Eastern Bay Independent Industrial Workers Union v Norske Skog Tasman Ltd

JurisdictionNew Zealand
JudgeChristina Inglis
Judgment Date03 April 2012
CourtEmployment Court
Docket NumberARC 62/08
Date03 April 2012

In The Matter Of a challenge to a determination of the Employment Relations Authority

Between
Eastern Bay Independent Industrial Workers Union
Plaintiff
and
Norske Skog Tasman Limited
Defendant

[2012] NZEmpC 56

Judge Inglis

ARC 62/08

IN THE EMPLOYMENT COURT AUCKLAND

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.

Counsel:

L J Yukich, advocate for plaintiff

Kylie Dunn and June Hardacre, counsel for defendant

JUDGMENT OF JUDGE Christina Inglis

Christina Inglis
1

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.

2

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.

3

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 Silver Fern Farms Ltd v New Zealand Meat Workers and Related Trade Unions Inc. 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.

The Collective Agreement
4

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.

Summary of parties' submissions
5

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).

6

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 statutory framework
7

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.

8

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”.

9

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 with the employee. 4

10

The statutory increase to four weeks' annual holiday did not automatically increase the entitlements of all employees. That is because some employees already had a contractual entitlement to four weeks' annual holiday. Rather, the effect of the amendment was to require that all employees receive a minimum of four weeks' annual holiday – anything extra was a matter of contract or extra-contractual agreement between the parties.

The issue
11

The issue at the heart of this case is whether the collective agreement provided for an increase in the annual holiday entitlements for shift workers and/or employees with at least four years of continuous service (long service employees)

above the prevailing statutory minimum entitlement. In other words, did the parties intend to maintain relativities in the annual holiday entitlements of the three categories of employees identified in cl 14 following the increase to four weeks' statutory annual holiday from 1 April 2007
12

The issue arises because the parties failed to specify what was intended by way of annual holidays from 1 April 2007. Prior to that time, all day employees were entitled under cl 14.2 to three weeks' annual holiday, which coincided with the then statutory minimum. All employees with four continuous years of service were entitled to an additional week of annual holidays. Shift employees were entitled to an additional week of annual holiday. 5

13

If, as the defendant submits, each category of employee was entitled to four weeks' annual holiday after 1 April 2007, they would receive no more than the statutory minimum to which all employees had become entitled. And employees with four years of continuous service and shift workers, who had previously enjoyed additional annual holidays over day employees with less accrued time with the company, would be on an equal footing with other employees (absent any extra contractual agreement). Relativities between employees would, accordingly, be lost.

The factual context
14

The factual context in which this dispute arises is set out in the agreed summary of facts and uncontested affidavits filed by the parties.

15

The original term of the Agreement at issue in these proceedings was from 1 July 2002 to 30 June 2005. It appears that annual holidays were not discussed during negotiations for the 2002 collective agreement. The agreement was renegotiated in 2004. Annual holidays were not discussed during the course of these negotiations either, despite the fact that, at the time these negotiations took place, both parties were aware of the provisions of the Holidays Act 2003 and were aware

of the increase to a fourth week of statutory annual leave which was to take effect from 1 April 2007
16

The collective agreement was due to expire before the increase in the statutory minimum entitlement took effect. A “Variation of Collective Agreement” was entered into in December 2004, which (amongst other things) extended the term of the agreement to 7 February 2007. It also updated the public holidays...

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