Issue 146
NZ Tramways and Public Passengers Transport Employees’ Union Inc and Xie v Wellington City Transport Ltd—Employment Relations Authority, Wellington, August 2009. Claim for reimbursement of legal expenses—unsuccessful.
An employee’s claim that his employer should pay his legal expenses for defending a criminal charge incurred while at work has been rejected by the Employment Relations Authority.
The employee was a bus driver employed under a collective agreement which contained a clause stating “When operators are on duty and driving a company vehicle, the company, when it is a driving-related prosecution, will pay legal fees of operators who successfully defend any charge brought against them”.
While working as the driver of a late night bus, the employee helped a drunken female passenger to disembark. She later complained that he had groped her and the employee was charged with indecent assault. He successfully defended this charge, incurring over $2700 in legal costs.
The employee claimed reimbursement of his legal expenses on the basis of the clause in the collective agreement. The employer declined because the charge was not “driving-related”.
The Authority noted that the wording “driving-related” referred to the word “prosecution” in the collective agreement. This meant that for the clause to apply, it must be a prosecution for a driving-related offence. It determined that indecent assault is not a driving offence.
The employee had also claimed that under common law, his employer was obliged to indemnify him for defending himself against charges brought while he was acting for the employer. The Authority acknowledged this principal existed, but that the courts had held the right to be indemnified could be excluded or modified by the express terms of the contract. It determined that the clause in the collective agreement restricting the employer’s liability to pay legal costs for driving-related prosecutions “could have no other purpose other than to modify the common law as to indemnification”.
Eastern Bay Independent Industrial Workers Union Inc v Carter Holt Harvey Ltd—Employment Court, Auckland, December 2009. Application for determination on compliance of employment protection provision—partly successful.
The Employment Court has given some pointers on what an employment protection provision (EPP) should contain in order to comply with the ERA 2000.
The union represented five saw doctors who were party to a collective agreement that contained an EPP. The company wanted to proceed with a restructuring which would affect the saw doctors. The Court was tasked with looking at whether the EPP complied with the ERA 2000. The EPP clause was as follows:
In the event of a restructuring, as defined in the Employment Relations Amendment Act (No 2), being the sale, transfer, or contracting out of all or part of the company’s business to another entity (‘the new employer’), the Company will:
(i) Provide the new employer with a copy of this agreement
(ii) Meet with the new employer and, taking into account the commercial requirements and obligations of the Company and the new employer, negotiate with the new employer regarding the arrangements that would apply to affected employees in the event that the sale, outsourcing or transfer takes place. These negotiations shall include determining whether affected employees would transfer to the new employer on the same or different terms and conditions of employment.
Employees are not obliged to accept any offer of employment made by the new employer. However, in the event that any employee rejects an offer of ongoing employment made by the new employer, [the clause setting out circumstances under which the employer was not liable to pay redundancy compensation] shall apply.
The Employment Court compared the EPP to the meaning given under the ERA 2000. The requirement that it include “a process that the employer must follow in negotiating with a new employer about the restructuring to the extent that it relates to affected employees” appeared to be addressed by the obligation to “Meet with the new employer”. The Court held that the notion of “process” in the Act seemed to contemplate more than a bare requirement for a meeting, and should include details such as:
- The timing of meetings in relation to an intended restructuring process;
- Advice to the union and/or affected employees of such meetings and their intended agendas;
- The method of meetings including who will attend; and
- A process of reporting back the outcomes of the meetings.
In relation to the requirement to include “the matters relating to the affected employees’ employment that the employer will negotiate with the new employer, including whether the affected employees will transfer to the new employer on the same terms and conditions of employment”, the EPP simply reiterated the statutory provision. The Court held that although this might meet, barely, the second statutory requirement, it was not enough to save the EPP.
The third requirement was to include “the process to be followed at the time of restructuring to determine what entitlements, if any, are available for employees who do not transfer to the new employer”. The Court noted that the final paragraph of the EPP purported to address this requirement. However, it did not give the process to be followed, but rather the consequences of an event. The redundancy compensation clause that the EPP referred to limited the employer’s liability to pay compensation if the employee chose not to transfer to the new employer. The Court held that it was “more an employer protective provision”.
The Court concluded that the EPP did not meet the statutory requirements. However, in line with Norske Skog Tasman Ltd v Manufacturing and Construction Workers Union Inc (see below), the absence of a compliant EPP did not prevent the employer from restructuring.
Bandy v Collins Homes Ltd—Employment Relations Authority, Christchurch, August 2000. Claim for unjustified dismissal and unpaid wages—successful.
A company has been ordered by the Employment Relations Authority to pay a worker for the considerable amount of time spent travelling to and from the work site.
The employee had been employed as a builder for about eight months when he was told that he was out of work because the business had closed. The employee claimed to the Employment Relations Authority that his redundancy might not have been necessary if the company owner had devoted more energy to marketing. He also claimed that he was owed wages as he hadn’t been paid for all of his hours nor his travel time.
The Authority accepted that “there is some obligation on employers to maintain, so far as is possible, the work of employees, but it cannot be an obligation of an employer to satisfy a test that it has adequately marketed a struggling business in order to satisfy the genuineness of a redundancy”. The employee’s redundancy was genuine, but the way in which it was effected was unjust and unfair as there was no consultation or earlier warning.
