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Latest Case Law Decisions

An overview of the latest case law decisions and our thoughts and takeaways.

Worksafe New Zealand Mahi Haumaru Aotearoa v R H & Jury Trust and others [2023] NZHC 3871

This case considered the liability of trusts and trustees for prosecution under the Health and Safety at Work Act (HSWA).

Facts

  • the case arose from a tragic farm accident.
  • a young child visiting his grandfather at work on a dairy farm in Waiotahe died when the child’s jacket became caught in exposed rotating machinery.
  • Worksafe filed charges against the Trust, and (in the alternative) the three trustees (Jocelyn Brown, Philip Roucher, and Perpetual Trust Limited).
  • the charges were dismissed by the District Court because the Trust was not a ‘person’ conducting a business or undertaking, and the trustees individually could not be charged collectively (because personal liability attached to the individual).
  • Worksafe appealed to the High Court.

Issues

The key issue was whether the trust fits the definition of “person” under HSWA.

Findings

The High Court allowed the appeal, agreeing with WorkSafe in part, and finding that whilst a trust itself was not a person (and could not be prosecuted) the trustees collectively did fit the definition and could be prosecuted.

This was because the trustees acting collectively  were are a “body of persons…unincorporate” which was included in the HSWA definition of “Person”.

Worksafe argued that the Trust itself should be interpreted as a person, to properly give effect to the enforcement of HSWA and recognise the collective nature of trust decision making.  However the Court preferred the interpretation that the trustees collectively were a “body of persons” and therefore met the HSWA definition of “person” rather than the trust itself.

The Court noted that there was no advantage to prosecuting the trustees collectively or the Trust itself because either way the trustees (or the trust) would be liable for a fine up to $1.5m (instead of a fine up to $150,000 which applies to individuals).

Trust law provides for an indemnity of trustees from the trust assets.  The Court clarified that indemnity by the statutory ‘no insurance against fines’ rule in the HSWA.  Although whether the trustees will actually be indemnified would depend in each case on the wording of the trust deed, and the circumstances.

Takeaway

A trust cannot be prosecuted as a PCBU under HSWA.  However the trustees collectively may themselves be charged as the PCBU for breach of a duty.  This means that a trust cannot be used as a vehicle to avoid prosecution under HSWA.

The trustees collectively will be liable for a fine up to $1.5m (and not $150,00 if prosecuted as an individual).  HSWA doesn’t prevent trustees being indemnified for any fine/reparations.

Given these developments, trustees (in particular independent trustees) should review whether it is appropriate carry on in such trusts (particularly in trusts involved with high safety risks), and adequacy of insurance cover.

Pact Group v Robinson [2023] NZEmpC 173

Background

Ms Robinson was employed by Pact Group as a community carer in Wellington. She held that role for 15 years before she was dismissed for serious misconduct.

Ms Robinson successfully challenged her dismissal in the ERA and was awarded $20,0000 compensation for humiliation, loss of dignity, and injury to feelings.

Pact Group challenged that determination, on a de novo basis, in the Employment Court.

Facts

Shortly after the Wellington region transitioned to Alert Level 2, Pact Group support workers were required to complete additional training about administration of medication.

Ms Robinson had difficulty attending the morning training sessions because she cared for her elderly mother, who suffered from dementia and required daily care.

Ms Robinson’s manager asked her to book additional training. Ms Robinson replied to her manager advising that she was trying to catch up with her clients since lockdown lifted and was completing the training outside of her rostered hours. Ms Robinson said it had “been a huge juggle”.

Ms Robinson’s manager forwarded Ms Robinson’s email to the company’s General Manager, Mr Cardy. Mr Cardy decided to investigate Ms Robinson’s work. He reviewed her work diary and clients assigned to her on the company’s online management system, obtained her time records, records from her work phone, and GPS records from her work vehicle.

In the meantime, Ms Robinson completed the training.

Mr Cardy wrote to Ms Robinson about his investigation and raised concerns about how she was spending her working hours. He alleged that Ms Robinson was not working all hours during her workday and that she was fraudulently claiming payment for time she had not worked via the electronic timesheet system. Dismissal was a possible outcome. 

