season’s greetings [email protected] from ... · partner ddi: 474 0766...

8
QUIGG PARTNERS NEWSLETTER - DECEMBER 2014 1 Level 7, The Bayleys Building 36 Brandon Street PO Box 3035, Wellington Phone 64 4 472 7471 Fax 64 4 472 7871 www.quiggpartners.com Quick Reference New Laws Effective 6 March 2015 1 Court of Appeal Upholds Redundancy Ruling 4 Equal Pay 6 Overseas Snippets 7 DECEMBER 2014 Michael Quigg Partner DDI: 474 0766 [email protected] New Laws Effective 6 March 2015 e Employment Relations Amendment Bill received royal assent on 6 November 2014 and will come into effect on 6 March 2015. e Act amends the Employment Relations Act 2000, with the stated aim of increasing fairness, flexibility and choice in New Zealand’s labour market. e key amendments are summarised below. Good Faith At present, an employer does not have to disclose confidential information, which is relevant to a decision that is likely to have an adverse effect on the continuation of an employee’s employment, if there is a good reason to maintain the confidentiality of the information. For example, protecting an individual’s privacy or the employer’s commercial position. In Vice-Chancellor of Massey University v Wrigley, it was held that under the good faith provisions of the Act, the University was required to disclose, as part of a restructuring and selection process for redundancy, information concerning other employees to the unsuccessful candidates. e Court held that the privacy of the individuals involved in the process was not a sufficiently ‘good reason’ to maintain the confidentiality of the information. is decision has resulted in potentially affected employees making more active requests for information under the good faith provision of the Act. In response to this decision, the Amendment Act clarifies what information employees are entitled to in situations where a decision is likely to affect their continued employment. e Bill initially permitted employers to withhold confidential information, which is regarded as evaluative or opinion material, or about the identity of the person who supplied such material (i.e. the situation in Wrigley). However, these clauses were deleted from the Bill in accordance with a recommendation from the Transport and Industrial Relations Committee. Rather, under the Amendment Act an employer would not have to disclose confidential information: that is about an identifiable individual, other than the affected employee (e.g. other candidates), if providing access to that information would involve the unwarranted disclosure of the affairs of that other individual; that is subject to a statutory requirement to maintain confidentiality; or where it is necessary for any other good reason to maintain the confidentiality of the information (e.g. to protect the employer’s commercial position). e test for whether information may be regarded as confidential, is whether there is a mutual understanding of secrecy. Simon Martin DDI: 474 0752 [email protected] Clare Willard DDI: 474 0752 [email protected] Natalie Shaw DDI: 474 0768 [email protected] Kathryn Nicholas DDI: 474 0758 [email protected] Season’s Greetings from Quigg Partners

Upload: others

Post on 25-Jun-2020

1 views

Category:

Documents


0 download

TRANSCRIPT

Page 1: Season’s Greetings michaelquigg@quiggpartners.com from ... · Partner DDI: 474 0766 michaelquigg@quiggpartners.com ... pay in the event of a partial strike, which includes circumstances

QUIGG PARTNERS NEWSLETTER - DECEMBER 2014 1

Level 7, The Bayleys Building36 Brandon Street

PO Box 3035, WellingtonPhone 64 4 472 7471Fax 64 4 472 7871

www.quiggpartners.com

Quick Reference

New Laws Effective 6 March 2015 1

Court of Appeal Upholds Redundancy Ruling 4

Equal Pay 6

Overseas Snippets 7

DECEMBER 2014

Michael QuiggPartner

DDI: 474 [email protected]

New Laws Effective 6 March 2015The Employment Relations Amendment Bill received royal assent on 6 November 2014 and will come into effect on 6 March 2015. The Act amends the Employment Relations Act 2000, with the stated aim of increasing fairness, flexibility and choice in New Zealand’s labour market. The key amendments are summarised below.

Good FaithAt present, an employer does not have to disclose confidential information, which is relevant to a decision that is likely to have an adverse effect on the continuation of an employee’s employment, if there is a good reason to maintain the confidentiality of the information. For example, protecting an individual’s privacy or the employer’s commercial position.

