EMPLOYMENT CASES SUMMARY May 2007 - NZ Department of Labour

National Distribution Union Inc v General Distributors Ltd

AC 7/07

Heard: 7 Feb 2007, Auckland

Judgment Date: 16 Feb 2007

Court/Authority/Tribunal: Full Court

Appearances: D Fleming & G Lloyd ; S Langton & A Clements

PROCEEDINGS REMOVED FROM EMPLOYMENT RELATIONS AUTHORITY – Application for declarations, penalties and damages – Parties entered collective employment agreement (“cea”) which included pay increase and bargaining fee clause – Employees voted by secret ballot in favour of clause – Significant number of employees on individual agreements opted out of paying bargaining fee – Defendant gave employees who had opted out a backdated pay increase but would not individually negotiate pay increases – Plaintiff alleged defendant breached ss4, 59B(2) Employment Relations Act 2000 (“ERA”) – Alleged defendant’s conduct misleading and deceptive – Alleged defendant encouraged staff to opt out – Alleged later pay rise given was substantially the same as that in cea – Alleged defendant intended to undermine cea and breaches had had that effect – Defendant alleged prohibition on passing-on contained in clause illegal – HELD – Defendant’s actions demonstrated good faith behaviour – Defendant did not influence unduly non-union employees to opt out – Defendant’s conduct not misleading or deceptive – Was not necessary to establish that all terms and conditions of cea had been passed on to show breach – Could be unlawful passing-on of even one term or condition – Court would look for sameness or substantial sameness in substance not form – Plaintiff had not established wage increase was the same or substantially the same – Section 59B(2) ERA was concerned solely with the undermining of an extant cea – Cea might only be undermined by passing-on in extreme cases – No evidence passing-on had affected adversely union membership numbers – Intent to harm plaintiff need not be defendant’s primary purpose but must be at least a concurrent or activating purpose – Properly drawn inference might be necessary – Defendant did not pass on wage increases with intention or effect of undermining cea – No breach of clause by defendant – Clause not illegal – Application dismissed – Supermarket employees

This was a matter removed from the Employment Relations Authority. The plaintiff was unsuccessful in seeking declarations, penalties and damages for alleged breaches of ss 4 and 59B Employment Relations Act 2000.

The defendant operated three supermarket chains throughout New Zealand (Foodtown, Countdown and Woolworths). The plaintiff union had members who worked for the defendant in a variety of positions receiving a range of remunerations under a collective employment agreement (“cea”).

Collective negotiations between the parties in the past had generally taken place midyear and, following their settlement, wage rates agreed upon had been passed on to non-union employees with effect from 1 August. As a result there had come to be a settled expectation among non-unionised employees that their pay would be reviewed and increased by the company at that time each year.

In early 2005 collective negotiations between the parties resulted in a wage increase across the board of 60c per hour for unionised employees (“the hourly pay increase”) which would increase the overall wage bill of the defendant by about 5 percent. A number of other benefits were granted to employees under the cea and a bargaining fee clause for non-union members was inserted in the cea in accordance with Part 6B Employment Relations Act 2000 (“ERA”).

In June 2005 the parties agreed and arranged for the bargaining fee ballot of employees, as required by s69Q ERA. In July voting papers were distributed to employees with their pay pack and returned to ballot boxes in individual stores. Of employees who voted, the majority favoured adoption of a bargaining fee arrangement for non-union employees whose work was covered by the terms of the cea.

The parties then arranged for affected non-union employees to choose whether to pay the bargaining fee: s69R ERA (“the opt out process”). The defendant instructed managers to provide only factual information to employees inquiring about the process, in particular, that the improved conditions under the cea could not be passed on to other employees automatically and in full as in previous years. If employees opted in they would pay the bargaining fee and receive the same terms and conditions as the cea. If employees opted out they would remain on their individual contract’s current terms and conditions. Each party, the plaintiff in particular, alleged that the other had at times given misleading advice. Of almost 13,000 who returned the forms, 10,360 opted out of the bargaining fee and 2,560 either positively opted in or were deemed to have opted in by not opting out.

The cea commenced on 1 August 2005. Shortly before that the defendant had decided to give a percentage pay increase to non-union employees. On 22 August the defendant wrote to non-union employees who had opted out of the bargaining fee
clause advising them of an increase, backdated as from 1 August, of 5.2 percent for Countdown staff and 5 percent for other staff (“the percentage pay increase”). The letter went on that those who were not happy with the increase could discuss it with their managers. The defendant was prepared to negotiate individually with employees about movement to a different position but was not prepared to negotiate further increases with individual employees.

The effect of the hourly pay increase to union members (and bargain fee payers) and percentage pay increase to non-union members was that lower paid union members got a higher percentage increase than non-union members employed on the same rate of pay. Whereas, higher paid union members received a lower percentage increase than non-union members.

In the present proceedings, removed from the Employment Relations Authority, the plaintiff alleged that the offer of the percentage pay increase was made in breach of ss4 and 59B(2) ERA and was a breach of the cea. In particular, the plaintiff alleged the defendant acted in a misleading or deceptive manner by advising that changes in remuneration would be individually negotiated with non union employees who had opted out of paying the bargaining fee when no individual negotiation was ever intended. The plaintiff alleged the defendant acted in bad faith by encouraging or unduly influencing its staff to opt out. The plaintiff submitted that Part 6B and s59B ERA combined to create a presumption that passing-on could only occur lawfully when that was pursuant to a bargaining fee arrangement. The plaintiff further alleged the percentage pay increase was substantially the same as a term or condition in the cea and that that was done with the intention and effect of undermining the cea. The plaintiff alleged it suffered loss of potential union membership and a loss of income as a result of the breaches. In the course of submissions, the plaintiff conceded that it could not maintain an argument that the defendant’s actions breached s63A(2) ERA concerning requirements for individual bargaining.

The defendant submitted that: (i) it had not acted in bad faith or in a misleading or deceptive manner, (ii) the percentage pay increase was not substantially the same as the hourly pay increase; (iii) s59B ERA was directed towards undermining the cea and not the union; (iv) intent to harm the plaintiff need not be the defendant’s primary purpose but it must at least be a concurrent or activating purpose, that was one which could be viewed as a cause, if not the only cause, of the defendant acting as it did and the defendant did not have the necessary intent; and, (v) the defendant’s conduct did not have the effect of undermining the cea. The defendant also submitted that the prohibition of passing on contained in the bargaining fee clause of the cea was illegal and therefore unenforceable because it operated to prohibit non-union employees from enjoying the terms of the cea.

The issues for the Court were: (a) whether the defendant unduly influenced employees to opt out of paying the bargaining fee; (b) whether the defendant acted in a misleading or deceptive manner as to the method of reviewing employees’ wages; (c) whether the percentage pay increase by the defendant was substantially the same as the terms and conditions contained in the cea; (d) whether the statutory criteria in s59B(6) ERA supported the conclusion that the defendant acted with the intent and effect of undermining the cea; (e) whether other evidence before the Court supported the conclusion that the defendant had the requisite intent to establish a breach of s59B; (f) whether the cea was in fact undermined; and, (g) whether the cea was breached.