Ms Robinson was required to attend a disciplinary meeting via Zoom.

Ms Robinson asked to meet in person. This request was refused.

The meeting took approximately three hours. Ms Robinson attended with a representative. At the meeting, Ms Robinson reiterated her preference to meet in person, and said the process Pact Group adopted left her feeling “stripped of her mana and culturally disadvantaged, and this mishandling of her mana had resulted in feelings of shame.”

Ms Robinson explained that:

  • she had always been paid to work an 80-hour fortnight with some flexibility regarding her start and finish times (as her workload varied depending on the complexity of her client’s needs at any given time).
  • she was unable to fraudulently claim for time because her line manager edits the timesheets to an 80-hour fortnight before submitting them to payroll.
  • Mr Cardy incorrectly assumed that when she was not with a client or driving, she was not working. She was often working on other tasks, including engaging with stakeholders, and attending to arrangements to support her clients.

Mr Cardy made a preliminary decision that Pact Group could not have trust and confidence in Ms Robinson to complete her stipulated hours of work. The letter referred to a pattern of seeking payment for time worked over contracted hours on days she worked overtime but still claiming a full day when she took time in lieu or worked a shorter day.

Ms Robinson responded by letter. She reiterated that seeking payment for hours above her contracted hours was impossible because her line manager edits her timesheets to an 80-hour fortnight.

The next day, Mr Cardy wrote to Ms Robinson dismissing her for serious misconduct with immediate effect.

Findings

The Court considered all the circumstances at the relevant time, which included: the company had recently undergone a restructuring which resulted in a degree of disruption to work practices, New Zealand had recently come out of lockdown, Ms Robinson’s personal circumstances and cultural needs, and that “higher standards can generally be expected of a fair and reasonable employer who is well resourced and well supported.”

The Court identified the following flaws in Pact Group’s process:

  • Mr Cardy did not request further information about the personal challenges that Ms Robinson was confronting (despite Ms Robinson raising them in the disciplinary meeting).

The Court rejected Pact Group’s argument that Ms Robinson should have provided full disclosure of those challenges if she considered they were relevant. The Court said that once Ms Robinson raised the concerns as relevant it was the employer’s responsibility to take steps to ensure it had the relevant information before reaching a concluded view.

  • Mr Cardy did not consider the fact that Ms Robinson is Māori and raised concerns that her mana was being impacted by the process adopted by him (including by the decision to not meet face to face).

In its consideration of the concept of mana, the Court cited passages from the Supreme Court’s decision in Ellis v R, and the Law Commission’s recent He Poutama report about tikanga in New Zealand law. Ms Robinson provided documentation which she believed would assist Mr Cardy understand her cultural perspective. Mr Cardy did not accept the validity of the cultural concerns and rejected them without engaging further on them.

[31] I have no difficulty concluding that, at the very least, a fair and reasonable employer would have considered what an appropriate process might require in light of its obligations to staff under its own policy and Ms Robinson’s expressed cultural needs, and engaged with her on these points. A fair and reasonable employer in the circumstances … would have arranged an in-person meeting.

  • Mr Cardy’s decision to proceed with a Zoom meeting was also unfair because Ms Robinson has trouble hearing. The Court also noted recent research that low audio quality negatively impacts the impression people take from information being conveyed in a virtual form.
  • Mr Cardy relied upon GPS data to support his decision about serious misconduct. The company policy provides that GPS data can be used in a disciplinary process if there has been a breach of legislation such as speed limits. The policy did not provide that the data could be used more generally for disciplinary purposes.

The Court noted it is “seriously arguable that it is problematic for an employer to on the one hand advise its employees that information it collects may be used for limited disciplinary purposes and then to proceed to use it for different disciplinary purposes.” The Court did not need to take this point any further considering the other conclusions reached.

The Court also identified flaws in Pact Group’s substantive decision:

  • if the company genuinely believed that Ms Robinson was underperforming (despite her years of good service with no issues) and that she should have been doing more work than she was, then a performance issue should have been dealt with under that umbrella.
  • there was a failure to consider the flexible work arrangements that had previously been in place and whether a change in approach had been adequately communicated.

