Human Resources Magazine

EMPLOYMENT RELATIONS  David Burton

Flexibility at work comes with risk?

While we await the Court of Appeal’s ruling on the recent Uber cases, David Burton, an employment law barrister, looks at the implications for employers. Achieving flexibility by accessing the so-called “gig economy” may bring some risk.

Generally, the Uber cases reflect a testing of employment status in light of fast-moving changes to the way in which work is done. Most recently, the Chief Judge of the Employment Court in E Tū Inc v Rasier Operations BV issued a declaration that four Uber drivers were employees.

The business model and the law

The Court explained that the Uber operation works as follows: riders/eaters download the Uber App; they advise Uber (via the App) of where they want to travel to/what they want to eat; Uber (via the App) offers the trip/food to available drivers; an available driver accepts the offer, collects the rider/food and drives to their chosen location. Riders and eaters make payment to Uber; Uber makes payment to the drivers.

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”.

The Employment Court highlighted the need to adopt an approach to determining the status of the drivers with regard to legislation and its role in protecting vulnerable workers and ensuring that minimum standards are maintained. It said that the broader social purpose of the legislative framework must be kept in mind when considering whether a worker is an employee. The Chief Judge said that her task was to ascertain whether the individual is within the range of workers to which Parliament intended to extend minimum worker protections.

The Court’s findings

The Court accepted that some of the usual indicators of a traditional employment relationship were missing. However, it found that significant control was exerted on drivers in other ways. These included incentive schemes that reward consistency and quality. Other controls included withdrawal of rewards for breaches of Uber’s standards, such as slips in quality levels, measured by user ratings.

The Court observed that, on one level, being an Uber driver provides flexibility and choice. Drivers could juggle driving with their other jobs, businesses or family and community responsibilities. None of the drivers were required to log onto the App at any particular time and could work as long or as little as they liked.

The Judge thought that concepts of “flexibility” and “choice” were not particularly helpful in determining employment status. She observed that flexibility is a feature of modern employment relationships. Casual employees, for example, can exercise flexibility and choice about when they work (there being no legal obligation to accept work offered). The fact that they can choose to work at times that suit their personal commitments does not mean their worker status changes. She observed that in New Zealand any employee, casual or otherwise, is entitled to request flexible working hours and such requests can only be denied on a limited number of grounds.

Importantly, the Court said Uber had sole discretion to control prices, service requirements and standards as well as other aspects of the business such as marketing. Drivers were restricted from forming their own relationships with riders or organising substitute drivers to perform services on their behalf.

The cost of defending

In coming to its decision that the drivers were employees, the Employment Court was not deterred by the complex commercial operation that Uber uses in New Zealand. Interestingly, the Court found that an employee may have more than one employer and that an employer may be more than one corporate entity.

When considering flexible work arrangements, employers may need to consider the cost of defending the arrangement. Uber has deep pockets and operates in a global market. It can certainly afford to litigate this issue as far as it needs to (or can). The appeal of the decision has now been heard in the Court of Appeal and the decision will be released in due course. Whatever the outcome, it will be a significant decision.  Read more....

It all seems rather “Trumpian” in New Zealand politics at present. Do we need to do a factcheck before even contemplating the accuracy of statements being made by Ministers?

Recently, the Prime Minister made announcements regarding changes to maths to be taught in schools. His speech at the National Party Conference included references to what he labelled the "shocking" state of maths achievement after "years of drift and decay". At Year 8, he said, only 22 percent of students were at the expected standard for maths which he called "deeply concerning" and a result of "total system failure".

In support of his analysis he said "this is the first time we have assessed our kids showing where they are at compared to the year they are actually in. Essentially, that means many parents were being told that their children are doing just fine when the reality is they could be years behind." The failure to use assessment properly was "abhorrent" and the necessary interventions had not occurred.

Former Education Minister Jan Tinetti did not deny that New Zealand has a long-standing maths achievement issue but was very critical of the Prime Minister’s analysis.

“The big thing here that I’m very angry about is that this Government has manipulated data to justify their own crisis at the moment.” She explained “They’ve bandied round that figure of 22% now that is measured against the curriculum that was released last year, has not been taught so effectively you’re measuring kids against something that they’ve never ever been taught. That is manipulation”.

Likewise, Labour's leader Chris Hipkins called out the government for not using accurate data. He explained that "it's a bit like moving the goalposts after the kids have already kicked the ball" and said "I think the government should use data and information that's accurate. I think assessing kids against a curriculum that they have not been taught isn't a fair reflection of what kids are capable of”.

Maybe the Prime Minister was not aware of the irony when trying to justify his use of the data; “whether it’s 45% or 22%, we’ve got a problem in maths” he said.

