Workplace Watch is an occasional publication tracking legislative and regulatory reform in relation to workplace law. This marks the end of the Labour-led Coalition’s first term and shows that, although the promised fair pay agreement system is still a work in progress, much else has been achieved. A National-led Government would reverse many of these changes, but not all.
Time to review your short-term incentive scheme payments?
A full bench of the Employment Court has ruled that incentive payments conditional on meeting performance targets should be included in holiday pay calculations, even where the scheme states it is discretionary and it is in a standalone document separate to the employment agreement. This could cause a Holidays Act compliance issue for many employers.
The Court held that the concept of “gross earnings” in the Holidays Act was intended by Parliament to capture all remuneration for an employee’s job, including incentive payments tied to productivity targets – even where the employer retained the discretion not to pay when targets are met.
This could be read as suggesting that bonus schemes can be considered discretionary for holiday pay purposes (and therefore outside gross earnings) only if they are not part of the employment agreement, and where they are a truly gratuitous bonus.
The Court found that the scheme was “intended to have contractual force” and was not discretionary. This was despite express statements to the contrary in the scheme terms, the fact that it was not a condition of the employee’s employment, and that payments were expressly at the discretion of the Board and were not guaranteed, even when targets were achieved.
The employer has appealed the decision to the Court of Appeal. In light of the appeal and the very narrow approach taken by the Court, we recommend that you seek advice before making any changes to your incentive arrangements at this stage. If the appeal fails, a large number of employers will need to review their policies and consider their options at that time.
Lessons from the Covid-19 Lockdowns
The Employment Relations Authority (ERA) has found that employees were still entitled to be paid their full salary and wages despite the Level 4 Lockdown because the employer did not obtain the employees’ agreement to the pay reduction. The Authority rejected the employer’s argument that it was entitled to unilaterally reduce salary and wages because the employees were not “ready, willing and able” to work. The decision is being appealed.
Whatever the fate of the appeal, we recommend you consider introducing a broadly drafted force majeure clause into your employment agreements, which will override the need to get employee agreement before making changes to pay and hours.
There are limits to the use of force majeure clauses and obligations of consultation and good faith will still apply. However they remain a useful tool and can provide flexibility in the event of future lockdowns. Any changes to existing employees’ employment agreements will require employee consent.
The Employment Relations Authority has found that employees were still entitled to be paid their full salary and wages despite the Level 4 Lockdown.
Non-lawyer employment investigators must be licensed
A recent decision of the Private Security Personnel Licensing Authority requires a non-lawyer investigator carrying out an employment investigation to hold a licence under the Private Security Personnel and Private Investigators Act 2010.
Before instructing a non-lawyer investigator, we recommend that you check the investigator’s credentials to avoid any disruption to the investigation or challenges to whether the investigator’s report can be relied upon.
11 to become 12?
Labour has committed to making Matariki New Zealand’s 12th public holiday from 2022. Matariki is the Māori New Year and falls in winter.
A private member’s Bill by Māori Party MP Rahui Katene in 2009 would have fixed the date using the new moon in June but Labour has said it will be celebrated on a Friday or a Monday to ensure a long weekend.
Fair pay agreement system hanging in the balance
The Labour Party’s commitment to introduce a fair pay agreement system will now depend upon winning a second term.
Although submissions closed on the Bolger-led working group’s recommendations on 27 November 2019, we have yet to see a Bill and Parliament is now dissolved for the elections.
Labour campaigns on additional sick leave
Labour proposes to double employees’ sick leave entitlements from five to 10 days a year if it wins a second term.
National offers clear alternative
A National-led Government would put the brakes on any moves to promote collective bargaining beyond enterprise level, open the 90 day rule to all businesses, and make the terms of breaks a matter for negotiation (rather than statute).
National would also ban “no win, no fee” arrangements in employment litigation, simplify the dispute resolution service and review WorkSafe to ensure that it is taking “a reasonable approach” to health and safety.
