International Newsletter

Recent Case Law Relevant to Employers in New Zealand

May 20, 2019
New Zealand

New Zealand is a common-law jurisdiction; therefore, case law provides us with important guidance and direction on the interpretation of the law. This article provides an update of some recent judgments of note that have significant implications for employers and employees in New Zealand.

The three judgments below relate to interesting matters in the employment sphere, including: the Employment Court’s expectations of an employer when managing an employee with mental health issues, compensation levels available to a successful claimant in employment disputes, and the meaning of “work” for the purpose of determining for which activities an employee should be paid.

An Employer’s Obligations to Employees With Mental Health Concerns

In FGH v RST [2018] NZEmpC 60, an employee who was subject to a performance management process suffered from an attention-deficit disorder (ADD) and an anxiety disorder. These disorders affected the employee’s work performance and ability to cope with a resulting performance management process. When the employer became aware of the employee’s conditions, the employer implemented additional support to reduce stress and assist with performance improvement, including offering an employee assistance program: extending timeframes for responding to steps in the performance management process, allowing time for the employee to attend the gym, providing discussion points before meetings, postponing meetings, and permitting the employee to move her desk to a “quiet space.”

The employee did not consider the employer’s support sufficient and raised a disadvantage grievance on the basis that her employer had failed to provide a safe-work environment while dealing with her performance issues. The Employment Relations Authority dismissed the grievance, and the employee challenged the decision to the Employment Court.

Finding in favor of the employee, the judge held that a fair and reasonable employer (the cornerstone test of an employer’s obligations) would not have conducted a routine performance management process and subsequent disciplinary process upon learning of the employee’s health concerns. A fair and reasonable employer would have requested further medical information prior to continuing to follow a performance management process.

The Employment Court further held that RST did not manage the employee’s disorders as far as was “reasonably practicable,” which is the standard imposed by the Health and Safety at Work Act 2015. The Employment Court concluded that RST management believed the employee’s reactions to, and inability to cope with, the performance and disciplinary processes stemmed from the fact she didn’t like being performance managed when, in reality, her actions (such as absenteeism and outbursts) were symptoms of her anxiety disorder.

This case is important as it emphasizes that if an employer becomes aware of an employee’s medical condition prior to or while carrying out an employment process, an employer’s primary obligation is to understand the employee’s medical condition further and consider how that employment process could be reasonably adapted prior to initiating or continuing such process.

Compensation Amounts

In Richora Group Limited v Cheng [2018] NZEmpC 113, the employer unsuccessfully challenged a finding by the Employment Relations Authority that a former employee, Cheng, was unjustifiably dismissed.

The approach taken by the chief judge of the Employment Court in determining the amount of compensation that Cheng was awarded as the successful party is worthy of note in this case. Compensation for humiliation, loss of dignity, and injury to feelings is a remedy that can be awarded pursuant to the Employment Relations Act 2000. In short, the chief judge suggested a banding approach with respect to assessing compensation: Band 1: $0‒$10,000; Band 2: $10,000‒$40,000; Band 3: $40,000 plus. The level of banding was a significant increase from the level of compensation currently awarded to successful claimants. Prior to this judgment, there had been limited guidance regarding the amount of compensation awards. This meant that the level of such awards was often unpredictable. Going forward, we expect the amount of compensation that an employee or former employee may claim will be greater and that the Employment Relations Authority and Employment Court will accordingly award higher figures.

The Meaning of “Work”

The issue in question in Ovation New Zealand Limited v New Zealand Meat Workers and Related Trades Union Inc. [2018] NZEmpC 151 was whether the “donning and doffing” of protective clothing and equipment worn by meat workers at the beginning and end of each shift and at breaks during the shift was considered “work” for the purpose of the Minimum Wage Act 1983.

The Minimum Wage Act 1983 states that every worker shall be entitled to receive, from their employer, payment for their work at not less than the minimum rate. Ovation New Zealand did not pay their workers for the time to put protective clothing on and off, as these activities fell outside of the employee’s contractual shift period (and Ovation only paid employees for the duration of the shift).

The judge held that the “donning and doffing” of protective clothing and equipment was a mandatory and essential part of the company’s business, due to the regulatory requirements set by the Health and Safety at Work Act 2015. Without such activities, the business would not be conducting adequate health and safety practices and would be in breach of health and safety requirements. Accordingly, the Employment Court held that these activities amounted to “work” and employees should be paid for it.

This case highlights the importance for employers to carefully consider whether any tasks performed by employees before or after a shift starts is mandatory and forms part of their job requirements and if, as a result, they should be paid for that time. In New Zealand, there are a number of industries and professions in which employees are likely to be carrying out additional tasks without being paid the minimum wage. Accordingly, we will watch the courts tackling the definition of work with interest as case law continue to develop in this area.

Written by Charlotte Joy of Bell Gully and Roger James of Ogletree Deakins

© 2019 Bell Gully and Ogletree, Deakins, Nash, Smoak & Stewart, P.C.