Held

Section 59B ERA started, under subs (1), with the important proposition that it was not a breach of the duty of good faith in s4 ERA for an employer to agree that a term or condition of employment of an employee not bound by a cea should be the same or substantially the same as a term or condition in a cea that bound the employer. The statute then made exceptions to that general proposition depending on whether the cea had been concluded or not. The importance of the distinction lay in the test that a party would have to establish for a breach of the duty of good faith in circumstances of passing-on. There was a lower standard where passing-on was alleged to be a breach of good faith during the bargaining process. Where the bargaining had concluded and there was a binding cea as in the present case, subs (2) required both that the employer passed on with the intention of undermining the cea and that the effect of doing so was to undermine the cea. (para 57)
Section 4 ERA did not constrain an employer from engaging in otherwise lawful bargaining tactics with a union but did require the employer to do so transparently and truthfully and to open and maintain channels of communication with the union in so doing. So it was somewhat enigmatic that Parliament, in subsequently enacting s59B ERA, had, for the first time and in one particular circumstance only, deemed the substance of what an employer did to be an instance of acting in bad faith rather than simply the manner in which it was done. Parliament had not merely prohibited, as it could have, passing-on in contravention of the tests in s59B(2) and (4) ERA. Rather, it had altered in that regard at least, the otherwise pervasive meaning of dealing in good faith to make such passing-on a bad faith dealing. That in turn made an employer liable to a penalty under s4A(c) ERA and the general penalty provisions of the ERA (ss133 and 135). (paras 61, 62)
The bargaining fee ballot and opt-out processes arose in relation to an employment agreement and were therefore covered by the good faith dealing requirements of s4(4) ERA, and in particular paragraphs (b) and (g) of s4(4). The Court in Association of University Staff v University of Auckland (cited below) set a high standard of good faith behaviour in bargaining including bargaining for variations of existing individual agreements. (para 72)
During the time leading up to the bargaining fee ballot, the parties reached an agreement on the process whereby employees would be provided with written information and asked to cast a vote on voting forms distributed with their pay slips. The plaintiff asked and the defendant did delete references to the phrase “you will not be disadvantaged” in the wording of the documents. The defendant’s actions demonstrated a co-operative attitude to the plaintiff’s representatives which the Court categorised as good faith behaviour, inconsistent with the allegation of undue influence made. (para 76)
The defendant forwarded the opting-out document used in draft to the union who agreed with the form and a timetable for its issue. Even if the option methodology had not been agreed to by the union, the choice of alternatives method adopted met the spirit of the ERA and clearly explained the process for employees. (para 78)
The defendant responded to concerns of the union by advising managers that, when they were handing out the option forms, they were to be very careful not to tell employees that they would still get a pay increase if they opted out and should not hold group meetings or one to one meetings to discuss the bargaining fee. That communication was made at the request of the union and showed a commendable degree of cooperation and good faith by the defendant. (para 79)
The promptness of the defendant’s response to a specific incident ensured that no potentially affected employee saw or otherwise learned of a communication by a manager to her successor in the next shift in effect to ensure that non-union employees opted out of the bargaining fee arrangement. (paras 25, 80)
The defendant, whether subtly or overtly, did not either influence, or influence unduly, its non-union employees to opt out of paying the bargaining fee. (para 81)
The defendant’s communications to staff, indicating that changes to the remuneration of non-union employees and of non-bargaining fee payers would be by individual negotiation and individual agreement, did not amount to the provision of misleading information. In the covering information for store managers, although it stated that the defendant did not wish to enter into ““negotiations” with individuals”, the company did provide the opportunity for discussion and allowed individual employees to seek advice. If they were not happy with the review, they were to make time to speak to the managers and if they wanted to negotiate other terms and conditions that could have been arranged. That conduct was not inconsistent with the statements contained in the opting out information so as to amount to bad faith conduct. (paras 83, 84)
There was no misleading and deceptive conduct by the defendant when it failed to disclose that it would pass on an equivalent pay rise to those non-union employees who had opted out, backdated to 1 August, when the wage increases under the cea also became operative. That was primarily because the percentage pay increase was not the same or substantially the same as the hourly pay increase. But even if that were not so, it was clearly signalled by the defendant to the union that the employer would review individual pay rates with effect from 1 August as it had always done and as was the legitimate contractual expectation of non-union employees. (paras 86)
The defendant did not engage in any misleading conduct or provide any misleading information during the opt-out process. The defendant acted with commendable cooperation and good faith. (para 87)
The Court did not accept that the combination of s59B ERA and the bargaining fee clause in the cea meant that the terms and conditions of the cea could only be accessed by non-union employees via the payment of the bargaining fee. That would be to ignore the statutory requirements under s59B(1) ERA that passing on was prima facie lawful unless certain criteria were established and, in particular, the necessity to establish both the intention and effect of undermining of the cea if passing on was to be an act of bad faith contrary to s4 ERA. (para 91)
It was unnecessary to establish that all terms and conditions of a cea had been passed on. There could be a potentially unlawful passing-on of even one term or condition, especially an important one such as wage rates. It would not be necessary for a union to establish that every employee had received, by passing on, a term or condition that was substantially the same as one in a cea. However, amongst a workforce of thousands being paid different hourly rates for a range of different jobs, the identification of one employee or even a small group of employees who might be said to have been offered substantially similar terms and conditions of employment, but ignoring the evidence about other circumstances, could not alone require the conclusion that s59B ERA had been breached. Conduct, motive and effect, as the legislation required the Court to investigate, was to be considered broadly and not selectively or in an artificially isolated way. (para 93)
The Court would look for sameness or substantial sameness in substance, not form. The concept of sameness required both the form and substance to be the same, the notion of being “substantially the same” required sameness in substance or effect but not necessarily in form. However, sameness or substantial sameness was not referable to the overall effect on the employer of the passing-on. (paras 94, 95)
The more appropriate adjectives to describe a comparison of the percentage and hourly pay increases were “similar” or even “substantially similar”. However, Parliament had stipulated for the higher or more precise standard of sameness, whether on its own or, as was in issue in the present case, qualified by the adjective “substantial”. That connoted a higher degree of identity than the plaintiff contended for and the evidence exhibited. The union had not established that the hourly pay increase was the same or substantially the same as a term or condition in the cea. (paras 103-105)
The Court applied the same meaning of “undermine” as was used in the Association of University Staff v University of Auckland case (cited below), but the difficulty facing the union in the present case was showing that the actions of the defendant affected the cea and actually had the effect of undermining it. Section 59B(2) ERA was not concerned with undermining of the union, its ability to bargain, its ability to attract members, or future bargaining for a future cea. It was concerned solely with the undermining of an extant cea. In the present part of the ERA as opposed to others, Parliament had confined the effects of undermining to a cea. (paras 109-115)
It might well be that an operative cea might only be undermined by passing-on in extreme cases, such as if significant numbers of employees were induced by a passing on to resign from a union and thereby ceased to be covered by the cea, or new employees were dissuaded by passing on from joining the union and thereby remaining covered by the cea after the first 30 days of employment. In those cases there might be an undermining in breach of s59B ERA because the extent of coverage of the cea had been substantially diluted. The present case was not one of them. The present was not an appropriate case to determine definitively how a cea might be undermined by passing-on. However, the allegations made against the defendant, even if they had been made out on the evidence, did not establish an undermining of the cea. The Court was supported in that conclusion by the view taken of the matters taken into account in s59B(6) ERA (addressed at para 137 and following: see below). (paras 112, 115)
The difficulty with the plaintiff’s submission that the defendant’s intention to undermine was established by the evidence of the employer’s choice to pass on, knowing the union’s view that such passing on in previous years had undermined collective bargaining and that any passing on would render meaningless the bargaining fee arrangement that had been agreed between the parties, was that while the Court could conclude that the defendant was aware of the defendant’s concern that past passing-on had affected adversely the union’s membership numbers in its supermarkets, the evidence did not go so far as to establish knowledge by the defendant that that had undermined collective bargaining or had undermined previous ceas, whatever the latter meant. Nor was there sufficient evidence to conclude safely that the defendant either considered that passing-on would render meaningless the bargaining fee arrangement that had been agreed to or even that the union might have believed this. (para 121)
The Court followed the reasoning in Van Camp Chocolates v Aulsebrooks and the impact that had on NZ Jet Boat River Racing case (cited below). The intent to harm the plaintiff need not be the primary purpose but it must be at least a concurrent or activating purpose. The Court reached that conclusion bearing in mind that a breach of s59B(2)(a) ERA had penal as well as significant reputational consequences and, although subject to the civil burden of proof, it must be proved to a high standard. (para 135)
The Legislature must have intended that proof of intention by properly drawn inference would be appropriate and necessary in many cases. If the undermining was an incidental, albeit known or foreseen consequence of an employer’s act done or omission committed for some other purpose that would be insufficient to establish the necessary intention to undermine. Further, recklessness by an employer as to the consequences of an act or omission that might have the effect of undermining might not be sufficient to establish that employer’s intention to undermine. (para 136)
Even if the question of the defendant’s liability had turned on its intent (which it did not), the Court would not have been satisfied that the defendant passed on wage increases to non-union employees with the intention of undermining the cea within the meaning of s59B ERA. (para 137)
Regarding whether the passing on had the effect of undermining the cea (s59B(2)(b) ERA), undermining the cea could not consist solely of reducing the potential number of employees covered. That was because the statute expressly permitted employees to have passed on to them all of the relevant terms and conditions of the cea without joining and remaining a member of the union so long as a bargaining fee was paid to the union. That was an arrangement that preserved, and arguably enhanced, unions’ financial positions although not necessarily their membership numbers. (para 139)
The union had not established that its membership rates among relevant employees decreased as a consequence of the alleged passing on. Indeed, the evidence established that increased rates of union membership before the 2005 bargaining round remained largely stable after that round had been completed and the union’s financial circumstances were improved by payments of membership subscriptions and bargaining fees by non-union employees. (para 140)
Turning to the statutory considerations in s59B(6), the first was whether the employer bargained with the non-union employees before they agreed on the term or condition of employment. It should be presumed that where an employee had received a term or condition without bargaining it was more likely to have been passed on in breach of the section than in circumstances where the term had been agreed after genuine individual negotiations. (para 142)
The case for the union was that, although there was an offer to negotiate with non-union employees who had concerns about the pay review, the defendant’s managers were instructed not to actually negotiate those sums and instead to advise the employees that the only way to get a greater increase was to be promoted to a higher paying job. Even if that were so as it might have been, what the defendant presented or held out to non-union employees about wage increases was motivated, not by an intention to undermine the cea that had been settled with the union, but rather by what the defendant perceived to be its moral and legal obligations to other employees to review and increase their remuneration annually. This was so even although the forms of individual agreements the defendant had with its non-union employees did not contain an explicit term to that effect. (para 143)
As to s59B(6)(a) ERA, “bargaining” by unilateral offer intended to be accepted or rejected was a well established and recognised feature of the creation and variation of individual employment agreements and was not unlawful. The minimum legal requirements of bargaining for an individual employment agreement (in s63A ERA), including a variation to an existing agreement, were met by the defendant in the present case. That factor therefore did not, in the particular circumstances of the present case, weigh in the union’s favour. (para 144)
As to s59B(6)(b) ERA, the absence of good faith consultation before any widespread passing on of conditions (as in the present case) should be taken as an indication that the employer had acted with the intent to pass on. However, in the present case there was no evidence of concealment or anti-union sentiment within the defendant. There was no evidence that the defendant was pressured into concluding a cea it opposed, so that any subsequent passing on might have been seen as a response by it to undermine a cea the company had disliked or agreed to unwillingly. The existence of such matters might well flavour the factors and the weight to be given to them in other cases but that factor did not support the plaintiff’s position in the resent case. (paras 145, 146)
As to s59B(6)(c) ERA, although the number of workers covered by the cea, either as union members or after having paid the bargaining fee, was fewer than those that were not covered, that factor was neutral in the present case and did not point either towards an intention to undermine on the part of the defendant, or to the effect of an undermining. (para 149)
As to s59B(6)(d) ERA, the sooner any passing on occurred after the cea came into force, the stronger the inference should be that the employer acted with the intent and effect of undermining the cea. However, in the present case that factor had to be balanced with the employee’s contractual expectation of a wage review at that time. That was therefore a neutral consideration in the present case. (para 150)
As to s59B(6)(e) ERA, it might be of relevance that the individual employment agreements were substantially different in form and content to that of the cea. In particular, the individual agreements offered by the defendant did not include some enhanced provisions contained in the cea, especially in relation to leave. That therefore was a factor which favoured the defendant’s position. (para 155)
Overall, the s59B(6) ERA factors were not determinative of the questions of intention of undermining and effect of undermining. (para 156)
Other factors agued for by the union under s59B(7) ERA were rejected by the Court. (paras 157-163)
The defendant’s allegations that the bargaining fee clause was illegal were rejected. The clause did not purport to contract out of the 30 day rule in s63 ERA. The Court rejected that the cea conferred an unlawful preference in terms of ss 9 and 10 ERA. The Court rejected the defendant’s arguments based on the common law doctrine of privity of contract. The Court also rejected the plaintiff’s allegations that the defendant had breached the terms of the bargaining fee clause. (paras 164-183)

Comment

The approach in s69S ERA to rights and responsibilities in employment relations seemed contrary to the general thrust of consumer and other social legislation that persons should not, by their inertia, be bound, effectively or irrevocably to private financial arrangements they might resent. (para 64)

Result: Application dismissed ; Costs reserved

Statutes considered:

Crimes Act 1961 s219

Crimes Act 1961 s219(2)

Employment Contracts Act 1991 s7(b)

ERA s3

ERA s4

ERA s4(1)

ERA s4(1)(b)

ERA s4(1A)

ERA s4(2)

ERA s4(4)

ERA s4(4)(b)

ERA s4(4)(g)

ERA s4(6)

ERA s4A(c)

ERA s8

ERA s9

ERA s9(3)

