Progressive Meats Ltd v Tom Pohio, Eru Te Rito, Carl Berg, Kevin Blane, Wayne Gerbes, Paul Cooke, Hamish Waldon, James Campbell, Robert Aird, David Blue Brown, Shane Stephens, Sonya Wallace and Riki Hilton
| Jurisdiction | New Zealand |
| Judge | A D FORD |
| Judgment Date | 05 July 2012 |
| Court | Employment Court |
| Docket Number | WRC 32/11 |
| Date | 05 July 2012 |
In The Matter of a challenge to a determination of the Employment Relations Authority
[2012] NZEmpC 103
WRC 32/11
IN THE EMPLOYMENT COURT WELLINGTON
Application for a declaration by Progressive Meats Ltd that a clause in the an employment agreement relating to seasonallayoffs based on skills, referred to a system used to measure the productivity of employees rather than skills and length of service — plaintiff operated meat processing plant — employment agreement provided employees to be laid off by skill level and then by length of service — in 2005 plaintiff introduced “Marel System” to record employees' skills — no reference toMarel System in collective agreement — from 2009 plaintiff used Marel System to retain staff out of sequence and length of time had not been considered — whether assessment of skill levels for layoff purposes should be based on the training module provisions rather than productivity under the Marel System.
Tim Cleary, counsel for the plaintiff
Simon Mitchell, counsel for the defendants'
JUDGMENT OF JUDGE A D FORD
The plaintiff, Progressive Meats Limited (Progressive), was described by its counsel, Mr Cleary, as a “toll processor for ovine and venison meat exports”. Unlike other meat companies which purchase livestock from farmers before processing and on-sale (usually for export), a toll processor does not purchase livestock but contracts with its customers to process livestock to the customers' specifications. In other words, the customers provide the live animals and for an agreed fee, the toll processor then processes the stock which involves slaughtering, boning and producing cuts to the customers' specifications.
The case before the Court involves Progressive's Hastings plant which operates on a toll basis. The Hastings plant has two departments: slaughtering and boning. The boning department comprises of both boners and packers. All of the defendants are employed in the boning department and all but one are boners. Ms Sonya Wallace is a packer.
The parties are in dispute over the interpretation of a clause in their collective employment agreement 1 (the collective agreement) relating to layoff situations. The clause, cl 22.1.1., provides that in the event of a seasonal layoff situation, a system of ranking employees according to skill levels will be operated to ensure that sufficient people are retained to operate each department at its most efficient level of productivity. When skills are equal then length of service will determine ranking. The principal issue at stake relates to the interpretation and method of assessment of “skill levels”.
The defendants referred personal grievances to the Employment Relations Authority (the Authority) alleging that in August 2010 they were unjustifiably laid off because their layoff did not take place on the basis of skill and other less skilled staff were retained. The company disagreed. In its determination 2 dated 30 September 2011, the Authority concluded that, “both parties were equally mistaken in adopting a too restrictive approach to the meaning of the disputed words”. Mr Cleary described the Authority's conclusions as a “halfway house” approach. In this proceeding Progressive has challenged the Authority's determination.
Before turning to consider the respective stance of each party, it is necessary to explain more about the background to the dispute.
Apart from the differences already noted, there are other relevant distinctions between the operations of conventional meat processing plants and a toll processor. For example, whereas processing plants invariably process carcasses through the use of conveyor chains with each boner assigned a particular processing task, in a toll situation each boner processes a whole carcass working at what is referred to as a “boning station”. This is the main task in the boning room. At the Hastings plant there are 20 such boning stations.
Another relevant distinction relates to layoff situations generally. In my judgment in New Zealand Meat Workers Union of Aotearoa Inc v AFFCO New Zealand Ltd, 3 I noted, with reference to earlier authorities, that one of the features of the meat industry is that the plants operate on a seasonal basis with the customary yearly layoffs being determined under a seniority system of longstanding provided for in relevant collective agreements and awards. At Progressive's toll processing plant, however layoffs are a relatively rare event. The evidence was that, apart from what occurred in 2009 and 2010, the only other layoff in the last 30 years took place in 1991.