Ms Robinson believed that the former practice of flexible start and finish times and sometimes making time up in the evening completing administrative tasks continued on the same informal basis. If the company was concerned about compliance with a relatively recent change in policy, then a proportionate response would have been to clarify the new approach with Ms Robinson.

Ultimately, the Court concluded that the material relied upon may have provided an adequate basis for raising performance concerns, it did not justify advancing immediately down the disciplinary route, or Pact Group’s final decision.

Remedies

Pact Group argued that if Ms Robinson was unjustifiably dismissed she should not be entitled to relief. The Court said that outcome was “not viable”.

Hurt and Humiliation

The Court applies a banding approach to awards under section 123(1)(c)(i). (Band 1: $0 – $12,000; Band 2: $12,000 – $50,000; Band 3: $50,000+)

Pact Group argued that because Ms Robinson did not provide medical evidence of hurt and humiliation, and because disciplinary processes are inherently distressing and the award should not compensate for that inherent distress, the award should be at the low end of band 1.

The Court held it is not appropriate to read in a requirement for independent evidence, including medical evidence, for compensation beyond band 1.

The Court considered Ms Robinson’s evidence about the impact of Pact Group’s actions on her mana, reputation, financial pressure, feelings of whakamā, a loss of confidence, personal stress, that contact with her clients (who were personally and professionally important to her) immediately ceased without an opportunity to say goodbye, and that she felt unable to work in a field she was committed to because of the intense embarrassment and shame of being dismissed for, essentially, fraud.

The Court held this fell “comfortably within the middle range of band 2” and awarded $31,000 without reduction for contribution.

Lost Wages

Ms Robinson sought lost wages. Pact Group argued none should be awarded because Mr Robinson did not mitigate her loss.

The Court accepted that Ms Robinson felt she was unable to find work as a community carer, given the high trust that must be reposed in them, following a dismissal for fraud. Ms Robinson obtained some part-time work and then retrained and opened her own business.

The Court awarded three months lost wages.

Lost Benefits

At the time she was dismissed, Ms Robinson was two weeks away from achieving 15 years’ service and being entitled to three weeks’ long service leave. The Court awarded this to Ms Robinson in addition to the award for lost wages. 

Takeaway

This was an unsuccessful appeal for Pact Group. Not only did the Court uphold the ERA’s decision, but it also significantly increased the remedies awarded to Ms Robinson.

The case is a further example (following GF v Comptroller of Customs) of an employer being obliged to acknowledge and consider the tikanga values that it introduced to the employment relationship in its own policies. The Court’s reference to the Law Commission’s He Poutama report suggests this will be an important resource in cases involving tikanga.

The decision also serves as a reminder about the importance of conducting disciplinary meetings in person, ensuring that information is obtained fairly, and considering whether performance management, or simply clarifying expectations, is appropriate before embarking upon a disciplinary process.

Ms Robinson responded by letter. She reiterated that seeking payment for hours above her contracted hours was impossible because her line manager edits her timesheets to an 80-hour fortnight.

The Athletes’ Cooperative Inc v High Performance Sport New Zealand Ltd [2024] NZERA 43

How many union members does it take to bargain for a collective agreement? None, according to the Employment Relations Authority.

Background

An inquiry into cycling and high-performance sport following the death of cyclist Olivia Podmore found that the existing funding model for athletes did not prioritise wellbeing.

The funding arrangements involve athletes having a direct contractual relationship with their national sporting organisations (Cycling New Zealand and Rowing New Zealand) who in turn receive funding for their elite athletes from High Performance Sport New Zealand. 

Criticisms of the funding model include that it results in low levels of funding to athletes, associated concerns about wellbeing, and uncertainty and unfairness can arise from funding being withdrawn without consultation or warning.

The report recommended that athletes set up a representative body and engage in consultation with HPSNZ about the funding model (including about whether the athletes should be engaged as employees or independent contractors).

This report led to the establishment of The Athletes’ Cooperative Incorporated, a registered union under the Employment Relations Act 2000. TAC is led by Olympic rowing great Mahe Drysdale.

