Terranova Homes & Care Ltd v Service and Food Workers Union Nga Ringa Tota Inc.

JurisdictionNew Zealand
CourtCourt of Appeal
JudgeFrench J
Judgment Date28 October 2014
Neutral Citation[2014] NZCA 516
Date28 October 2014
Docket NumberCA631/2013

[2014] NZCA 516



O'Regan P, Stevens and French JJ


Terranova Homes & Care Limited
Service And Food Workers Union Nga Ringa Tota Incorporated
First Respondent


Kristine Bartlett
Second Respondent

A H Waalkens QC and E J Coats for Appellant

P Cranney, S A Dyhrberg and A J Connor for Respondents

P T Kiely and J M Douglas for Business New Zealand Inc as Intervener

B A Corkill QC and J Lawrie for New Zealand Council of Trade Unions Inc as Intervener

J C Holden and C Fleming for Attorney-General as Intervener

P A McBride for New Zealand Aged Care Association Inc as Intervener

M S R Palmer for Human Rights Commission as Intervener (appearance excused)

Appeal from an Employment Court decision concerning evidence that could be taken into account in determining the rate that would be paid to the hypothetical male under s3(1)(b) Equal Pay Act 1972 (“EPA”) (work exclusively or predominantly performed by female employees… remuneration that [which] would be paid to male employees with the same, or substantially similar, skills) — EC held that any evidence of historical systemic undervaluation of the work or structural gender discrimination could be taken into account along with evidence of wages paid in other industries if those in the same industry would be an inappropriate comparator — whether the EPA was limited to requiring equal pay for the same or similar work — whether evidence of wages paid by other employers and in other sectors could be considered — whether evidence of systemic undervaluation could be considered — whether s9 EPA (Court may state principles for implementation of equal pay) allowed the EC to set guidelines for the implementation of equal pay — whether the repeal of the Employment Equity Act 1990 (EEA) meant that the EPA should be interpreted to be limited to equal pay for the same work.

The issues were: whether the EPA was limited to requiring equal pay for the same or similar work; whether in determining what would be paid to the hypothetical man featured in s3(1)(b) EPA, it was relevant to consider evidence of wages paid by other employers and in other sectors; whether evidence of systemic undervaluation should be taken into account; and, whether the enactment and repeal of EEA suggested that the EPA was not intended to deal with pay equity.

Held: The genesis of the EPA was the 1971 report of the Commission of Inquiry into Equal Pay (“the Commission report”). The EC had placed considerable emphasis on the report. However both the Commission's report and the parliamentary debates relating to the EPA, as recorded in Hansard, were ambiguous and provided support for both sides. Systemic undervaluation of skills was not mentioned in the Report.

The problems in interpreting the Commission report were compounded by consideration of the fact that the Commission was operating in a very different legal environment. Enterprise bargaining was not the norm. The Commission was likely to have had a different mindset to that of a person trying to make sense of the legislation in 2014. Therefore the weight placed on the Commission's report by the Employment Court was not justified.

The critical and ultimately decisive feature of s3(1) EPA was the fact that there were two separate categories in respect of which different tests were to apply. The creation of the two categories was plainly deliberate and any interpretation had to make the distinction meaningful.

The test for s3(1)(b) EPA situations used the language “the rate of remuneration that would be paid to male employees with the same, or substantially similar, skills …”. The use of the phrase “would be” indicated that the comparator was intended to be a hypothetical one and so was not limited to actual rates paid to males employed by the employer. That in turn meant it was likely that evidence of rates paid by other employers was contemplated.

This led to the rejection of the argument that the sole mischief the EPA was intended to address was different rates paid by the same employer to males and females for the same work. Similarly it was necessary to reject the argument that in a predominantly female workforce what was intended was a solely internal comparison limited to the wage rates and policies of the employer concerned.