ERA s10

ERA s11

ERA s31

ERA s32

ERA s32(1)(d)(iii)

ERA s59A

ERA s59B

ERA s59B(1)

ERA s59B(2)(a)

ERA s59B(2)(b)

ERA s59B(3)

ERA s59B(4)

ERA s59B(5)

ERA s59B(6)

ERA s59B(6)(a)

ERA s59B(6)(c)

ERA s59B(7)

ERA s59B(8)

ERA s59C

ERA s62

ERA s63

ERA 63(2A)

ERA s63A

ERA s63A(2)

ERA s68(2)(c)

ERA s69P

ERA s69R

ERA s69R(1)

ERA s69W

ERA s69W(a)

ERA s69W(b)

ERA s69S

ERA s69S(a)

ERA s69S(b)

ERA s69S(c)

ERA s69S(d)

ERA s86(1)(da)

ERA s133

ERA s135

ERA Part 5

ERA Part 6

ERA Part 6B

Employment Relations Amendment Act (No 2) s18

Employment Relations Law Reform Bill cl19

Employment Relations Amendment Bill (No 2)

Employment Relations Amendment Act (No 2) 2004 s18

Wages Protection Act 1983

ILO Convention 87

ILO Convention 98

Words and phrases: same ; substantially the same ; intent ; intention ; effect ; undermine ; good faith

Cases referred to in judgment:

Air New Zealand Ltd v Kippenberger [1999] 1 ERNZ 390

Association of University Staff Inc v Vice-Chancellor of the University of Auckland

[2005] 1 ERNZ 224

Epic Packaging Ltd v New Zealand Amalgamated Engineering, Printing &

Manufacturing Union Inc (2006) 3 NZELR 480

Kores Manufacturing Co Ltd v Kolok Manufacturing Co Ltd [1959] 1 Ch 108 ; [1958]

2 WLR 858 ; [1958] 2 All ER 65

MESB Berhad v Lu unreported, Fisher J, HC Auckland, 16 June 2000, CL12/98

Moorgate Mercantile Co Ltd v Finch and Reid [1962] 1 QB 701

National Union of Public Employees Inc v Asure NZ Ltd [2004] 2 ERNZ 487

New Zealand Dairy Workers Union Inc v NZMP Ltd [2002] 1 ERNZ 361 (EC)

NZ Dairy Workers Union Inc v New Zealand Milk Products Ltd [2004] 3 NZLR 652;

[2004] 1 ERNZ 376 (CA)

NZ Jet Boat River Racing Organisation (Inc) & Ors v NZ Seamen’s Union IUOW &

Ors [1990] 1 NZILR 529

Northern Clerical Administrative and Related Trades IUOW v Toyota NZ (Thames)

Ltd [1985] ACJ 990 (CA)

R v Hancock, R v Shankland [1986] 1 AC 455

R v Moloney [1985] AC 905 ; [1985] 2 WLR 648 ; [1985] 1 All ER 1025

R v Nedrick [1986] 1 WLR 1025 ; [1986] 3 All ER 1 ; (1986) 83 Cr App R 267

R v Woollin [1999] 1 AC 82 ; [1998] 3 WLR 382 ; [1998] 4 All ER 103

Van Camp Chocolates Ltd v Aulsebrooks Ltd [1984] 1 NZLR 354 (CA)

Pages: 11

[973396]

X v Auckland District Health Board

AC 10/07

Heard: 7 Nov 2006, Auckland

Judgment Date: 23 Feb 2007

Court/Authority/Tribunal: Colgan, CJ

Appearances: P Swarbirck & K Rowell ; B Banks & R Larmer

PROCEEDINGS REMOVED FROM EMPLOYMENT RELATIONS AUTHORITY – Unjustified disadvantage – Unjustified dismissal – Serious misconduct – Plaintiff took photos of own genitals with work cell-phone and transferred photos to work computer – Later sent relevant photo to female friend via work email – Plaintiff also received and forwarded pornographic calendar using work email – Plaintiff dismissed for serious misconduct – Plaintiff raised personal grievance alleging unjustified disadvantage and unjustified dismissal – Plaintiff sought reinstatement, compensation, and permanent non-publication order – HELD – Section 103A Employment Relations Act 2000 (“ERA”) test for justification commented on and applied – Also s4 ERA good faith dealing – Defendant failed to provide plaintiff chance of representation – Defendant’s attempt to revive allegations of bullying and intimidation after warning given unjustified – Instruction to keep investigation confidential not given and if it had been was not a lawful and reasonable instruction – Important that roles in disciplinary inquiries were clearly established – Defendant misled and deceived plaintiff – Defendant breached own policy – Defendant not entitled to have regard to certain factors which it did – Plaintiff’s actions wrong, but fair and reasonable employer would not have dismissed – Defendant should have applied other options open to it – Plaintiff contributed substantially to dismissal – Significant reduction in remedies required – Reinstatement was all-or-nothing remedy – Defendant’s objection to reinstatement ignored plaintiff’s ability to reform and learn from experience – Reinstatement ordered – All other remedies declined including permanent name suppression – Senior physician

This was a matter removed from the Employment Relations Authority in which the Employment Court held that the plaintiff’s dismissal was unjustified and ordered reinstatement but declined to grant permanent non-publication of the plaintiff’s identity.

The plaintiff was employed by the defendant Health Board (“the Board”) as a senior physician. Over a long career, the majority of which was in the public health sector, the plaintiff had attained a very high professional standing and had not attracted serious criticism in the performance of his work.

The plaintiff took photos of his exposed genitalia, using his work cell phone camera. The photos were transferred to his work laptop and office computers. In September 2004 the plaintiff sent one of these penis photos as an attachment to an email to a female friend. The plaintiff had a number of staff who had access to his email and his computer record systems. Three of the plaintiff’s administrative assistants found the photos. In December 2004 an overseas colleague sent the plaintiff a pornographic calendar which depicted elderly and obese women in sexual poses in various states of undress. The plaintiff forwarded the calendar to another colleague. An assistant notified the Board of the existence of the photos and the calendar. In February 2005 the Board began a disciplinary procedure which ultimately led to the plaintiff’s dismissal for serious misconduct. During the investigative process a number of other pornographic images were found but much was eliminated from the inquiry. The reasons for dismissal included the: taking of offensive photographs; receiving of an offensive calendar; lack of sincerity in the apology tendered; failure to keep the investigation confidential despite being asked to do so; bullying and intimidating administrative staff, including threatening to dismiss them; and, issuing inappropriate instructions to administrative staff regarding access to the plaintiff’s email.

The plaintiff filed a personal grievance and sought interim reinstatement which was granted. The substantive matter was removed to the Court for hearing at first instance.

The plaintiff alleged that he was unjustifiably disadvantaged by: (i) the Board’s delays in raising the allegations of serious misconduct; (ii) the Board’s failure to provide him proper and fair representation at the first investigation meeting; (iii) the Board’s seizure of his laptop computer in a manner which caused unnecessary distress; (iv) the Board’s attempt to revive concerns about behaviours on which it had elected to warn the plaintiff; (v) an alleged breach of confidence; and (vi) events which occurred after his interim reinstatement.

The plaintiff submitted his dismissal was procedurally and substantive unjustified. He further alleged that the Board was improperly motivated in dismissing him by an earlier unrelated conflict. He sought permanent reinstatement in employment, compensation for financial losses; $60,000 compensation for humiliation etc, and permanent name suppression.

The Board submitted the dismissal was both procedurally and substantively justified. It opposed reinstatement of the plaintiff because it alleged the defendant’s patients and other staff could not have the necessarily high degree of confidence in the plaintiff as a registered medical practitioner following the events that led to his dismissal. The plaintiff could not be trusted in the future to deal appropriately with patients under his care or with professional colleagues.

