prospective employment changes michaelquigg@quiggpartners ... · overseas snippets 6 september 2017...

QUIGG PARTNERS NEWSLETTER -SEPTEMBER 2017 1

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Prospective Employment Changes 1

First Sentencing Decision under HSAW 2015 Reveals Higher Penalties 2

Quantum: Are Compensation Awards under Section 123 High Enough? 3

A Relief Carer is not a “Homeworker” 4

Kindergarten Workplace Bullying Results in $100k Payout 5

Overseas Snippets 6

SEPTEMBER 2017

Michael QuiggPartner

DDI: 474 [email protected]

Simon MartinDDI: 474 0752

[email protected]

Sarah RicemanDDI: 474 0765

[email protected]

Prospective Employment ChangesWhilst the election outcome remains uncertain it seems some changes to the employment environment are likely, perhaps regardless of the composition of the new government. With New Zealand First having a key role its worth examining what some of the changes may look like. Based on pre-election policies some of the policies worth reflecting on are:

Compulsory Redundancy CompensationNZ First wishes to set minimum redundancy compensation provisions based on twice the normal contractual notice period up to a maximum of 13 weeks’ pay.

Review of Casual Employment PracticesNZ First seeks a review to ensure casual employment practices are fair and just.

Scrapping Trial PeriodsLabour would scrap the trial period provisions introduced by a National-led Government in 2009 that allows employers to dismiss new employees without a justifiable cause within the first 90 days of employment. A new trial period regime would be introduced that allows such employees to have recourse to a new referee service that is to be established.

Fair Pay Agreements (FPA’s)Labour would introduce Fair Pay Agreements (FPAs). FPAs are designed to set basic standards of pay and other conditions within an industry including allowances, weekend/night rates and leave entitlements.

NZ First would abolish the “starting out wage” for young people.

HSAW ActNZ First would amend the Health and Safety at Work Act 2015 to get rid of bureaucratic excesses.

Twice as Many Labour InspectorsLabour would double the number of Labour Inspectors aimed at ensuring employees’ minimum rights are protected.

Increase the Minimum WageLabour would increase the current minimum wage from $15.75 to $16.50 per hour. NZ First would increase it to $20 per hour.

Nick LoganReturning in December

2 QUIGG PARTNERS NEWSLETTER - SEPTEMBER 2017

First Sentencing Decision under HSAW 2015 Reveals Higher Penalties

Parental LeaveLabour would extend paid parental leave from 18 weeks to 26 weeks.

NZ First supports this.

NZ First would introduce paid paternal leave of 2 weeks, to increase to 4 weeks.

Equal Pay Amendment BillNZ First support the private members Bill of Green MP Jan Logie that would require all employers to collect information

about how much men and women are paid. The aim is to make it easier to find out where there is discrimination.

Will the Higher Earners Law Change Survive?In our last Newsletter we reported on the Employment Relations (Allowing Higher Earners to Contract out of Personal Grievance Provisions) Amendment Bill 2016. The aim was “to allow employees with an annual gross salary of over $150,000 per annum to contract out of personal grievance provisions”.

The Select Committee reported back on 15 August 2017. It proposed pursuing this law change with some amendments.

Both NZ First and Labour oppose the Bill. NZ First do not see the Bill as necessary. Labour opposes the change on the basis it is “Unnecessary, poorly targeted and established a dangerous concept in New Zealand’s workplace relations framework.”

It would appear this proposed change to employment law is unlikely to happen.

First Sentencing Decision under HSAW 2015 Reveals Higher Penalties The first successful prosecution under the Health and Safety at Work Act 2015 has occurred and the sentencing decision has revealed that the Courts will apply much higher penalties than they did under the previous health and safety regime.

WorkSafe New Zealand v Budget Plastics (New Zealand) LimitedAn accident involving a plastic extrusion machine occurred at the workplace of Budget Plastics (New Zealand) Limited (‘Budget’) which resulted in the amputation of a worker’s hand, leaving only his thumb and half his forefinger. Budget subsequently pleaded guilty to failing in its duty as a person conducting a business or undertaking (‘PCBU’) to ensure the health and safety of its workers so far as was reasonably practicable.