In relation to unpaid wages, the employment agreement provided for 40 hours per week and special arrangements when the employee was required to work “outside normal working hours”. The employee was never paid for a full 40-hour week.
The company claimed that the “outside normal working hours” provision meant that it could reduce the employee’s hours of work without consultation. The Authority did not agree, saying that the clause provided for extra hours to be worked—it did not create a facility to reduce hours of work.
The employee was also entitled to be paid for his travel time to work sites. The employment agreement gave the employer’s address as the location of the workplace. For several months, the employee had been working 125km away from that address, travelling 1½ hours each way.
The Authority determined that a fair and reasonable employer would not allow an employee not to clock on until he had driven for 1½ hours to get to the work site and deduct a similar amount of time at the end of the day.
The company was ordered to pay the employee $3000 compensation for hurt and humiliation, lost wages, 243 hours of unpaid work and around 115 hours of travel time.
Norske Skog Tasman Ltd v Manufacturing and Construction Workers Union Inc—Employment Court, Auckland, December 2009. Appeal against order stopping restructuring until an employment protection provision was agreed—successful.
The Employment Court has ruled that it is unable to order that an employer cannot proceed with restructuring unless there is a compliant employment protection provision (EPP) in place.
The collective agreement had expired and the union and employer were bargaining for a new one, but had not reached agreement on the employment protection provision (EPP). Meanwhile, the employees were on individual employment agreements under the same terms and conditions as the expired collective agreement, which did not contain an EPP.
The company wished to consult with employees on a proposal to contract out of its wood processing operation. The union refused to participate in the consultation on the basis that the restructuring could not proceed until an EPP had been agreed.
The Employment Relations Authority determined that the existing employment agreement did not meet the statutory requirements for an EPP. Although the Employment Relations Act 2000 (ERA 2000) does not have a sanction for failing to include an EPP in employment agreements, the Authority determined that this was an inadvertent oversight on the part of Parliament. The Authority ordered that the employer could not implement the restructuring until an EPP was agreed by the parties. The employer appealed.
The Employment Court first looked at whether the individual employment agreements contained an EPP by way of the wording of the redundancy clauses. The Court accepted that it is the content rather than the form of an EPP that is important. The Court held: “... if taken together, the relevant provisions of the employment agreements can be said to contain the statutory constituents of an EPP, it does not matter that they are not in a discrete provision so labelled”.
The Court held, however, that in this case the employer’s employment agreements and redundancy policy did not meet the statutory requirement of an EPP.
The Court then considered whether not having an EPP prevented an employer from restructuring. The Court accepted that the Employment Relations Act 2000 does not address the consequences of non-compliance with section 69OJ. It noted that both parties are responsible under the Act to negotiate an EPP and the consequence of that dual failure should not be visited on one party, ie, the employer.
The Court held that Parliament’s failure to provide a sanction was equally consistent with deliberation as it was with inadvertence. The Court concluded that it was unable to order that the employer could not restructure until an EPP had been agreed. The employer was entitled to progress its restructuring.
Rawiri v The Attorney-General in Respect of the Chief Executive of the Inland Revenue Department—Employment Relations Authority, Wellington, September 2009. Claim for unjustified disadvantage—unsuccessful.
The Employment Relations Authority has determined that an employee was not entitled to a retirement payment when he left for another job.
The employee began working for Inland Revenue in the 1980s. His employment agreement provided for both ‘retiring leave’ and ‘resigning leave’. After 22 years of service, the employee met the qualifying periods for both retiring and resigning leave.
The employee gave notice of his retirement and his direct manager told him that he was entitled to retiring leave. However, a more senior manager subsequently advised that the employee was not entitled to retiring leave. The senior manager did not believe that the employee intended to permanently leave the workforce. The employee had, in fact, already accepted a job with another employer. However, he did not tell his managers at that time.
The employee was offered resigning leave instead. The employee’s entitlement to retiring leave would have been 65 days. His resigning leave entitlement was 32 days.
The employee claimed that, as there was no definition of “retirement” in his employment agreement or in legislation, his entitlement to receive retiring leave arose out of his decision to retire. The employer claimed that, while it was not in writing, the common sense and widely-used meaning of “retiring” was a genuine intention to permanently leave the workforce.
The Employment Relations Authority agreed with the employer. Case law interpreted “retirement” as implying the end of a career, the dictionary definition was “to retire from work”, the employer’s HR manual required assessment for retirement on the “basis of capability”, and the historical situation of retirement backed up a narrow interpretation.
The employer was permitted to put a meaning to the word “retire” and in doing so was able to assess whether or not the employee was permanently leaving the workforce. The Authority concluded that the employee was not retiring because he had another job to go to.
The Authority acknowledged that there had been a handful of cases where the employer had paid retiring leave to employees who did not permanently leave the workforce. However, there were explanations for these, such as the employer being misled or wrong decisions being made by individual managers.
The Authority said “Different decisions from different managers in different circumstances do not lead to rendering a decision unjustified”. The employee had been treated the same as the vast majority of other employees who had applied for retiring leave.
—Selected and written
by Louisa Clery
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