki. And all but two are shaped like a vulva. I also love a good vulva. I think I may make it a mission to enter them all (the tunnels, that is).”

This may be offensive to many given Green’s leadership position, and a lot more may regard it as having the “ick” factor.

To his credit, after being emailed by the Taranaki Daily News, Green deleted the post several days later.

New Plymouth mayor Neil Holdom was questioned about the post and was asked whether he considered it an issue that the council needed to address as Green’s employer. He acknowledged that “we live in an age where people in the public eye are judged by every word whether it be at work in public, in private and online, including with family members”. As an outcome, Holdom said “I have reminded our CEO of this and do not expect we will see a repeat of anything like this in the future.”

There is no doubt that sexual jokes or remarks may amount to sexual harassment in the workplace (and in other forums).  Under the Human Rights Act sexual harassment includes any unwelcome or offensive sexual behaviour that is repeated, or is serious enough to have a harmful effect. It can occur in person and through other channels; such as txt messaging, email, internet chat rooms or other social media platforms.

It is highly likely that staff at the New Plymouth District Council would have seen the Facebook post, and would certainly have been made aware of it from colleagues that accessed the post, or heard of it through the media.

It is a concern that New Plymouth councillors have not made it clear that their Chief Executive has acted inappropriately. Comments made by councillors reported in the media have largely been in Green’s favour.

Councillor Murray Chong said he did not think it was even an issue. “It was a bit of humour,” he said. “In order to have a good marriage you need to have a good sense of humour and I hope his wife had a little chuckle. I don’t have a problem with it, in fact, I praise the guy for having a Kiwi-bloke sense of humour.”

First-term councillor Bali Haque had full confidence in Green and questioned whether the Taranaki Daily News was acting appropriately in its reporting. “I can see no public interest being served here,” he said.

Fellow first-term councillor Bryan Vickery also expressed his “complete confidence” in Green’s integrity. “In retrospect, his banter comment made to his spouse posted publicly lacked circumspection,” he said.

Councillor Tony Bedford said while he had an opinion on the situation, he had communicated that directly with Green and believed that was between the two of them.

Veteran councillor Gordon Brown believed Holdom had handled the situation in the right way by acknowledging it was not the right thing to do without making “a huge fuss” about it.

In has long been established in the employment jurisdiction that conduct outside the work relationship which brings the employer into disrepute may warrant dismissal.

Mr Green’s conduct may not warrant his dismissal, but his lapse of judgement and how the council has dealt with this now sets a precedent at the highest levels that sexually offensive behaviour or sexual harassment will not be called out for staff at the council. Should staff feel that they have been sexually harassed they may be less likely to bring a complaint, or maybe rightly justified in feeling that their complaint would not be taken seriously. They may rightly feel that their leaders values are such that they should not sit in judgement if a complaint is made.  Read more....