ERA working well
The Minister of Labour Margaret Wilson says the Employment Relations Act is working well, nine months after it came into
Releasing a Labour Department analysis of the operation of the Act until the end of June, Margaret Wilson said she was
particularly pleased with the service provided to employers, managers, employees and unions by the Mediation Service and
the Employment Relations Service.
In the 9 months after October 2 the Mediation Service received more than 4,700 requests for assistance - an average of
530 per month. Most (55.7%) were about personal grievances. Other issues included recovery of wages (8.6%), bargaining
and good faith (7.1%).
Only about 14% of cases are recorded as "not settled" at mediation. Most cases are completed within 6 weeks. Nearly all
are completed within 12 weeks.
Margaret Wilson said the Labour Department, through its info-line, mediators and inspectors had answered more than
165,000 inquiries in the 9 months.
"There was - of course - an increase in inquiries as the new law came into effect but overall the level of inquiries is
not much more than the number received during the equivalent period in the last year of the old law. The increase, of
less than 10%, shows that the new law has been well understood and that the Labour Department's communications have been
Most enquiries continue to be about holidays and related entitlements.
"The ERA didn't deal with that issue. A further report is expected soon from an advisory group of union and employer
representatives set up to review the Holiday Act," said Margaret Wilson.
At the end of June 139 unions were registered and union membership totalled 319,660 or 22.1% of wage and salary earners
and 17.7% of the total employed workforce. This is an estimated increase from December 1999 of 17,255 or 5.7%.
New unions (enterprise based) make up 28% of registered unions - but combined membership is less than 1% of union
"The good faith, mutual trust and understanding promoted by the Act has been welcomed in by employers and employees.
With the new law working so smoothly, we're now past the point of wondering what all the fuss was about - in workplaces
around the country the fuss itself has been long forgotten," said Margaret Wilson.
The First Nine Months
Under the Employment Relations Act
Labour Inspectorate 4
Mediation Service 4
Employment Relations Authority 5
Employment Tribunal 6
Employment Court 6
Registrar of Unions 7
Bargaining Outcomes 8
Work Stoppages 9
- The Auckland Info-line, Mediation Service and the Labour Inspectorate answered a total of 165,545 enquiries during the
first nine months of operation under the Employment Relations Act (ERA). This compares to 135,129 enquiries received in
the last nine months under the ECA and 152,454 over the October 1999 to June 2000 period. The Auckland Info-line
answered 98% of all enquiries made during the first nine months under the ERA.
- As the graph below illustrates, enquiries increased sharply in the month the Employment Relations Act came into force.
- The most frequent enquiry types over the nine-month period related to matters of leave and holidays (30%), which is
consistent with the previous nine months under the ECA. In the first two months of the ERA, however, there was a large
number of enquiries relating to collective bargaining, general agreement issues, and good faith with 9,059 (21% of)
enquiries relating to such matters. Over the last seven months (December 2000 to June 2001), enquiries relating to these
matters reduced to an average of 2,013 (12%) per month (enquiries relating to holidays and leave have accounted for 33%
of total enquiries over the same period).
- During the period, the Auckland Info-line completed 1,565 enquiries that required the officers to provide information
to more than one party. In such situations, an offer is made by the officer to contact a respondent to ensure that the
respondent is aware of what their obligations are under any relevant employment legislation.
- The Auckland Info-line conducted 69 talks or seminars with groups and organisations throughout the Auckland region.
Most recently these have focused on secondary schools (5th to 7th form) and Citizens Advice Bureaux. Info-line employees
also make regular appearances at various training establishments in the Auckland region, such as at the Hotel and Chef’s
- The Labour Inspectorate received 1,352 complaints in the October 2000 to June 2001 period. This equates with the 1,368
received in the previous nine months and the 1,374 received during the October 1999 to June 2000 period.
- The vast majority of complaints (77%) for the period concerned breaches of the Holidays Act - 51% of complaints
related to annual holidays, 21% related to public holidays, and 5% related to special leave. The remaining main types of
complaints related to adult minimum wage (10%) and application of the Wages Protection Act (6%). This is consistent with
applications received over other periods.