In Vice-Chancellor of Massey University v Wrigley, it was held that under the good faith provisions of the Act, the University was required to disclose, as part of a restructuring and selection process for redundancy, information concerning other employees to the unsuccessful candidates.

The Court held that the privacy of the individuals involved in the process was not a sufficiently ‘good reason’ to maintain the confidentiality of the information. This decision has resulted in potentially affected employees making more active requests for information under the good faith provision of the Act.

In response to this decision, the Amendment Act clarifies what information employees are entitled to in situations where a decision is likely to affect their continued employment. The Bill initially permitted employers to withhold confidential information, which is regarded as evaluative or opinion material, or about the identity of the person who supplied such material (i.e. the situation in Wrigley).

However, these clauses were deleted from the Bill in accordance with a recommendation from the Transport and Industrial Relations Committee. Rather, under the Amendment Act an employer would not have to disclose confidential information:

• that is about an identifiable individual, other than the affected employee (e.g. other candidates), if providing access to that information would involve the unwarranted disclosure of the affairs of that other individual;

• that is subject to a statutory requirement to maintain confidentiality; or

• where it is necessary for any other good reason to maintain the confidentiality of the information (e.g. to protect the employer’s commercial position).

The test for whether information may be regarded as confidential, is whether there is a mutual understanding of secrecy.

Simon MartinDDI: 474 0752

[email protected]

Clare WillardDDI: 474 0752

[email protected]

Natalie ShawDDI: 474 0768

[email protected]

Kathryn NicholasDDI: 474 0758

[email protected]

Season’s Greetingsfrom Quigg Partners

Page 2: Season’s Greetings michaelquigg@quiggpartners.com from ... · Partner DDI: 474 0766 michaelquigg@quiggpartners.com ... pay in the event of a partial strike, which includes circumstances

2 QUIGG PARTNERS NEWSLETTER - DECEMBER 2014

New Laws Effective 6 March 2015

Collective Bargaining

Right to stop bargaining The duty of good faith will no longer require parties to collective bargaining to conclude an agreement. This means that if an employer and union have come to a standstill or reached a deadlock about a matter, the duty of good faith does not require the employer and union to continue bargaining on other matters. An employer will however breach the duty of good faith if it refuses to enter into a collective agreement on the basis that it is opposed, or objects in principle, to bargaining for or being a party to a collective agreement.

Initiating bargainingIf there is a collective agreement in force, under the current Act unions are provided with the first opportunity to initiate bargaining with an employer. The Amendment Act aligns the employer’s right to initiate bargaining with that of the unions so that either party may initiate bargaining from the same date.

Multiple Employers A significant change to the Act is that employers may now opt out of bargaining for a collective agreement where multiple employers are involved. The employer must opt out within 10 days of receiving notice to initiate bargaining.

Determination that Bargaining has concludedA party to collective bargaining may now apply to the Employment Relations Authority to determine whether bargaining has concluded because of difficulties in concluding bargaining. If the Authority determines that bargaining has concluded, without agreement from the other party or parties, either of the parties cannot initiate further bargaining within 60 days of the determination. The Authority is however prevented from making such a determination if the party seeking the declaration is found to have breached the duty of good faith.

30 Day Rule ScrappedFor the first 30 days’ of employment, the terms and conditions of a new employee’s employment, who is not a member of a union, will no longer automatically be that of any collective agreement which is in force and covers their position.

Multiple Flexible Working RequestsAll employees now have a right to request flexible work arrangements at any time, and employers must respond to this request within one month. There is no limit to the number of requests an employee may make. Under the current Act, this right was restricted to employees who had caring responsibilities.

Page 3: Season’s Greetings michaelquigg@quiggpartners.com from ... · Partner DDI: 474 0766 michaelquigg@quiggpartners.com ... pay in the event of a partial strike, which includes circumstances

QUIGG PARTNERS NEWSLETTER - DECEMBER 2014 3

New Laws Effective 6 March 2015

Transferring EmployeesPart 6A of the Act provides protection to employees who are employed in sectors in which restructuring occurs frequently and whose terms and conditions tend to be undermined by such restructuring. Currently, an employee who has the protection of this subpart can elect to transfer to any new employer as defined in section 69D of the Act. However, the Amendment Act limits the coverage of this subpart by excluding new employers who have 19 or fewer employees, and who provide a warranty confirming that they only employ 19 or fewer employees. The Amendment Act also introduces provisions for affected employees to raise a personal grievance and imposes notification requirements on the current employer and their transferring employees.