The District Court found that Budget had not fitted the machine with appropriate guards and emergency stops. Additionally, the machine did not have adequate hazard identification systems, operating procedures or safety processes in place for worker training.

Culpability BandsUnder the previous Act, the Health and Safety in Employment Act 1992, the Court had provided culpability bands for low, medium, and high culpability; up to 50,000, 50,000 – 100,000 and 100,000 – 175,000. However it was also made clear that the figure of $175,000 at the upper end of the high culpability band was not intended to preclude a greater fine up to the statutory maximum of $250,000. WorkSafe submitted that a departure from these bands was appropriate. It argued for a revised set of bands that were ten times higher and pushed for the “full quantum of fines available”.


Quantum: Are Compensation Awards under Section 123 High Enough?

WorkSafe assessed Budget’s culpability as moderate and therefore submitted that a starting point of $900,000 was appropriate. Budget argued the appropriate starting point was $200,000 and submitted that the sentencing under the new regime should produce results that are consistent with the experience and guidance provided by the Australian courts. It was accepted that the starting point under the old regime would have been only $90,000.

DecisionIn assessing Budget’s culpability the Court found that there was an obvious risk of amputation to those using the machine. The incident was foreseeable and there was potential for a much more severe injury to have occurred. Weighing up all factors, the Court determined that Budget’s culpability was moderate. This would have fallen within the middle band of $50,000 – 100,000 under the old Act, however under the new regime it determined the available starting point could range between $400,000 and $600,000.

The Court then decided that the end sentence would sit between $215,000 and $315,000 depending upon the starting point adopted. This was due to reductions made to give credit for mitigating factors.

Ability to PayThe Sentencing Act requires the Court to consider the financial capacity of an offender when determining a fine. The Court accepted and considered submissions that a fine in excess of $100,000 would cause significant difficulties for Budget as a business. The Court found clear evidence that “a fine above $100,000 will be outside of the defendant’s means” and accordingly, the fine was reduced to the amount that Budget could realistically pay, namely the sum of $100,000.

Although the Court specifically declined to provide any sentencing guidelines, this decision certainly indicates that higher penalties will be imposed under the new regime.

Lower Band Less serious cases such as where the act of discrimination is an isolated or one off occurrence

£800-8,400 (NZ $1,500-15,600)

Middle Band For serious cases which do not merit an award in the highest band

£8,400-25,200 (NZ $15,600 – 47,000)

Top band For the most serious cases, such as where there has been a lengthy campaign of discriminatory harassment

£25,200-42,000 (NZ $47,000-78,000)

Quantum: Are Compensation Awards under Section 123 High Enough?There have been several recent Employment Court cases where the Court has raised concerns as to the extent to which compensatory awards have kept pace with the times, and adequately reflect the non-pecuniary loss or damage sustained by an employee. This concern was considered in the case of Stormont v Pedal Thorpe Aitken Limited where the Court recognised that these recent cases reflect a “discernible upswing” in the quantum of awards for compensation under s 123(1)(c)(i). That section allows the Court to award compensation to an employee for humiliation, loss of dignity, and injury to feelings.

The Court in Stormont also recognised that the top-end awards under s 123(1)(c)(i) fall well short of the monetary awards provided for in the Human Rights Review Tribunal for the same form of non-pecuniary loss or damage. A well-known example is the case of Hammond v Credit Union Baywide where the Human Rights Review Tribunal awarded an employee $98,000 to compensate her for the humiliation, loss of dignity and injury to feelings she had suffered. Hammond, often referred to as “The Cake Case”, arose out of the dissolution of an employment relationship and involved many aggravating factors which are not uncommon in personal grievance claims that go through the Authority and the Employment Court.

UK Guidance

The Presidents of the Employment Tribunals in England, Wales and Scotland have recently revised the three broad bands of compensation for injury to feelings that may be awarded. As of September 2017 the new bands set out in the Presidential Guidance are:


A Relief Carer is not a “Homeworker”

The bands were increased approximately 40% from the previous bands, which had been in effect since 2009. The bands will now be reviewed annually and any new guidance will come into effect in April each year. Although there are three distinct bands, the guidance also notes that awards can exceed the top band in the most exceptional of cases.

