The employment law landscape has been a dynamic one over the past 12 months, to say the least. NZ Lawyer caught up with some of the practice area’s top practitioners and each one told us that it’s been an incredibly busy year, what with Law and Colbert v Woodford House and Iona Boards of Trustees shaking up statutory minimum remuneration issues, and Terranova Homes and Care v Service and Food Workers Union bringing concerns around gender-based pay discrimination to a head. Here’s an overview of what’s happened, what’s happening, and a sneak peek at what’s yet to come.
The employment law landscape has been a dynamic one over the past 12 months, to say the least. NZ Lawyer caught up with some of the practice area’s top practitioners and each one told us that it’s been an incredibly busy year, what with Law and Colbert v Woodford House and Iona Boards of Trustees shaking up statutory minimum remuneration issues, and Terranova Homes and Care v Service and Food Workers Union bringing concerns around gender-based pay discrimination to a head. Here’s an overview of what’s happened, what’s happening, and a sneak peek at what’s yet to come.
KEY CASES
A number of landmark cases considering ‘minimum rights’ entitlements and restructuring and redundancy have made headlines over the last 12 months. Megan Richards, Minter Ellison Rudd Watts partner and head of the firm’s Wellington employment law team, says these cases are especially significant because they affect large numbers of employees and employers across a range of industries.
“On one hand there is a need to ensure that workers are being fairly remunerated for work carried out, but on the other hand it is important to recognise that some outcomes from these cases, if applied strictly … would mean some businesses would no longer be solvent and would need to close.”
Law and Colbert v Woodford House and Iona Boards of Trustees [2014] NZEmpC 25, for instance, concerned the entitlement of matrons to statutory minimum remuneration for sleepovers.
Simpson Grierson senior associate Simon Lapthorne notes that in this case the Employment Court found that when undertaking sleepovers the matrons were working, and accordingly they were covered by the provisions of the Minimum Wage Act 1983. The Court also confirmed that the Minimum Wage Act 1983 applied to salaried employees.
“The case is significant because affected employees can claim arrears of pay going back six years, and the Court's decision has potential ramifications for a large number of employers who employ staff who sleep over on the job,” says Lapthorne.
Richards adds that recent cases focusing on the area of restructuring and redundancy have proved significant as well, as previously the law was relatively settled under a number of Court of Appeal decisions.
“In practical terms, it is now technically more difficult for an employer to make changes to its organisational structure without obtaining legal advice throughout all steps of the process, including implementation – to be confident that the actions taken are likely to be legally robust if challenged,” she says.
Tan v Morningstar Institute of Education T/A Morningstar Preschool is a perfect recent example.
In this case, the Court came to the conclusion that the information provided to Tan as part of the consultation process prior to her being made redundant was materially false, misleading and insufficient to meet the obligation to provide her with all relevant information under the Act.
Swarbrick Beck Mackinnon partner and New Zealand Law Society vice president Kathryn Beck says that, in making this determination, the Court examined the financial information in detail and commented on some of the accounting practices used to achieve various outcomes.
“This case was significant in that it reiterated that it is not enough for an employer to simply assert that a dismissal for redundancy was for genuine business reasons,” says Beck. “It must justify the dismissal and the court can and will enquire into the merits of that decision.”
Another headline case, Terranova Homes and Care Limited v Service and Food Workers Union [2013] NZEmpC 157, could potentially dramatically refocus the way businesses assess remuneration. The Employment Court held that workers in female-dominated industries could potentially compare their wages to those of workers in other industries to determine if those wages were affected by sex discrimination. Terranova Homes has appealed the judgment and it is likely that a number of potential claimants are awaiting the outcome of this appeal.
Kiely Thompson Caisley partner Peter Kiely counselled Business New Zealand in the Employment Court and Court of Appeal regarding the case.
“If the Employment Court finds that there has been remunerative discrimination against female employees based on gender, higher wage rates could be imposed by the Employment Court under the Equal Pay Act,” he says. “As a result and depending on the outcome of the matter, the case could have significant effects on pay rates in New Zealand.”
NOTABLE TRENDS
Practitioners in the employment law space are fortunate in that workflow tends to remain steady despite overarching economic conditions. However, the variety of cases landing on lawyers’ desks does fluctuate over time.