Transferring Employees’ annual leave/sick leaveThe Amendment Act introduces new requirements in respect of liability for service-related entitlements (e.g. sick leave and annual leave) of transferring employees. These costs must now be apportioned between the current and new employer. If the employers cannot reach an agreement then the costs are apportioned as follows:

• The current employer is liable for costs they would have to pay if the employee had ceased employment before the restructuring occurred (e.g. annual leave).

• The new employer assumes responsibility for the costs of any service-related entitlements not payable on termination (e.g. sick leave or bereavement leave).

Recent Case AlertIn the recent case of LSG Sky Chefs NZ Ltd v Pacific Flight Catering Limited, the new employer of transferred workers under Part 6A of the Act sought reimbursement from the previous employer for assuming liabilities

associated with service-related entitlements after the transfer date. The Supreme Court in dismissing the appeal held that the new employer could not recover these costs. Interestingly, under the Amendment Act, the previous employer would have been statutorily liable for the costs of discharging annual holiday entitlements up to the transfer date.

Rest and Meal BreaksThe Amendment Act removes an employee’s entitlement to rest and meal breaks at prescriptive intervals (e.g. one 10 minute break for employees who work between two and four hours). It introduces an obligation for employers to provide rest and meal breaks that provide the employee with a reasonable opportunity for rest, refreshment and attention to personal matters, which are appropriate for the duration of the employee’s work period. The employer and employee must agree to the timing and duration of rest and meal breaks. This negotiation process is underpinned by the duty of good faith and the employer’s obligation to provide the employee with a reasonable opportunity to negotiate. In absence of agreement, the employer may specify reasonable times and durations of such breaks.

The employer may however restrict an employee’s entitlement to rest and meal breaks, but only if the restrictions:

• are reasonable and necessary, having regard to the nature of the employee’s work, or are reasonable and agreed to by the employee; and

• relate either to: the employee continuing to be aware of their work duties or, if required, continuing to perform some of their work duties during their break; circumstances where an employee’s break may be interrupted; or the employee taking their break within or at a specified place within the workplace.

If these circumstances arise, an employee is entitled to paid rest breaks.

Page 4: Season’s Greetings michaelquigg@quiggpartners.com from ... · Partner DDI: 474 0766 michaelquigg@quiggpartners.com ... pay in the event of a partial strike, which includes circumstances

4 QUIGG PARTNERS NEWSLETTER - DECEMBER 2014

Court of Appeal Upholds Redundancy Ruling

Compensatory measuresThe Amendment Act allows in certain circumstances for the employer not to provide rest and meal breaks. Firstly, an employee may agree to receive ‘compensatory measures’ instead of taking a rest or meal break. Secondly, where the employer, having regard to the nature of the work performed, cannot reasonably provide the employee with rest and meal breaks (e.g. the employee is in sole charge). In both circumstances the employer must provide the employee with reasonable compensatory measures (e.g. allowing a later start time or the employee to leave work early).

Strikes and LockoutsUnder the Amendment Act, advance notice in writing must be given before a strike or lockout. Previously, this only applied to strikes that would affect essential service industries. If the notice requirements are not complied with the strike or lockout will be deemed unlawful.

The Act is also amended to allow employers to deduct pay in the event of a partial strike, which includes circumstances where employees refuse to perform part of their normal duties or reduce the performance or rate of their work. An employer must calculate the pay deduction in accordance with the formula under the Amendment Act or at a flat rate of 10% of the employee’s wages.