Equal Pay Amendment Bill
The Equal Pay Amendment Bill passed with unanimous support one minute before midnight on 23 July. It aims to make it easier for workers to raise, progress and resolve pay equity claims. It does this by:
- setting a low threshold for raising a claim (the work must have been performed historically by a workforce “of which approximately 60% or more members are female”), and
- not requiring claimants to follow a specific hierarchy of pay comparators.
The Equal Pay Amendment Bill aims to make it easier for workers to raise, progress and resolve pay equity claims.
New rights in force for workers in triangular employment
The Employment Relations (Triangular Employment) Amendment Bill has passed and is now in force.
It ensures that employees who are employed by one employer but working under the control and direction of another business or organisation have the right to coverage by a collective agreement and to lodge a personal grievance.
Bereavement leave for miscarriages
Bereavement leave has been extended to employees who lose a pregnancy to miscarriage or still birth, whether or not the woman knew she was pregnant.
The change was introduced through a member’s Bill sponsored by Labour MP Ginny Anderson.
“Hobbit Bill” and more protections for vulnerable contractors
The Screen Industry Workers Bill has been reported back from select committee with a majority recommendation that it be passed subject to a number of technical amendments. National issued a minority report stating that, while they supported some aspects of the Bill, they were concerned it would “create a less flexible labour market and strengthen union power beyond what is appropriate”.
This means that the Bill will need to be progressed post-election and that its final shape will depend on whether Labour or National lead the next government. If Labour win a second term, it is also likely that it may introduce further protections for vulnerable contractors, consistent with consultations on this topic, which were completed in February this year.
Stronger protections for whistleblowers
A Bill to provide more protection for whistleblowers in both the public and private sectors was introduced on 24 June this year. It allows whistleblowers to report serious wrongdoing to an appropriate external authority at any time and strengthens the protections available to disclosers.
Report questions WorkSafe’s investigation capability
An independent expert report commissioned by WorkSafe and released under the Official Information Act identifies “issues” that may be “holding investigators back from operating to their full potential”.
- demand, workload and caseloads (although the volume of incoming cases is trending down slightly, case complexity continues to grow)
- investigation and investigator management (more training is needed and better monitoring of performance)
- case management business model (currently there is none)
- victim focus (inconsistencies were found in the quality and recording of victim contacts), and
- alignment and national consistency (the assessment found “little evidence of any formal information gathering or sharing as part of any structured process to build an intelligence picture”).
These findings are unsurprising. Back in 2012, the Royal Commission into the Pike River tragedy found training and capability constraints in the then Labour inspectorate. And in 2018, Chapman Tripp exposed weaknesses in the WorkSafe investigation in our successful defence of Athenberry Holdings Ltd (which in part prompted the Independent Review).
Given that the problems are of long duration, WorkSafe’s lack of leadership in dealing with them thus far is concerning.
An independent expert report identifies “issues” that may be “holding investigators back from operating to their full potential”.
Courier decision may have wide effect
The Employment Court judgment of May 2020 that Mike Letoa, a courier driver for Parcel Express Ltd, was an employee rather than an independent contractor will have wider implications, to the extent that the circumstances of Mr Letoa’s employment are industry norms.
The Court’s decision centred on the level of control Parcel Express had over Mr Letoa – e.g., he had to wear its uniform, drive a van featuring the company’s logo, work only for the company, work specific days and times, work where and as directed, and adhere to company policies. He had little to no opportunity to develop new clients.
The Court considered industry practice but didn’t give it much weight, saying that determining whether a particular worker was an employee required “an intensely fact-specific inquiry” and that “the essential issue in a case such as this is whether the worker serves their own business or someone else’s business”.
Little wants more prosecutions
Andrew Little has told WorkSafe to get Crown Law advice when the Coroner has recommended prosecution, or to reconsider a previous decision not to prosecute, even where alternative enforcement action has been taken.
