Ruling clarifies what 'something more' means when a contract clause is invoked
A salary deduction clause did not shield an Auckland employer from a personal grievance claim, New Zealand's Court of Appeal ruled in February.
In Breen v Prime Resources Company Limited, decided on 24 February 2026, the Court of Appeal found that the Employment Court had erred in its construction and application of s 103(3) of the Employment Relations Act 2000 (the "jurisdictional bar"), which excludes personal grievances where an employer's action derives solely from the interpretation, application, or operation, or disputed interpretation, application, or operation, of any provision of any employment agreement.
Prime Resources Company Limited, an Auckland property developer, employed Kevin Breen in April 2021 as general manager and head of sales and marketing at an annual salary of $150,000. Four months later, the Government imposed a COVID-19 lockdown in Auckland. Breen notified the company he would continue working during the lockdown, including by contacting customers and dealing with all incoming calls, email and text communications and inquiries from potential customers.
On 1 September 2021, company managing director Mr Chung emailed Breen, stating he needed to deduct $4,326.75 from his August salary under cl 4.2 of the employment agreement, which provided that an employee would not be paid for hours not worked due to "personal matter or ACC etc." Chung estimated Breen had not worked 75 hours. Despite Breen's immediate objection, the company proceeded with the reduced payment.
When the matter reached the Employment Court, Chung acknowledged in evidence that the calculation had been based on the number of emails Breen was responding to, that it was a "best guess", and that he had never asked Breen what work he had done in August before making his calculation.
The Employment Relations Authority upheld Breen's personal grievance and awarded him $2,000 compensation for hurt and humiliation. The Employment Court reversed that outcome, finding the dispute derived solely from the company's interpretation of cl 4.2. The correct path, Chief Judge Inglis held, was the disputes procedure, which carries no compensation remedy.
The Court of Appeal disagreed. The Court held that while the interpretation of cl 4.2 was an important feature of the case, the wage deduction also derived – directly – from the company's method of calculating hours worked. Chung's calculation was extraneous to the clause: a unilateral decision based on a factual assumption, not an assumption about the clause's meaning. What hours Breen actually worked was entirely a factual dispute.
The Court's ruling turned on the word "solely" in s 103(3). The correct question, the Court held, is whether resolution of the claim turns entirely on a finding about the correctness or otherwise of the employer's genuine interpretation of the relevant provision. Where "something more" exists (such as a process issue, a factual dispute, or a statutory obligation beyond the contract), the bar does not apply and the personal grievance proceeds.
The Court also noted the company had not alerted Breen in August about the proposed deduction, had proceeded unilaterally despite his objection, and had made no enquiry into the hours he actually worked. The Court found it was reasonably arguable that these were not the actions of a fair and reasonable employer and were therefore unjustified within the meaning of s 103A.
Counsel for Breen and the New Zealand Council of Trade Unions told the Court that multiple Employment Relations Authority determinations, citing the now-overturned Employment Court decision, had been applying the jurisdictional bar in circumstances where it would not previously have applied. The Court of Appeal's ruling, finding that the Employment Court erred, narrows the scope of that bar.
The Court remitted the matter to the Employment Court for determination of Breen's personal grievance.