- The Labour Inspectorate completed 1,248 applications during the period compared to the 1,256 complaints resolved in
the previous 9 months and the 1,297 complaints resolved in the October 1999 to June 2000 period. As with complaints
received, there is relative parity between each time period.
- The average time taken to commence an investigation of a complaint was 1.2 weeks and the average time taken to resolve
a complaint was 12.2 weeks. It should be noted, however, that the specific circumstances of individual complaints often
differs considerably and actual commencement and resolution times deviate widely around the average time.
- A total of $615,603.70 in arrears was recovered in files completed during the period. A total of $1012.98 in interest
and $20,000 penalties was also collected.
- During the period, Labour Inspectors held 39 talks at various schools and industries informing people, among other
things, about their employment rights and minimum employment standards. As part of their pro-active enforcement
programme, Labour Inspectors have recently focused on cafes and restaurants (particularly ethnic restaurants), fruit and
asparagus growers in the Hawke’s Bay and South Island areas, and the forestry industry to investigate minimum code
- A large majority of clients (91% of employee clients and 82% of employer clients) surveyed during the April to June
2001 quarter about the Inspectorate’s enforcement activities continue to be either “satisfied” or “very satisfied” with
the overall conduct of the Inspectorate’s investigations.
- The Mediation Service received 4,768 requests for mediation assistance - an average of 530 requests per month.
Applications to the Service ranged between 256 for October 2000 and 702 for May 2001.
- Personal Grievances remained the predominant application type to the Mediation Service with “Unjustifiable Dismissal”
comprising the bulk (64%) of this category. The table below illustrates a breakdown of the main types received by the
Bargaining/Good Faith 7.1%
Disciplinary Problems 3.2%
Employees - Definition 0.4%
Individual Agreement 4.6%
Interim Reinstatement 0.2%
Minimum Code 2.1%
Personal Grievance 55.7%
Recovery of Wages 8.6%
Strikes & Lockouts 0.4%
- The Service completed 3,957 applications during the period. The table below illustrates a breakdown of the manner in
which applications were completed.
Not Settled 14.0%
Not proceeding 16.4%
Mediator Decision 0.4%
Recorded Settlement 11.1%
Partial Settlement 0.1%
- Terms of settlement vary widely in those cases that were either recorded settlements, settled, or mediator decisions.
For example, reinstatement was the outcome (or part of the settlement) in 110 cases; 1,168 cases incorporated a
non-monetary type of outcome (e.g., a letter of apology, a reference to be given, property returned to the rightful
owner, or promises of different behaviour etc.); and 3,042 cases had a settlement which included a monetary component.
- The following table illustrates the completion rates for applications completed during the specified period:
Week 1 2 3 4 5 6 7 8 9 10 11 12
Completion rate (accumulative) 14% 22% 32% 40% 48% 57% 65% 70% 75% 80% 84% 86%
- Mediators participated in 492 seminars, talks or visits attended by approximately 6,360 people on either the Mediation
Service or various topics covered under the ERA. Mediators also attended the Pasifika Festival in March, and continue to
be involved in pro-active distribution of information about employment rights in general and the Mediation Service
- The first results of the Mediation Service client satisfaction survey have been analysed and found that 86% of clients
who answered the survey were either satisfied or very satisfied with the Service’s handling of their issue.
Employment Relations Authority
- The Authority received 892 applications during the period - 55% in Auckland, 18% in Christchurch and 27% in
- The table below illustrates the main types of applications received.
Direction Sought 0.1%
Personal Grievance 54.6%
- The Authority completed 495 applications. The table below provides a breakdown of outcomes.
Invest. Abandoned 6.1%
Refer to Mediation 24.8%
Remove to Court 0.4%
Struck Out 0.0%
The ERS is currently developing measures that will enable an analysis of the outcomes of Authority applications that
have been referred to mediation.
During the period, there were 1,325 applications filed in the Employment Tribunal (and 90 applications re-opened). As
expected, this is a significant reduction from the 3,072 applications filed in the October 1999 to June 2000 period, and
the 3,001 during the previous nine months before the ERA came into effect.
- The Tribunal completed 2,322 applications during the period, leaving 1,771 applications outstanding at the end of June
2001. This compares to 2,763 outstanding applications at 30 June 2000 and 2,678 at the end of September 2000, just
before the ERA came into effect.
