TATUA CO-OPERATIVE DAIRY COMPANY Ltd v NEW ZEALAND DAIRY WORKERS' UNION TERUNANGA WAI U Inc. NZEmpC AK

 
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[2011] NZEmpC 61

IN THE EMPLOYMENT COURT AUCKLAND

ARC 105/09

In the Matter of a challenge to a determination of the Employment Relations Authority

BETWEEN
Tatua Co-Operative Dairy Company Limited
Appellant
and
New Zealand Dairy Workers’ Union Te Runanga Wai U Inc
Respondents
Counsel:

Garry Pollak, counsel for plaintiff

Helen White, counsel for defendant

Challenge to an Employment Relations Authority (“ERA”) decision — independent co-operative dairy company with significant number of long serving employees — disagreement as to application, interpretation and operation of current collective agreement — current agreement contained more beneficial long service leave entitlements than previous agreement — ERA found provisions of current agreement superseded previous agreement — both parties were dissatisfied with the decision — whether the ERA erred in its interpretation of the current agreement.

Held: At issue was whether the ERA had erred in its interpretation of the current agreement.

Held: The principles for interpretation of collective employment agreements were set out in New Zealand Meat Workers Union of Aotearoa Inc v AFFCO New Zealand Ltd. Unlike statutes, there was no presumption against retrospectivity in relation to contracts, since parties had the ability to arrange their terms and conditions in any way they chose (as long as the terms were not inconsistent with statute). It was helpful by analogy to look at the cases of Inspector of Awards v NZ Co-operative Dairy Co Ltd and Apple Fields Ltd v Counterpoint Equities Ltd though they dealt with the issue of double payments rather than two contracts dealing with long service leave entitlements. The Court required a clear expression of an intention to provide a double entitlement. In interpreting a contract, consideration of business common sense or what was commercially realistic was the appropriate approach.

The Union approach would disadvantage employees who had used their entitlement to special leave prior to the current agreement and advantage those who had not used up all their entitlement. Nothing in the plain words of clause 17 justified such a variation, which would appear to be contrary to the intention to equally award long service employees and would be contrary to business common sense. There was no mandate in the wording of clause 17 giving those who had not used up all their entitlement the right to receive the enhancements under the current agreement. Payment for leave was dealt with expressly in clause 17 and did not have the retrospective effect the Union interpretation would give it.

As a matter of commercial realism and the absence of any words to the contrary, clause 17 could only apply to those whose anniversary dates were reached during the currency of the current agreement. Entitlements accrued under the previous agreement had to be based on the agreement that existed at the time the rights accrued.

Challenge successful.

JUDGMENT OF JUDGE B S Travis

1

The plaintiff (Tatua) has challenged a determination of the Employment Relations Authority, issued on 30 November 2009 1 which interpreted the long service entitlements contained in two succeeding collective agreements.

Factual background
2

The following facts were not in issue. The plaintiff is an independent cooperative dairy company and has a significant number of long serving employees who are directly affected by a disagreement as to the application, interpretation and

operation of the current collective agreement. The plaintiff and the defendant (the Union) disagree on how to apply the current collective agreement which came into force on 15 November 2008 (the current collective). It is common ground that the current collective contains more beneficial long service leave entitlements, which the parties have described as “the enhanced leave entitlements”, than the previous collective agreement and there is a dispute as to how the enhanced leave entitlements should operate. Clause 17 of the now expired collective agreement (the expired collective) provided:

17 SPECIAL HOLIDAYS FOR LONG SERVICE

17.1 ENTITLEMENTS

A worker shall be entitled to special holidays as follows:

17.1.1 One special holiday of 40 hours after the completion of 10 years and before the completion of 20 years of continuous service with the employer.

17.1.2 One special holiday of 80 hours after the completion of 20 years and before the completion of 30 years of continuous service with the employer.

17.1.3 ne special holiday of 120 hours after the completion of 30 years and before the completion of 40 years of continuous service with the employer.

17.1.4 One special holiday of 200 hours after the completion of 40 years continuous service with the employer.

3

The expired collective, as does the current collective, provided that the long service leave could be taken in variable amounts.

4

Clause 17 of the current collective increased the entitlements by 40 hours from 40 to 80; 80 to 120; 120 to 160 and 200 to 240 hours but otherwise the wording remained the same. The current collective also contains the following clauses:

17.1 PAYMENT FOR LONG SERVICE HOLIDAYS

All such special holidays provided for in clause 17.1 shall be on ordinary pay as defined by the Holidays Act 2003 and its amendments, and may be taken in one or more periods and at such time or times as may be agreed by the employer and the worker

17.1.1 At the request of the worker, the employer and the worker may agree to the payment of long service leave owing in lieu of taking the leave, payment to be at the rate set out in Clause 17.2. Such agreement shall be in writing and signed by the employer and the worker prior to any payment being made.

17.4 TERMINATION

If a worker having become entitled to a special holiday leaves his/her employment before such holiday has been taken he/she shall be paid in lieu thereof.

5

Clause 1.6 of the current collective provides:

1.6 PREVIOUS CONTRACTS OF EMPLOYMENT

It is a condition of this Agreement that it shall supersede all previous terms and conditions of employment contained in any relevant Collective Agreement and/or, all terms and conditions of employment by way of an Individual Employment Agreement, verbal or written agreed between the parties.

No worker shall be disadvantaged by the coming into effect of this Collective Agreement. Individuals who have entitlements over and above this agreement shall retain those additional terms and conditions.

6

When the expired collective came to an end, some long serving employees had not taken up their full entitlements and still had special leave owing to them. A dispute has arisen as to whether they can claim the enhanced entitlements under the current collective in addition to, or in place of, their previously accrued entitlements. The parties summarised their respective positions by giving the Authority five examples to illustrate the various situations that gave rise to the dispute. The five situations and the respective views of the entitlements were encapsulated in a spreadsheet which I set out:

The determination
7

Each party had advanced its own interpretation of the clauses to support its position as shown in the spreadsheet. The Union's position was that if an employee had taken the special leave entitlement before commencement of the current collective, then the employee had no entitlement to the enhanced leave. If the employee had only partially taken the leave, the employee received the enhanced entitlement.

8

Tatua's position was that the enhanced entitlements applied only to those employees who qualified for it on or after the commencement of the current collective and those who had either taken all or part of their entitlements during the currency of the expired collective received no enhanced leave under the current collective.

9

The Authority disagreed with the positions of both parties. It found that the provisions of the current collective superseded those of the previous, that the enhanced entitlements applied to all employees and there was no further qualification additional to that of service, as expressly stipulated in the clause. The Authority found: 2

Qualifying for the entitlement and the taking of the entitlement are two separate and unrelated things. Whether or not long service special leave is partially or wholly taken prior to the Collective is entirely irrelevant. There is nothing in the wording of the clause which requires any consideration of whether long service special leave has already been either wholly or partially taken previously.

10

The Authority's reasoning was translated as follows in terms of the table tendered by the parties:

Employee

Start date

Service

Leave

Entitlement

A

15.11.95

10+ yrs

Unused

80 hours

B

15.11.95

10+ yrs

Used

40 hours

...

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