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Robinson, Labour Inspector v Auckland Auto Collection Ltd—Employment Relations Authority, Auckland, June 2009. Application for determination on whether ‘relevant daily pay’ for public holidays should include car sales commission.
The Employment Relations Authority settled a dispute about whether the ‘relevant daily pay’ for car salespeople should include commission. The car salespeople were paid a retainer, plus monthly commission—calculated at the end of the month based on the volume of vehicles sold.
In the past, the company had calculated ‘relevant daily pay’ for public holidays, sick, and bereavement leave by paying the daily average of the employees’ previous four weeks’ commission payments in addition to their retainer. However, from April 2008, it began paying the salespeople their retainer only on public holidays.
If they were absent on sick or bereavement leave, commission for any vehicles delivered on those days was credited to the salesperson.
The labour inspector claimed the company should include commission in its calculation of relevant daily pay. He said a public holiday would otherwise be a working day for the salespeople, and commission could be earned on a working day. As a result, the inspector said, the employer had incorrectly calculated the relevant daily pay, and the employees had been disadvantaged.
The company, however, said that for the purposes of calculating commission, a vehicle was not ‘sold’ until after delivery, and vehicles were not delivered on public holidays. It also pointed out that if commission was included in relevant daily pay, then there would be an incentive for its salespeople to be absent—they would get commission for the day in question, then be paid the commission again in the monthly commission calculation.
The Authority agreed with the company. The salespeople would not have received any commission payments on the day concerned because such payments were calculated on a monthly basis. The ‘relevant daily pay’ they would have received ‘but for’ their absence was their retainer.
Allardice v Netcor Education and Training Ltd—Employment Relations Authority, Auckland, June 2009. Claim for unjustified dismissal—successful.
An employee who wanted to be an independent contractor, but whose employment was terminated when she did not sign an employment agreement in time, has succeeded in her personal grievance claim.
The woman had worked for the company as a contract tutor until the decision was made to change the policy so that tutoring staff were employees, as of January 2007. She was not happy with the change in status, but nevertheless, the company began treating her as an employee from January 2007, and deducted PAYE from its payments to her. The employee’s work remained the same.
Initially, the company did not provide the woman with a written employment agreement, but in March 2007 she was given a proposed agreement that included a fixed-term ending in December 2007. Her accountant wrote to the company on various concerns (including the fixed-term) in March 2007. The company was side-tracked by an allegation from one if its directors that the woman had been overpaid. It investigated and found this was not the case. Her accountant again wrote to the employer about the employment agreement in August 2007, after which the company director’s arranged a meeting.
Despite this meeting, the woman’s concerns about her employment agreement were not addressed. Finally, in early December 2007, she was provided with another proposed fixed-term employment agreement, ending in December 2008. She was given a week to sign or the offer would lapse.
The woman raised a number of questions about the proposed agreement with her manager, who asked that she put them in writing, which she did. However, without responding to the questions, the employer required the woman to sign the agreement or the offer would be withdrawn.
The woman did not sign the agreement by the deadline, and her employment was terminated as a result. She raised a personal grievance for unjustified dismissal.
The Employment Relations Authority was satisfied that the woman was an employee. The parties were not disputing the oral terms and conditions of employment, apart from the company maintaining that the woman was all times subject to a fixed term.
The Authority noted that the woman had not agreed that her employment would be fixed-term. Nor was she given reasons for it being fixed-term. There was also a requirement under section 66 of the Employment Relations Act for fixed-term agreements to be stated in writing. The company was unable to rely on a fixed-term if it had failed to meet this requirement. The woman’s employment was therefore of an indeterminate nature.
The company’s failure to respond to the woman’s March letter until August was “an inordinate delay” without any satisfactory explanation. Its actions in terminating the woman’s employment fell well short of what a fair and reasonable employer would have done in all the circumstances. Her dismissal was unjustified.
The Authority ordered the company to pay the woman three months’ lost wages and $10,000 compensation for distress caused by the abruptness of the dismissal. It also ordered the company to pay a penalty of $1000 (to the woman) for breaching its duty of good faith.