InstitutionsAt the conclusion of an investigation hearing, the Employment Relations Authority must now, wherever practicable, give an oral determination or oral indication of its preliminary findings. The Authority must record an oral determination in writing as soon as practicable, and no later than one month after the conclusion of the investigation meeting. Likewise, the Authority must provide a written determination as soon as practicable following an oral indication, and not later than three months after the conclusion of the investigation meeting or the date on which the last evidence or information was heard from the parties (whichever is the later).

Court of Appeal Upholds Redundancy RulingThe Court of Appeal’s decision in Brake v Grace Team Accounting Ltd confirmed the test in regards to justification of dismissals on the grounds of redundancy.

BackgroundPrevious newsletters have noted the position taken in the Totara Hills case as regards managerial prerogative, which was affirmed in Brake v Grace Team Accounting Ltd.

The Employment Court held GTA unjustifiably dismissed Ms Brake principally on the basis that the decision to make Ms Brake’s position redundant was based on incorrect financial information, the provision of information was inadequate, and GTA were unable to justify why Ms Brake had been included in the redundancy proposal.

The actions of GTA were therefore not what a fair and reasonable employer would have done in all the circumstances at the time the dismissal occurred (note, this case is before the amendment of s103A from ‘would’ to ‘could’).

The Employment Court awarded Ms Brake $65,000 for lost remuneration, which equated to 12 months’ salary, and $20,000 for hurt and humiliation caused by the unjustified dismissal.

AppealIn December 2013, leave was sought and granted for GTA to appeal the decision to the Court of Appeal, on the following questions of law:

(a) Did the Employment Court apply the correct test under s 103A of the Employment Relations Act 2000 for justification of dismissals on the grounds of redundancy?

(b) Did the Employment Court apply the correct principles when exercising its discretion to award remedies to the respondent?

Page 5: Season’s Greetings michaelquigg@quiggpartners.com from ... · Partner DDI: 474 0766 michaelquigg@quiggpartners.com ... pay in the event of a partial strike, which includes circumstances

QUIGG PARTNERS NEWSLETTER - DECEMBER 2014 5

Court of Appeal Upholds Redundancy Ruling

DecisionIn early November, the Court of Appeal delivered its substantive decision, dismissing both grounds of the appeal.

Correct Test under s 103A of the ActGTA argued that the correct test under s 103A in a redundancy situation is that the redundancy will be justified if, on an objective basis, the employer’s decision to dismiss is genuine. GTA based their argument on the Employment Court’s 1991 decision in Hale that if a redundancy dismissal is genuine then it will be substantially justified.

GTA relied on the Employment Court’s finding that Ms Brake’s dismissal was genuine, as there was no suggestion that GTA had used the redundancy to mask an ulterior motive.

The Court of Appeal held that the reference to a ‘fair and reasonable employer’ in s 103A cannot be read down to mean a genuine employer. Rather, the Court must consider on an objective basis whether the employer’s actions and how it acted were what a reasonable employer would have done in all the circumstances at the time.

The Court however does not dismiss genuineness as a factor in that test, because if a redundancy dismissal is not genuine then it will be difficult to make a finding that the actions of the employer were what a fair and reasonable employer would or could do.

This case confirms that the subjective findings in respect of the employer’s actions will be measured against the Court’s assessment of what a fair and reasonable employer could have done in all the circumstances. The Court noted that this assessment is not substituting its decision for that of the employers.

RemediesGTA argued that the Employment Court’s award to Ms Brake for lost remuneration was wrong in principle, being four times the starting point of three months’ lost earnings.

GTA also argued that the Employment Court’s award of compensation of $20,000 for hurt and humiliation, was wrong in law. GTA submitted that these remedies should be substantially reduced.

The Court of Appeal held that the Employment Court had correctly applied the principles in exercising its discretion to award such remedies to Ms Brake and subsequently dismissed the appeal.

Page 6: Season’s Greetings michaelquigg@quiggpartners.com from ... · Partner DDI: 474 0766 michaelquigg@quiggpartners.com ... pay in the event of a partial strike, which includes circumstances

6 QUIGG PARTNERS NEWSLETTER - OCTOBER 2014

Equal Pay

Equal PayThe Court of Appeal’s decision in Terranova Homes & Care Limited v Service and Food Workers Union Nga Ringa Tota Inc, addresses an appeal from the Employment Court in relation to the scope of the Equal Pay Act 1972.