Under the Employment Relations Act:
- The Court received 46 applications under the new legislation - 23 in Auckland, 4 in Christchurch; and 19 in
- The applications resulted in 48 application types. The percentages were:
Challenge - point of law or fact 12.5%
Challenge - seeking de novo 50.0%
Declaration - strike, lockout or picket 2.1%
Declaration whether employee 6.3%
Interim dec. - strike, lockout, picket 2.1%
Interim inj. - strikes, lockouts, picket 4.2%
Injunction - strikes, lockouts, picket 4.2%
Proceedings removed in full from ERA 6.3%
Proceedings removed in part from ERA 2.1%
Referral of question of law from ERA 4.2%
Special leave to remove authority proceedings 2.1%
- Nineteen applications have been completed from October 2000 to the end of June 2001 - 9 were judgments and 10 were
withdrawn. Of the 19 applications completed under the new legislation, only one out of 10 judgments involved an
application for a de novo hearing, and 6 out of 11 withdrawals were seeking a de novo hearing.
- As of 30 June 2001, there were 27 applications outstanding.
- The ERS is currently developing measures that will enable an analysis of Employment Court applications and outcomes as
they relate to de novo applications.
Under the Employment Contracts Act:
- The Court received 128 applications. Additionally, 10 files were re-opened. Of the main types of applications, appeals
against decisions of the Employment Tribunal accounted for 51% and damages 20%.
- During the period, 229 applications were completed. Withdrawals and administrative withdrawals accounted for 50% and
4% respectively; 45% of completed applications were recorded judgments.
- At the end of the period, 239 applications were outstanding.
- As of 30 June 2001, there were 43 outstanding appeals to the Court of Appeal under the old legislation.
Registrar of Unions
- The Registrar of Unions received 146 applications for union registration to the end of June 2001 and registered 139
unions. The annual return of members was completed at the beginning of June and membership numbers were obtained from
121 unions registered as of 1 March 2001, as they were required under section 16 of the ERA to provide membership
numbers by this date. Union membership totalled 319,660 employees, representing 22.1% of wage and salary earners, and
17.7% of the total employed labour force. Based on the data produced by Raymond Harbridge in December 1999, this figure
amounts to an increase of 17,255 (5.7%) employees since that time.
- The past 9 months has seen an emergence of new, enterprise-based unions with their coverage being limited to a
specific workplace. As of 1 March 2001, new unions made up 28% of registered unions, however, their combined membership
accounted for less than 1% of total union members.
- The office of the Registrar of Unions conducted a client satisfaction survey over the period from December 2000 to May
2001. The questionnaire was sent to 136 persons who had recently had dealings with the RoU Office and 82 (60%)
responded. The survey found that 84% of respondents were either “satisfied” or “very satisfied” with the registration
- The Registrar of Unions was involved in legal action focused on the validity of the National Union of Public Employees
(NUPE) registration and the actions of the Registrar in registering NUPE prior to the date the ERA came into force. The
Court decided in favour of the Registrar. This case is to be appealed on August 15. The Registrar has surveyed the 20
unions registered prior to 2 October 2000 to gauge the impact on them, and their activities, should the Court of Appeal
find their registrations to be invalid. The survey found that the majority of unions have been engaging in activities:
16 of the unions have received fees from members; 15 have held paid meetings; 3 have undertaken strike action; and 16 of
the unions have given notice to initiate bargaining to 349 employers potentially covering a total of 30,445 members.
- 8,877 contracts/agreements have been lodged with the Department as of 30 June 2001. Of these, 8,828 have been analysed
covering some 1,698,489 employees.
- As of 30 June 2001 there were 2,008 active contracts/agreements covering 374,735 employees (21% of the employed labour
force). Of these, 446 contracts/agreements (covering 4,227 employees) covered less than 20 employees.
- Of the contracts/agreements analysed during the period, 187 agreements covering 41,372 employees (2.2% of the employed
labour force) were made under the Employment Relations Act; 1,821 contracts covering 333,363 employees (17.4% of the
employed labour force) were made under the Employment Contracts Act.
