Carter Holt Harvey Ltd v Ian McAuley

JurisdictionNew Zealand
CourtEmployment Court
JudgeGL Colgan
Judgment Date14 March 2012
Date14 March 2012
Docket NumberARC 66/11

[2012] NZEmpC 48


ARC 66/11

In the Matter of a challenge to a determination of the

Carter Holt Harvey Limited
Ian McAuley

Rob Towner, counsel for plaintiff

Anne-Marie McInally, counsel for defendant

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.

The issue was: 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.

Held: Section 66(1) ERAct provided that an employee and employer might agree that the employment would end on the occurrence of a specified event or at the conclusion of a specified project. Recognised extraneous legislative materials did not assist in determining what Parliament intended to mean by reference to a specified event or project. All that could be usefully taken from those materials was that there was an emphasis on genuineness, reasonableness and propriety for fixed term validity and these concepts informed the need for a “specified event” or “specified project”. However that was not the same thing as requiring a sufficiency of them, which connoted a quantitative rather than a qualitative analysis. The ERA misinterpreted s66 by requiring CHH to meet a test of sufficient specificity, which was not only absent from s66, but added a gloss to it that was contrary to its scheme.

Both the third and fourth FT agreements were terminable upon seven days' notice by either party. CHH never abandoned its intention to restructure its fire service for cost saving reasons. There was a consistency of purpose and the various phrases in the relevant FT agreements supported the intention of CHH to change the way in which fire fighting and associated emergency services were provided at the mill..

The greater the numbers of consecutive fixed term agreements under which an employee might work, and/or the greater the length of any or all of these agreements, the more carefully the Court or the ERA should scrutinise them to ensure their compliance with s 66. But if, following that scrutiny, either or both of repeated consecutive agreements and a lengthy fixed term agreement or agreements were shown to have complied with s66, then agreement multiplicity and/or long terms did not lead to invalidity of such agreements.

CHH's restructuring of its fire service was at all relevant times a project within a broader project of mill-wide restructuring. At the times the third and fourth fixed term agreements were entered into, that “project” existed and the fixed term agreements were proposed by CHH for the purposes and duration of that project. The event of the completion of the restructure referred to expressly in the FT agreements was an event for the purpose of s 66(1)(b).

Appeal allowed.



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

redundancy compensation, payments of employer contributions to a superannuation scheme, interest on such payments, medical insurance premiums for Mr McAuley and his wife, life insurance premium payments for Mr McAuley and his wife, earnings protection and insurance premium payments, and interest on those payments. In addition, Mr McAuley sought further nominal compensation of $4,000.
Relevant facts

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.


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