BackgroundMs Bartlett was employed by Terranova Homes as a rest home caregiver. She contended that the wage rates paid to her by Terranova do not comply with the meaning of ‘equal pay’ under the Act. The Act defines equal pay as:

“A rate of remuneration for work in which rate there is no element of differentiation between male employees and female employees based on the sex of the employees.”

Ms Bartlett did not dispute that male rest home caregivers employed by Terranova are not paid at the same wage rate, but rather that both male and female caregivers are being paid at a lower wage rate due to the fact that the work is predominately performed by woman. Ms Bartlett sought an order determining what wage rate would amount to equal pay under the Act and an order to amend her employment agreement accordingly.

Employment CourtThe Employment Court agreed to consider eight preliminary questions on the matter and delivered a decision accordingly. Terranova however challenged two of the Employment Court’s answers, which concerned the interpretation of s 3(1)(b) of the Equal Pay Act. This

section sets out the criteria to be applied in determining whether an element of sex-based differentiation exists in wage rates being paid for work which is exclusively or predominately performed by females, and requires the Court to consider what a hypothetical male would be paid to do the same work. The Employment Court held that in making such an assessment, the Court should take into account any systemic undervaluation of the work derived from current, historical or structural gender discrimination. The Employment Court further held that it could have regard to the wage rates of males in other industries.

Court of Appeal DecisionThe question of law for determination on appeal was whether the Employment Court’s answers (refer above) were wrong in law.

Terranova argued that the assessment under s 3(1)(b) of the Act would usually be limited to the workplace at issue. Terranova acknowledged that in exceptional circumstances the Court may have regard to wage rates paid by other employers in the sector, but not another sector or for the purpose of considering systemic undervaluation. Terranova argued that these exceptional circumstances did not exist on the facts as Terranova employed male caregivers.

The Court’s interpretation of the language and purpose of the Act was such that it considered wage rates paid to males by other employers and in other sectors when considering what would be paid to the hypothetical male

Page 7: Season’s Greetings michaelquigg@quiggpartners.com from ... · Partner DDI: 474 0766 michaelquigg@quiggpartners.com ... pay in the event of a partial strike, which includes circumstances

QUIGG PARTNERS NEWSLETTER - OCTOBER 2014 7

Overseas Snippets

under s 3(1)(b) of the Act. The Court also held that the Act provided for evidence of systemic undervaluation to be taken into account. In essence the Court of Appeal’s findings confirm the Employment Court’s decision that the Act is not limited to providing for equal pay for the same or similar work (e.g. a man working in the same workplace and doing the same work) but also pay for work of equal value (e.g. a man doing similar work in another sector not dominated by women).

Terranova raised concerns about the Employment Court’s decision leading to an unjust and unworkable result, which Parliament did not intend.

The Court’s decision acknowledged that this case is likely to be complex and difficult when it does come to trial, however, it dismissed Terranova’s concerns as they did not persuade the Court to depart from the meaning derived from the language and the purpose of the Act. Rather, the Court held that the issues surrounding the ‘workability’ of the Act should be left to the Employment Court to provide guidance on.

On that note, the Court provided direction to the Employment Court that the issue is more finely balanced than its approach to the preliminary questions of law.

As a result of the Court’s findings, Terranova’s appeal was dismissed and the case was referred back to the Employment Court to provide a workable framework for the resolution of Ms Bartlett’s claim and to enable the parties to bring that claim before the Employment Court in a manageable way.

CommentThis decision may have significant implications, not only for the aged care sector, but also for other sectors where woman predominately perform the work.

Employers of such workers may struggle to absorb the costs of any court imposed pay rise and ultimately these may well to be passed on to consumers.

Overseas SnippetsUnited Kingdom - Executive Receives Golden ParachuteA former executive in the United Kingdom has recently been awarded over £418,774 in severance pay, despite the employer’s protests that he was not entitled to this due to the payment of a £487,925 transaction bonus only a few months earlier.

