New Zealand Airline Pilots' Association Inc. and Ritchie v Mount Cook Airlines Ltd Coa

• Jurisdiction: New Zealand
• Judge: Arnold,Ellen France,Stevens JJ
• Judgment Date: 23 May 2013
• Neutral Citation: [2013] NZCA 174
• Docket Number: CA24/2013
• Court: Court of Appeal
• Date: 23 May 2013

BETWEEN

New Zealand Airline Pilots' Association Inc

First Applicant

And

Mark Paul Ritchie

Second Applicant

and

Mount Cook Airlines Limited

Respondent

[2013] NZCA 174

Court:

Arnold, Ellen France and Stevens JJ

CA24/2013

IN THE COURT OF APPEAL OF NEW ZEALAND

Application by pilot's union for leave to appeal on a question of law in relation to calculation of relevant daily pay “RDP” of pilots under s9 (Meaning of relevant daily pay) Employment Relations Act 2000 “ERA” and s50 ERA (time and a half for working on public holiday — pay greater of etc) — Employment Court “EC” ruled that RDP was to be calculated by dividing a pilot's annual salary by 365 — union argued that the divisor had to be 206 (number of days pilots were actually required to work), or, in the alternative, 235 (that is 206 plus annual holiday entitlement) — whether EC erred in calculation of RDP — whether the question of law was of any general or public importance.

Counsel:

S C Dench for Appellant

T P Cleary for Respondent

• A The application for leave to argue a question of law under s 214 of the Employment Relations Act 2000 is dismissed.

• B The applicants must pay the respondent one set of costs for a standard application on a band A basis and usual disbursements.

JUDGMENT OF THE COURT

REASONS OF THE COURT

(Given by Stevens J)

The application

1 The New Zealand Airline Pilots' Association and Mark Paul Ritchie 1 (the applicants) have applied for leave 2 to submit to this Court a question of law arising from a decision of Judge Ford in the Employment Court delivered on 17 December 2012. 3

2 The case concerns the method of calculating “relevant daily pay” (RDP) for the purposes of ss 9(1) and 50(1) of the Holidays Act 2003 (the Act) in relation to pilots employed by the respondent.

3 Section 9(1) of the Act relevantly provides:

9 Meaning of relevant daily pay

• (1) In this Act, unless the context otherwise requires, relevant daily pay, for the purposes of calculating payment for a public holiday, an alternative holiday, sick leave, or bereavement leave,–

  • (a) means the amount of pay that the employee would have received had the employee worked on the day concerned;

  • …

4 All of the pilots employed by the respondent (of which there are about 100) are parties to a collective employment agreement (the agreement). Under the agreement, pilots are paid an annual salary, for which they are required to work a maximum of nine days per fortnight and a maximum of 206 days per annum (or 235 days if holidays are included). Some pilots may work more than others, depending on how the rostering works out, but will be paid the same annual salary as that paid to all the other pilots in the same pay band. Pilots are paid fortnightly, and are paid for each of the 14 days in a fortnightly period on the basis of a notional figure of 112.30 hours per fortnight. This equates to payment for an eight hour day on 365 days of the year. Rosters are issued fortnightly, and prior to a roster being issued, there is no certainty as to how many hours a pilot will have to work that fortnight.

5 The relevance of calculating RDP in this case concerns the appropriate pay for a pilot who works on a public holiday. Section 50 of the Act requires that a person be paid at least time and a half of his or her RDP for working on a public holiday. Section 50(1) of the Act provides:

50 Employer must pay employee at least time and a half for working on public holiday

• (1) If an employee works (in accordance with his or her employment agreement) on any part of a public holiday, the employer must pay the employee the greater of–

  • (a) the portion of the employee's relevant daily pay or average daily pay (less any penal rates) that relates to the time actually worked on the day plus half that amount again; or

  • (b) the portion of the employee's relevant daily pay that relates to the time actually worked on the day.

6 Under s 56(2)(a) of the Act the employer must also provide the employee with an alternative holiday. The respondent has been calculating RDP by dividing a pilot's annual salary by 365. The applicant argued before the Employment Relations Authority and the Employment Court that the divisor should in fact be 206 (that is, the number of days the pilots are actually required to work), or, in the alternative, 235 (that is 206 plus the annual holiday entitlement). Both the Employment Relations Authority and the Employment Court found the respondent was permitted under the Act to use 365 as the divisor.

7 The applicants have identified two questions of law for which leave was sought:

• (a) Did the Employment Court err in its approach to the calculation of RDP?

• (b) What is the correct approach in law to this case?

8 The respondent opposes the grant of leave on three grounds:

• (a) The decision of the Employment Court contains no error of law.

• (b) In the alternative, the decision of the Employment Court involves the construction of the collective agreements.

• (c) In the further alternative, no question of law arises which by reason of its general or public importance or any other reason ought to be heard by this Court. 4

Submissions of the applicants

9 The specific grounds advanced by the applicants in support of the grant of leave are:

• (a) Under s 9(1) of the Act, RDP means the amount of pay the employee would have “received” had the employee worked on the day concerned. In s 9(1)(a) the word “received” does not literally mean the amount the employer paid, but must refer to the employee's entitlement under his or her employment agreement. Moreover, under s 9(3) of the Act, if it is not possible to determine relevant daily pay under s 9(1) an averaging formula must be used. That formula excludes from the denominator days on which the employee did not actually work, producing an average day's pay per working day.

• (b) The respondent has an internal practice of calculating and allocating pay on the assumption that pilots are paid for a notional eight hour day on 364 days of the year (with an adjustment to compensate for the 365th day). The Employment Court erred in failing to treat the amount “received” as the amount the pilots were contractually entitled to receive under their employment agreements for a day of work (according to the fortnightly roster) but, instead, treating the amount “received” as that portion of the pilots' salary that the respondent chose to allocate to each day in accordance with its internal calculation.

• (c) While the starting point must be the agreement, the Employment Court took too narrow an approach to the meaning of RDP and had insufficient...