Remaining in the education field, earlier this month the mega polytech, Te Pūkenga, tabled its 2023 Annual Report in Parliament, which showed that it had made more than $50 million in cost savings. The report showed it still had an operating deficit of $37.9 million at the end of 2023, but that was a significant reduction on the forecast deficit of $93.4 million.

Yet, as recently as June this year the Tertiary Education Minister Penny Simmonds told Parliament’s Education and Workforce Select Committee that the polytechnics were facing a $189 million financial hole.

Who knows what the actual position in the health system is. Doctors and nurses continue to raise the alarm about staff shortages and burnout. All too often patients are sharing stories of long wait times and delayed diagnoses. The Minister and Health New Zealand are adamant frontline roles are safe from cuts. Yet a copy of a presentation to senior leadership last week about "potential cost savings in hospital and specialist services" suggested a total reduction of 4492 staff, including 470 doctors, 1491 nurses, 338 allied staff and more than 2000 managers and admin workers. The newly appointed Health Commissioner denies he was aware of this and staff have been told to dismiss the presentation.

Contrast this to the obligation of good faith that is at the heart of employment relationships. Under common law it was an implied duty, but the Employment Relations Act introduced a statutory duty of good faith. It provides that parties to an employment relationship must deal with each other in good faith; and must not, whether directly or indirectly, do anything to mislead or deceive each other (or do anything that is likely to mislead or deceive each other). It confirmed that the duty of good faith is wider in scope than the implied mutual obligations of trust and confidence. The Act also provides for remedies, including possible penalties, if the duty of good faith is breached.

Data from Covid times, pre-high inflation times, and the cost of living crisis continues to be used to obfuscate the true position. New Zealand has gone and continues to go through some hard times. By treating us in good faith the journey and the measures that the present government wants us to take would be more palatable – with no wearisome point scoring and manipulation of the actual position. Trust and confidence makes strong governance. And Government? Read more....

A decision of the Employment Court in late July is the latest decision that confirms that the cost of unjustifiably dismissing an employee is getting higher. It follows a decision of the Employment Court last year that raised the “bands” used for assessing the level of compensation an employee may be entitled to.  

An employment relationship is fundamentally governed by the common law of contract. Under the common law, the parties to an employment agreement have mutual obligations of trust and confidence in their dealings with each other. But the special nature of the employment relationship means that an extensive body of additional rules and procedures also governs it. In New Zealand, most of these are found in the Employment Relations Act (the Act) and through decisions made through our courts.

When dismissing an employee, employers need to be able to show that the dismissal was justified; that means the employer will need to have a good reason to dismiss the employee, and that the employer followed a fair and reasonable process. Failure to meet either of these requirements is likely to establish that the dismissal was unjustified. If the dismissal was unjustified, the employee will be entitled to remedies proscribed by the Act. While reinstatement remains the primary remedy (although not in practice) the most common remedies awarded are lost wages and compensation for humiliation, loss of dignity, and injury to the feelings of the employee.

In the recent case of Gumbeze v The Chief Executive of Oranga Tamariki, Judge Smith in the Employment Court found that Mr Gumbeze was unjustifiably dismissed. Oranga Tamariki had dismissed Mr Gumbeze summarily for serious misconduct. The decision was made after an investigation of Gumbeze by an external investigator into complaints about him by his supervisor, some other supervisors, and following a review of three cases where he was the assigned social worker. Oranga Tamariki concluded that his behaviour, actions and social work practice amounted to serious and persistent misconduct.

Judge Smith noted that Oranga Tamariki could have concluded that some of Mr Gumbeze’s work fell below its expectations and required remediation. But Judge Smith concluded that Oranga Tamariki had not shown that either individually or together the concerns about Mr Gumbeze amounted to serious misconduct. The Judge also concluded that there were also problems with the investigative process.

Mr Gumbeze requested that he be awarded lost remuneration for one year. His evidence was that he did not receive any income during that period following his dismissal. Under the Act, the Court may order reimbursement of all or any part of the remuneration lost by an employee. Where a successful grievant has lost remuneration, the Act directs that the minimum amount that must be awarded is the lesser of the actual lost remuneration or to three months’ remuneration. The Act provides a discretion to award a greater sum. Judge Smith was satisfied that it was appropriate to exercise the Court’s discretion and to order more than three months’ remuneration and awarded Mr Gumbeze one year’s salary. Mr Gumbeze was also awarded $35,000 compensation.

GF v Comptroller of the New Zealand Customs Services was an Employment Court decision last year dealing with the mandate for all government front-line employees to be vaccinated for Covid-19. Chief Judge Inglis found that GF was unjustifiably disadvantage and dismissed for refusing to be vaccinated.

