Carter Holt Harvey Ltd v Ian McAuley
Jurisdiction | New Zealand |
Judge | GL Colgan |
Judgment Date | 14 March 2012 |
Court | Employment Court |
Docket Number | ARC 66/11 |
Date | 14 March 2012 |
In the Matter of a challenge to a determination of the
[2012] NZEmpC 48
ARC 66/11
IN THE EMPLOYMENT COURT AUCKLAND
Challenge from Employment Relations Authority (“ERA”) determination — fire-fighter (D) accepted fixed term employment agreement (“FT agreement”) with Carter Holt Harvey Ltd (“CHH”) — FT agreement provided it would terminate “on the event of the completion of the restructure” — CHH was restructuring to reduce number of fire fighters employed — whether ERA had erred in concluding there was no sufficiently specific event or project under s66 Employment Relations Act 2000 (“ERAct”) (fixed term employment) on which to base FT agreement.
Rob Towner, counsel for plaintiff
Anne-Marie McInally, counsel for defendant
JUDGMENT OF CHIEF JUDGE GL Colgan
The issue for decision in this challenge from a determination of the Employment Relations Authority 1 is whether Ian McAuley was disadvantaged unjustifiably in his employment. That decision in turn depends upon whether Mr McAuley was an employee engaged on two lawful fixed term employment agreements, the expiry of the latter of which entitled the company to reject his claim to benefits that would have been available to a so-called ‘permanent’ 2 employee.
The Employment Relations Authority, in its determination issued on 17 August 2011, found that Mr McAuley was not subject to lawful fixed term employment agreements pursuant to s 66 of the Employment Relations Act 2000 when his employment came to an end and so, by implication, he was a permanent employee to whom the benefits of that status attached. These benefits included
Mr McAuley was a professional firefighter. Ever since the pulp and paper mill near Tokoroa, now owned by Carter Holt Harvey Limited (CHH) has been in operation, there had been crews of firefighters employed at the mill and based at a fire station on the premises. Because of the chemicals and other materials with which the mill operates, the risk of fire and other large-scale emergencies is high.
As part of a proposed workforce restructuring, from as early as March 2002 and known as “Project Green”, CHH planned to reduce the numbers of, or even eliminate, its full time firefighters at the mill. Potential ways of doing so included replacing some firefighters with production workers who would perform firefighting and other emergency duties as and when required. There was consultation from March until December 2002 between CHH and what was later to become Mr McAuley's union (the New Zealand Engineering Printing and Manufacturing Union), during which period, on 27 November 2002, Mr McAuley was offered and accepted a first fixed term employment agreement beginning on 29 November 2002.
Mill maintenance, but not including fire services, was outsourced (performed by an independent contractor rather than by CHH's own employees) to an international corporation known as ABB in January 2003. In the following month, on 24 February 2003, the union was advised by CHH that the company was investigating a contracting out of its emergency services including its fire service. On 7 March 2003 Mr McAuley accepted a second fixed term employment agreement which expired on 31 May 2003. There is no challenge to the lawfulness of this second fixed term agreement.
In May 2003, CHH and the Union settled a new collective agreement, the coverage of which included firefighters. One element of the settlement was that the company withdrew or abandoned its proposal for production workers to carry out firefighting duties, meaning that there was no immediate prospect of redundancy for its firefighters. However, the terms of settlement of the collective agreement included, under the heading “Consultation”, that “[t]he review of the fire service would fit into this category of challenges” referring to items to be dealt with after the new collective agreement was ratified. The restructuring of the fire service, therefore, remained on CHH's agenda.
Other operational restructuring at the mill was concluded by 7 June 2003 and, on 18 June 2003, Mr McAuley was offered a third fixed term employment agreement which provided that work under it would cease “on completion of the Kinleith Restructure”. This was said to be expected to occur “following 31 August 2003” and that “[t]he temporary role undertaken under the terms of this agreement will cease on the implementation of the new structure”.
Mr McAuley's third successive fixed term agreement expired on 31 August 2003 shortly after CHH's offer to, and acceptance by, him of another (fourth) new fixed term agreement on 29 August 2003. This provided for its expiry by reference to an event, not a date, and said that it was a “fixed term agreement commencing on 5 September 2003 and terminating on the event of the completion of the restructure”.
On 20 August 2003 there had been a meeting between CHH management and the Union which did not get to deal with the mill's emergency (including fire) services in respect of which the company described itself then as being “back at the drawing board”. CHH wished to address all emergency services' functions at the mill including the Occupational Health Centre as well as the fire service. Its stated objective was to “design and implement an integrated, modern, effective and cost efficient emergency service” for the purpose of removing “unnecessary cost”.
Although progress overall, and from this point in particular, progress on fire service restructuring was slow, this resulted from a combination of other workplace issues having higher priority and effective delaying tactics by the Union which must have come increasingly to accept the inevitability of change. Ultimately, progress of its intended restructuring lay with CHH and there is no suggestion that it took issue with the firefighters' responses to its proposals.
The next event was on 6 April 2004 when the company's representatives sent the Union what it described as its “principles” for a new integrated service model for emergency services. There was further delay arising out of the same or similar circumstances as I have just outlined. It was then not until 11 January 2005 that the Union was advised by the company that it proposed a further form of restructuring that could be put to the employees. Negotiations about this were unsuccessful and in 2006 the company met with the Union advising that it was considering “outsourcing” and that negotiations would cease and be replaced by consultation on the outsourcing proposal.
In February 2007 a letter was sent to staff about the commencement of consultation and there was then a new restructuring proposal which was eventually implemented. The Union notified CHH of Mr McAuley's personal grievance (unjustified disadvantage in employment) on 4 April 2007 and affected staff, including Mr McAuley, were given notice of their dismissals on 14 December 2007.
The Authority found that by the time the third fixed term agreement was entered into between Mr McAuley and the company, it did not have “a sufficiently specific proposed event upon which to base a fixed term agreement” and that “[t]here was no particularised proposal in place at that time”. The Authority held that a general, albeit genuine, desire to effect change (to the arrangement for the company's emergency services) was not sufficient to invoke the provisions of s 66 of the Act reflected by the element of specificity in subs (1). The Authority concluded that the third and fourth fixed agreements were invalid as being in breach of s 66 and that, therefore, Mr McAuley was “a permanent employee”. The Authority decided that he became so from the settlement of the collective agreement in May 2003 and left the parties to attempt to resolve issues of remedies, reserving leave to return to the Authority if they were unable to do so. The Authority likewise reserved but timetabled questions of costs.
Section 66 of the Act governs the underlying questions of law in this case and provides materially (with particularised emphasis italicised):
66 Fixed term employment
(1) An employee and an employer may agree that the employment of the employee will end-
(a) at the close of a specified date or period; or
(b) on the occurrence of a specified event; or
(c) at the conclusion of a specified project.
(2) Before an employee and employer agree that the employment of the employee will end in a way specified in subsection (1), the employer must-
(a) have genuine reasons based on reasonable grounds for specifying that the employment of the employee is to end in that way; and
(b) advise the employee of when or how his or her employment will end and the reasons for his or her employment ending in that way.
(3) The following reasons are not genuine reasons for the purposes of subsection (2)(a):
(a) to exclude or limit the rights of the employee under this Act:
(b) to establish the suitability of the employee for permanent employment.
(c) to exclude or limit the rights of an employee under the Holidays Act 2003.
(4) If an employee and an employer agree that the employment of the employee will end in a way specified in subsection (1), the employee's employment agreement must state in writing-
(a) the way in which the employment will end; and
(b) the reasons for...
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