Held

The relevant test for the plaintiff’s claims was s103A Employment Relations Act 2000 (“ERA”). The Court agreed and followed the principles set out in Air NZ v Hudson (cited below). The Court added that the new test of justification under s103A was just that and not a legislative re-statement and entrenchment of the pre-2005 law set by the Court of Appeal in W & H Newspapers v Oram (cited below). The s103A test was not difficult to define or apply. The Court was to first consider justification objectively. That was to be compared to, subjectively, the way in which the affected employee or the affected employer might have considered justification. Objective in that sense might be likened to dispassionate or disinterested. (paras 91-96)
The focus of s103A ERA was to be on “the employer’s actions”, and “how the employer acted”. So it was the employer’s conduct in dismissing or disadvantaging an employee in employment that was to be the focus of the inquiry. That phrase also directed that there be two separate considerations, first of what the employer did (the
substantive dismissal or justification and the grounds for it) and, second, how the employer acted (the process leading to those outcomes). The Court must apply the standards of a notional employer to the conduct of the actual employer. In doing so the Court must draw on its knowledge and experience of, and expertise in, employment relations in determining whether it was satisfied that what the employer did met those notional standards. (para 97)
Section 103A ERA made it clear that questions of justification for dismissal were to be judged “at the time the dismissal…occurred”. So even if relevant events later came to light or the employer considered that there were other grounds for the dismissal based on things known at the time, those could not affect considerations of justification for dismissal. They might, however, be relevant to remedies including, in particular, the remedy of reinstatement. (paras 98, 99)
The relevant events in the present case took place after the coming into force of the expanded and enhanced good faith requirements in s4 ERA. The fairness and reasonableness of the employer’s actions and how it acted were to be judged by their compliance with those statutory requirements of good faith dealing, in addition to the established judge-made law of personal grievances. (para 100)
If the Board acted otherwise than in good faith (as defined in s4 ERA) towards the plaintiff in dismissing him or in its inquiry that led to his dismissal, that would be a factor going to justification. If breaches were serious and/or numerous and/or repeated, it might be difficult for the Board to contend that it had nevertheless conducted itself, and therefore dismissed the plaintiff, justifiably as that was defined in s103A ERA. (para 102)
The Board’s delay between the end of December 2004 when matters first came to its notice and the start of February 2005 when it made the plaintiff aware of them was not unreasonable in all the circumstances. (paras 103-105)
The Board failed to provide for proper and fair representation of the plaintiff at the first investigation meeting. The Board’s own policies made it clear that there was a positive obligation on the Board not simply to make its employees aware of their entitlement to representation, but to make reasonable attempts to ensure that an employee facing allegations of serious misconduct was properly represented at all stages of the inquiry. The Board’s obligation was to provide an opportunity to be accompanied by a representative. The advice given to the plaintiff, that it was open to him but unnecessary, did not provide a real or effective opportunity to have a representative, especially where continued employment was at risk. (para 106)
The above disadvantage suffered by the plaintiff as a result of the breach of the Board’s obligations of fair dealing in employment and, in particular, of its own policies, was exacerbated by the previously undisclosed presence at the first investigation meeting of a senior legal practitioner representing the Board. The presence of a senior lawyer after the plaintiff had been advised an in-house human resources representative would be present, must have left the plaintiff with a clear impression of imbalance, unfairness and even deception at the outset. (para 107)
The manner in which the Board seized the plaintiff’s laptop computer was not unjustified. To complete proper investigations, the Board had to access the hard disk drive that was an integral part of the plaintiff’s transmission of the photographs. (paras 109-111)
It was unfair and unreasonable for the Board to have attempted to revive allegations of bullying and intimidation on which it elected to warn the plaintiff counsel-to-counsel. It was neither fair nor reasonable for the defendant to attempt to claw back into consideration and rely on allegations that it had represented would be problematic for the plaintiff if they were repeated or continued. (paras 113, 114)
The plaintiff was entitled to communicate with others as part of preparing his responses to very serious allegations. Even if an instruction that he must maintain confidentiality had been given to him (as the Court was satisfied on balance it was not), it would not have amounted to a lawful and reasonable instruction. (para 115)
The plaintiff had not issued inappropriate instructions to his administrative staff about access to his email, electronic calendar and other office facilities, impeding the ability of those staff to carry out their duties and causing them excessive distress. (paras 116-118)
It was important that roles in disciplinary inquiries were clearly established and not compromised. An important member of an investigative team should not also have a role as confidential adviser (“the confidant”) to, and supporter of, the person being investigated, however carefully and compassionately the attempt to perform that latter role might have been. The plaintiff was justifiably upset to learn that confidences he had imparted, at the confidant’s request, had been passed on to others investigating his alleged misconduct. The plaintiff was entitled to consider that his trust in the fairness and impartiality of the inquiry was thereby diminished. The confidant’s invitation to the plaintiff to discuss those matters with him also encouraged the plaintiff to think that his position was not as precarious as it was. In that sense, the confidant misled the plaintiff about the Board’s attitudes to the misconduct, albeit not deliberately. (para 122)
In addition to founding separate personal grievances, the above conclusions adverse to the Board constituted elements of the other consideration under ss 103 and 103A ERA, whether the plaintiff was dismissed unjustifiably. While the Board could not justify what it did, the disadvantage grievances were so integrally connected to the dismissal that they should be considered as part of the assessment into the justification for the subsequent dismissal, at least for remedies. (paras 108, 123, 124, 132)
Although individually and even collectively events between the Board and the plaintiff after his interim reinstatement in employment might well have annoyed the plaintiff, sensitised as he was in those circumstances, they did not amount to disadvantage in employment or, even if so, unjustified disadvantage for which the plaintiff had a personal grievance. (paras 125-130)
Regarding s4 ERA, the Board misled and deceived the plaintiff right from the outset of its inquiry. The plaintiff was not advised of the allegations against him. Not only was he not given any indication of those but, when he asked about them, the information was refused on the grounds that the allegations were too serious. That breach was arguably cured the following day when the first investigation meeting occurred and the allegations were put, but by then it had contributed to the unfairness of the Board’s investigative process. The Board’s policy required the advice to be provided as soon as practicably and it ought to have preceded the first investigative meeting. That advice contributed to the plaintiff’s decision not to be represented the following morning and, thereby, to his disadvantage in the process. (para 136)
The plaintiff was also misled in breach of s4 ERA when he was told by an investigator that the people to be present at the first investigation meeting would include “someone from HR” when it was known to the Human Resources manager that no-one from HR would be attending but instead a very experienced and knowledgeable employment law practitioner. (para 138)
Despite the unfair way in which they emerged, the plaintiff’s responses at the first meeting were included in the range of material that the Board took into account in deciding to dismiss the plaintiff. That was contrary to the assurance the Board’s solicitor gave to the plaintiff’s barrister. (para 139)
In breach of s4(1A)(c) ERA, its policies, and fundamental principles of fairness in employment law, the Board steadfastly failed or refused to even acknowledge the existence of relevant records, let alone to provide copies of those records as the plaintiff was entitled to. The Board did not merely conceal the identities of its informants but misled the plaintiff by asserting, in effect, it had no further written material that was relevant to the allegations, a patent untruth. (paras 141-144)
The Board never put to the plaintiff its purported disbelief of him and negative assessments of his “body language” that subsequently formed very significant grounds for his dismissal, so that he might have had a fair opportunity to dissuade them of their assumptions. Section 4(1A)(b) ERA required an employer in those circumstances to be “responsive and communicative”, the antithesis of how the Board dealt with the plaintiff. (paras 149-152)
An employer investigating serious allegations made against an employee could not simply act as a proverbial sponge, a non-communicative observer and critic. In addition to the specific statutory requirements for responsiveness and communicativeness in s4(1A) ERA, longstanding requirements of fair dealing required significant conclusions, including tentative ones, to be articulated to the employee. In the present case the dangers of a blotter-like approach to interviews by the employer led to further mistaken body language. (para 153)
Although not suggested as a general practice in investigations, where subjective and problematic considerations as interpretation of “body language” were in issue, persons not well acquainted with the employee being investigated might not always be best suited to act as investigators and decision makers. The Court did not accept the conclusions reached about the plaintiff’s sincerity based on perception of the plaintiff’s body language. (paras 154-156)
The plaintiff’s dismissal was in breach of contract because it was in breach of the defendant’s policy. The relevant policy required the decision maker in the present case to discuss his intention to dismiss and the reasons for it with his immediate superior (“the CEO”), and to seek and take notice of the CEO’s views about that decision. That simply did not occur as it should have. (paras 157-159)
It was not relevant that the CEO might have agreed with the decision to dismiss although there was no evidence of that in any event. The importance of the requirement to consult was as much for the decision maker as for the consultee. The knowledge that a decision maker would have to justify an intended dismissal to a superior would help ensure the quality of the initial decision making. (para 162)
It was wrong for the investigators to provide the CEO with copies of all the electronic images that were discovered when by then most had been discounted and were no longer relied on. (para 162)
Regarding substantive justification, the Board was not entitled to have had regard to several of the factors upon which it relied in deciding to dismiss the plaintiff for serious misconduct. The defendant was not entitled to rely upon the plaintiff’s conduct towards other staff which the Board elected to address by a warning conveyed by its counsel, or the restriction the plaintiff put upon his personal assistant to access his records and office. A fair and reasonable employer would not have concluded, as the defendant did, that the plaintiff’s communications per se with other staff about his predicament was further misconduct that both confirmed its loss of trust and confidence in him and caused it to doubt his veracity and sincerity in response to the original complaints against him. (paras 166-168)
In the end, it mattered little that the plaintiff might not have been aware of the particulars of the defendant’s email policy because, as he conceded, what he did was contrary to commonly accepted standards of conduct for senior clinicians in public hospitals. Even if the incidents with the penile photos and the forwarding of the calendar met the tests of serious misconduct as defined in the policy, it could not be said that dismissal ought to have been the natural consequence of it. (para 170)
Viewed objectively in the context of all of the relevant evidence, a fair and reasonable employer would not have dismissed the plaintiff for the two instances of electronic misconduct that it had established and indeed that the plaintiff had admitted to from the outset. Rather, it would have applied a variety of sanctions and behavioural correctives and safeguards with a view to ensuring that such misconduct did not recur. (paras 171, 172)
There was a considerable emphasis by the Board in its policies on behavioural change. The defendant had bound itself to “non-punitive” outcomes to disciplinary matters. More particularly, its stated aim was to “improve the situation and prevent recurrence of unsatisfactory actions or behaviours”. Although dismissal might be said
to be one very effective method of specific or even general deterrence, the Court did not read the policy in that way. Rather, it was an enlightened and progressive objective to enable both particular employees and staff generally to learn from unsatisfactory acts or omissions and for the avoidance of their repetition. Although the Court did not think that the plaintiff’s dismissal was, to use the words of the policy, “for the purpose of exacting revenge or inflicting punishment for its own sake”, the punitive elements of the outcome might be seen to have outweighed the rehabilitative ones. (para 177)
The Court did not uphold the plaintiff’s claim to unjustified dismissal on the basis of disparate treatment alone. However, fair and reasonable treatment of employees guilty of even serious misconduct required a broad consistency of approach and outcome on the part of the employer. The Court was satisfied that a fair and reasonable employer would have treated similar (but not identical) cases similarly (although again not identically) which would not have seen another employee retained in employment and the plaintiff dismissed from it. (paras 178-179)
There was no objective evidence adduced to support the theory that the Board and the relevant decision maker in particular were improperly motivated to dismiss the plaintiff for other reasons and that was not a ground supporting his unjustified dismissal. (para 180)
The plaintiff’s misconduct contributed substantially to the circumstances that gave rise to his dismissal. His adolescent and frankly stupid actions were the catalyst for the defendant’s investigation that resulted in the plaintiff’s dismissal. Put simply, had he not engaged in those logically inexplicable acts of self-gratification, it was unlikely that he would have been dismissed. (para 183)
Although the plaintiff’s dealings with his staff did not amount to the serious harassment, intimidation and bullying, they were nevertheless elements of the plaintiff’s conduct that contributed to his dismissal and reactions to his situation that he ought to have curbed. (para 187)
The above factors required a significant reduction in the remedies to which the plaintiff might otherwise have been entitled. On the other hand, they could not negate all remedies because the defendant’s lack of justification for what it did and how it did it, was significant and pervasive. (para 188)
Reinstatement was, in all the circumstances, an all-or-nothing remedy. Not only did the law not permit the Court to reinstate, for example, to a lower ranked position, but the combined research and clinical role held by the plaintiff was unique and unalterable. In the circumstances, reinstatement would not be affected by s124 ERA, but the plaintiff’s other remedies would be. (para 189)
The process leading to and of dismissal caused the plaintiff substantial upset, humiliation and distress for which he might have expected to have been compensated monetarily. By making no award for those consequences the Court reflected appropriately the plaintiff’s contributory conduct. Another reflection of the plaintiff’s contributory conduct was that the Board did not have to contribute to the costs of purchasing the plaintiff’s mobile telephone and another laptop computer which the plaintiff had claimed as a loss of benefit. (para 190)
In all the circumstances, and if the defendant had gone about its investigations fairly and reasonably, a fair and reasonable employer in the Board’s position would not have concluded that there had been such an irretrievable loss of trust and confidence that the plaintiff both had to be dismissed and could not be reinstated. (para 224)
It was too simplistic and untenable to attribute to the plaintiff all of the worst characteristics of his erroneous behaviour and to conclude that he could not be trusted to care adequately and professionally for patients generally. To conclude that the plaintiff’s actions involving the calendar meant that he could not be trusted to have the care of elderly or obese persons as patients, failed to acknowledge such elements of discernment, redemption and awareness of appropriate behaviours in clinical circumstances which the Court found were not absent in the plaintiff. (para 225)
The Board’s assessment ignored completely the ability of humans generally, and the plaintiff in particular, to reform, to learn from their experiences, and would necessarily condemn him to suffer forever the consequences of what were really occasional and isolated, even if stupid and logically inexplicable, acts or omissions. The plaintiff would not be a risk to the Board, its other staff, and to its patients. (para 226)
As a general principle there should not be suppression of identity of persons in public positions in public institutions and especially following conclusions of cases where the extent of misconduct could be clearly established by reference to a public judgment. (para 232)
Potential patients should be able to know what the plaintiff, in whose care they might be, had done and, if they wished, elect not to be treated by him. (para 234)
Although ending suppression of publication of the plaintiff’s identity would probably cause him embarrassment and even humiliation, he would have a public judgment concluding that he was unjustly treated and unjustly dismissed and that he was entitled to be reinstated in his employment. Further, he had brought that consequence upon himself by his bizarre and inappropriate behaviour. (para 235)
The way to balance the plaintiff’s right to reinstatement and legitimate concerns of patients was to allow details of the plaintiff’s identity to be published in the usual way. To preserve the plaintiff’s entitlement to appeal against that aspect of the judgment, the Court made a further interim order for non-publication of the plaintiff’s identity. (paras 236, 239)
As to costs, in setting appropriate remedies which took into account contributory conduct, the Court’s inclination was that although the plaintiff might be seen to have been successful, he should meet his own costs of representation in the proceedings without contribution from the Board. However, such cases sometimes included offers made without prejudice except as to costs that were not revealed to the Court before judgment but which might affect significantly the incidence of costs. In those circumstances the Court did not make a final order. (para 240)