In dealing with the remedy for compensation for humiliation, loss of dignity, and injury to feelings the Chief Judge concluded that the “bands” for assessing quantum should be adjusted for future cases. In noting that the bands needed to remain current, the Chief Judge referenced that a similar view had very recently been taken by the Court of Appeal in the United Kingdom. Applying the Reserve Bank's inflation calculator the Chief Judge increased Band 1 to $0-$12,000; Band 2 to $12,000-$50,000; and Band 3 over $50,000.

The job market in New Zealand is much tighter than it was a year ago. Wellington is the hardest hit with the slashing of the public service. This means that a lot of highly skilled and highly paid public servants will be looking for roles in the private sector. But it will not be easy given that business confidence is the lowest it has been for a long time. Even in the private sector, consultancy firms around the world are making cuts. Redundant workers may be out of work for significant periods of time.

Both the Gumbeze and Customs cases involved public service organisations that are well supported by Human Resource departments and legal services. Both organisations were held to account and faced significant monetary awards, even without taking into account the legal cost of defending the claims. Big public sector employers such as the Ministry of Education are being held to account by the unions. If such employers get it wrong, the cost could be huge with a clear trend of increasing remedies for successful grievants. Read more....

Bringing up children takes work, often a lot of work. “It takes a village to raise a child” is an African proverb that means an entire community of people must interact with children for those children to grow in a safe and healthy environment. 

Sweden is a small country that has over generations built a society where citizens are taken care of from cradle to grave through its taxpayer-funded social welfare system. In a world first, Sweden has recently extended paid parental leave to include grandparents.

In Sweden, parents already have enviable parental entitlements they can access. Between the parents they can get a paid parental benefit that can extend to 480 days (about 16 months) per child between the parents. Of those days, 390 days are calculated on a person’s full income (about 80%), the remaining 90 days are paid at a fixed rate of 180 kronor (about $NZ28) per day.

Fifty years ago, Sweden was the first country in the world to introduce paid parental leave for fathers and not just mothers. Other enviable benefits for parents include the ability to work reduced hours until the child is 8 years old, and government employees can get those reduced hours until the child turns 12.

Under the recent change to the law, grandparents can also be paid to step in to care for their grandchildren for up to 90 days for the child’s first year. Parents have to transfer some of their parental leave allowance to the child’s grandparents. A parent couple can transfer a maximum of 45 days to others while a single parent can transfer 90 days.

Commenting on Sweden’s recent change, Dr Asha Sundaram, a Senior Lecturer in the Department of Economics at the University of Auckland, said “Research suggests that children who spend time with grandparents have better behavioural and cognitive outcomes. It's also beneficial to grandparents, and not only that, there's evidence that children who spend time with extended family also have better health outcomes."

How does New Zealand compare? Eligible parents can receive paid parental leave payments for up to 26 weeks. These have recently been increased from 1 July with the maximum weekly rate for paid parental leave going from $712.17 to $754.87 gross per week. The minimum parental leave payment rate for self-employed parents has also increased from $227 to $231.50 gross per week.

“We know families are doing it hard right now", Workplace Relations and Safety Minister Brooke van Velden said announcing the increases. "This coalition Government is committed to making sure that families and parents receive the support they need to give their new child the best start to life. Paid parental leave is one way that this is done."

At the other end of the scale, the United States is one of only a few countries that does not have a national paid maternity leave policy. The federal law provides eligible workers with up to 12 weeks of (unpaid) job-protected leave per year. At a state level, just 13 states and Washington DC provide some paid parental leave, but generally only for 3 months.

The Retirement Commission reports that already, one third of New Zealand’s workforce is aged 55+. New Zealand has one of the highest rates of people aged 65+ still working at 24%. This compares to the UK rate of 10%, Australia 12%, USA 19%, Japan 20% and Iceland 35%. Statistically, in New Zealand there are less grandparents that can assist bringing up a grandchild due to work commitments. If New Zealand were to consider extending parental leave to include grandparents, the first step would be to provide job protection for those temporarily giving up work to care for their grandchild. Like parents taking parental leave, the employer could be obliged to keep the grandparent’s job open for them while they take grandparental leave, unless it is a key position in the business, or the role becomes redundant? Consideration could also be given to the grandparents sharing in the entitlement to paid parental leave the government already provides? Both seem low cost ideas.

In New Zealand, Maori have whakatauki that express a similar sentiment to the Swedish system. He waka eke noa - a canoe which we are all in with no exception. This whakatauki implies that ‘we are all in this together’. He aha te mea nui o te ao? He tangata! He tangata! He tangata! What is the most important thing in the world? It is people! It is people! It is people! Our children are our future – should we be doing more to assist the village to give them the best start?  Read now....