- Of the 187 collective agreements negotiated under the ERA that have been filed with the Employment Relations Service
at the end of June, 178 were negotiated by unions that had existed prior to the Employment Relations Act coming into
- Annualised base wage rate movements have changed from 1.8% in the quarter ending 30 June 2000 to 2% in the quarter
ending 30 June 2001. When weighted for employee coverage, the base wage rate movement has fluctuated from 1.9% in the
quarter ending 30 June 2000 to 0.1% in the quarter ending 30 June 2001.
- For the period of January 2001 to the end of June 2001, 17% of employees in 76% of contracts/agreements have had an
increase in their base wage rates. This compares with 85% of employees (77% of contracts/agreements) over the full year
in 2000, and 78% of employees (67% of contracts) in 1999. The most common increase in 2001 to date is between 2% and 4%
(45% of contracts/agreements covering 11% of employees).
- The percentage of contracts/agreements with a nil pay movement increased from 27% of contracts (15% of employees) in
1998 to 33% of contracts (22% of employees) in 1999 and decreased to 23% of contracts (15% of employees) in 2000. In the
year 2001 as of the end of June, 23% of contracts/agreements covering 82% of employees have had a nil pay movement. The
proportion of contracts/agreements which provided pay decreases in 2000 was zero and is 1% in the first half of 2001.
- There were 8 work stoppages in the March 2001 quarter involving 949 employees, totalling 6,206 person-days lost. This
compares to 5 stoppages during the December quarter involving 209 employees totalling 441 person-days lost. From October
2000 to the end of March 2001, there have been 13 work stoppages.
- There have been 24 work stoppages at the end of the March 2001 year.
- Although figures have not yet been released, evidence would indicated that there was approximately the same number of
work stoppages in the June quarter as in the March quarter. Anecdotal evidence suggests, however, that a number of
stoppages have been averted through mediation.
April to June 2001
David v The Employment Relations Authority (Employment Court)
- On 29 May 2001 the Employment Court issued a judgment of the full Court concerning the question of whether, and to
what extent, the Employment Relations Authority can dispense with cross-examination of witnesses. The Court held that
cross-examination is a necessary ingredient of the principles of natural justice at every hearing where a party wishes
to exercise that right, particularly in cases that involve issues of credibility. As a result of this decision, the
Authority’s general practice of not allowing cross-examination must be modified.
- The Court noted that the meaning of natural justice may vary, given the continuum of decision-making bodies from those
empowered to make purely administrative decisions to those empowered to make judicial decisions. The Court held that the
Authority’s role was more akin to a general Court procedure, and that it is therefore obliged to grant a full hearing
including the right to cross-examine.
- Specifically, the Court has found that:
cross-examination is a necessary ingredient of the principles of natural justice at every hearing at which a party
wishes to exercise that right, being a hearing or meeting that can lead to the establishing of facts and a determination
based on them of the merits of an employment relationship problem. This is especially so [in] ¡K cases turning on acute
issues of relative credibility.
- The Court considered the practical effects of the decision, given a submission that the right to cross-examination,
even if limited, will be claimed in almost every case. It noted that a beneficial consequence of allowing
cross-examination may be a greater acceptance of the Authority’s determinations and a corresponding reduction in demand
for de novo challenges to them in the Court.
- To this end, the Chief of the Employment Relations Authority, Alastair Dumbleton, on 11 July 2001 replaced the
practice note that was originally issued on 6 November 2000. The primary change in the new practice note is that it
states that all parties or their representatives being heard in an investigation meeting may be permitted to question
any witnesses. The Authority, nevertheless, is continuing to conduct its meetings in the investigatory manner required
by the legislation.
W & H Newspapers Limited v Oram (Court of Appeal)
- The Court of Appeal has recently issued a decision in W & H Newspapers Limited v Oram, unreported. This was a high profile unjustified dismissal case under the Employment
Contracts Act. The case arose from an incident where a senior reporter was responsible for the publication of a
photograph on the front page of the Herald of a social worker wrongly identified as a gang leader.