Result: Application granted (unjustified disadvantage)(unjustified dismissal) ; Application dismissed (permanent non-publication order) ; Permanent reinstatement ordered ; Other remedies declined to reflect contributory conduct ; Costs reserved ; Indication given that costs should lie where they fall

Statutes considered:

ERA s4

ERA s4(1)

ERA s4(1A)

ERA s4(1A)(b)

ERA s4(1A)(c)

ERA s4(4)(bb)

ERA s4(5)

ERA s103

ERA s103(1)(b)

ERA s103A

ERA s123

ERA s123(1)(a)

ERA s123(1)(c)(i)

ERA s124

ERA s125

ERA Third Schedule cl12

Employment Relations Amendment Act (No 2) 2004 s38

Films, Videos, and Publications Classification Act 1993

Words and phrases: Objective ; Subjective ; Consult

Cases referred to in judgment:

Air NZ Ltd v Hudson (2006) 3 NZELR 155

Northern Distribution Union v BP Oil New Zealand Ltd [1992] 3 ERNZ 483

Simpson Farms Ltd v Aberhart (2006) 7 NZELC 98, 450

W & H Newspapers Ltd v Oram [2000] 2 ERNZ 448

Pages: 9

[973419]

Service and Food Workers Union Nga Ringa Tota v OCS Ltd

WC 8/07

Heard: 7 Dec 2006, Wellington

Judgment Date: 1 Mar 2007

Court/Authority/Tribunal: Shaw J

Appearances: P Cranney ; P McBride

DE NOVO CHALLENGE TO DETERMINATION OF EMPLOYMENT RELATIONS AUTHORITY – Dispute – Interpretation of collective employment agreement (“cea”) – Defendant reduced working hours during weeks which included a public holiday – Only paid workers for work actually done on public holiday at penal rate plus alternative day – Did not pay usual daily pay – Whether cea provided minimum fixed normal hours of weekly work – HELD – Full time employees were employed weekly and were entitled to full weekly pay even where public holiday occurred – Payment for work on public holiday was in addition to that but defendant was entitled to decide hours of such work – Part time employees were entitled to payment of minimum entitlement on public holidays regardless of hours worked plus penal payment for hours actually worked – Challenge granted – Hospital cleaners

This was a successful de novo challenge to a determination of the Employment Relations Authority (see: WA 70/06) which held that the defendant was allowed to vary its employees’ hours of work.

Members of the plaintiff union were employed by the defendant on part time and full time bases as hospital cleaners (“workers”) in a subsequent contracting situation. They were on individual agreements based on an expired collective employment agreement (“cea”) with the previous contract holder, to which the union was a party. Both full time and part time workers had regular days and hours of work.

The cea provided that “the ordinary hours of work shall not exceed 40 in any one week without payment of overtime” (clause 6). Part time employees were those employed “for less than 40 hours per week”. A “permit” system provided for specified weekly and daily minimum hours for part time employees (clause 14). Clause 10 listed the public holidays to be observed, followed by the statement “notwithstanding the foregoing, an employee required to work on a public holiday shall be paid at the [penal] rate… for the hours so worked on that day…”. Clause 13 set out weekly rates of pay. Clause 25 provided that “except as otherwise specially provided… the employment shall be a weekly one…”, and “… no deduction shall be made from the weekly wages except for time lost through default of an employee”.

On Anzac Day and Queens Birthday 2005, the defendant reduced the ordinary hours of work for workers in either capacity. It paid workers for the actual hours worked at the penal rate stipulated in the cea, but not their usual daily pay. Workers who worked on those days also received an alternative holiday.

The union claimed that workers were entitled to their usual daily pay in addition to the payments for the hours actually worked and the alternative holiday. A dispute arose about the interpretation of the cea affecting payments for work done on public holidays. The parties agreed that the workers were receiving their correct entitlement to an alternative holiday and there was nothing in the cea which was inconsistent with the Holidays Act 2003. Therefore, the present case concerned the interpretation and operation of the cea only.

The Employment Relations Authority held that the cea listed the workers’ maximum ordinary hours of work per week but did not provide for any minimum or ordinary hours of weekly work. Therefore, the defendant was entitled to vary the employees’ hours of work.

The union challenged the Authority’s decision, alleging that workers were weekly employees. It submitted that full time workers were entitled to a specified weekly wage and part time workers were entitled to a minimum weekly wage. Where a public holiday fell during the working week they were also entitled to penal rates for any hours worked on that public holiday. It sought a declaration that the defendant breached the cea in respect of the payment of workers who worked on public holidays.

The defendant submitted that the cea provided for maximum but not minimum hours of work and it was up to the employer to fix the working hours of each employee. The defendant also submitted that the words “notwithstanding the foregoing” in Clause 10 contained a code for payments on public holidays which put such payments on a different footing from the provisions for a normal weekly pay. It submitted that that meant that workers were only entitled to be paid for each of the hours actually worked on the public holiday at the penal rate stipulated in the cea. In addition, the defendant queried whether the Court had jurisdiction to determine the claim for arrears of wages in the union’s statement of claim. It submitted that the union had not established that it had authority under s18(3) Employment Relations Act 2000 (“ERA”) to represent employees in their claim for arrears of wages under s131(1) ERA. Finally, it submitted that as the union was not a party to the individual agreements once the cea had expired, it had no standing in its own right.

There where five issues to be determined by the Court: (i) whether the Court had jurisdiction to hear an application for arrears of wages; (ii) whether the union had standing to be heard in the present proceedings; (iii) whether full time employees were weekly employees who were entitled to a minimum weekly wage and, if so; (iv) whether the cea contained a code which provided an exception to that weekly entitlement when a working week contained a public holiday; and (v) whether the defendant could reduce the minimum paid hours of part timers employed on public holidays.

Held

The jurisdiction issue could be shortly answered. First, it was not referred to in the statement of defence and therefore the union had no opportunity to rebut it. Commonsense dictated that, had it done so, the union would have obtained formal authority from the individual employees affected by this matter. Second, the present proceeding was first and foremost a dispute over the interpretation and operation of the cea. The question of wages owing to union members was an ancillary issue which was dependent on the resolution of the dispute between the parties which was the issue before the Court. (paras 32-34)
Because the union was at all times the representative and agent of the workers and continued to represent them collectively in bargaining, the union had standing for the purpose of the present dispute. (para 39)
Full time employees were employed on a weekly rate of pay. That was evident from clause 13 which referred to a normal weekly rate of pay and particularly from clause 25 which expressly stated that the employment was a weekly one and the reference to a usual weekly wage. That meant that full time employees were entitled to their full weekly pay each week even where a public holiday occurred during a working week and the employer did not require its employees to work on that day. The cea provided that in such cases the employees were to be paid their relevant daily pay for the public holiday. (paras 47-48)
The weekly wage as set in the cea was a minimum and the only deduction which could be made was through a default by an employee. That reinforced the finding that the weekly wages were not able to be reduced. Although it was correct that the employer might fix the working hours of each employee, the cea nevertheless provided for payment for 40 hours in normal circumstances. (para 49)
Clause 10 was not to be read in isolation from the rest of the cea. The words “notwithstanding the foregoing” referred to the preceding public holidays to be observed. That meant that although the public holidays were to be observed there was an agreement that a worker might be required to work but would receive special rates of pay. While the cea did not specify that the penal rates were in addition to the usual daily rate, that could be reasonably implied from the rest of the cea. Clause 10 did not oust the weekly wage and replace it with a code but could be read consistently with the weekly wage requirement. (paras 54-55)
The above interpretation was consistent with the policy of the Holidays Act 2003 which contemplated that a person who was required to work on a public holiday received more compensation for that work than they would get for working on a normal working day. (para 56)
The effect was that the defendant might exercise its managerial prerogative as to whether or not its full time employees would work on a public holiday and the hours of such work. If it decided not to employ them on a public holiday they would be paid their normal daily rate. If it decided they would work, then they were to be paid their normal daily rate plus an additional penal hourly rate for each hour they actually worked. (para 57)
Once the minimum hours of work for part time employees had been determined under the “permit” system of clause 14, those employees were to be paid that minimum entitlement whether weekly or daily unless there had been an agreement reached with the union to vary it. The part time employees were therefore entitled to be paid their usual daily rate for work on a public holiday regardless of the hours worked plus an extra penal payment for each of the hours actually worked. Those hours must be a minimum of those agreed under the permit arrangement in clause 14. (paras 62-63)
Declarations were made that the defendant breached the cea in respect of full time and part time workers who worked on public holidays. Those declarations were limited to the public holidays which were subject of the present proceedings, Anzac Day and Queen’s Birthday 2005 as there was no evidence about any other holidays. It followed, however, that the employees covered by the terms of the cea were entitled to be paid according to the findings for work done on other public holidays. (paras 64-65)
The effect of the breaches of the cea was that the workers who worked reduced hours on public holidays were entitled to be paid the ordinary pay for the hours they would normally have worked on that public holiday and in addition receive an additional hourly payment for those hours actually worked on that holiday as well as an alternative holiday. (para 66)