On 22 July 2022, TAC served a Notice of Initiation of Bargaining on HPSNZ. The initiation notice specified that the collective agreement was intended to cover certain categories of elite athletes.

HPSNZ objected to the notice on the basis that it does not employ, and does not intend to employ, any employees within the proposed coverage of the collective agreement.

The Authority’s Analysis

The first step in bargaining for a new collective agreement is when a union sends a notice of initiation of bargaining to an employer.

The legal requirements of an initiation notice are that: (1) it must be in writing and signed by the union, (2) it must identify the intended parties to the collective agreement, and (3) it must identify the intended coverage of the collective agreement.

The key issue was about who can initiate bargaining. Section 40 of the Employment Relations Act 2000 says that bargaining can be initiated by “1 or more unions with 1 or more employers”.

The terms “employer” and “union” are defined in the Act. TAC is a duly registered union and HPSNZ is an employer. TAC argued that this is the end of the story.

HPSNZ argued that both definitions (in section 5 of the Act) are subject to the qualifier “unless the context otherwise requires” and, in this context, the terms “union” and “employer” should be read as meaning a union that represents, or an employer that employs, employees within the proposed coverage clause.

The Authority considered a Supreme Court decision about the qualifier, which held that strong contextual reasons, based on the relevant sections in the Act, are required to depart from a defined meaning. (That Supreme Court case, AFFCO New Zealand v New Zealand Meatworkers and Related Trades Union [2017] NZSC 135, considered with sections in the Act relating to “lockouts” and held that for those sections the context required extending the meaning of “employee” to include seasonal workers with a contractual right to re-employment during the off-season.) 

The Authority also considered an earlier Employment Court decision about initiation notices. In Maritime Union of New Zealand v China Navigation Co [2016] NZEmpC 111, China Navigation Co did not have any employees, but it intended to have employees within the intended coverage of MUNZ’s initiation notice. The Court applied the qualifier to hold that employer includes a “prospective employer”, to enable collective bargaining in “greenfield” employment.

Decision

In this case the Authority held that the terms “union”, “employer” and “employee” have defined statutory meanings and there are not strong contextual reasons for narrowing the definition of “union” or “employer” as proposed by HPSNZ.

This meant that TAC could initiate collective bargaining with HPSNZ by giving a valid initiation notice.

Takeaway

The initiation notice is the first step in the process; effectively, the parties are at the starting line.

This determination means they must meet, in good faith, to negotiate for a collective agreement and must conclude a collective agreement unless there is a genuine reason, based on reasonable grounds, not to.

Practically, the parties won’t be able to conclude a collective agreement because it must be ratified by “the employees to be bound by it” (section 51(2) of the Act).

C3 Ltd v O’Brien [2024] NZEmpC 6

At issue was whether the Employment Court should grant interim reinstatement to an employee who was dismissed for allegedly providing a false drug test sample.

Background

C3 Limited provides stevedoring services at the Auckland port. The workplace is inherently high risk. In the past decade, there have been 18 deaths and 397 reported injuries at ports in New Zealand. As recently as April 2022, an employee from another stevedoring company died at Auckland port after he was crushed under a container while working on a docked container ship.

Mr O’Brien’s role involved operating heavy machinery such as cranes, top lifters, and forklifts. He commenced employment with C3 in Auckland in June 2022. He had previously worked for C3 for seven years at another port.

During Mr O’Brien’s 13 months of employment at Auckland port he was involved in health and safety incidents (including driving a motorcycle on the port without a helmet or licence and attempting to surreptitiously enter the site without his identification card after being denied entry by port security). These incidents resulted in “health and safety breach notices” but not disciplinary action.

Due to the high-risk nature of the worksite C3 has a Drugs and Alcohol at Work Policy which provides for random drug testing. The policy provides that if a drug test specimen returns a non-negative result or its integrity is suspect then the employer will advise the worker of a potential suspension and the consequence of a confirmed positive drug or alcohol result: disciplinary action up to and including termination.

The policy incorporates some aspects of AS/NZS 4308:2008 Procedures for specimen collection and the detection and quantitation of drugs of abuse in urine. C3 did not incorporate the full standard, which provides that if the integrity of a specimen cannot be established then “another urine specimen shall be collected and both forwarded to the laboratory for drug and specimen integrity testing.”

