Eastern Bay Independent Industrial Workers Union v Norske Skog Tasman Ltd
 NZEmpC 56
IN THE EMPLOYMENT COURT AUCKLAND
In The Matter Of a challenge to a determination of the Employment Relations Authority
L J Yukich, advocate for plaintiff
Kylie Dunn and June Hardacre, counsel for defendant
Challenge to Employment Relations Authority determination that leave entitlements provided for in a collective agreement were subsumed by the statutory increase in the annual holiday entitlements which took effect from 1 April 2007 — collective agreement between parties provided that: (1) employees were entitled to the equivalent of three weeks holiday; (2) after four continuous years of service employees were entitled to an additional weeks holiday each year; and (3) shift employees were entitled to the equivalent of an additional weeks holiday each year — whether the agreement provided for an increase in the annual holiday entitlements for shift workers and/or employees with at least four years of continuous service above the prevailing statutory minimum entitlement.
At issue was whether the agreement provided for an increase in the annual holiday entitlements for shift workers and/or employees, with at least four years of continuous service, above the prevailing statutory minimum entitlement.
Held: From 1 April 2007, clause 14.2 of the agreement was of no effect to the extent that it restricted or reduced the statutory entitlements of employees covered by the clause. In these circumstances, ambiguity arose from the failure to specify the effect of the rise in the statutory minimum entitlement, and what the word “additional” in clauses 14.5 and 14.7 was intended to apply.
Although the wording of clause 14 did not strongly indicate the parties' objective intention, the history of their prior dealings did. and Related Trade Unions Inc confirmed that it was appropriate to have regard to the parties' prior employment agreements in determining their underlying intention. Clause 14 had been in the parties' collective agreement for a long time and in materially the same terms. A distinction had consistently been drawn between day workers, shift workers and long serving employees, and the holiday entitlements of each.
The admitted purpose of the additional one week of holiday in clause 14.5 was to reward long service and it was intended as a special benefit — it was a contractually agreed reward. In the context and history of clause 14, the benefit contained in clause 14.5 was intended to survive the legislative changes introduced by the HA, as it had previously survived increases to minimum statutory leave entitlements (from two weeks to three weeks).
Although the extra holiday for shift workers was for rest and recreation, that did not automatically mean that the additional week's holiday referred to in clause 14.7 was subsumed within the statutory minimum entitlement increase ( ). Section 6(2) HA (relationship between Act and employment agreements) recognised that an employer might provide an employee with an enhanced or additional entitlement on a basis agreed with the employee. The agreement provided a clear distinction between the categories of employees and the holiday entitlements applying to each, reflecting an intention that qualifying employees (shift workers) would receive more holidays than non-qualifying employees (non-shift workers). Read in context, it was apparent that the parties intended clause 14.2 to set the base entitlement for all employees at the prevailing statutory minimum rate and then provide extra holiday entitlements in clauses 14.5 and 14.7.
Judgment for plaintiff.
JUDGMENT OF JUDGE Christina Inglis
This proceeding raises an issue as to the leave entitlements of long serving employees and shift workers following the increase to the minimum statutory annual holiday entitlement from 1 April 2007.
The plaintiff contends that the parties' collective employment agreement provides for holiday entitlements in addition to the minimum statutory requirement of four weeks' annual leave now conferred by the Holidays Act 2003. The Employment Relations Authority declined to adopt the interpretation advanced on behalf of the plaintiff, finding that the leave entitlements provided for in the collective agreement were subsumed by the statutory increase in the annual holiday entitlements which took effect from 1 April 2007.
A statement of claim challenging the Authority's determination was filed on 11 August 2008. The parties initially requested that the challenge be dealt with on the papers. An adjournment was subsequently granted, by agreement, pending delivery of the Court of Appeal's judgment in 1 That judgment was delivered on 21 July 2010. Mr Yukich, advocate for the plaintiff, then advised the Court that the union was in bargaining with the defendant and had applied for facilitation. He asked that the process be allowed to run its course before either party applied further time and expense to these proceedings. That request was granted. In the event no agreement was reached. The plaintiff then filed an application seeking leave to place evidence of historical bargaining before the Court. That application was granted on 5 October 2011. 2 Judge Travis directed that the parties could file evidence as to previous negotiations, agreements and custom and practice, which they did.
Part four of the collective agreement deals with issues of leave. It provides that:
Annual holidays shall be paid in accordance with the Holidays Act 1981 and its amendments.
Each employee shall be entitled to annual holiday of 127.5 work hours per year (equivalent to three 42.5 hour weeks for day employees).
While on holiday an employee shall continue to receive normal salary.
An employee's holiday shall be taken at a time mutually agreed by the company and the employee. Holiday leave shall not accrue from one leave year to the next without the written approval of the company, except for amounts of leave smaller than 8.5 work hours which will automatically accrue into the next leave year.
Upon completion of FOUR (4) continuous years service with the company, each employee shall for the FOURTH and subsequent years of continuous service be entitled to an additional 42.5 work hours annual holiday per year (equivalent to one 42.5 hour week for day employees).
Time served as an apprentice with the company shall count as time served the purpose of this clause.
Shift employees shall be entitled to an additional annual holiday of 42.5 work hours per year.
The plaintiff submits that the leave entitlements contained in the collective agreement were “automatically” increased from 1 April 2007, when the minimum statutory annual holiday entitlement was increased from three weeks to four. It submits that from that date, each employee became entitled to four weeks' annual holiday and once he/she completed four years of continuous service, they became entitled to five. Shift workers became entitled to five weeks from 1 April 2007, and six on completion of four years' continuous service (namely four, plus one, plus one).
The defendant submits that the contractual entitlement to an additional week of leave under the agreement has been subsumed by the statutory obligation to provide a minimum of four weeks' annual leave to all employees from 1 April 2007. The defendant denies that the entitlements under cls 14.5 and 14.7 are in addition to the current statutory entitlement, and denies that it has a contractual obligation under cl 14.7 to provide a further week of leave to employees who work shifts. It says it has provided an additional (fifth) week of leave to shift workers since 1 April 2007 in recognition of the burden that such work places on employees and their families, but submits that there is no contractual obligation to do so. It submits that as non- shift employees (day employees) receive four weeks' annual holiday a year and shift employees receive five weeks' annual holiday each year, all employees receive at least four weeks' annual holiday and accordingly Norske Skog has complied with its obligations under the Holidays Act 2003.
The Holidays Act 1981 was replaced by the Holidays Act 2003. The 2003 Act came into force on two dates. From 1 April 2007, it provided for a fourth week of paid annual holidays for all employees. 3 Prior to 1 April 2007, employees had been entitled to three weeks of annual holiday. The Act did not expressly address the position of employees who had a pre-existing contractual entitlement to a fourth week of annual holiday.
Section 3 states the Act's purpose as being to promote balance between work and other aspects of employees' lives and, to that end, to provide employees with certain minimum entitlements. These include, under s 3(a), annual holidays “to provide the opportunity for rest and recreation”.
Section 6(1) provides that entitlements under the Act are minimum entitlements. These minimum entitlements do not prevent an employer from providing an employee with “enhanced or additional entitlements”, whether specified in an employment agreement or otherwise on an agreed basis...
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