Although it is uncommon, both in the UK and in New Zealand, to hear about awards at the top end of the scale, many cases involving the most serious type of humiliation, loss of dignity, and injury to feelings will be settled out of court on a confidential basis, as these cases pose the greatest reputational risk to employers.

The Court in New Zealand has not yet adopted a banding approach to compensatory awards. Ultimately, each case falls to be decided on its own facts, bearing in mind desirability of broad consistency with other cases.

A Relief Carer is not a “Homeworker”In the recent case of Janet Elsie Lowe v Director-General of Health, Ministry of Health and Anor the Supreme Court considered whether individuals providing relief care under the Ministry of Health and District Health Boards (‘DHB’) Carer Support scheme came within the definition of “homeworker” under section 5 of the Employment Relations Act 2000 (‘the Act’). The impact of a positive finding would mean that the Relief Carers were employees of the Ministry and/or the relevant DHB, and would thus be entitled to the benefits of an employment relationship such as the minimum wage, holiday pay and sick pay.

The Carer Support scheme provides respite for Primary

Carers of disabled or elderly people by enabling them to obtain the services of relief carers. The Primary Carer is reimbursed by the Ministry or DHB for all or some of the amount they have paid to the Relief Carer, or alternatively the Ministry or DHB pays the Relief Carer directly.

In line with the definition of homeworker provide in the Act, the Appellant Ms Lowe, argued that she was a homeworker because she was engaged by the ministry and/or DHB to do relief care in a dwellinghouse and that this was work for the Ministry or the DHB in the course of their trade or business.

In the first instance the Employment Relations Authority found that Ms Lowe was not a homeworker, however the Employment Court subsequently found that she was. That decision was then reversed by the Court of Appeal, which resulted in Ms Lowe pursuing her claim in the Supreme Court.

The Supreme Court split 3 to 2 on the decision with the majority finding that Ms Lowe was not a homeworker, and was therefore not an employee of the Ministry or DHB.

Justices Arnold and O’Regan based their decision on the fact that the Ministry and the DHB did not engage Ms Lowe to work for them. They determined that engagement required an event to occur in order to create a relationship between the hirer and the person being engaged and that in this instance, the relationship did not exist because neither the Ministry nor the DHB have any role in selecting relief carers under the Carer Support scheme.

Reaching the same conclusion but with different reasoning, Justice William Young held that Ms Lowe was not a homeworker because her provision of relief care was not in the course of the Ministry’s or DHB’s trade or business and that the relief care work she carried out was not “for” the Ministry or the DHB.


Kindergarten Workplace Bullying Results in $100k Payout

Kindergarten Workplace Bullying Results in $100k PayoutA bullied kindergarten teacher has been awarded almost $100,000 after the Employment Relations Authority found she was unjustifiably dismissed.

The Authority found that the teacher “Mrs T”, had been bullied by her manager who had a track record of bullying other workers.

After laying a formal complaint in regards to the bullying, Mrs T was put on paid special leave so that the kindergarten could carry out an investigation. The kindergarten upheld Mrs T’s complaint and disciplined “Ms X”, the manager involved.

The Authority was told by the kindergarten that Ms X denied she had bullied Mrs T and was not prepared to apologise for her actions. This led to Mrs T feeling “panic stricken” about returning to the same work environment in which the bullying had occurred. The kindergarten then effectively told Mrs T that if she wanted to return to work she had to agree to abandon all potential legal claims against it and accept the kindergarten’s return to work plan, without actually providing a copy the plan to Mrs T. This was set out in a letter to Mrs T which also stated that if she did not wish to return to work on that basis then the kindergarten would “treat that as a resignation”.

Throughout the investigation, the kindergarten’s positon was that Mrs T must have resigned because she was on

notice that failing to comply with its return to work plan, which was to be incorporated into a section 149 Record of Settlement, would be treated as a resignation.

The Authority member did not accept the kindergarten’s submissions that created a situation where Mrs T freely, genuinely or voluntarily resigned and found that there was no dispute that it was the kindergarten that brought up resignation, not Mrs T. The dismissal was found to be both procedurally and substantively unjustified.