Result: Challenge granted ; Declarations accordingly ; Quantum of arrears to be resolved between parties ; Costs reserved

Statutes considered:

ERA s18(3)

ERA s52(3)

ERA s131(1)

Holidays Act 2003

Words and phrases: notwithstanding the foregoing

Pages: 4

[973444]

Credit Consultants Debt Services NZ Ltd v Wilson & Anor

WC 12/07

Heard: 16 Mar 2007, Wellington

Judgment Date: 16 Mar 2007

Court/Authority/Tribunal: Travis J

PRACTICE AND PROCEDURE – Proceedings removed from Employment Relations Authority – Interim injunction sought to prevent first defendant’s alleged breach of express restraint of trade, confidentiality and non solicitation covenant – Injunction against second defendant sought on basis of alleged breach of s134(2) Employment Relations Act 2000 (“ERA”) – HELD – Because of present state of ERA Court not satisfied it had any injunctive jurisdiction in relation to the second defendant – Clearly arguable case against first defendant – Period of injunctive relief sought was limited – Lack of financial information supporting plaintiff’s undertaking as to damages considered – Fact first defendant’s undertaking did not deal with the allegations of solicitation and the use of confidential information considered – Interim injunction granted preventing first defendant from certain conduct and requiring return of certain material – Injunction to remain in force until further order of Court – Because wording of the interim injunction different to that sought by plaintiff injunction might be modified in the light of any further submissions – Application granted in part – General Manager

This was a partially successful application for an interim injunction, in proceedings removed from the Employment Relations Authority.

The plaintiff provided credit and debt management services throughout New Zealand and Australia and was part of a group of companies involved in debt collection and associated services. The first defendant was the plaintiff’s general manager for 5 years. His job involved forming, maintaining and developing relationships with the plaintiff’s clients, both actual and potential. He had access to information in the nature of client details, pricing structures, debt loading amounts, recovery rates, target clients, and market share by industry and geography. His employment agreement contained a clause restraining him for 6 months from being involved in the same or substantially the same business within New Zealand, a confidentiality clause and a non solicitation covenant.

Following restructure of the plaintiff, the first defendant was made redundant. Two months after his termination it came to the plaintiff’s notice that the first defendant had began working for a rival company (the second defendant) and had contacted a number of the plaintiff’s clients to advise them of his move and asking if they would like to meet with him on behalf of his new employer.

In proceedings removed from the Employment Relations Authority, the plaintiff applied for interim injunctions restraining the first and second defendant until the substantive matter could be heard. The plaintiff alleged breach of the restrictive covenants and sought injunctions against the first and second defendant restraining the alleged breaches. The injunctive relief against the second defendant was based on an alleged breach of s134(2) Employment Relations Act 2000 (“ERA”) in relation its alleged inciting, instigating, aiding, or abetting a breach of the first defendant’s employment agreement.

The plaintiff submitted there was an arguable case in respect of the alleged breaches and that the balance of convenience and overall justice favoured the plaintiff. The allegations, if proved were a serious breach of the employment agreement freely entered and damages would not be an adequate remedy because of problems of establishing the plaintiff’s losses. It would not be equitable for the first defendant to continue to breach the agreement to gain an unfair advantage. The plaintiff observed the first defendant had not applied to the Court for a ruling on the reasonableness of the restraint before he elected to proceed.

The first defendant conceded there was an arguable case but submitted that the restraint clause was excessive in the circumstances including the fact the first defendant was made redundant. The first defendant submitted the restraint was unreasonably long, geographically wide, and wide in scope. The enforceability of the clauses were questioned in terms of the rule in General Billposting v Atkinson (cited below). The first defendant also submitted that given his undertakings damages would be an adequate remedy.

Held

Because of the present state of the legislation the Court was not satisfied it had injunctive jurisdiction in relation to the second defendant. It therefore did not intend to impose any injunctive relief on the second defendant at the present stage, taking into account its undertaking to abide by the decision of the Court in due course. (para 16)
A number of issues raised were arguable and the threshold of an arguable case had clearly been met. However, the strength of the plaintiff’s case, insofar as it was possible to estimate at the present stage, did depend upon a contest as to the reasonableness of the restraint, whether there was actual solicitation, and whether the first defendant had made use of any confidential information. (para31)
The period for which the injunctive relief sought would apply was limited, but if granted in the terms sought it would disrupt the existing employment relationship between the first defendant and the second defendant. There were also some difficulties in relation to the reasonableness of the restraint which might or might not be resolved in the plaintiff’s favour by the substantive hearing. (para 36)
The plaintiff’s evidence did not provide guidance as to its financial ability to support the undertaking as to damages which it had filed. No doubt the issue of financial information supporting the undertaking could be addressed at the substantive hearing, but it was an element the Court took into account in granting only limited relief at the present stage. (para 37)
The first defendant’s undertaking was very limited. It did not deal with the allegations of solicitation and the use of confidential information. For those reasons an injunction was issued preventing the first defendant from carrying out the activities he was proscribed from undertaking by the terms of his employment agreement. The Court, however, was not prepared to go so far as to prevent him remaining in the employ of the second defendant until the issues of the reasonableness of the restraint had been properly resolved. (para 38)
An interim injunction was issued preventing the first defendant from: (a) soliciting, endeavouring to entice away or discourage any client of the plaintiff from remaining a client of the plaintiff; (b) soliciting, endeavouring to entice away from or discouraging from being employed by the plaintiff, any employee or actual client or customer or prospective client or customer of the plaintiff; (c) conveying in any manner or form to any person confidential information belonging to the plaintiff, including information relating to the business of the plaintiff, except as authorised by the plaintiff; and (d) using for his own benefit or for the benefit of any other person any information gained in the course of employment with the plaintiff and not publicly available. (para 39)
The first defendant was further ordered within 3 working days from the date of the present judgment to return to the plaintiff all business cards of clients or prospective clients of the plaintiff removed by the first defendant from the plaintiff’s premises and all copies of any lists made from those cards. (para 40)
The injunction would remain in force until further order of the Court and on the basis of the plaintiff’s undertaking to abide by any order that the Court might make in respect of damages that were sustained by the first defendant through the making of the interim order and that the Court decided the plaintiff ought to pay. (para 41)
Because the wording of the interim injunction was different to that sought by the plaintiff and the parties had not had the opportunity to address that modified form of order, the interim injunction might be modified in the light of any further submissions from the parties. (para 38)

Result: Application granted in part ; Orders accordingly ; Costs reserved

Statutes considered:

ERA s134(2)

ERA s161(1)(m)(ii)

ERA s189

Cases referred to in judgment:

Axiom Rolle PRP Valuations Services Ltd v Kapadia (2006) 3 NZELR 390

DB Breweries Ltd v Marshall [1994] 1 ERNZ 98

Debtor Management (NZ) Ltd v Quail [1993] 2 ERNZ 498

Faccenda Chicken Ltd v Fowler [1986] 1 All ER 617

Fuel Espresso Ltd v Hsieh [2007] NZCA 58

Gallagher Group Limited v Walley [1999] 1 ERNZ 490

General Billposting Co Ltd v Atkinson [1909] AC 118

Volbar Restaurants Ltd v St Lukes Square Ltd (1991) 5 PRNZ 165

Other workers/site names etc: EC Credit Control Ltd

Pages: 3

[973507]

The Chief Executive of Unitec Institute of Technology v Henderson

AC 12/07

Heard: 12 Jun 2006, Auckland

Judgment Date: 19 Mar 2007

Court/Authority/Tribunal: Colgan CJ

Appearances: E Butcher ; C Patterson & C Ross

DE NOVO CHALLENGE AND CROSS-CHALLENGE TO DETERMINATION OF EMPLOYMENT RELATIONS AUTHORITY – Unjustified dismissal – Harassment – Defendant had affair with another staff member (“husband”) whose wife was also staff member – Affair ended but work relationship between defendant and wife deteriorated – Frustrated by lack of perceived progress in plaintiff resolving matter, defendant sent envelopes to wife containing emails sent between the husband and defendant – Husband and wife raised formal harassment allegation – Defendant dismissed – Whether sending of emails breached plaintiff’s harassment policy and inappropriate use of plaintiff’s property – Whether defendant entitled to wage increase offered – HELD – Use of email not misuse of the plaintiff’s property – Plaintiff’s conduct in sending envelopes and their contents constituted harassment – Constraints on employee conduct such as prohibition of harassment could not be limited either to physical confines of campus or to working hours in academic year – Conduct also corrosive of trust and confidence – Dismissal substantively justified – Plaintiff’s investigation largely fair – Section 103A Employment Relations Act 2000 had not altered long-established case law that fairness and reasonableness assessed broadly – Failures to attain consistently high standards of fair procedure would not have affected outcome – Dismissal justified – Defendant entitled to salary increase – Challenge and cross-challenge granted – Senior lecturer

This was a successful de novo challenge and cross-challenge to a determination of the Employment Relations Authority which had held that the plaintiff’s dismissal was unjustified and that she was not entitled to a salary increase.

The defendant worked at the plaintiff’s tertiary institute for 10 years. In March 2003 a clandestine affair began between herself and a married staff member (“Mr N”). In
April 2003 Mr N’s wife (“Mrs N”), who worked part time for the plaintiff in the same building as the defendant, learned of the affair which continued until late November 2003. The relationship between the two women was strained. A physical confrontation between the women at a private residence resulted in the defendant requiring hospital treatment. Unknown to the plaintiff, an application by the defendant for a restraining order under the Harassment Act 1997 resulted in a mediated settlement between the women who were to limit contract with each other except for professional reasons.

The relationship between the two women continued to deteriorate. The defendant alleged Mrs N spread rumours about her and was on the plaintiff’s campus more often than necessary. In January 2004 the affair resumed at Mr N’s instigation ending finally in April. In August there was an incident at work which led to the defendant seeking assistance from the plaintiff’s conciliator. The matter was dealt with informally. The defendant raised a personal grievance concerning her dissatisfaction with how the plaintiff handled the matter which was settled. Unknown to the defendant Mr and Mrs N also raised issues with the conciliator. A number of staff were involved in the ongoing process which resulted in the defendant working from home towards the end of that year.