- Mr Oram was employed by the Herald as a senior reporter. Mr Oram was reporting on a story about an alleged leader of a
gang regarded as one of the most dangerous organised crime operations in the country. Mr Oram directed a photographer to
photograph the alleged gang leader, but did not, however, observe the photograph being taken, nor did he check that the
photograph was correct prior to publishing of the photo in the Herald. The photograph taken was, in fact, of a social
worker not connected to any gang activity. Mr Oram admitted that he intended to check the photograph but failed to do
so. Unsurprisingly, the social worker wrongly identified in the photograph took offence to the damage caused to his
reputation. The Herald, following an investigation into the incident, decided to dismiss Mr Oram for serious misconduct.
- The Employment Tribunal found that Mr Oram had acted negligently. The Tribunal, however, found that this did not
justify the employer’s actions to dismiss the employee. The Tribunal held that the loss of trust caused by the act of
negligence was simply one factor that needed to be weighed evenly against a range of other factors in deciding to
dismiss the appellant. The Tribunal also found that there had been a procedural flaw in the investigation by failing to
give Mr Oram the opportunity to comment on the assessment made of Mr Oram’s attitude to the mistake. The Tribunal found
that the Herald was partly to blame for the error. The Employment Court dismissed the employer’s appeal, finding that
the Tribunal correctly dealt with the material issues and made findings that were open to it.
- The Court of Appeal held that the Tribunal had effectively replaced its own judgment for that of the employer. The
Court held that there was no basis for the Tribunal and Court’s findings that the Herald was partly to blame for the
failure to check whether the photo was correct. The Court also held that there was no procedural error in failing to
give the employee the opportunity to comment on the employer’s assessment of his attitude and the impact on their
ability to trust him in the future. The Court found that Mr Oram’s conduct meant that his superiors had lost confidence
that he could be relied on in the future, and that a fair and reasonable publisher could form that view. This view was
open to the employer despite the appellant’s previous unblemished record with the Herald.
Rankin v The Attorney General in respect of the State Services Commissioner (Employment Court)
- This decision, which has received a great deal of media attention, arose out of Ms Rankin not being re-appointed Chief
Executive of the Department of Work and Income. Ms Rankin challenged the actions of the State Services Commissioner not
to reappoint her by filing proceedings in the Employment Relations Authority, where upon the case was transferred to the
Employment Court. Ms Rankin claimed breach of contract, breach of good faith obligations on the part of the Crown, and a
personal grievance for disadvantage. The Crown alleged that Ms Rankin was not an employee and that accordingly the
Employment Relations Act was not applicable, meaning that neither the Authority nor the Employment Court had
jurisdiction over the case.
- The Court first considered whether a chief executive of a government department is subject to the Employment Relations
Act (and accordingly the jurisdiction of the Authority or the Employment Court) based on the definition in s67 of the
State Sector Act, which states that, “Except as otherwise provided in this Act, the Employment Relations Act 2000
applies in relation to the public service.” Section 27 of the State Sector Act states that the public service is
comprised of the departments specified in the Act. The Court held that the Employment Relations Act does apply to chief
executives of government departments as chief executives are a part of their department and are accordingly part of the
- As a second question for the Employment Court to consider, the Crown argued that the Employment Relations Act does not
apply to the State Sector Act’s provisions which confers a power on the State Services Commissioner to appoint or
re-appoint departmental chief executives. The Court observed that Ms Rankin’s claims for damages relate to alleged
personal remarks that were made about her appearance and her dress, thus influencing the decision of the State Services
Commissioner to recommend Ms Rankin for re-appointment. The Court held that if such factors were considered in deciding
whether to re-appoint Ms Rankin, then her not being re-appointment is an employment issues that falls under the
jurisdiction of the Employment Court.
- This case has been heard by the Employment Court, however a judgment has not yet been issued.
October 2000 to March 2001 (as previously reported in The First Six Months Under the Employment Relations Act)
Attorney-General (on behalf of the Director-General of the Ministry of Agriculture & Forestry) v National Union of Public Employees (NUPE) (Employment Court)
- This case arose out of the MAF Veterinarians collective bargaining dispute and a claim that the union representing the
vets (NUPE) had not observed the special notice requirements for strikes within an essential service. MAF argued that
the strike notices were invalid on the ground that a notice of intention to strike is capable of being given only by a
registered union and NUPE were not a duly registered union. This was based on NUPE having been purportedly registered on
29 September 2000, 3 days before the coming into force of the Employment Relations Act 2000 providing (among other
things) for the registration of unions.