For instance, Beck notes that a surge in cases in the redundancy area and in relation to disclosure have meant that more dismissals for redundancy are being challenged, and that employers are increasingly having to review their consultation processes.
“With the tighter economic environment and increased competition, we are also seeing an increase in the willingness to enforce restraints of trade,” she says. “Contrary to the popular belief that they are not worth the paper they are written on, the Courts will enforce restraints to the extent they are reasonable as long as they are a binding term.”
Kiely agrees, saying his firm has also noticed an upswing in the number of restraint of trade cases over the past 12 months.
“I have worked on a number recently, one of which found its way to the Employment Relations Authority,” he says. “Of course, many of these cases are resolved without formal determinations or judgments on the basis of undertakings. It may be that this growth in activity was a result of the economic conditions, but the trend has continued throughout the recovery.”
LangtonHudsonButcher partner Andrew Schirnack adds that increased M&A activity has also led to a “significant” upswing in advisory work connected with commercial transactions over the past year.
“The fact that parties are seeking specialist advice indicates that the commercial sector is becoming better educated about the risks of non-compliance with employment law,” he says.
Russell McVeagh partner Richard McIlraith says he’s also noticed a continuing increase in work related to health and safety, something reiterated by many of the other practitioners NZ Lawyer spoke to. “There are at least three aspects of this: first, day-to- day advisory work on obligations, processes, etc.; second, health and safety related disputes/litigation; [and] third, advising in relation to workplace accidents, from the handling of investigations, including legal privilege matters, through to court appearances in the event of prosecution by WorkSafe or another body,” he says.
Furthermore, McIlraith believes the number of issues arising for clients that are requiring the involvement of an independent investigator is also on the rise.
“Two particular examples come to mind. First, with the heightened awareness and focus on workplace bullying, more claims appear to be being made and … there appears to be a growing expectation that independent investigators will be used. Second, independent investigators are frequently being used in relation to ‘whistle-blower’ allegations,” he says.
LOOKING AHEAD
Going forward, most members of our panel appear to agree that health and safety and restraints of trade will be front and centre.
“I believe there will be an increased focus on health and safety in the workplace, says Lapthorne. “The Health and Safety Reform Bill, which is currently before a select committee, is expected to come into force in April next year and is New Zealand's biggest health and safety reform in 20 years. This reform, which has already seen the establishment of WorkSafe, signals a new era with a focus on workplace health and safety issues.”
Lapthorne also believes we will see a rise in disputes related to social media. “We have seen a number of employment disputes arising from incidents involving social media,” he says. “Some of the issues coming before the Authority have involved online misconduct, damage to employer reputation, and the crossover between professional and personal interactions between employees on social media platforms.”
Schirnack agrees, adding that, in an increasingly digital age, employers are recognising that there is significant business value – in the form of confidential or commercially sensitive information and intellectual property – stored on their computers and other digital devices, which can easily be copied and disseminated by employees. “We have seen a significant increase in litigation focusing on the misuse of digital property, and I predict this area will continue to grow,” he says.
He says employers are also learning that it is a myth that restraints of trade are ‘not worth the paper they are written on’.
“I expect increased use by sophisticated employers of carefully crafted restraints of trade and litigation related to their enforcement,” says Schirnack.
Finally, while not technically on the cards, nearly all the lawyers interviewed for this article expressed a desire to see the Holidays Act 2003 revisited.
A recent study conducted by Simpson Grierson found that, for many businesses, the Act does not fit the many and varied work patterns of the modern workplace, and that a new, user-friendly piece of legislation is required.
“Eighty per cent of respondents to the survey did not find the Holidays Act easy to apply,” says Lapthorne, who adds that his firm would like to see the implementation of one formula for calculating all types of leave (instead of the current four formulas) and accrual and payment of leave in hours.
Richards agrees, noting that the current legislation is no longer relevant when it comes to modern employment realities.
Looking ahead, she also believes the current Bill proposing to amend the Employment Relations Act would address some practical concerns. However, following the resignation of John Banks (and the National Party’s subsequent parking of the Bill), it is unlikely to be introduced if there is a change of government.
Overall, however, the future looks bright for the employment law sector. With a steady stream of diverse cases flowing through and a number of key decisions likely to have significant implications for many New Zealand businesses, the nation’s employment lawyers are unlikely to sit idle any time soon.
