Postal Workers Union of Aotearoa Incorporated v New Zealand Post Ltd Coa

• Jurisdiction: New Zealand
• Judge: Randerson J
• Judgment Date: 30 October 2012
• Neutral Citation: [2012] NZCA 481
• Docket Number: CA327/2011
• Court: Court of Appeal
• Date: 30 October 2012

BETWEEN

Postal Workers Union of Aotearoa Incorporated

First Appellant

and

Linda Street

Second Appellant

and

New Zealand Post Limited

Respondent

[2012] NZCA 481

Court:

Randerson, White and French JJ

CA327/2011

IN THE COURT OF APPEAL OF NEW ZEALAND

Appeal from Employment Court decision on question of law regarding correct approach to calculation of “relevant daily pay” for the purposes of the Holidays Act 2003 — Respondent employed appellant Union members as posties who were required to work reasonable unrostered overtime in excess of standard hours — usually not possible to predict whether posties would be required to work unrostered overtime, or for how long — substantial variation in unrostered overtime worked — respondent did not include any component in the relevant pay calculation for unrostered overtime — whether unrostered overtime for posties was to be included in calculation of “relevant daily pay” for the purposes of s9 Holidays Act (meaning of relevant daily pay) (as it applied prior to 31 March 2011) and, if so, in what circumstances.

Counsel:

S R Mitchell for Appellant

R J McIlraith and G Service for Respondent

• A The appeal is allowed and the decisions of the Employment Court and the Employment Relations Authority are set aside.

• B If formal declarations are required, counsel may apply by memorandum.

• C The respondent must pay one set of costs to the appellants as for a standard appeal on a band A basis with usual disbursements.

JUDGMENT OF THE COURT

REASONS OF THE COURT

(Given by Randerson J)

Introduction

1 This appeal is concerned with the correct method of calculating “relevant daily pay” for the purposes of the Holidays Act 2003 (the Act). The specific issue is whether unrostered overtime for postal delivery workers is to be included in the calculation and, if so, in what circumstances. Although the outcome of this appeal will immediately affect postal workers, it is likely to have ramifications for other employees entitled to holiday pay.

2 The obligations upon employers to pay allowances to employees for holidays and for absences due to sickness or bereavement are set out in various sections of the Act as we later detail. Those sections provide that the employer's obligation under them is to pay the employee “relevant daily pay” in the circumstances prescribed. The critical issue in this appeal is how “relevant daily pay” is to be calculated in terms of the definition of that expression in s 9 of the Act in the form in which it stood prior to its amendment on 1 April 2011. 1 Section 9 then provided:

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, 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; and

  • (b) includes -

    • (i) productivity or incentive-based payments (including commission) if those payments would have otherwise been received on the day concerned:

    • (ii) payments for overtime if those payments would have otherwise been received on the day concerned:

    • (iii) the cash value of any board or lodging provided by the employer to the employee; but

  • (c) excludes any payment of any employer contribution to a superannuation scheme for the benefit of the employee.

• (2) To avoid doubt, if subsection (1)(a) is to be applied in the case of a public holiday, the amount of pay does not include any amount that would be added by virtue of section 50(1)(a) (which relates to the requirement to pay time and a half).

• (3) If it is not possible to determine an employee's relevant daily pay under subsection (1), the pay must be calculated in accordance with the following formula:

  • a / b

  • Where -

  • a is the employee's gross earnings for -

    • (i) the 4 calendar weeks before the end of the pay period immediately before the calculation is made; or

    • (ii) if, the employee's normal pay period is longer than 4 weeks, that pay period immediately before the calculation is made

  • b is the number of whole or part days during which the employee earned those earnings in the 4 calendar weeks, or longer period (as the case may be) including any day on which the employee was on a paid holiday or paid leave; but excluding any other day on which the employee did not actually work.

• (4) However, an employment agreement may specify a special rate of relevant daily pay for the purpose of calculating payment for a public holiday, alternative holiday, sick leave, or bereavement leave if the rate is equal to, or greater than, what would otherwise be calculated under subsection (1) or subsection (3).