The key provision in the collective agreement is cl 22.1.1. but for completeness I set out the whole of cl 22:
22. LAY OFF
22.1. Skill Based Ranking
22.1.1 In a lay-off situation, a system of ranking employees (within the departments remaining operating) according to skill levels will be operated to ensure that sufficient people are retained to operate each department at its most efficient level of productivity. When skills are equal then length of service will determine ranking. Temporary employees shall be laid off before permanent employees.
22.2. Length of Notice
22.2.1. Upon realising that a lay-off situation is going to be inevitable, the employer will advise all employees of the impending situation 14 days prior to the termination date of the affected employees. The affected employees will be given a minimum of 7 days written notice prior to the actual date of their employment termination.
22.2.2. Re-employment: Should an employee having been laid off in one work period be re-employed in the subsequent work period, then that employee shall retain their skill margin and sick leave entitlement attained at the date they were laid off. The employee's sick leave anniversary date will change to the date of re-employment.
Because it relates to another provision in the collective agreement, it is convenient to consider first the interpretation contended for by the defendants. In essence, it is the case for the defendants that the term “skill levels” in cl 22.1.1. refers to training modules obtained by workers through the plaintiff's skill based training system provided for in cl 10 of the collective agreement. That provision states:
10. SKILLS & TRAINING
10.1. A skills and training committee shall be established comprised of one member per shift per department and two representatives appointed by the Plant Manager.
10.2. The skills and training committee shall have full authority to make modifications or changes to the training system as deemed necessary by the committee, provided these changes do not hinder the ability to maintain and increase knowledge and skill levels.
10.3. It is the function of the skills and training committee to administer, review or change the skills training system; including module composition, waking and training priorities, to ensure equity and fairness and the efficient operation of the system. Suggestions for change from staff are to be directed in writing through the relevant committee representative. A unanimous decision of the skills and training committee is required to allocate additional units to any department.
10.4. Employees may appeal to the skills and training committee regarding individual issues pertaining to the application of the training system.
10.5. Staff rotation between slaughter and processing, where staff levels allow, will be encouraged to maintain staff flexibility for backup.
10.6. The Company is committed to training one staff member in 20 (5%) in each department, on average, until quotas are filled.
10.7. The quota number shall be a minimum of three people per module or a minimum of 25 % over the required manning per module or rotation whichever is the greater.
Counsel for the defendants, Mr Mitchell, also referred in argument to Schedule B of the collective agreement which deals with the hours of work and wages of boners. Clause 3 of Schedule B provides for a “processing rate” which is described as an accumulation of various components including an hourly rate of $10.70 and a skill margin which is based on the number of modules held by the individual worker.
The various modules were listed on a spreadsheet produced in evidence (the spreadsheet).The collective agreement provides that each module is graded 1, 2 or 3 units depending on the degree of difficulty. “Induction” is a module common to all boners and the “induction module” is graded at 3 units. There are three other modules common to all lamb boners, namely leg boning (worth 3 units); shoulder boning (worth 3 units) and “mid-boning” which refers to loins, saddles and flaps (worth 2 units), giving a combined tally for the “boning module” of 8 units. Most of the boners listed in the spreadsheet have the 11 units made up of the 3 units for induction and the 8 units for boning. Other modules listed in the spreadsheet, which are not directly relevant to the boning task, are “Sawman” (3) units; “Pre-trim” (1) unit; “Skinner” (2) units; “Chiller” (units not stated in spreadsheet); “Mid-process”(1) unit; “DLM” (units not stated); “Forklift” (units not stated); “Packaging” (4) units; “Pre-Op” (1) unit; “Scanning” (units not stated); “Ven/Lamb Slaughter” (units not stated); “Venison” (units not stated). The range between the total number of units held by the 73 boners listed in the spreadsheet varies between 27 and 3.
The defendants contend that the reference to skill levels in cl 22.1.1. of the...
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