“Employment lawyers are useful both during times of recession and economic buoyancy and this helps practitioners ride the economic waves,” says Schirnack. “In times of economic buoyancy, we have more instructions linked to corporate transactions, development of incentive and retention programs, investment in protective measures such as compliance training, and policy development and litigating issues of ‘principle’ even when settlement may be the cheaper option.”
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“It matters. Whether you look at it from a social or economic perspective, employment relationships and the workplace are a fundamental part of our society ... It is also constantly evolving, as you would expect given its function, which makes it interesting and challenging for practitioners in the area.”
Kathryn Beck,
Swarbrick Beck Mackinnon
“I am excited by the interesting and varied nature of the work. Employment law involves litigation and disputes as well as advisory work and generally no two days are the same. The human element ensures it is never dull!”
Simon Lapthorne,
Simpson Grierson
“What keeps me motivated is the diversity of the work in the employment law field. Every day is different and a challenge. And, of course, helping clients come up with practical solutions for their problems is always interesting and rewarding. Also, helping people achieve what they consider a fair and reasonable result is mutually desirable and good for society.”
Peter Kiely,
Kiely Thompson Caisley
“The variety – no two cases are the same! On any given day, we could be providing health and safety advice to an employer, assisting another client in investigating serious misconduct, and then providing immigration advice to Nigella Lawson (as we did earlier this year!).”
Megan Richards,
Minter Ellison Rudd Watts
“Every day is different and you are dealing with ‘real issues’, which means it is never boring – far from it! I also enjoy that you have exposure to many different industries and workplaces.”
Richard McIlraith,
Russell McVeagh
“While it’s a long time since I have been shocked, I am still intrigued by the bad, and regularly appalling, behaviour engaged in by employees at all levels of seniority. So, in terms of the fact patterns, there’s little chance of boredom. The fact that the area is regularly subject to amendment or evolution, and there is always scope to make advances with case law, makes for an intellectually engaging area.”
Andrew Schirnack,
LangtonHudsonButcher
This article appeared in New Zealand Lawyer’s latest magazine edition 6.3. Subscribe for more articles and detailed legal features.
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KEY CASES
A number of landmark cases considering ‘minimum rights’ entitlements and restructuring and redundancy have made headlines over the last 12 months. Megan Richards, Minter Ellison Rudd Watts partner and head of the firm’s Wellington employment law team, says these cases are especially significant because they affect large numbers of employees and employers across a range of industries.
“On one hand there is a need to ensure that workers are being fairly remunerated for work carried out, but on the other hand it is important to recognise that some outcomes from these cases, if applied strictly … would mean some businesses would no longer be solvent and would need to close.”
Law and Colbert v Woodford House and Iona Boards of Trustees [2014] NZEmpC 25, for instance, concerned the entitlement of matrons to statutory minimum remuneration for sleepovers.
Simpson Grierson senior associate Simon Lapthorne notes that in this case the Employment Court found that when undertaking sleepovers the matrons were working, and accordingly they were covered by the provisions of the Minimum Wage Act 1983. The Court also confirmed that the Minimum Wage Act 1983 applied to salaried employees.
“The case is significant because affected employees can claim arrears of pay going back six years, and the Court's decision has potential ramifications for a large number of employers who employ staff who sleep over on the job,” says Lapthorne.
Richards adds that recent cases focusing on the area of restructuring and redundancy have proved significant as well, as previously the law was relatively settled under a number of Court of Appeal decisions.
“In practical terms, it is now technically more difficult for an employer to make changes to its organisational structure without obtaining legal advice throughout all steps of the process, including implementation – to be confident that the actions taken are likely to be legally robust if challenged,” she says.
Tan v Morningstar Institute of Education T/A Morningstar Preschool is a perfect recent example.
In this case, the Court came to the conclusion that the information provided to Tan as part of the consultation process prior to her being made redundant was materially false, misleading and insufficient to meet the obligation to provide her with all relevant information under the Act.
Swarbrick Beck Mackinnon partner and New Zealand Law Society vice president Kathryn Beck says that, in making this determination, the Court examined the financial information in detail and commented on some of the accounting practices used to achieve various outcomes.