- This case essentially turned on whether under section 11 of the Acts Interpretation Act it was desirable that the
Registrar of Unions’ power to register unions should be exercised in advance of the Act coming into force. The Court
held that while it was not necessary for bringing the Employment Relations Act 2000 into operation to register any union
on any date prior to 2 October 2000, it was necessary (or at least desirable) to receive applications for processing
prior to that day as in the case of some applications questions might have arisen requiring investigation and this might
not be capable of being achieved within 1 day without an application of resources that could not reasonably be expected
to be made available.
- The Court further held that as registration flowed from processing it was also desirable that the Registrar of Unions’
register any unions’ applications that were received prior to 2 October 2000, and that even if there was any
irregularity in the Registrar’s action, this was technical and should not make that action invalid.
- This case also has implications for the Employment Relations Act’s requirement which stipulates that a party that
seeks to challenge an Employment Court decision first has to apply for leave to appeal to the Court of Appeal. There was
no equivalent requirement under the ECA. The Court of Appeal granted leave to hear the appeal as the case has
implications for 19 other unions registered before the ERA came into force and because an equivalent situation in which
legislation establishes similar powers on officials could potentially arise. The appeal is to be heard on 15 August.
Baguley and Coutts Cars Limited (Employment Relations Authority)
- This determination is of importance in relation to its description of the process to be followed by the Authority,
which emphasises simplicity, justice without legality and speed in reaching determinations. The Authority stated: “It
was emphasised to the parties that an investigation before the Authority is clearly not intended by the Act to be the
same as the process of trial by adjudication in the Employment Tribunal.”
- In the course of this determination, an application for an adjournment by the respondent’s representative was made the
day before the agreed investigation meeting was to occur. The reasons given for the application included the
representative’s unavailability on the day of the scheduled investigation meeting. The respondent had just appointed the
representative one day prior to replace previous counsel. The Authority dismissed the application for adjournment,
warning that “Parties before the Authority will need to avoid selecting as representatives busy professional people
whose commitments may be such as to prevent them from being available in the Authority at reasonable times for
- The dismissal of the application for adjournment can be seen as a warning to both parties involved in investigation
hearings and professional representatives. The parties themselves should, if they are changing their representatives,
attempt to ensure that any new representative will be available for agreed meetings. Similarly, professional
representatives who take over a matter should ensure that they are able to meet any commitments earlier made by either
the party or their previous representative. This reinforces the role of the Authority in seeking to speedily resolve the
matters at hand without being constrained by legal technicalities and process issues.
Baguley and Coutts Cars Limited (Employment Court)
- The Court commented on the fundamental effect that the passage of the Employment Relations Act has had on the relevant
law here, stating that this
is a proper and necessary occasion, at any rate for the Court, to revisit first principles and to determine how the law
has been modified by the new legislation¡K It is therefore not satisfactory to make decisions in reliance on cases
decided while the Employment Contracts Act 1991 was in force unless they state principles of general application as
opposed to principles arising out of the Employment Contracts Act 1991.
- In arriving at this conclusion the Court focussed on section 3 of the Act (the Object of the Act), in particular the
provisions relating to the recognition that employment relationships must be built on good faith behaviour and the
acknowledgement of the inherent inequality of bargaining power in employment relationships. The Court also emphasised
the requirements of the duty to act in good faith contained in section 4 of the Act, and its direct application to
contracting out situations or proposals to make employees redundant, as well as other references in the Act to good
faith behaviour and the obligations of the Employment Institutions to support successful employment relationships.
- Based on the principles that the Court drew from the Act, the Court held that a number of propositions in the Aoraki
case could no longer be considered to be good law. The Court stated that
the Act of 2000 requires something of a return to the collectivist principles of previous legislation and some
discarding of the model of free contractual bargaining. In its place are the doctrines of good faith and the principles
underlying ILO Conventions 87 and 98. Also, the duty of good faith applies expressly when consultations are in progress.
It follows, of course, that if an employer chooses to consult, even if not bound to do so, it must observe the dictates
of good faith expressly required by the Act to be observed when consultation is being undertaken or a proposal is being
made that can possibly impact on the employer’s employees.
