New Zealand Meat Workers and Trades Union Incorporated v Affco New Zealand Ltd
| Jurisdiction | New Zealand |
| Judge | B A Corkill |
| Judgment Date | 08 September 2016 |
| Court | Employment Court |
| Docket Number | EMPC 152/2015 |
| Date | 08 September 2016 |
IN THE MATTER OF an application for an injunction
And
[2016] NZEmpC 117
EMPC 152/2015
IN THE EMPLOYMENT COURT AUCKLAND
Determination of preliminary legal issues relevant to the calculation of quantum of wages which the second plaintiffs would have been paid but for an unlawful lockout by and the unlawful conduct of AFFCO New Zealand Limited (AFFCO) — the plaintiffs sought a compliance order that reasonable wages be paid for the duration of the lockout — AFFCO contended that the plaintiffs' claims were in fact for damages; and that orthodox principles relating to the assessment of damages should apply — the plaintiffs said that the amounts claimed were for “wages” as defined under the Wages Protection Act 1983 (WPA) — AFFCO also submitted that under s4 WPA (No deductions from wages except in accordance with Act) wages had not “become payable” a during the off season and until re-engagement, the plaintiffs had no contractual right to wages — there had been no disruption to the contractual right to be paid wages — whether the claim for lost remuneration was a claim for damages, or a claim for “wages” under the WPA — whether the calculation of lost remuneration should disallow any period when an employee was on a benefit or working elsewhere — whether assessment of such a sum was subject to an obligation to mitigate loss.
P Cranney and S Mitchell, counsel for the plaintiffs
P Wicks QC and M Williams, counsel for the defendant
JUDGMENT (NO 2) OF JUDGE B A Corkill
On 18 November 2015, a full Court held that AFFCO New Zealand Limited (AFFCO), a meat processing company that operates processing plants at various locations, had unlawfully locked out multiple members of the New Zealand Meat Workers and Related Trades Union Incorporated (the Union) at certain of its plants, and that it had in numerous respects breached its good faith obligations in bargaining
(the November judgment). 1
Subsequently, the Union and 164 affected members who normally work at AFFCO's Wairoa plant sought compliance orders on the basis of these findings. Their primary application was for an order compelling AFFCO to re-engage them in the positions in which they would have been employed but for the unlawful lockout and breach of good faith obligations.
This issue was resolved in a judgment which I delivered on 11 February 2016 (the February judgment). 2 The issue before the Court was whether all affected second plaintiffs could be re-employed as a group on nightshift, having regard to the relevant provisions of the applicable (expired) collective agreement. 3 I found that re-employment of those persons as a group on a nightshift, without their consent, would not be in accordance with the relevant provisions of the collective agreement. Such a course of action would infringe the applicable seniority provisions. 4 I also found that where the application of seniority would have resulted in second plaintiffs being engaged on the morning shift, and where those duties were being performed by other persons engaged on independent employment agreements there was an infringement of s 97 of the Employment Relations Act 2000 (the Act). 5
The next relevant finding was that any analysis as to the circumstances which would have applied at the commencement of the season had to proceed on the basis that the conclusions of the full Court were respected. The Court had to assume that AFFCO would not have acted in bad faith or in breach of the collective agreement. 6
Against that background I considered the claim made by the plaintiffs for a compliance order that reasonable wages be paid for the duration of the lockout. I held that it was premature to make such an order, because the parties were still exchanging information with a view to calculating lost remuneration for each affected employee.
Since the February judgment, various memoranda have been filed with a view to determining the wages which each second plaintiff would have been paid but for the unlawful lockout and unlawful conduct.
By May 2016, counsel had agreed that there were preliminary legal issues which were relevant to the calculation of quantum. These may be summarised as follows:
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a) Would any sum claimed by the second plaintiffs in respect of lost remuneration as a result of the unlawful lockout and conduct be a claim for damages, or would it be a claim for “wages” under the Wages Protection Act 1983 (WP Act)?