“This case was significant in that it reiterated that it is not enough for an employer to simply assert that a dismissal for redundancy was for genuine business reasons,” says Beck. “It must justify the dismissal and the court can and will enquire into the merits of that decision.”
Another headline case, Terranova Homes and Care Limited v Service and Food Workers Union [2013] NZEmpC 157, could potentially dramatically refocus the way businesses assess remuneration. The Employment Court held that workers in female-dominated industries could potentially compare their wages to those of workers in other industries to determine if those wages were affected by sex discrimination. Terranova Homes has appealed the judgment and it is likely that a number of potential claimants are awaiting the outcome of this appeal.
EMPLOYMENT LAW STATS
- 31% of all New Zealand-based lawyers spend at least some of their time on employment law cases. This is up from 21.9% of all practising certificate holders in 2011.
- This makes it the sixth most common practice area, after corporate/commercial, property, civil litigation, trusts/estates and family.
- On a regional basis, 42.1% of employment law specialists were located in Auckland and 25.4% in the Wellington area.
- According to the most recent data (compiled in 2011), in Gisborne, 37.5% of all branch members spend some time working in employment law, although there are none who spend more than half their time in the field. Other areas with a relatively high proportion of lawyers spending some time on employment law are Otago (33.7%), Whanganui (32.8%) and Nelson (32.6%).
Kiely Thompson Caisley partner Peter Kiely counselled Business New Zealand in the Employment Court and Court of Appeal regarding the case.
“If the Employment Court finds that there has been remunerative discrimination against female employees based on gender, higher wage rates could be imposed by the Employment Court under the Equal Pay Act,” he says. “As a result and depending on the outcome of the matter, the case could have significant effects on pay rates in New Zealand.”
NOTABLE TRENDS
Practitioners in the employment law space are fortunate in that workflow tends to remain steady despite overarching economic conditions. However, the variety of cases landing on lawyers’ desks does fluctuate over time.
For instance, Beck notes that a surge in cases in the redundancy area and in relation to disclosure have meant that more dismissals for redundancy are being challenged, and that employers are increasingly having to review their consultation processes.
“With the tighter economic environment and increased competition, we are also seeing an increase in the willingness to enforce restraints of trade,” she says. “Contrary to the popular belief that they are not worth the paper they are written on, the Courts will enforce restraints to the extent they are reasonable as long as they are a binding term.”
Kiely agrees, saying his firm has also noticed an upswing in the number of restraint of trade cases over the past 12 months.
“I have worked on a number recently, one of which found its way to the Employment Relations Authority,” he says. “Of course, many of these cases are resolved without formal determinations or judgments on the basis of undertakings. It may be that this growth in activity was a result of the economic conditions, but the trend has continued throughout the recovery.”
LangtonHudsonButcher partner Andrew Schirnack adds that increased M&A activity has also led to a “significant” upswing in advisory work connected with commercial transactions over the past year.
“The fact that parties are seeking specialist advice indicates that the commercial sector is becoming better educated about the risks of non-compliance with employment law,” he says.
Russell McVeagh partner Richard McIlraith says he’s also noticed a continuing increase in work related to health and safety, something reiterated by many of the other practitioners NZ Lawyer spoke to. “There are at least three aspects of this: first, day-to- day advisory work on obligations, processes, etc.; second, health and safety related disputes/litigation; [and] third, advising in relation to workplace accidents, from the handling of investigations, including legal privilege matters, through to court appearances in the event of prosecution by WorkSafe or another body,” he says.
Furthermore, McIlraith believes the number of issues arising for clients that are requiring the involvement of an independent investigator is also on the rise.
“Two particular examples come to mind. First, with the heightened awareness and focus on workplace bullying, more claims appear to be being made and … there appears to be a growing expectation that independent investigators will be used. Second, independent investigators are frequently being used in relation to ‘whistle-blower’ allegations,” he says.
LOOKING AHEAD
Going forward, most members of our panel appear to agree that health and safety and restraints of trade will be front and centre.
“I believe there will be an increased focus on health and safety in the workplace, says Lapthorne. “The Health and Safety Reform Bill, which is currently before a select committee, is expected to come into force in April next year and is New Zealand's biggest health and safety reform in 20 years. This reform, which has already seen the establishment of WorkSafe, signals a new era with a focus on workplace health and safety issues.”