In late 2004 the plaintiff indicated it was considering a reorganisation which would mean Mrs N was working in another building. That did not eventuate and in April 2005 the defendant, who was no longer working from home, wrote to the Registrar saying she felt she had been left with “no alternative”. The previous day the defendant forwarded an amorous email between herself and Mr N to her personal email account and printed the email which she then posted anonymously to Mrs N. The communication was intercepted by Mr N. Over the next few days the defendant wrote to the conciliator indicating she was going to take matters into her own hands with disregard as to the consequences. The defendant then, by the same method, posted a log of emails totalling about 300 between herself and Mr N to Mrs N. Mr N again intercepted the communication but then told Mrs N of both. The husband and wife formally complained of harassment against the defendant.

The plaintiff investigated the allegations and the defendant was dismissed for inappropriate use of the plaintiff’s property and breaching the plaintiff’s harassment policy (which prohibited communications which were intimidating or threatening and repeated).

The defendant raised a personal grievance alleging unjustified dismissal and an entitlement to a salary increase offered in the last part of her employment.

The Employment Relations Authority determined that the defendant had been
unjustifiably dismissed but had no entitlement to the salary increase.

The plaintiff bought a de novo challenge and the defendant cross-challenged the Authority’s determination. The plaintiff submitted that the dismissal was justified and that while the defendant had been offered a salary increase, that offer had not been
accepted.

The defendant alleged her removal of the emails from the plaintiff’s computer system protected her from allegations of misconduct. She further alleged that she had not intended to intimidate but to inform Mrs N that it was Mr N who was guilty or complicit in their affair. She also claimed that she was entitled to the salary increase.

Held

The defendant’s use of an intimate e-mail and her use of an electronic list of emails that Mr N had sent her on the plaintiff’s e-mail system, could not reasonably have constituted a misuse of the plaintiff’s property in its e-mail system as it was alleged. (para 43)
The plaintiff was justified in concluding that the defendant’s conduct in sending the two envelopes and their contents to Mrs N constituted harassment of another member of staff and was serious misconduct. The plaintiff was justified in concluding that the defendant’s explanation for doing so was untrue or at least insufficient. The defendant’s true or at least predominant motive was not to seek to persuade Mrs N of Mr N’s guilt or complicity in their affair. Rather, it was, at least predominantly, to bring pressure to bear on her (and indirectly Mr N) and to resolve a situation at work that the defendant resented and believed that the plaintiff was unwilling or at least unable to resolve to her satisfaction. It was the start of an insidious campaign against the husband and wife personally. As the defendant’s own contemporaneous e-mails to others confirmed, she appreciated not only its improper nature, but also the risks that she ran by doing so and accepted. (para 44)
Constraints on employee conduct such as the prohibition of harassment of colleagues could not be limited either to the physical confines of a campus or to the working hours in an academic year. To find otherwise would be to license illogically behaviours that, although no different, depended for their enforceability on place or time. The plaintiff could not have intended, and its policies and codes of conduct could not reasonably be interpreted, to have prohibited harassment of students or other staff only during certain hours and/or when some or all of the people were on campus.
(para 45)
Intimate correspondence between lovers could, after the end of the affair and a subsequent acrimonious relationship, be misused as weapons of revenge and intimidation. That was no less so when such items were sent deliberately to someone in Mrs N’s circumstances. (para 46)
Not only was it intimidatory towards Mr and Mrs N but the defendant’s conduct was corrosive of the trust and confidence that the plaintiff was entitled to have in the defendant as an employee. The plaintiff was entitled to conclude that it was intolerable to have one employee behaving towards other employees in that manner. (para 47)
The defendant had set out (albeit belatedly) on a campaign to harass other employees and to undermine the plaintiff’s efforts to achieve a balanced solution to a difficult staff problem not of its own making. Dismissal was not only an option reasonably open to the employer but, following the s103A Employment Relations Act 2000 (“ERA”) test, the Court was satisfied that it was what a fair and reasonable employer would have done in all the relevant circumstances at the time. (para 49)
Substantive justification for the decision to dismiss was only one of two equal elements that s103A ERA required to be considered by the Court. The other, that might be termed procedural justification, was now given equal prominence in the legislation. So while the Court had determined that a fair and reasonable employer in the plaintiff’s circumstances would have dismissed the defendant for deliberately harassing and intimidating other staff in full knowledge of the wrongfulness of that conduct and of its consequences, the Court had to nevertheless also be satisfied that a fair and reasonable employer would have reached that conclusion in the manner in which the plaintiff did. (para 49)
In many respects the plaintiff’s investigation was fair and lawful but in others it failed to meet that standard. The plaintiff neither provided copies of the letters of complaint against the defendant to her, nor disclosed the full extent of the serious allegations that the husband and wife had made. In many cases that lack of candour would be inimical to fair dealing with an employee. In the present it was, however, reasonable because the employer did not rely at all upon those other allegations of which it did not tell the defendant. Indeed, it was to her advantage that the plaintiff limited the scope of its inquiries and it must be judged on the fairness and reasonableness of that limited process. Although it would probably be rare that an employer’s decision not to disclose adverse material to an employee was a neutral factor, let alone one that has advantaged the employee, the present was one of those rare cases. (paras 50, 51)
The plaintiff did not tell the defendant of the fact or outcome of several interviews or provide her with copies of the notes of them or allow her to respond to issues affecting her situation that had emerged from these interviews. Rather, the plaintiff determined both that the defendant had been guilty of serious misconduct in employment and that that warranted summary dismissal. That was likewise a failing that might, in many cases, be fatal to the fairness of the process. But in the present, the essential acts of harassment were admitted and other information gleaned in the inquiry did not affect those. (para 52)
The defendant had not been given an opportunity to say why she should not have been dismissed. An employer acting fairly and reasonably in all the circumstances should have given the defendant that opportunity, as the plaintiff appeared to consider (erroneously) it had. (para 53)
Section 4(1A) ERA required the plaintiff (and also the defendant) to be responsive and communicative as part of being active and constructive in maintaining a productive employment relationship. In particular, s4(1A)(c) required the plaintiff, when proposing to make a decision that would, or would be likely to, have an adverse effect on the continued employment of the defendant, to provide her with access to information relevant about its decision and an opportunity to comment on the information before the decision was made. (para 54)
While in many cases a discrete opportunity for an employee to address the possible consequences of a finding of misconduct would be necessary as an integral part of a fair process, the present case was an exception. (para 55)
Parliament had not altered the long-established case law that fairness and reasonableness must be assessed broadly and not by the application of inflexible principles by minute and pedantic scrutiny. Even if in some instances over a long
process, the employer might be found to have failed to meet all ideal standards of a fair and reasonable employer, that would not necessarily mean that the resultant dismissal that might itself have been justified, would thereby be declared to have been unjustified and that remedies should be awarded accordingly. (para 56)
Set against the above process failures or omissions by the plaintiff must be the otherwise thorough and deliberative investigation of the complaints against the defendant. In the circumstances the need for a scrupulously rigorous and fair investigation was less critical than in other cases although nevertheless largely undertaken by the plaintiff. It followed that its failures to attain consistently the
highest standards of fair procedure would not have affected the outcome for the defendant. (paras 57, 58)
Even if dismissal had been unjustified, the defendant’s conduct that gave rise to the circumstances in which she was dismissed was so significant and substantial that she would have been unlikely to have received any remedies. (para 59)
Despite the arguable procedural failures or omissions identified, the Court was satisfied, on an objective basis, that the manner in which the plaintiff acted in investigating and deciding the complaints against the defendant was what a fair and reasonable employer would have done in all the circumstances. Her dismissal was justified. (para 60)
The contract did not provide that the salary increase would be conditional upon the defendant’s agreement. Rather, the contract provided that it would be a matter for unilateral determination by the employer. The letter to the defendant amounted to advice to her of that unilateral determination and she was accordingly entitled to the increased annual salary. It was not open to the plaintiff, under the terms of the contract, to make liability for payment of that sum conditional upon her agreement to other variations to the contract. The defendant was entitled to succeed in that aspect of her claim. However, because of the Court’s conclusion that, overall, the plaintiff’s dismissal of the defendant was justified, there could be no other remedies for her. (para 64)

Result: Challenge granted (unjustified dismissal); Cross-challenge granted (salary increase) reimbursement of wages arrears (quantum to be determined by parties) ; Costs reserved ; Indication given that costs should lie where they fall

Statutes considered:

ERA s103A

ERA s4(1A)

ERA s4(1A)(c)

Cases referred to in judgment:

Air New Zealand Ltd v Hudson (2006) 3 NZELR 155

Fuiava v Air New Zealand Ltd (2006) 4 NZELR 103

Waitakere City Council v Ioane [2006] 2 NZLR 310

W & H Newspapers Ltd v Oram [2000] 2 ERNZ 448

Pages: 5

[973506]

Housham v Juken New Zealand Ltd

AC 17/07

Heard: 22 Mar 2007 - 23 Mar 2007 (2 days) Kaikohe

Judgment Date: 5 Apr 2007

Court/Authority/Tribunal: Colgan CJ

Appearances: D Fleming ; PA Swarbrick

DE NOVO CHALLENGE TO DETERMINATION OF EMPLOYMENT RELATIONS AUTHORITY – Unjustified dismissal – Serious misconduct – Plaintiff suspended and later dismissed for alleged fighting – Plaintiff alleged acted in self-defence – Alleged dismissal procedurally and substantively unjustified – HELD – Dismissal for serious misconduct could not reasonably extend to every participant in a confrontation – Employees were entitled to take reasonable steps to avoid actual or imminent assault – Plaintiff should have been assessed and treated for injuries before investigation begun – Suspension on pay was appropriate – Reconstruction of incident by manager was not unreasonable – Was a failure to disclose crucial information upon which defendant relied – Was a failure to put allegation that plaintiff was a suspect in timely manner – Defendant failed to meet standards of procedural fairness – No evidence of injury to the other employee consistent with suggestion plaintiff punched other employee – Even if plaintiff had pushed other employee in head that response was reasonable – Fair and reasonable employer would not have decided plaintiff had been guilty of serious misconduct and had to be dismissed – Plaintiff’s conduct not contributory – Dismissal had serious effects – Plaintiff sufficiently mitigated loss – Court awarded lost remuneration, loss of benefit (superannuation) and compensation for humiliation etc ($20,000) – Lathe runner

This was successful de novo challenge to a determination of the Employment Relations Authority which had held that the plaintiff’s dismissal was justified.