On 27 July 2023, Mr O’Brien was randomly drug tested.

  • Mr O’Brien completed the testing consent forms and a TDDA technician explained to him the monitored urine testing process and handed him the urine test cup. The test cup is manufactured by Nexscreen, USA. It has a thermal temperature strip that reacts to the temperature of urine and can measure temperature between 33 and 38 degrees Celsius, which is generally the temperature of the human body, plus or minus a couple of degrees. The test cup also has a colorimetric strip for measuring creatinine levels. Creatinine is produced by the kidneys. The minimum level of creatinine in a valid sample is over 20 and the test cup will indicate if this minimum level of creatinine is not present.
  • when Mr O’Brien gave his urine sample, the technician stood behind and to the side of him, near the testing van’s door. His evidence was that he was not able to see Mr O’Brien’s genitals or urine stream as the sample was being provided. The technician could only see that he took the cup and that his arms were held in front of him in the region of his genital area while the sample was being provided.
  • the technician’s evidence was that the test cup was just over half full, and the cup did not feel as warm as it should have when Mr O’Brien handed it to him. The technician advised Mr O’Brien that the thermal strip had not been activated, which indicated that the sample was outside the required temperature range, so he was unable to continue with the sample, and would be invalidating the test. The technician did not inform Mr O’Brien that his sample had also failed to meet the minimum level of creatinine required for a valid sample.
  • Mr O’Brien’s evidence was that he asked the technician and then his manager, Mr Coleman, whether he could undertake another test. The technician does not recall that request being made and Mr Coleman strongly refutes that any request was made. Mr O’Brien was then sent home and suspended from work.
  • on 28 July 2023, Mr O’Brien received a letter inviting him to attend a disciplinary meeting. He was informed that C3 Ltd was investigating the allegation that he had supplied a false urine sample. The letter stated that “TDDA commented in the adulterant section that the collected sample is outside the expected temperature range (33-38 degrees) and the creatinine value is abnormal <20…”.
  • on 31 July 2023, C3 Ltd convened a disciplinary meeting. Mr O’Brien said at the disciplinary meeting that the urine he supplied was his own and that he could not have adulterated the sample as suggested because the technician was monitoring him when he provided the sample. Mr O’Brien’s union representative, Russell Mayn, challenged the validity of the test. He questioned whether the test cup was faulty, and the testing strips had failed. He pointed out that, if the sample was said to be false, then they should have requested a second sample and sent both samples away for testing.
  • on 2 August 2023, C3 Ltd wrote to Mr O’Brien setting out its “preliminary decision”. It considered Mr O’Brien had been unable to provide a reasonable explanation for why his urine sample was outside of the expected temperature range, or why the creatinine level was abnormal. It did not accept that the urine sample was his own. C3 Ltd accepted that the test was monitored by a technician standing nearby and that that was one step to ensure that the test was not tampered with. However, it considered the most accurate measure, and indicator of whether a sample had been tampered with, were the testing strips on the testing cup. C3 Ltd asserted that TDDA does not send invalid drug tests for further testing and that there was no indication that the drug cup was faulty.
  • on 7 August 2023, C3 Ltd upheld its preliminary view as set out in its 2 August 2023 letter and dismissed Mr O’Brien.

Mr O’Brien raised a personal grievance regarding his dismissal and applied for interim reinstatement which was granted by the Authority. C3 appealed the Authority’s determination to the Employment Court.

Because this is an application for interim reinstatement (in other words, returning the employee to their role pending the Authority’s investigation of the employee’s personal grievance), the Authority (or Court) must:

  • determine whether there is a serious question to be tried (or conversely whether the claim is vexatious or frivolous) in relation to the claim of unjustified dismissal and the claim for permanent reinstatement;
  • consider the balance of convenience; and
  • assess the overall justice.

The Court noted that the threshold for a “serious question to be tried” is low. (It has previously been described “as a bar so low one could trip over it”).