The Authority said the woman: “had been given limited opportunity to discuss or negotiate on the terms set out in the employment agreements. Then at the 11th hour Netcor acted very swiftly indeed to terminate the relationship, rather than spend any more time in what it viewed as fruitless negotiation. These actions were not the actions of an employer being responsive and communicative in an employment relationship.”
It also commented on the irony of the situation: “The main issue of dispute between the parties throughout 2007 was Ms Allardice’s assertions throughout that she should be an independent contractor. Had she achieved her ambition, she would not have had redress to the personal grievance provisions of the Act”.
Air New Zealand Ltd v V—Employment Court, Auckland, June 2009. Appeal against Employment Relations Authority’s determination of unjustified dismissal—successful.
The Employment Court has reversed an Employment Relations Authority determination that an employee who tested positive for drugs was unjustifiably dismissed. The employee’s work included the use of heavy machinery, which meant that he was in a ‘safety sensitive’ role. As such, he could be subject to random drug tests under the employer’s alcohol and drug policy.
The employer’s policy required zero blood alcohol and a drug-free status. The policy strongly encouraged employees who felt they might have an alcohol or drug abuse problem to declare it by ‘self referral’, in which case the policy provided they may be given rehabilitation support. The policy made it clear, however, that if an employee declared an alcohol or drug problem immediately before or after testing, it was not considered to be self referral. The policy also warned that a positive drug or alcohol test result could lead to an investigation and disciplinary action, including dismissal. Another clause stated that the offer of rehabilitation to an employee was at the discretion of the company.
In a random test, the employee tested positive for cannabis at 20 times the threshold level. An investigation was carried out, during which the employee openly admitted he had a problem with cannabis and said that he used it to help deal with his domestic problems, which included caring for his chronically ill mother. He said that he had not smoked cannabis since his drug test, and that he was prepared to give it up and participate in rehabilitation. However, he did not agree that he needed to give up alcohol, and denied that his drug use had endangered anybody in the workplace.
At the end of the investigation, the decision was made to dismiss the employee for serious misconduct. The Employment Relations Authority determined that the employee’s actions constituted serious misconduct, but that the employer’s failure to offer him rehabilitation meant that his summary dismissal was unjustified. The Authority concluded that rehabilitation was a more prominent feature of the policy than summary dismissal, and that dismissal and rehabilitation were mutually exclusive under the policy.
The Employment Court, however, held that the employer was justified in dismissing the employee. The Authority had erred by merging the discretion to offer rehabilitation, which was outside the disciplinary investigation, with the disciplinary investigation itself. The company was entitled take into account the employee’s denial that he had endangered workers or should give up alcohol. The company had acted as a fair and reasonable employer in accordance with its published policy. It was discretionary as to whether rehabilitation should be offered. The employee’s personal grievance claim was dismissed.
Lapworth v Fonterra Cooperative Group—Employment Relations Authority, Auckland, June 2009. Claim for unjustified dismissal on the basis of redundancy—unsuccessful.
The Employment Relations Authority determined that the way the employer handled the employee’s redundancy was in line with the collective agreement. The employer was proposing major changes in technology in its milk powder packing plant. As a result, the number of staff needed to operate the plant would reduce from 36 to 12.
The collective agreement contained a comprehensive clause on the process to be followed in the event of redundancies. As the Employment Relations Authority later noted, the intention of these provisions was to avoid compulsory redundancies as far as practicable.
The employer began consulting on its proposals and established a consultative committee, made up of both employer and union representatives. It was agreed that the affected staff could identify any preferences they had for vacancies, and that vacant positions would be advertised internally and would be contestable among the directly affected employees.
A competency check was developed and employees were rated accordingly. The man scored very low on this assessment. He was not happy that this points system did not take into account his 24 years of service. The employee did not attend CV writing and interview skills workshops held for the affected employees.
He was unsuccessful in his applications for vacancies. The managers provided him with constructive feedback on why he hadn’t been successful and made suggestions for his approach to future vacancies. The employee was provided with one-on-one coaching to help him improve his performance at interviews. The date his employment was supposed to end was extended by several months to give him more chance of redeployment.
Nevertheless, the vacancies available were filled by the other employees affected by the restructuring, and the employee’s employment eventually ended. He claimed that, in line with the ‘first on, last off’ principle stated in the collective agreement, he should have been given priority for redeployment over employees with lesser service.