Lapthorne also believes we will see a rise in disputes related to social media. “We have seen a number of employment disputes arising from incidents involving social media,” he says. “Some of the issues coming before the Authority have involved online misconduct, damage to employer reputation, and the crossover between professional and personal interactions between employees on social media platforms.”
Schirnack agrees, adding that, in an increasingly digital age, employers are recognising that there is significant business value – in the form of confidential or commercially sensitive information and intellectual property – stored on their computers and other digital devices, which can easily be copied and disseminated by employees. “We have seen a significant increase in litigation focusing on the misuse of digital property, and I predict this area will continue to grow,” he says.
He says employers are also learning that it is a myth that restraints of trade are ‘not worth the paper they are written on’.
“I expect increased use by sophisticated employers of carefully crafted restraints of trade and litigation related to their enforcement,” says Schirnack.
Finally, while not technically on the cards, nearly all the lawyers interviewed for this article expressed a desire to see the Holidays Act 2003 revisited.
A recent study conducted by Simpson Grierson found that, for many businesses, the Act does not fit the many and varied work patterns of the modern workplace, and that a new, user-friendly piece of legislation is required.
“Eighty per cent of respondents to the survey did not find the Holidays Act easy to apply,” says Lapthorne, who adds that his firm would like to see the implementation of one formula for calculating all types of leave (instead of the current four formulas) and accrual and payment of leave in hours.
Richards agrees, noting that the current legislation is no longer relevant when it comes to modern employment realities.
Looking ahead, she also believes the current Bill proposing to amend the Employment Relations Act would address some practical concerns. However, following the resignation of John Banks (and the National Party’s subsequent parking of the Bill), it is unlikely to be introduced if there is a change of government.
Overall, however, the future looks bright for the employment law sector. With a steady stream of diverse cases flowing through and a number of key decisions likely to have significant implications for many New Zealand businesses, the nation’s employment lawyers are unlikely to sit idle any time soon.
“Employment lawyers are useful both during times of recession and economic buoyancy and this helps practitioners ride the economic waves,” says Schirnack. “In times of economic buoyancy, we have more instructions linked to corporate transactions, development of incentive and retention programs, investment in protective measures such as compliance training, and policy development and litigating issues of ‘principle’ even when settlement may be the cheaper option.”
WHAT DO YOU ENJOY MOST ABOUT WORKING IN EMPLOYMENT LAW?
“It matters. Whether you look at it from a social or economic perspective, employment relationships and the workplace are a fundamental part of our society ... It is also constantly evolving, as you would expect given its function, which makes it interesting and challenging for practitioners in the area.”Kathryn Beck,
Swarbrick Beck Mackinnon
“I am excited by the interesting and varied nature of the work. Employment law involves litigation and disputes as well as advisory work and generally no two days are the same. The human element ensures it is never dull!”Simon Lapthorne,
Simpson Grierson
“What keeps me motivated is the diversity of the work in the employment law field. Every day is different and a challenge. And, of course, helping clients come up with practical solutions for their problems is always interesting and rewarding. Also, helping people achieve what they consider a fair and reasonable result is mutually desirable and good for society.”Peter Kiely,
Kiely Thompson Caisley
“The variety – no two cases are the same! On any given day, we could be providing health and safety advice to an employer, assisting another client in investigating serious misconduct, and then providing immigration advice to Nigella Lawson (as we did earlier this year!).”Megan Richards,
Minter Ellison Rudd Watts
“Every day is different and you are dealing with ‘real issues’, which means it is never boring – far from it! I also enjoy that you have exposure to many different industries and workplaces.”Richard McIlraith,
Russell McVeagh
“While it’s a long time since I have been shocked, I am still intrigued by the bad, and regularly appalling, behaviour engaged in by employees at all levels of seniority. So, in terms of the fact patterns, there’s little chance of boredom. The fact that the area is regularly subject to amendment or evolution, and there is always scope to make advances with case law, makes for an intellectually engaging area.”Andrew Schirnack,
LangtonHudsonButcher
This article appeared in New Zealand Lawyer’s latest magazine edition 6.3. Subscribe for more articles and detailed legal features.
Like us on Facebook and never miss an update!