- The Court also stated that the Act “strongly suggests” that there will be a greater requirement for consultation in
potential redundancy situations, and that although “it is not necessary or permissible to speak in terms of consultation
being mandatory in all cases or of never being required. Usually it will be.”
- In this context, the Court stated that while employers are able to make commercial decisions that result in employees
being made redundant, they may be required to postpone their decision for long enough to allow employees to contribute
to the decision making process through consultation. This does not, however, require that employers obtain their
employee’s concurrence to their being made redundant.
- The Court also stressed the importance of employers behaving in good faith in that process. As a part of the process
of consultation employers are also required to clearly provide employees with information on the criteria that they will
be utilising to make decisions over redundancy.
Price v Palmer's Garden World (Employment Relations Authority)
- This case related to whether an agreed terms of settlement reached in mediation in relation to an employment
relationship problem were enforceable, and prevented a party that had not signed those terms of settlement from applying
to the Authority for a determination of the problem. Mrs Price had participated in the mediation, and agreed verbally to
the terms of settlement, which the Mediator then signed.
- Following subsequent events unrelated to the mediation, Mrs Price refused to sign the agreed terms of settlement and
sought an Authority hearing in relation to her employment relationship problem. The Authority found that the Act did not
require that the parties sign the agreed terms of settlement for these to be binding, and while the written evidence in
this case was equivocal, were satisfied that Mrs Price had in fact consented to the agreed terms of settlement.
Smith v Christchurch Press Company (Court of Appeal)
- This case was an appeal against an Employment Court dismissal of a wrongful dismissal claim. Mr Smith was dismissed
for serious misconduct (sexual harassment) in relation to an incident that had occurred with a work colleague outside of
work premises during a lunch break.
- The Court of Appeal held that in cases of dismissal for misconduct there must be a clear connection between the
conduct and the employment. In this case, it was not the location at which the incident occurred, but rather the impact
on the employer’s business of the conduct, its impact on the employer’s obligations to other employees and the fact that
it undermined the relationship of trust and confidence that was necessary between employer and employee.
Question of Status as an Employee Under Section 6 of the Act
- Section 6 of the Employment Relations Act 2000 directs the Employment Relations Authority (and Employment Court), when
deciding if a person is employed by another person under a contract of service, to determine the real nature of the
relationship between them. When determining the relationship, the Authority must consider all relevant matters,
including any that indicate the intention of the persons. However the Act does not specifically direct the Authority to
treat the parties’ intentions as being the primary consideration, therefore all other “relevant matters” not relating to
intention must also be considered.
- A number of Employment Relations Authority cases, including Hook v J B’s Contractors Limited and Alfred Stubbs v
Kimihia Home and Hospital, have considered applications to determine an individual’s status as an employee. The
Authority has applied the test in section 6 in determining these applications, however, to date the individual cases
have largely turned on their facts.
Diane Margaret Matheson being Executrix of the estate of Mark Douglas Matheson, deceased v Transmissions and Diesels
Limited (Employment Court)
- The key issue to be considered in this case was the ability of an estate to pursue a personal grievance on behalf of a
deceased employee who had arguably been constructively dismissed before his death (from suicide). The Court held that
the cause of action, that is the claim of unjustified dismissal, arises at the time of the dismissal (when the employee
is alive). At that time there exists a factual situation entitling him to claim a remedy. This is a cause of action
which may, under the Law Reform Act 1936, vest in his estate should he die before the procedure commences.
- In relation to the substantive issue in this case the Court held that on the balance of probabilities Mr Matheson was
constructively dismissed as a result of the breach of the defendant’s duty to act fairly and reasonably to him. Mr
Matheson suffered undue stress and humiliation as a result of that breach.
- The Court was clear that Mr Matheson’s death was an unforeseeable event, which his employer could not have
anticipated. His death did, however, limit his estate from claiming any damages for the loss of earnings in relation to
the period when, but for his death, he would have been likely to receive earnings from his employment. Under the Law
Reform Act 1936 there can be no claim for losses of future income. The Court did, however, award compensation to Mr
Matheson’s estate for distress / humiliation, loss of dignity, and injury to the feelings of the employee of $50,000.