Employment Law Activity in 2021

Employment | Print Article

2020 was a challenging year for employers with the COVID-19 alert level restrictions, concerns about workplace safety and continued confusion about the application of the Holidays Act 2003. In this article we will address some trends we have seen in recent Employment Law cases and take a look at what issues we are likely to see come up later in 2021.

The Gig Economy, Dependent Contractors and the ‘Uber’ Case

A unique but growing way of working is where individuals are engaged on a per-activity basis as independent contractors. This concept has been termed Dependent Contracting. Individuals being largely or wholly dependent on one business to obtain all of their work is becoming more common. Dependent contractors don’t receive the same benefits as employees (such as leave entitlements, the minimum wage, and the ability to raise a personal grievance against the company they are engaged by).

This issue was highlighted in the recent case Arachchige v Rasier New Zealand Ltd & Uber B.V [2020] NZEmpC 230. The worker was a driver for Rasier New Zealand Ltd (who trade as ‘Uber’ in New Zealand), and sought a declaration that he was an employee, despite being characterised as an independent contractor. The driver had worked for Uber for nearly four years. Uber had removed the driver’s access to Uber application where the rides are booked, without warning, following a customer complaint. The driver had no right of reply and was blocked from using the application.

The Employment Court (following the Supreme Court judgment in Bryson v Three Foot Six [2005] NZSC 34), held that the court must determine the real nature of the relationship between the parties by considering all relevant matters that show the intention of the parties and disagreed with the driver. The driver was not restricted to working solely for Uber, and had in fact demonstrated choice about when and for how long on any given day they worked. The Court distinguished this case from another employee or contractor decision, Leota v Parcel Express Ltd [2020] NZEmpC 61, because in that case, the driver was uniquely vulnerable, had limited commercial understanding and was effectively restricted from working for other businesses.

The status of Uber drivers has come up in other countries too. In the recent UK Supreme Court case, Uber BV v Aslam [2021] UKSC 5, the court held the drivers were ‘workers’ (United Kingdom law specifically provides for a third category of ‘worker’, which captures individuals who are not employees but ‘dependent contractors’, there is no such category in New Zealand, however this may change), at all times they are logged into the Uber app within the area in which they were licenced to drive and were ready, willing and able to accept trips. This meant the drivers were entitled to the applicable minimum wage for all time logged in, even if not actively driving or waiting for their next ride.

There is a review on Dependent Contractors currently underway by the Ministry of Business Innovation and Employment (‘MBIE’) and the Screen Industry Workers Bill has been introduced, both of which include proposals that will address ‘dependent contractors’.

COVID-19, Alert Level Restrictions and Paying Employees Correctly

In 2020 the Covid-19 pandemic raised a number of difficult issues for employees and employers. Two cases particularly stuck out, Gate Gourmet New Zealand Ltd v Sandhu [2020] NZEmpC 237 (‘Gate Gourmet’) and Raggett v Eastern Bays Hospice Trust t/a Dove Hospice [2020] NZERA 266 (‘Dove Hospice’).

In Gate Gourmet, the employer reduced employee hours (despite being deemed an essential service), applied for and received the wage subsidy and unilaterally decided to pay its employees only 80 percent of their usual wages or salary. The employer also did not pay the applicable increased minimum wage for employees who were ‘rostered off’, after the minimum wage came into effect on 1 April 2020.

The Employment Relations Authority held that the employer must pay the minimum wage whether or not the employee was at work, and a business who unilaterally reduced its employee’s remuneration without undertaking some employment process was in breach of the Minimum Wage Act 1983. On appeal, the Employment Court, by majority, held that this Act did not apply to employees who did not actually work during Alert Level 4. The minority judgment held that that view ignores the common law rule that an employee’s wages remain ‘payable’ if an employee is ready, willing, and able to work those hours and that where an employee is engaged to work, the employer can only legally deduct from that employee’s wages items that are permitted under the Wages Protection Act 1983. Gate Gourmet is appealing the Employment Court’s decision.

In Dove Hospice, the employer had undertaken a restructure and terminated six employees with eight weeks’ notice (four more than entitled). Employees were told the first four would only be paid 80 percent of their normal wages or salary and the extra four would only be paid at the wage subsidy amount. The Authority held that the deductions were unlawful because there was no agreement to reduce wages or salary or to be paid only the wage subsidy. The employees’ agreements did not provide for any break in payment of wages or salary (for instance through a force majeure clause) and the employees were ready willing and able to work, if necessary remotely, during the lockdown period. The determination has been appealed and we await the Employment Court’s judgment.

Holidays Act 2004, Metropolitan Glass v Labour Inspector under Appeal

The Holidays Act 2003 continues to be a source of frustration and confusion for many employers. A review of the Act has been concluded with several key recommendations having been made including to simplify the calculation of leave payments and allowing entitlements to bereavement leave and family violence leave available from the first day of employment. The Holidays (Increasing Sick Leave) Amendment Bill (which at the time of writing is before the Select Committee), proposes to increase the annual entitlement of sick leave from 5 days to 10 days per 12-month period. The decision in Metropolitan Glass & Glazing Ltd v Labour Inspector, Ministry of Business and Innovation and Employment [2020] NZEmpC 39 (‘Metropolitan Glass’) (about short term incentive and bonus payments as part of an employee’s gross income for the purposes of calculating annual leave entitlements) is also under appeal, which may also turn up some interesting commentary about when bonus payments are truly discretionary and how this applies to the calculation of annual leave entitlements under the Holidays Act 2003.

Crystal Ball Gazing into 2021

What is clear is that we are facing another year of turbulent and rapid changes in the employment space, as the world continues to grapple with the spread and subsequent effects of COVID-19. We can also anticipate that the proposed changes to the Holidays Act will also create some teething difficulties for employers and employees. Employers will need to be vigilant about ensuring its compliance with any changes to the legislation and to obtain up to date advice as situations develop, remembering that employment law obligations continue to apply!