Nz Meat Workers & Related Trades Union v Affco Nz Ltd Wn

 
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[2010] NZEMPC 62

IN THE EMPLOYMENT COURT WELLINGTON

WRC 7/10

IN THE MATTER OF a challenge to a determination of the Employment Relations Authority

BETWEEN
New Zealand Meat Workers & Related Trades Union Inc
Plaintiff
and
Affco New Zealand Limited
Defendant
Appearances:

Simon Mitchell, Counsel for Plaintiff

Graeme Malone, Counsel for Defendant

Collective employment agreement — engagement of new employees on trial or probationary periods — whether inconsistent with the collective agreement.

Held: Probationary periods were covered by s67 of the Act. There was no definition for a probationary arrangement. It was a period that allowed the employer to assess the employee's competence and suitability for a position and which allowed for training, modification and improvement by the employee. It took into account that sometimes an employee's suitability for particular work could not be assessed prior to commencement. It was acknowledged by both parties that the arrangement may result in termination if, assessed fairly and reasonably by the employer, the employee was incapable of performing the work or is otherwise unsuited for it. It was a period of uncertainty as opposed to employment that did not have a probationary period.

Case law suggested that the requirements of procedural fairness and reasonableness leading to dismissal at the end of the period may be less rigorous than in cases of indefinite duration. Probationary periods also imposed duties on the employer to supervise and review the performance of employees, with an inherent concept of the opportunity for correction or improvement. There was an expectation that when the probationary period passed without adverse comment or action, the employee would then be in a position of “permanent employment”.

The test on which the Union's challenge relied on was s63(2)(b) (terms of condition of a new employee who is not a union member). Section 67 allowed parties to agree to probationary agreements but it did not mean that it was not possible for a collective agreement to negate this. The section was permissive and not mandatory — parties could agree on probationary arrangements but, in the case of new employees in employment covered by a collective agreement, such an arrangement could not be inconsistent with the collective agreement. The test for inconsistency was whether the collective agreement made provision for determining issues of competency and suitability in employment, and specified what happens if new employees were found to be incompetent, incompatible or otherwise unsuitable for employment.

The applicable tests for inconsistency under s63(2) were collated in Maritime Union of New Zealand Inc v Ports of Auckland Ltd. Inconsistencies between the collective employment agreement and additional terms must be resolved objectively. It must be determined whether the relevant provisions could live together as terms of the employment agreement. If the additional term was more favourable to the employee than the collective agreement, there was usually no inconsistency. However if the two provisions could not stand together, the collective agreement must prevail even if the result was perceived as unfavourable to the employee.

In the present case the question of consistency or inconsistency between the collective agreement and the trial employment agreement was not whether a probationary arrangement per se was inconsistent with the core collective agreement, as the Authority appeared to have approached the matter. It was rather whether AFFCO's specific probationary arrangements were inconsistent and therefore unlawful.

There were two provisions in the trial employment agreement that were problematic. The first allowed the employer in assessing the employee to “take into account such matters as the Employer sees fit, irrespective of whether or not any such matter amounts to misconduct on the part of the Employee”. AFFCO was required to act fairly, reasonably, and in good faith towards the employee, and not take into account irrelevant considerations. The statutory tests under s103A must be satisfied and the employer must show it acted as a fair and reasonable employer would have acted in all the relevant circumstances.

The second problematic clause was interpreted as meaning that even if an employee's employment was not terminated or otherwise affected adversely at the completion of the 30 day probationary period as a result of suitability issues that had arisen during the period, the employer reserved to itself the discretion to terminate employment subsequently. Once again the employer would have to show compliance with s103A and show why it had not addressed these issues during the trial period.

The collective agreement required the employer to address issues of competency as they arose during a season rather than simply not hiring workers the following season. There was no time qualification on this and it therefore applied at all times that the collective agreement applied. This would include the first 30 days of employment. The probationary arrangement addressed issues of competence that were addressed by the collective agreement's disciplinary processes. The probationary agreement provisions were inconsistent with the collective agreement at least in so far as the paragraphs of the trial employment agreement purport to modify the collective agreement's express provisions and/or the statutory provisions under s67 of the Act and/or the statutory personal grievance rights available to employees under Part 9 of the Act. The trial employment agreement was unlawful.

Challenge upheld.

JUDGMENT OF CHIEF JUDGE GL Colgan

Nature of proceeding
1

This is a challenge by the New Zealand Meat Workers and Related Trades Union Inc (the union) to the Employment Relations Authority's determination 1 that it is lawful for AFFCO New Zealand Limited (AFFCO) to engage new employees on terms and conditions of employment that include trial or probationary periods. The Authority found against the union's argument that such provisions were inconsistent with the relevant collective agreement and so are unlawful and invalid. This is not a case about the new legislative provisions for trial periods in employment under s 67A of the Employment Relations Act 2000 (the Act) as inserted by s 7 of the

Employment Relations Amendment Act 2008 and which took effect on 1 March 2009.
2

Counsel advised that several AFFCO employees allege that they were dismissed unjustifiably and/or disadvantaged in their employment unjustifiably by their employer's reliance on the employer's so-called “trial” employment agreement. One of these cases has apparently been settled in mediation, but others are awaiting guidance from this judgment as to the lawfulness of the trial period and its implications.

3

Although not dealt with expressly in evidence, counsel advised me that AFFCO has made it a condition of employment of any “new” employees in its meatworks that they are to be subject to this “trial” period. However, it is applied only to persons seeking employment who have not been employed by the company in the preceding season and whose employment was concluded by the season ending.

4

The so-called “trial employment agreement” at issue is not an employment agreement within the terms of the legislation. Further, and as Mr Malone conceded readily, it is not correctly described as a “trial”. Rather, it should be a probationary provision pursuant to s 67 of the Act although, for present purposes, there appears to be little difference in practice between those labels.

5

The provision at the heart of the case is as follows:

A N D (“the Employee”)

This is to advise that the Employee's first thirty (30) days of employment is deemed to be a trial period. This trial period is to allow the Employee a settling-in time during which their suitability to work in the Meat Industry, their ability to fit in with other staff and their ability to perform the role that they have been engaged for can be assessed, so that the Employer can be satisfied that the Employee is suitable for appointment as a seasonal employee.

During the 30 day trial period the Employee's further terms of employment will be according to the AFFCO/Meat Workers Collective Agreement.

In assessing whether the Employee is likely to be a satisfactory appointment to the seasonal staff the Employer may take into account such matters as the Employer sees fit, irrespective of whether or not any such matter amounts to misconduct on the part of the Employee.

Notwithstanding this trial period, the Employee is subject to the normal disciplinary process and any outcome therein.

Any outstanding matters regarding the Employee's suitability for seasonal or casual employment that are not resolved by the completion of the trial period may become grounds for termination at the Employer's discretion.

The Employee acknowledges that during the trial period the availability or configuration of work may alter and necessitate a review of the possibility to continue employment at the Employer's sole discretion.

TRIAL EMPLOYMENT AGREEMENT
BETWEEN AFFCO NEW ZEALAND LIMITED (“the Employer”)
A N D (“the Employee”)
6

The parties presented the Court with an agreed statement of relevant facts which may be summarised as follows. The majority of employees at AFFCO's Wairoa plant (one of the company's several North Island meat works) are members of the union. What is known as a “core” collective agreement between AFFCO and the union sets “core” terms and conditions of employment of meatworkers at all AFFCO plants....

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