Mrs T gave evidence to the Authority about the considerable distress and humiliation she had suffered as a result of her unjustified dismissal. Mrs T’s husband also corroborated her evidence and explained that he had noticed dramatic changes in her after her dismissal.

Mrs T also tried to mitigate her loss by moving her and her family out of the area in an attempt to find work. This resulted in her incurring the stress, uncertainty and the cost of selling her family home and moving out of the region in an attempt to mitigate her loss by moving closer to potential employment opportunities.

The Authority Member stated that this was an “appropriate case where there needs to be a significant level of distress compensation awarded to Mrs T to reflect the significant humiliation, loss of dignity and injury to feelings she has suffered.”

The kindergarten was ordered to pay Mrs T $15,000 compensation for humiliation and loss of dignity and hurt feelings in addition to her legal fees and nearly 17 months of lost wages.


Overseas Snippets

Overseas SnippetsSpain: Facebook Slapped with US$1.4 Million Fine over Privacy Breaches The Spanish Data Protection Agency (‘AEPD’) has determined that Facebook have been breaching privacy rules on multiple counts due to the way it uses people’s personal data for advertising purposes.

Facebook uses ad-targeting practises based on the interests people express by “liking” certain content on the social network. The AEPD is of the view that the way in which Facebook collects data on people’s ideologies, religious beliefs, personal tastes, and browsing history was inappropriate given that Facebook did not clearly tell its users what it would do with the information. Under European law, “personal data” means “any information relating to an identified or identifiable natural person”, so people’s “likes” would qualify as personal data.

In a statement, the AEPD said that “Facebook’s privacy policy contains generic and unclear terms,” and that “The social network uses specifically protected data for advertising, among other purposes, without obtaining users’ express consent as data protection law demands, a serious infringement.”

Additionally, the AEPD noted that Facebook was committing further breaches by not deleting data that was no longer useful for the reasons it was collected.

Australia: Can an Employer make a Pregnant Employee Redundant? An Australian employer dismissed a pregnant employee, Ms P, on grounds of redundancy two days before she was due to commence parental leave. Ms P’s redundancy was one of eight redundancies arising from a business restructure. The other employees were to be made redundant on 12 November 2015, however Ms P’s termination date was brought forward to 4 November 2015 because she was due to commence parental leave on 6 November 2015 and the employer did not want Ms P to have to come in during her parental leave to be told.

The Federal Circuit Court found that while there was a genuine business case for the redundancy, the company’s decision to bring Ms P’s redundancy forward to just two days prior to her parental leave beginning amounted to unlawful adverse action.

The employer failed to convince the Court that it brought the date forward with Ms P’s best interests in mind. As a result of the earlier termination date, Ms P lost her


Overseas Snippets

right to parental leave (including a portion of company paid parental leave) and the return to work guarantee. Although the dismissal itself was justified, the timing of the dismissal made it unlawful.

In a warning for all employers contemplating making an employee redundant while on parental leave, the Court said it would also have been unlawful for the employer to terminate Ms P on 12 November 2015 after she had commenced parental leave as the company would have been in breach of the return to work guarantee in the Fair Work Act 2009.

Australia: Formal Written Warnings Not Always Required To Prove Dismissal FairIf an employer can show that an employee had significant performance deficiencies, which were communicated to the employee and that the employee was given avenues for improvement, termination of employment may be found reasonable, regardless of whether formal warnings have been issued.

The Australian Fair Work Commission recently considered an unfair dismissal claim whereby an employer dismissed an underperforming employee but lacked any formal warnings or file notes regarding the dismissal.

The employer, FMG Personnel Services (‘FMG’), dismissed the employee as he lacked the necessary skills, capabilities and knowledge to adequately perform his role. FMG had attempted to assist the employee prior to the dismissal by providing one-on-one informal coaching and organising offsite training for the entire team. Despite FMG’s efforts the employee failed to improve his performance and started to become increasingly sensitive to constructive criticism.

FMG then placed the employee on an informal performance improvement plan and held a meeting with the employee to discuss performance expectations. It was accepted by the Commission that FMG chose an informal method of performance management because it believed

that was the most effective method of improving the employee’s performance.