The instruction, delivered in writing to WorkSafe Chair (and former CTU President) Ross Wilson, followed WorkSafe’s failure to act on a Coroner’s recommendation that a truck company should be prosecuted over a crash on the Desert Road in which two boys were killed in 2018.
Minister Little has also publicly warned WorkSafe that there is a developing public perception that it is not doing enough.
“I come from the view that sometimes there are matters that are so important…that even if there is a 50-50 chance, you still take a prosecution to send a signal that people who do harm are going to be called to account.”
District Court on the value of project orders
A District Court Judge has laid out some guidelines for determining how project orders should be reflected in fines.
Judge Nicola Matthews said “considerable weight” should be given to the beneficial effects of a project order on workplace safety, even possibly “a full dollar for dollar reduction, particularly where a defendant has limited means”.
But “there should usually be an element of a fine to respect the normal objectives of denunciation, deterrence and to be held to account”. It would always be “a balancing exercise” in a Court’s ultimate discretion.
She made the comments in her judgment of 5 June in Maritime New Zealand v Fullers Group Limited. The case arose from an incident in November 2017 when the Kea collided with Devonport wharf, causing injury to a number of passengers. The vessel was being piloted at the time by a ferry master who was still under training on how to operate it.
Fullers, supported by Maritime NZ, had requested a Project Order as part of its sentence, presenting a detailed action plan, implementation of which was estimated to cost $300,750.
The Court fixed the starting point for the penalty at $450,000, having assessed culpability at the lower end of the medium range because it was acknowledged by Maritime NZ that tidal effects can be unpredictable at Devonport. It then added a 5% “uplift” because Fullers had two previous health and safety convictions.
But the eventual fine was only $86,159 after deductions of:
- 15% for cooperation and for the remedial measures Fullers had already taken
- 25% for Fullers’ early guilty plea
- 5% for remorse, and
- $200,000 for the Project Order commitments – this was significantly above the 40% deduction recommended by Maritime NZ, but the Court took the view that project orders “should be encouraged by prosecutorial authorities”.
Industrial manslaughter gets directors prison time in Queensland
Brisbane Auto Recycling Pty Ltd has been fined $3m and its two directors, both of whom worked alongside the company’s three employees, have been sentenced to 10 months imprisonment (suspended for 20 months) after a worker was killed on-site.
The man was crushed when a forklift reversed into him while he was loading tyres on to a truck. The forklift driver was not properly licenced, and there were no safety systems in place. Since the death, bollards and exclusion zones have been installed at modest cost.
The maximum penalty available to the Queensland Court against the company was a fine of $10m. New Zealand does not have an equivalent industrial manslaughter offence although a charge of reckless conduct carries a penalty of up to $3m.
Some charges have been filed under this provision in New Zealand and we expect more will follow as our experience is that regulators are becoming more aggressive, during both investigations and prosecutions.
While the hands-on engagement of the directors with the business in this case made it easier for the prosecutor to prove they were aware of the risk, any officer who has failed to implement safety strategies around key risks will be liable to a recklessness charge in respect of their due diligence duty.
It is critical that companies take appropriate steps to comply with their legal duties and are properly supported when responding to a serious harm accident or fatality.
Two directors of Brisbane Auto Recycling Pty Ltd have been sentenced to 10 months imprisonment after a worker was killed on-site.
Setting the standard
The State Services Commission has produced model standards establishing the minimum expectations on staff and organisations in the public sector to ensure positive and safe workplaces. The standards include response cards on how managers and employees should make a complaint, raise concerns or seek information on workplace behaviour and a bystander response card for those who witness inappropriate workplace behaviour.
The standards draw on a Sexual Ethics and Respectful Relationships training programme developed by the NZ Defence Force. Responses from participants have been “overwhelmingly positive”, according to internal evaluation surveys.
We can assist you in all areas of employment law, including health and safety, personal grievances, litigation, collective bargaining, disputes and mediations, redundancies, restructuring, senior executive employment, exit negotiations and post-employment arrangements.