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b) Should the calculation of lost remuneration disallow any period when the employee was on a benefit (other than an unemployment benefit, now known as Job Seeker Support) or working elsewhere, either on the employee's own account or for someone else?
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c) Is assessment of such a sum subject to an obligation to mitigate loss?
AFFCO contends that the plaintiffs' claims are in fact for damages; and that orthodox principles relating to the assessment of damages should apply.
The Union and affected employees, by contrast, contend that the amounts claimed are for “wages” as defined under the WP Act.
At common law, the primary remedy for breach of contract is described as “compensatory damages”, 7 or as “pecuniary compensation”. 8 For present purposes it is unnecessary to consider other categories of damages such as nominal damages,
Turning to the relevant statute, s 4 of the WP Act provides:
4 No deductions from wages except in accordance with Act
Subject to sections 5(1) and 6(2), an employer shall, when any wages become payable to a worker, pay the entire amount of those wages to that worker without deduction.
The definition of “wages” in s 2 of the WP Act is as follows:
wages means salary or wages; and includes time and piece wages, and overtime, bonus, or other special payments agreed to be paid to a worker for the performance of service or work; and also includes any part of any wages
Section 11 is also relevant. It provides:
11 Recovery of wages
(1) Subject to subsections (2) and (3), a worker, or a Labour Inspector on behalf of a worker, may recover from that worker's employer, by action in the Employment Relations Authority, established by the Employment Relations Act 2000, in the prescribed manner,-
(a) any deduction made (otherwise than pursuant to section 6) by that employer from wages that have been paid, or but for that deduction would have been paid, by that employer to that worker, if-
(i) that deduction was not consented to, or requested by, that worker in writing;
…
Section 11(2) and (3) provide for relevant time limits and are not relevant in this case.
The reference in s 11(1) to “an action in the Employment Relations Authority” is a reference to ss 131 and 137 of the Act, which provide alternative methods for recovery of arrears of wages; the latter is relevant in the present case.
The leading authority as to the application of s 11 to unlawful lockouts is Spotless Services (NZ) Ltd v Service and Food Workers Union Nga Ringa Tota Inc. 9 With regard to a lockout which is held not to be lawful, the Court of Appeal stated in its judgment: 10
… We thus agree with the SFWU's submission that where the wages are payable in terms of the WPA will depend on the employment agreement. We also agree that, if wages were payable in terms of those agreements, then there will have been unlawful deductions in terms of s 4 of the WPA. These may be recovered under s 11 of the WPA. …
There are numerous previous cases which demonstrate this principle. An early example is New Zealand Engine Drivers, Firemen, Greasers and Assistants IUOW v Gear Meat Processing Ltd, where a lockout was imposed in an attempt to compel compliance with a demand that the Federation of Labour had taken over a dispute. 11 The Court concluded that such a lockout “was not one provided for in the Industrial Relations Act and its effect must be considered on a common law basis”. 12 The Court ruled that the workers should receive full wages. They were ready and willing to work, but were prevented from doing so by the employer's action. 13 They were entitled to the wages they should have received under their contracts of service, which contained the applicable obligations.
In short, wages are payable if there is a liability for such payment under the relevant employment agreement, but for the breach. The question is what the affected employee would have been paid had the agreement been complied with in other respects. That is why, as the Court of Appeal in Spotless held, there must be a focus on what wages were payable in terms of the relevant agreement.
Turning to the applicable collective agreement in the present circumstances, the provisions relating to re-engagement are contained in cls 30 and 31, which provided:
30. SECURITY OF EMPLOYMENT
a) The employer acknowledges the value of a stable, competent and trained workforce which is familiar with the processing methods and procedures required.
b) Re-engagement is dependent upon employees completing the employer's induction process and signed acceptance of terms of employment (being any terms applying in addition to those set out in this Agreement and applicable Site agreements).
31. SENIORITY
a) Employees shall have seniority in accordance with the date of their commencement of employment with the Company and in accordance with the provisions of this...
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