The Authority commented that the employee’s understanding of the ‘first on, last off’ principle was correct. However, the collective agreement qualified the application of this principle with the words “…all things being equal”.
The Authority was satisfied that the employer had shown that all things were not equal between the employee and the other directly affected employees, and this is why he continued to miss out on opportunities for redeployment. It concluded that the employee’s dismissal by reason of redundancy met the tests for genuine reason and fair process.
McAlister v Air New Zealand Ltd—Supreme Court, July 2007. Appeal against Court of Appeal decision on the comparator to be used in determining whether the employee had been discriminated against on the grounds of age—successful.
The Supreme Court examined what comparator should be used when deciding whether the employee had been illegally discriminated against on the ground of age. The company had an employment policy which reflected the ‘Rule of 60’, under which commercial pilots could not operate as a pilot-in-command (PIC) on many international flights once they reached 60 years of age.
The employee was told that he could not continue to be a Boeing 747-400 (B747) flight instructor once he turned 60 because he could not act as a PIC on sufficient international flights to maintain his flight instructor position. He was effectively demoted. The company claimed that the age requirement was a genuine occupational qualification for the employee’s flight instructor position.
The Employment Court held that the policy breached section 104(1) of the Employment Relations Act 2000, and that the employee had been discriminated against on the grounds of age. In reaching this conclusion, the EC held that the comparison was between a flight instructor/PIC who has reached age 60 and those flight instructors/PICs who were under 60, but doing work of same description as the employee before reaching 60.
The Court of Appeal then overturned this decision, ruling that the Employment Court had used the wrong comparison. The Court of Appeal said that the comparison should have been between pilots who suffered from no operational restrictions and pilots who did suffer from operational restrictions. There were reasons other than age that would impose operational restrictions on pilots, such as if the pilot did something that dis-entitled them from entering the United States.
On appeal, the Supreme Court ruled that it was the Court of Appeal that had applied the wrong comparator. According to the Supreme Court, the comparison should simply have been with a similar pilot aged under 60.
The Supreme Court considered whether age was a genuine occupational qualification for the employee in terms of section 30 of the Human Rights Act 1993 and concluded that it was. However, the Court remitted the case to the Employment Court for a decision on whether the company can establish that it was, reasonably, unable to adjust its activities to accommodate the restriction placed on the employee by the FAA rule.
Postal Workers Union of Aotearoa v New Zealand Post Ltd—Employment Relations Authority, Auckland, June 2009. Application for payment for absence from the workplace—unsuccessful.
The Employment Relations Authority determined that employees who chose to leave the workplace while the toilets were temporarily unavailable were not entitled to be paid for the day.
The union delegate at one of the company’s depots was informed that the toilets were not working and there was no running water. She was told that employees would be paid to leave the workplace to use other facilities.
The delegate held a meeting with the union members, where it was decided that it was a health and safety issue, and the employees should not be required to stay at work. The Health and Safety in Employment Regulations 1995 requires employers to provide toilet facilities and running water. The delegate told the union members that they would still be paid.
The delegate relayed this decision to the branch manager, who explained that there was cold running water, but no toilets. She said that if employees left the workplace, they would not be paid.
Arrangements were made for portaloos to be delivered and the branch manager contacted the employees who had left work to let them know that the situation had been resolved. Most of them chose not to return to work.
The employees who left work were not paid for the hours they were absent. In disputing this, the union pointed out that there was a similar situation some eight weeks previously, where toilets and running water were not available. On that occasion, staff were sent home by the employer and paid for the day.
The Employment Relations Authority noted that the employees had left the workplace with “undue haste”. The union delegate’s advice to members that they would be paid for the day if they left the workplace was “misconceived and without authority”.
The delegate should, in good faith, have discussed with the branch manager what the situation would be if members chose to leave the workplace, before communicating with her members.
The previous occasion where employees had been paid was different, because there had been no running water and it had been the employer’s decision to send staff home. In that case, the employees were available for work but could not be offered any because of their employer’s instruction, and it was therefore appropriate for staff to have been paid.
In this case, however, the employees who chose to be absent from work, despite knowing that the toilet situation had been resolved, were not entitled to be paid.
—Selected and written
by Louisa Clery
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