David Brown v New Zealand Basing Ltd

JurisdictionNew Zealand
CourtEmployment Court
Judgment Date15 December 2014
Date15 December 2014
Docket NumberEMPC 237/2014

[2014] NZEmpC 229



Ellen France, French and Cooper JJ

EMPC 237/2014

In the Matter proceeding removed from the Employment Relations Authority

David Brown
First Plaintiff
Glen Sycamore
Second Plaintiff
New Zealand Basing Limited of Hong Kong (A wholly owned subsidiary of Cathay Pacific Airways Limited of Hong Kong)

G Pollak, counsel for the plaintiffs

M Lawlor and C Coup, counsel for the defendant

Applications for declarations that two pilots should not be discriminated against by being dismissed upon attaining the age of 55 years — employees were employed by a subsidiary of a Hong Kong airline company — were based in New Zealand but most of their duties took place outside of New Zealand — employment offers and conditions of service stated that the applicable law was that of Hong Kong — following a 2007 House of Lords case (Crofts) which stated that the base of a peripatetic employee should be treated as his place of employment, employer had indicated it was likely to raise the retirement age to 65 in conformity with local laws — instead offered employees a retirement age of 65 if they agreed to accept a lower salary, but otherwise the 55 year old retirement would apply — whether the base test from Crofts should be applied — whether, if New Zealand law applied, the retirement provisions were discriminatory — whether s238 Employment Relations Act 2000 (No contracting out) overrode the choice of law clause — whether public policy exclusion should be applied to the choice of law clause.

The issues were: whether the base test from Crofts should be applied; whether, if New Zealand law applied, the retirement provisions were discriminatory; whether s238 ERA (No contracting out) overrode the choice of law clause; and whether public policy exclusion should be applied to the choice of law clause.

Held: Section 104(1)(c) ERA stated that an employee was “discriminated against in that employee's employment” if the employer required an employee to resign by reason directly or indirectly of any of the prohibited grounds of discrimination. The ERA referred expressly to the prohibited grounds of discrimination set out in s21(1) HRA. It also referred to exceptions in the HRA, namely s 24 and s26.

NZBORA did not apply because NZBL did not perform a public function, power or duty imposed by law. Even if that Act did apply, it would in the present circumstances take matters no further since s19, which provided for freedom from discrimination, referred to the grounds of discrimination under the HRA.

Any declarations in this case would be made under the ERA rather than the HRA because the HRA focused on hiring practices while the ERA dealt with discrimination in employment matters. The ERA had no express territorial limits. It was necessary to determine what constituted relevant employment for the purposes of the ERA, on the basis of the broad definitions of that statute, and to “imply whatever geographical limitations [seemed] appropriate to the substantive right” ( Crofts). The Court had to determine the reality of B's and S' employment at the date of the hearing. The focus was on all factors pertaining to that reality, not just the contract itself. If the elements of employment in New Zealand were such that it was open to the Authority or the Court — potentially guided by the assistance of a “base test” — to conclude that the employees were working in New Zealand, then the statutory provisions of the ERA might apply.

Application of the base test would not amount to a conclusion that the New Zealand statutes had extra-territorial application. Rather, it would be premised on a conclusion that, in a case such as the present, the employees were based in New Zealand and therefore subject to laws within its territory.

The Court was not concerned with the ascertainment of the proper law of the contract at all; rather it was concerned with what law would ordinarily apply in the absence of any conflicts/choice of law issue. The base test outlined in Crofts was held to apply to CoS99 which was the same in all material respects to the terms of CoS02. The House of Lords applied the base test notwithstanding the connections which existed with Hong Kong law under that document. The same reasoning in respect of the same facts was appropriate in this case.

Given the broad language used when referring to employment, the “base test” provided appropriate guidance in respect of peripatetic employees when discrimination was asserted. The findings in Crofts applied in this case:

  • a) Pursuant to the Basings Policy, pilots who wished to be employed initially by Veta, and then by NZBL, were required to resign their employment with Cathay Pacific, and to do so irrevocably.