Section 3(1)(b) placed no restrictions on the scope of external comparisons other than to require that any evidence had to bear on what would be paid to a hypothetical male with the same or substantially similar skills, responsibility and service performing the work. In the absence of any express restrictions or guidelines, the purpose of the EPA and the definition of “equal pay” became particularly important. The purpose was to remove and prevent sex-based discrimination in the rates of remuneration of males and females in paid employment. The definition of equal pay was a rate of pay for work in which rate there was “no element” of sex-based differentiation.

If it could be proved that there was systemic undervaluation of care giving work derived from current, historical or structural gender discrimination, then it would be consistent with the EPA's purpose and the definition of equal pay for such evidence to be taken into account in determining what the employer would pay the hypothetical male. A rate of pay that was depressed because of sex-based undervaluation of the work was not a rate in which there was no element of sex-based differentiation.

Once it was accepted that Parliament had intended the inquiry to extend beyond the particular workplace and employer, it was difficult to justify excluding evidence of male rates in other sectors and evidence of systemic undervaluation by reference to the language of the EPA and its purpose. There was nothing in the language of the EPA to justify exclusion.

Although the title of the EPA referred to equal pay, not pay equity, and the words “pay equity” did not appear anywhere in the legislation, no significance could properly attach to that, especially when the statutory definition of equal pay was so broad and capable of embracing pay equity. The term pay equity was not common parlance in 1972. Pay equity was about equal pay. It was equal pay for work of equal value.

Section 3(1)(b) EPA assumed a comparison with a hypothetical male performing the work, in this case care giving work. The drafting of s3(1)(b) EPA was cryptic, but the hypothetical male did not exist in a vacuum. The only way of making sense of the provision was to identify an appropriate counterfactual and the evidence that was relevant to determining that counterfactual. The evidential value could only be determined on a case by case basis.

The power conferred by s9 EPA was very open-ended. Its legislative history shed little light as to its intended function. There was force in Terranova's workability argument. The Union's s9 case was likely to be complex and difficult when it did eventually come to trial.

However, the existence of s9 did temper concerns about complexity and the lack of guidelines. It had an important function to play as part of the EC's task under s9 would be to state general principles that would ensured substantive claims were able to be processed in an efficient and manageable way. It would be for the EC in the s9 context, for example, to identify appropriate comparators and to guide the parties on how to adduce evidence of other comparator groups.

The EEA was repealed was because a differently constituted Parliament was opposed in principle to legislating for pay equity. It was not because Parliament considered pay equity or some equivalent was already available under the EPA and preferred the mechanism of that Act to the mechanism provided in the EEA.

The general rule was that subsequent statutes were irrelevant as an interpretative aid. This was because nothing that happened after an Act had been passed could affect the intention of the Parliament that enacted it. There were, however, two established exceptions to that rule. The first was where the two statutes had a single subject matter, so it could be assumed that uniformity of language and meaning was intended. This exception did not apply. The fact that the two Acts both broadly dealt with gender discrimination in rates of remuneration was not sufficient to justify a unified interpretative approach.

The second potentially relevant exception was based on legislative harmony and the desirability of keeping the statute book as a whole as rational and consistent as possible. Thus where there were two competing interpretations of an Act, and one interpretation meant a later Act was unnecessary, the other interpretation should be preferred. Parliamentary time was sufficiently precious for Parliament not to pass unnecessary Acts.

Similarly, if Parliament drafted an Act on the assumption that an earlier Act had a particular meaning, then although the later Parliament may have been mistaken in its interpretation, the court should assume it was not so mistaken and in the absence of clear words seek to construe the earlier Act so as to accord with Parliament's understanding of its effect.

Terranova sought to extend the principle of legislative harmony still further by contending, in effect, that even if the words were clear and a court concluded the later Parliament was mistaken in its interpretation, it might still be necessary to give effect to that understanding in order to avoid the overall legislative scheme being subverted.

Arguments based on the 1990 legislation had some merit and the Employment Court was too dismissive of them. However, the assistance that could be derived from the EEA was limited. The 1990 Act had been repealed and so even if inconsistency between the two Acts would arise from a pay equity interpretation of the EPA (which was itself debatable), the case for preserving legislative...

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