The Chief of The New Zealand Defence Force v The New Zealand Public Service Association Incorporated

 
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[2011] NZEmpC39

IN THE EMPLOYMENT COURT WELLINGTON

WRC 37/10

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

BETWEEN
The Chief of The New Zealand Defence Force
Plaintiff
and
The New Zealand Public Service Association Incorporated
Defendant
Appearances:

Ms Anthea Williams, Counsel for the Plaintiff

Mr Peter Cranney and Caroline Mayston, Counsel for the Defendant

Challenge to Employment Relations Authority “ERA” determination — defendant represented Defence Force permanent security guards who worked on rostered shifts (of varying hours), providing round the clock security — ERA upheld defendant's claim that the annual leave provision in the collective agreement entitled the security guards to 20 days' annual leave per year — Defence Force challenged determination on grounds that unusual shift pattern meant that annual leave entitlements were calculated in terms of hours rather than days — whether the ERA had erred in its interpretation of the annual leave entitlement contained in the collective employment agreement.

At issue was whether the ERA had erred in its interpretation of the annual leave entitlement contained in the collective agreement.

Held: The principles relating to the interpretation of collective agreements were reviewed in New Zealand Meat Workers Union of Aotearoa Inc v AFFCO New Zealand Ltd. The interpretation supported by the PSA was consistent with the natural and ordinary meaning of the words used in the relevant clause of the collective agreement. The annual leave entitlement in the collective agreement was clearly stated, not in weeks or hours, but as “20 days annual leave”. Reference to s17(1) Holidays Act 2003 (how employee's entitlement to annual holidays may be met) had no relevance to the facts as the only evidence of any agreement on the issue was the relevant clause of the collective agreement and the variation agreement — an argument on an issue of interpretation by one party only did not constitute an agreement in terms of s17(1).

The variation agreement did not replace, or even purport to replace, the annual leave provisions in the collective agreement, or vary the application in respect of the security guards. If the parties had intended to do so an express provision could easily have been incorporated into the variation agreement defining the annual leave entitlement for the security guards in terms of hours instead of weeks or days and this was subsequently done.

ERA determination challenge dismissed.

JUDGMENT OF JUDGE A D Ford

Introduction
1

Essentially, this challenge is about the interpretation and application of a provision in a collective employment agreement relating to annual leave entitlement. The issues are complex. The case is concerned with the historical position that existed during a defined period between 15 January 2007 and 25 June 2009.

2

The plaintiff, (the Defence Force), and the defendant union (the PSA) were parties to the 2004 New Zealand Defence Force General Collective Agreement which applied until 7 September 2007 and thereafter the 2007 New Zealand Defence Force General Collective Agreement. Each agreement (the collective agreement) contained an identical provision relating to annual leave save that the 2007agreement included recognition that under the Holidays Act 2003, as from 1 April 2007, an employee's entitlement to paid annual holidays would increase from three weeks? to four weeks?.

3

In this challenge, the PSA represents approximately 20 Defence Force permanent security guards who work on rostered shifts providing round-the-clock security coverage 365 days per year at Defence Force headquarters, Aitken Street, Wellington. The PSA contend that, during the relevant period, the security guard employees were entitled to 20 days? annual leave per year. The Defence Force, on the other hand, argue that because security guards work an unusual shift pattern, which can vary between eight and 12 hours per day, it is necessary to calculate their annual leave entitlements in terms of hours (rather than days) “to provide a realistic calculation of leave entitlements and deductions.”

4

In a determination dated 16 November 2010, 1 the Employment Relations Authority (the Authority) upheld the PSA's claim that the annual leave provision in the collective agreement entitled the security guards to 20 days? annual leave per year and held that leave also accrued on that same basis. The Defence Force then challenged that determination and sought a hearing de novo of the entire matter.

5

The parties agreed to proceed on the basis of an agreed statement of facts and, accordingly, no oral evidence was presented at the hearing. There was, however, an uncontentious affidavit produced on behalf of the plaintiff from a Mr Mark Williamson, whose position is described as “Deputy Director Conditions of Service and Employment, in the Directorate of Personnel Capability Development, Defence Personnel Executive at the Headquarters of the New Zealand Defence Force”.

Background
6

From the documentation produced, it would appear that sometime in 2006 a final report was produced resulting from a review of security guard staffing arrangements at Defence Force headquarters. Following on from the presentation of

that report, the parties entered into a formal variation (the variation agreement) of the collective agreement. The variation agreement, dated 23 November 2006, came into force on 25 January 2007. The variation agreement provided for the operation and management of the security guards? rostered shifts. It also contained a specific provision relating to “Leave management” which I will need to return to.
7

The following paragraphs, taken from the agreed statement of facts, describe the rather complicated roster system for security guards:

  • 5. The NZDF Security Guards do not work an eight hour day, 40 hour work week. Senior Security Guards on an annual basis work an average of 42 hours per week, with an average of 3.5 12 hour shifts per week. On a four-weekly cycle, the Senior Security Guards will work a fortnight of 96 hours, followed by a fortnight of 72 hours based on 12 hours for each shift.

  • 6. Security Guards work mainly a 12 hour shift pattern similar to Senior Security Guards, but after eight weeks will work eight hour shifts for a fortnight from Monday-Friday before recommencing a four days on, four days off shift pattern (each of 12 hours), for eight weeks. Depending on where their shift cycle commences in a given calendar year, they average between 41.4 and 41.8 hours per week in a calendar year.

  • 8. The wages of Senior Security Guards and Security Guards are averaged out so that each is paid the same amount fortnightly regardless of whether they have worked the possible shift combinations of 96 hours, 80 hours (the Security Guard's two weeks of eight hour shifts), or 72 hours in the fortnightly pay period.

  • 9. When NZDF Security Guards take leave on a 12 hour day, they are paid for the period of 12 hours, on the averaged wage based on a 42 hour week, for the period (with a holiday pay increment).

  • 10. A new variation to the CEA was entered into in May 2009. This records the basis of leave entitlement for NZDF Security Guards is based on 168 hours over a four week period, and either eight hours or 12 hours is deducted depending on whether the guard would have worked an eight hour or 12 hour shift if they had not taken leave.

  • 11. The new variation came into operation from 12 June 2009 so the period at issue in this proceeding is 15 January 2007 – 25 June 2009.

8

Another complicating factor, which related to the Defence Force payroll system at the relevant time period, is referred to in Mr Williamson's affidavit:

  • 2. NZDF uses a computer human resources system called Atlas for its payroll. Atlas only operates on the basis of five day working weeks and eight hour days. The calculation of the payroll and leave for Security Guards and Senior Security Guards requires “work-arounds”

  • – manual adjustments to the Atlas calculations, as it is unable to cope with a four day on, four day off roster that does not fit neatly within a “standard” seven day week and 14 day fortnight. For instance, a dummy roster must be loaded into Atlas in order to pay the salary for guards (the salary calculation is set out in paragraph 8 of the agreed statement of facts).

  • 3. Prior to the period at issue, the plaintiff's practice was that if a Senior Security or Security Guard took annual leave on a 12 hour day shift, their leave balance was manually adjusted so as to deduct 12 hours leave from their leave balance. The Atlas system recorded this as a deduction of 1.5 days of leave.

  • 4. Around January 2007, the manual adjustment changed. NZDF payroll staff stopped deducting 1.5 days leave when leave was taken on a 12 hour shift, and one eight hour day was deducted regardless of the length of the shift.

  • 5. In 2008 NZDF realised leave had not been accruing [in the way] it considered correct and that leave balances had grown disproportionately during this period. NZDF sought to...

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