  • b) Thereafter, their base — described as their “Home Base” — was Auckland.

  • c) When taking up the Veta appointment, and maintaining their employment with NZBL they were no longer resident in Hong Kong and were specifically required to reside in New Zealand.

  • d) Their tours of duty began and ended in Auckland.

  • e) They were paid a salary designed to reflect a lower cost of living than that experienced in Hong Kong.

  • f) They were paid in New Zealand dollars

  • g) Various New Zealand statutes applied to their circumstances as a result of their employment, such as the Income Tax Act 2007, the Accident Compensation Act 2001, and the Health and Safety in Employment Act 1992

  • h) They received New Zealand medical insurance

B and S were based in Auckland and the ERA and the HRA — subject to any particular exemptions — applied to their employment agreements.

Section 104(1)(c) ERA was a straight prohibition on any termination of employment by reason of age and, in particular, abolished compulsory retirement ages. Consequently a mandatory retirement provision was prima facie discriminatory for the purposes of New Zealand employment law ( McAlister v Air New Zealand Ltd).

Section 24 HRA provided for an exception in relation to crews of ships and aircraft, stating that nothing in s22 HRA was to apply “to the employment or an application for employment of a person on a ship or aircraft, not being a New Zealand ship or aircraft, if the person was engaged or applied for it outside New Zealand”. The section focused on the place of engagement of the person, rather than on the place where the employment was performed. Given that the purpose of the statute related to the protection of human rights, it should be construed in a way that would best promote that goal. In terms of the test in Crofts, at the time the offer was made to B and S they were both employees of Veta based in Auckland and subject to New Zealand laws, for similar reasons as related to the finding concerning their status as employees of NZBL. The engagement of both plaintiffs did not occur “outside New Zealand”. Accordingly, the exception in s24 did not apply.

Both B and S did perform their duties mainly outside New Zealand as provided by s26. The second limb of the section was whether, because of the laws, customs or practices in the various countries where they were required to work (which included Hong Kong and, from time to time, Australia) the duties were ordinarily carried out by a person within a particular age group. Hong Kong had no law mandating early retirement; nor was any evidence been provided that international pilots were required by the laws, customs and practices of Hong Kong or Australia to retire at age 55. Retirement at age 65 — and not 55 — had become the international norm. Section 26 HRA did not apply.

Accordingly, s104(1)(c) ERA would apply to B and S, were New Zealand law to apply to them rather than Hong Kong law. They would be discriminated against on the grounds of age if they were required to retire or resign at age 55.

Parliament clearly intended that the ERA would regulate employment relationships in numerous respects, and this included provisions for the protection of multiple rights and values. Given that purpose, s238 ERA did have overriding effect. Were it not to do so, Parliament's intention to regulate minimum legislative standards in respect of employment agreements that fell within the ambit of the ERA would be frustrated. That intention was confirmed by the wide language used in the section. A broad interpretation was appropriate.

Applying s238 to the present circumstances, B and S as peripatetic employees based in New Zealand fell within the ambit of the ERA. The choice of law clause, if applied to the present facts, would provide an outcome that was contrary to the provisions of the ERA. The effect of s238 was that the choice of law clause did not apply.

In assessing whether the public policy exception applied to the choice of law clause, there had to be a focus on the nature of the special rights which arose under the HRA, as brought into the ERA. It was well recognised that human rights legislation was not to be treated as an ordinary law of general application, but should be acknowledged for what it was, “a fundamental law”. Parliament had seen fit to include age as a prohibited ground of discrimination as one of a number of deeply held values that bore on the very essence of human identity. In the case of employment, that identity related to the right to work, which might have a significant and inherent value of its own.

Hong Kong law did not provide for protections against age discrimination. Were the law of Hong Kong to apply, B and S would be treated differently on the basis of their age, and not on their merits as individuals. This was unjust.

The potential application of the age discrimination provisions of the ERA was a very significant factor in the present case. It suggested the public policy exception should be applied, since otherwise there would be an affront to basic principles of justice and fairness. This finding alone was sufficient to...

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