3 The appeal is from a judgment of the Employment Court delivered by Judge Ford on 20 October 2010. 2 The Employment Court's judgment in turn arose from two de novo appeals from determinations of the Employment Relations Authority. The first determination was in proceedings brought by the first appellant against the respondent (New Zealand Post). 3 The second determination was in proceedings brought by the first appellant (The Postal Workers Union of Aotearoa Inc) and the second appellant (Ms Street) against New Zealand Post. 4

4 The effect of the Employment Court's decision was that, in terms of s 9(1)(b)(ii) an employee was required to establish on the balance of probabilities

that he or she would have worked overtime on the day in question and the actual amount he or she would have received for overtime on that day. Unless that could be established, there was no room for the operation of s 9(3)

5 On 20 April 2011, this Court granted leave to the appellant on the following questions of law: 5

• (a) Did the Employment Court err in its approach to the calculation of relevant daily pay for the purposes of s 9(3) of the Holidays Act 2003, as it then stood?

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

6 For the purposes of determining the appeal, we have refined the broad issues in the following terms:

• (a) What is the correct approach under s 9(1)(b)(ii) when considering whether payments for overtime “would have otherwise been received on the day concerned”; and

• (b) In what circumstances does s 9(3) become engaged so as to require the employer to apply the averaging formula in that provision?

Factual background

7 The hearing in the Employment Court proceeded on the basis of an agreed statement of facts from which we now set out the salient features. New Zealand Post is a party to collective employment agreements with the Postal Workers Union of Aotearoa, the separate Postal Workers Union and the New Zealand Amalgamated Engineering Printing and Manufacturing Union. Members of those unions are employed by New Zealand Post as postal delivery workers (“posties”).

8 The postie's task is to sort and deliver mail daily to a round assigned to them. Posties work on a roster of 37.5 full-time hours each week. They are paid for the

rostered hours of full-time work each day even if they finish their delivery round in less than the time allocated. However, if they do not complete their round within the standard hours, New Zealand Post requires them to work reasonable unrostered overtime in excess of their standard hours to ensure the company meets its obligations to deliver mail on any given day. Sometimes overtime is rostered but that is not in issue in the present context

9 Importantly, it is often not apparent until during or near the end of the standard daily hours on any given day, that a postie will have to work unrostered overtime to complete the delivery round. A range of factors may give rise to the need for unrostered overtime. They include an above-average volume of mail for the round; oversized rounds; staff shortages; injuries; transport issues such as bicycle breakdown, roadworks or other delays during the round; the work rate of the individual postie on the day; and management meetings.

10 Where an unforeseen event arises (such as sickness or injury) and assistance is required to complete the round, a process known as a “cut-up” occurs. This involves one or more posties taking the place of the postie who is unable to commence or complete the round. This too can result in unrostered overtime. In consequence, it is usually not possible to predict with any certainty whether posties will be required to work unrostered overtime or for how long.

11 Another important factor is that there is substantial variation in unrostered overtime worked by posties. This varies between individual posties and also varies by month and region. The average number of hours of unrostered overtime recorded by posties nationally is 1.6 per cent of their total hours, or about 6.2 minutes per day. The bulk of unrostered overtime (71 per cent) is incurred regularly by only 25 per cent of posties.

12 Under the Act and the collective agreements, New Zealand Post is obliged to pay relevant daily pay for public or alternative holidays, and for other forms of leave including sick and bereavement leave. For these purposes, New Zealand Post pays its posties for the standard full-time hours along with some agreed allowances, but does not include any component in the relevant daily pay calculation for unrostered overtime.

The Employment Court's decision

13 After setting out the background facts, the Judge considered first the meaning of the expression “would have” in s 9(1) of the Act. He rejected the approach adopted by the Employment Relations Authority that this expression signified a high degree of certainty or probability in relation to an occurrence or the happening of an event. Instead, Judge Ford considered the proper approach was to adopt the civil standard of proof on the balance of probabilities with the burden falling on the party asserting the right. Applying that principle to the...