The plaintiff lived in Kaitaia and was employed by the defendant from 2000. Prior to the subject matter of the present proceedings, he had been demoted from his position as lathe runner to pallet maker and was issued a final warning because of industrial action taken. He was then involved in a physical altercation with an employee of a contractor (“the other employee”) which was not witnessed by anyone else. The other employee alleged the plaintiff almost collided with him while operating a fork hoist, that he threw his gloves at the plaintiff, and that the plaintiff punched at him before he responded in kind. The plaintiff alleged the other employee verbally abused him, threw his gloves at him and as the other employee attempted to mount the moving fork hoist he attempted to push the other employee away simultaneously as the other employee punched him.

Immediately after the altercation and before the plaintiff was given medical treatment the defendant requested and the plaintiff provided a written statement and was interviewed. When he returned to pick up his car after being treated for injuries he was told he would be contacted about returning to work. The plaintiff was then contacted by the defendant and informed the matter was being taken seriously and he should make sure he had representation during its investigation. The investigation meeting included a re-enactment of the altercation. The managerial representative of the defendant continued the re-enactment after the meeting finished and calculated that the plaintiff’s account was not physically possible. A further meeting was held two days later in which the defendant summarised its account of events; some aspects of which the plaintiff disagreed with. The defendant’s representatives then retired to consider the position. The plaintiff was told he was dismissed for breaching the defendant’s policy against engaging in physical acts of violence including fighting even if provoked.

The plaintiff raised a personal grievance alleging he had been unjustifiably dismissed. In separate proceedings, the Employment Relations Authority found the demotion and warning was unjustified. In the present proceedings the Authority determined that the dismissal was justified.

The plaintiff alleged he was unjustifiably dismissed and sought compensation for humiliation etc, and reimbursement of lost income and loss of benefit based on his lathe runner position.

The defendant alleged the dismissal was in all the circumstances justified and that even if it was not justified, the plaintiff’s contributory conduct negated any remedy.

Held

Although an employer might properly regard assault, other physical aggression and fighting as serious misconduct upon appropriate proof of which employees involved might be dismissed, that could not reasonably extend to every participant in such a confrontation under any circumstances. (para 23)
An employee was entitled to take reasonable steps in all the circumstances to avoid actual or imminent assault. Such steps might include what would amount to a technical assault upon the aggressor, pushing the aggressor away, tackling the aggressor to prevent further blows, or the like. No hard and fast rules could or should be provided. Every case was different and what amounted to a reasonable response to actual or impending violence would depend on those unique circumstances as fairly and reasonably ascertained by the employer. (para 24)
It could not be a reasonable policy or practice for an employer to dismiss summarily all the employees in any way involved in any physical altercation. While an employer was entitled to have a “zero tolerance” policy in the sense that employees engaged culpably in violence in a safety sensitive workplace should be liable to dismissal, that did not absolve that employer from the critical assessment of all of the relevant circumstances in which that employee might have been involved in the altercation. (para 25)
In many respects the defendant could not be criticised reasonably for the manner in which it investigated what was a serious incident. However, ideally it should have ensured that the plaintiff had been assessed, if not treated, for his injuries before involving him in its investigation, including a crucial interview of him. The Court was therefore wary of any reliance by the defendant upon the plaintiff’s account of events given when he first required, and should have been provided with, medical attention. (para 27)
In the circumstances, suspension on pay was an appropriate response by the defendant to the circumstances as they appeared immediately after the incident. (para 28)
The reconstruction of the incident was not unreasonable in itself although it was not ideal that a managerial representative “played” the other employee in the reconstruction with the plaintiff in the absence of much, if any, knowledge by the employer of where the plaintiff might have been at critical times. (para 29)
It was wrong and unfair of the managerial representative not to have made the calculations he relied on from the re-enactment available to the plaintiff before considering his explanation or, alternatively, it was wrong for the managerial representative to have taken that information into account as he did, having omitted to tell the plaintiff of it and allowing him to comment on it. (para 30)
As emerged in evidence for the first time, because the plaintiff had not previously been made aware of the managerial representative’s measurements and his reliance upon them, those measurements and calculations were incomplete. The failure to disclose crucial information upon which the defendant relied in dismissing the plaintiff illustrated that its assumptions were not as unequivocal as it concluded. (para 31)
The defendant’s compliance with the requirements of the relevant Code of Conduct concerning putting the allegation to the employee were met later than they should have been. By the end of the first investigation meeting at the latest, the investigations had reached the point that a fair and reasonable employer would have told the plaintiff that he was not there as a witness but, in effect, as a suspect. Although it was clear that the defendant met its obligations to tell the plaintiff that suspicion of misconduct was falling upon him, that he should be so advised in the presence of a representative, and that he would then have an opportunity to provide an explanation, that occurred only during the course of the final meeting two days later, and relatively soon before he was dismissed. A fair and reasonable employer would have so advised the plaintiff at the end of the first meeting at the latest. (paras 32, 33)
Although the defendant conducted an investigation that was fair and reasonable in many respects, in other important ones it failed to meet the applicable standards of procedural fairness and reasonableness set out in s103A of the Employment Relations Act 2000 (“ERA”). A fair and reasonable employer in all the circumstances would not have reached the conclusion that was adverse to the plaintiff that the managerial representative did. (para 36)
As to substantive justification, the employer’s actions were not what a fair and reasonable employer would have done in all the circumstances at the time of the dismissal. There was no evidence of injury to the other employee (or indeed to the plaintiff) that would have been consistent with any suggestion of the plaintiff punching the other employee in the head before the other employee assaulted the plaintiff. (paras 37, 38)
The defendant’s representatives, although inadvertently, reached a wrong crucial conclusion about the veracity of the plaintiff’s account of the altercation. A fair and reasonable employer in all the circumstances would not have reached the conclusion that was adverse to the plaintiff that the managerial representative did. (paras 40-44)
Even if the employer’s erroneous conclusion about the events immediately preceding the physical altercation was accepted, the plaintiff’s response, by applying force to the other employee’s head with his open hand, was reasonable and legitimate in all the circumstances then prevailing. (para 45)
The Court concluded it was the company’s view at the time that the plaintiff should not have touched the other employee at all but, rather, should have either engaged him in discussion or removed himself physically from his presence. In the circumstances that should have presented themselves to the employer at the time, and as had emerged in evidence, neither of those strategies could reasonably have been demanded by the Code of Conduct or by a reasonable employer. Self-defence by attempting to push the other employee away was a reasonable and legitimate reaction by the plaintiff to apprehend impending assault on him and as occurred. (para 47)
A fair and reasonable employer would not have concluded that the plaintiff’s push to the other employee’s chest, or even his head, in the circumstances of an apprehended assault was serious misconduct warranting dismissal. A fair and reasonable employer would not have accepted the other employee’s claim that he was punched in the head by the plaintiff. The defendant’s representatives wrongly concluded that any physical altercation in which the plaintiff participated, even to a lawful and reasonable extent, negated the significance of the particular circumstances in which that occurred. (para 50)
A fair and reasonable employer would not have decided, in all the circumstances at the time the dismissal occurred, that the plaintiff had been guilty of serious misconduct and had to be dismissed. (para 52)
Not only was the plaintiff’s conduct not contributory, in a culpable sense, to the situation that gave rise to his dismissal but it appeared to the Court to exemplify not only what he should have done in these circumstances but what the company’s policy against physical confrontations promoted. There was no culpable contributory conduct on the plaintiff’s part that should mean any reduction in remedies, let alone the total negation of them. (paras 63-65)
The plaintiff’s dismissal affected him particularly badly. The consequences would have made, and did make, obtaining alternative employment difficult, at least in the short term. At the age of 54 years, the plaintiff would not have been easily employable in the area in which he lived. That was illustrated, for example, by the location of the position he eventually obtained in Opua. (paras 53-60, 68)
Despite criticism by the defendant of his efforts to obtain alternative employment, the Court was satisfied that, as and when he could do so reasonably, the plaintiff made efforts to find work with a variety of employers in the area in which he lived but was unsuccessful. The plaintiff mitigated sufficiently his loss of employment in all the circumstances and was entitled to recover an amount equivalent to his remuneration loss resulting from his dismissal for approximately 11 months but less an allowance for 2 months (in which the plaintiff was sick) and less the figure of $200 representing the approximate value of koha or other goods and services given to him in return for voluntary work performed. (para 69)
The precise calculation of remuneration loss was left to the parties to settle in the first instance. The calculation of remuneration loss was to be at the rate that would have been payable to the plaintiff as a lathe runner. That amount should be assessed as being, in the first instance, the difference between his remuneration as a lathe runner and as a pallet maker whilst employed and, for the period following dismissal, at the lathe runner rate. (para 70)
The plaintiff also lost his employer’s superannuation subsidy to which he would otherwise have been entitled and he should recover that as a loss that was consequent upon unjustified dismissal. Again, calculation of the relevant amounts of that loss was left to the parties to attempt to settle in the first instance. The plaintiff was entitled to interest on those specific losses. (para 71)
There should be an award of compensation under s123(1)(c)(i) of the Employment Relations Act 2000 of $20,000. (para 73)
The plaintiff was entitled to a contribution to his legal costs in both the Authority and the Court. The amount was reserved. (para 74)

Result: Challenge granted ; Reimbursement of lost wages (approx 9 months) (quantum to be determined by parties) ; Compensation for humiliation etc ($ 20,000) ; Lost of benefit granted (superannuation entitlement) ; Costs in favour of plaintiff (quantum reserved)

Statutes considered:

ERA s103A

ERA s124

ERA s123(1)(c)(i)

Words and phrases: fighting

Cases referred to in judgment:

NCR (NZ) Corporation Ltd v Blowes (2005) 2 NZELR 67 ; [2005] 1 ERNZ 932 (CA)

Pilkington (New Zealand) Ltd v Sangha [1999] 2 ERNZ 263

Simpson Farms Ltd v Aberhart (2006) 7 NZELC 98, 450

Pages: 5

[973560]

Table of Contents | Next Section

Significant Decisions Headnoted - May 2007

National Distribution Union Inc v General Distributors Ltd

X v Auckland District Health Board

Service and Food Workers Union Nga Ringa Tota v OCS Ltd

Credit Consultants Debt Services NZ Ltd v Wilson & Anor

The Chief Executive of Unitec Institute of Technology v Henderson

Housham v Juken New Zealand Ltd