The executive’s contract contained a clause which provided that if the executive’s employment was terminated after a change in control, he would be paid a prescribed amount. In 2012, the executive assisted in negotiating the merger of the employer’s company.

This assistance was recognised by the payment of the transaction bonus. However, as a result of the merger taking place in mid 2013, the executive’s employment was terminated on the basis of redundancy. The employer’s termination letter sought to gain the executive’s agreement to waive his right to the severance payment. Unsurprisingly, agreement was not reached.

The employer argued that the former executive had been informed in 2012 that he would be awarded the transaction bonus but he would not be entitled to the severance pay as well, as it would be inappropriate for him to “double dip”. The Court nevertheless held that this was a “futile waste of time” as any contractual variation needed the agreement of both parties.

United Kingdom - Post Share Sale Integration Requires ConsultationThe United Kingdom’s TUPE regulations provide protection to employees if the business in which they are employed changes hands, which includes requiring employers to consult with employees.

Where a business changes hands via a share acquisition, there will normally be no change in the identity of the employer and therefore the TUPE regulations will not be in issue. The case of Jackson Lloyd v Smith & Ors dealt with a share acquisition where the TUPE protections did apply.

Jackson Lloyd Limited’s shares were acquired by Mears Group. Following the acquisition, Mears Group began an integration plan which included replacing Jackson Lloyd’s Board, informing employees of the acquisition and sending a team of integration managers to Jackson Lloyd’s sites to oversee the integration.

Several employees brought claims against Mears Group and Jackson Lloyd for failing to inform and consult them as required by the TUPE regulations.

The Employment Appeal Tribunal found that the share acquisition in itself did not trigger the TUPE regulations.

However, the Employment Appeal Tribunal found that there was a subsequent, separate and ‘co-extensive transfer’ from Jackson Lloyd to Mears Group which occurred as a result of the integration process and so the TUPE regulations applied.

In making this finding, the Employment Appeal Tribunal stated that although Jackson Lloyd retained the outward appearance of an autonomous and separate company, in reality Jackson Lloyd had largely become a trading name for Mears Group.

Page 8: Season’s Greetings michaelquigg@quiggpartners.com from ... · Partner DDI: 474 0766 michaelquigg@quiggpartners.com ... pay in the event of a partial strike, which includes circumstances

8 QUIGG PARTNERS NEWSLETTER - DECEMBER 2014

United Kingdom - Deduction for Failure to Work Out Notice Not a PenaltyThe Employment Appeal Tribunal has ruled in the case of Yizhen v First Marine Solutions Limited that a clause which provided for the deduction of any unworked notice period was enforceable.

Ms Yizhen, who brought the claim, resigned and then failed to work out her notice period. As a result, First Marine Solutions Limited deducted the period of unworked notice. Ms Yizhen claimed that the clause, which allowed for this deduction, was a penalty clause and therefore unenforceable.

The Employment Appeal Tribunal found that this clause was not a penalty clause, as it represented a genuine pre-estimate of the loss First Marine Solutions Limited would suffer in the event Ms Yizhen did not work out her notice. Important to this finding was the fact that Ms Yizhen was a skilled project engineer whose skills were not easily replaced.

This decision contrasts with an earlier decision of the Employment Appeal Tribunal which found that a similar clause was a penalty clause. The difference in that case was that the employee had been a delivery truck driver, who the Employment Appeal Tribunal found could be easily replaced without significant expense.

Ireland - Large Hotdog Costs Employer €20,000A cinema operator in Ireland has been ordered to pay €20,000 to an employee it dismissed for improperly upsizing his hotdog and taking a packet of wine gums instead of the maltesers he had paid for. The total difference in price between these items was €1.

Mr Meale, who had been employed for three years, stated that this was simply an honest mistake and that he had not intended to defraud the cinema.

The Employment Appeals Tribunal found that Mr Meale had been unfairly dismissed. It pointed to the employer’s evidence that the mere fact that the employer’s discount policy had been breached meant that the employer considered there was serious misconduct and dismissal was justified.

The Appeals Tribunal found that this indicated that the employer had not taken into consideration whether or not it was an honest mistake on the part of Mr Meale.

Overseas Snippets