The arguments raised by Mr O’Brien included that:

  • C3 did not comply with the relevant Standard when the test was undertaken (by collecting another urine sample and sending both to the laboratory for testing). Counsel for Mr O’Brien argued that a fair and reasonable employer cannot pick and choose which parts of the Standard they will follow and which parts they will not. There needs to be a very good reason to depart from the Standard which is not the case here.
  • C3 did not sufficiently investigate Mr O’Brien’s explanation that the urine sample he provided was his own and that his ability to provide a false or adulterated sample was extremely unlikely due to it being a random, monitored test. Nor did it take into account his denial that he had provided a false or adulterated test sample, his concern that the testing strips on the test cup were faulty and his offer to provide a second sample.
  • it is unfair, unreasonable and disparate that the Drug and Alcohol Policy requires a confirmatory test before a non-negative test results in a dismissal but the Policy does not require confirmatory testing of an invalid test.

Findings

The Court accepted the employee had an arguable case he was unjustifiably dismissed. The Court found it was arguable a fair and reasonable employer would have:

  • collected a second urine specimen, in accordance with the Standard:
  • fairly investigated the employee’s defence that it was not feasible for him to have provided a false or adulterated sample; and
  • considered other explanations for the urine being cool and the creatine level being low.

The Court accepted it was arguable the employee should be permanently reinstated, as he had the skills and experience to reintegrate into the stevedore roster. 

Nevertheless, the Court found the balance of convenience went against ordering full interim reinstatement. The Court took into account that:

  • there was a lack of evidence that the employee could be returned to the workplace safely and practicably in the interim.
  • the Court had to take seriously expert evidence that there was a risk of injury or death if the employee was reinstated.
  • the employee could get remedies of reimbursement and compensation if he succeeded in the unjustified dismissal claim.
  • the substantive hearing was scheduled to occur in a matter of weeks.

Finally, the Court considered the overall justice and concluded as follows:

[30] Mr O’Brien appears to have a relatively strong case for unjustified dismissal. There are concerns with C3 Ltd’s actions in failing to comply with the Standard, failing to obtain a second test and to undertake laboratory testing and failing to sufficiently investigate his explanations for the invalid test before making the decision to dismiss Mr O’Brien. These matters will go not only to justifiability but to remedies.

[31] The critical importance of health and safety in the POAL environment and Mr O’Brien’s safety sensitive role, together with the lack of expert evidence before the Court on the conditions on which Mr O’Brien could safely and practicably return to the workplace, is a strong consideration that points away from interim reinstatement.

[32] Standing back from the matter, and considering the overall justice of the case, I am satisfied that full interim reinstatement to the workplace should not be ordered. C3 Ltd’s challenge is successful; accordingly, the Authority’s determination is set aside and this judgment stands in its place. However, in the circumstances, and based on the affidavit evidence before this Court that Mr O’Brien has a strongly arguable case, it is appropriate that I order Mr O’Brien to continue to remain on the payroll until the substantive determination of his claim by the Authority.

Takeaway

This case is notable for the Court’s comments that Mr O’Brien has a relatively strong case for unjustified dismissal because his employer did not obtain a second test and undertake laboratory testing to investigate his explanations for the invalid test.

The case also highlights the risks of adopting only part of a Standard in an employment policy. Previous Employment Court decisions have considered drug and alcohol policies that attempted to incorporate the relevant Standard but were inconsistent or incomplete (for example, Vulcan Steel v Manufacturing & Construction Workers Union [2022] NZEmpC 78). The key lessons from this case are that Drug and Alcohol policies must be drafted with care and precision particularly when adopting the relevant Standard, and that that the test of justification requires an employer to sufficiently investigate an employee’s explanation, which might involve taking steps beyond those set out in the policy. 

Want to find out more about these decisions? Get in touch with us.

Sean Maskill
PARTNER

+64 6 759 5317
+64 27 555 1697
sean.maskill@abmm.co.nz

Philip McCarthy
PARTNER

+64 6 759 5322
+64 27 914 6796
philip.mccarthy@abmm.co.nz

Kayleigh Duncan
LAW CLERK

+64 6 759 5310
kayleigh.duncan@abmm.co.nz

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