The Commission found that employers do not always need to formally warn employees about unsatisfactory performance. Rather, evidence of a performance improvement plan, informal mentoring and general discussions about the dissatisfaction with the employee’s performance, can be enough to warrant as warning to the employee and in this case it was. This decision has since been appealed by the employee.

Australia: Company Directors are “Workers” Protected by Anti-bullying LawsA recent decision of the Australian Fair Work Commission has found that company directors are “workers” protected by anti-bullying laws.

The case involved the Chairperson of an Executive Board of APY Inc, Mr Adamson, who had applied for a stop bullying order under section 789FC of the Fair Work Act 2009 (‘FW Act’). That section provides that “A worker who reasonably believes that he or she has been bullied at work may apply to the FWC for an order…” It also states that for the purposes of that section, the term “worker” has the same meaning as it does in the Work Health and Safety Act 2011 (‘WHS Act’).

Upon a successful application of a stop bullying order, the accused bullies can be prevented from being in proximity to the applicant. The bullying allegations were in relation to APY Inc’s General Manager and Deputy Chairperson. Mr Adamson alleged that they bullied him by interfering with his conduct of executive board meetings, preventing him from exercising his powers or accessing meeting minutes, and refusing to deal with him.

There was no suggestion that the Company was not a PCBU and therefore the Commission focused upon whether Mr Adamson was a “worker”.

In contending that he was a “worker”, Mr Adamson emphasised that the objects of the HWS Act and the FW Act show a legislative intention to reform the workplace by improving the safety and quality of workplace life for people performing work. Mr Adamson argued that the categories specified in section 7(1) of the WHS Act (e.g. employee, contractor, volunteer, apprentice) were not exclusive, and that plainly, the performance of his duties as Chairperson amounted to work in the literal approach.

In considering the objects of each Act the Commission referred to an Explanatory Memorandum to the WHS Act which confirmed that the intention was for the Act to adopt a broad definition of “worker” instead of “employee” to recognise the changing nature of work relationships and to ensure health and safety protection is extended to all

for breach of contract based on the Council’s failure to allow them to apply for voluntary redundancy. The Employment Tribunal dismissed their claims on the basis that they had no contractual right to apply for voluntary redundancy because the Council had only offered it in one previous year and it was unlikely to be repeated and thus there was no “policy” such as to give rise to a contractual right. Additionally, the Tribunal found that only employees invited to apply for voluntary redundancy would be eligible and have a contractual right to do so and, regardless, those who did apply had no right to receive voluntary redundancy. The Claimants appealed.

On appeal it was recognised that the claimants were not relying on voluntary redundancy being a policy or custom and practice. Instead they were saying was that the Council had communicated that they, as affected employees, could apply for voluntary redundancy and the fact that in the end they could not was a breach of contract. The issue which needed to be focussed on was whether the Council’s communications viewed objectively, gave rise to a reasonable understanding on the part of the claimants that they had a contractual right to apply for voluntary redundancy. The appeal was successful and the case has been sent back to be heard again. 9

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8 QUIGG PARTNERS NEWSLETTER - JUNE 2017

Overseas Snippets

types of workers. The Commission considered the nature of Mr Adamson’s role and functions and found that it was significant that as Chairperson he had a specific role under the terms of the APY Act and was paid significant remuneration for doing so.

The Commission found that the activities undertaken by Mr Adamson did represent work, and the fact that the role didn’t fit “neatly” into any of the categories listed in section 7(1) was “not decisive”.

UK: A Contractual Right to Voluntary Redundancy?In December 2013 the Birmingham City Council announced on their intranet that they had decided to undertake a process offering a generous voluntary redundancy package in 2014/15. The process was to cover “all affected” employees that had previously been identified in a formal section redundancy notice. The notice stated that “all eligible” employees would be contacted and invited to make an application for voluntary redundancy.

The affected employees were later told that voluntary redundancy would not be available to them and they were made compulsorily redundant. They claimed damages

prospective employment changes michaelquigg@quiggpartners ... · overseas snippets 6 september 2017...

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