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Michael Quigg Partner
DDI: 474 0766 [email protected]
Jol Bates DDI: 474 0759
Deirdre Marshall DDI: 474 0765
Tim Sissons DDI: 474 0758
Leve l 7 , The Bayleys Bu i ld ing
28 Brandon St reet PO Box 3035 , W el l ington
Phone 64 4 472 7471 Fax 64 4 472 7871
www.qu iggpartners .com
AUSTRALIAN SENIOR
EXECUTIVES SUE FOR MILLIONS PWC FACES $10M HARASSMENT CLAIM
The Federal Court in Sydney heard recently that the likely trial date for a $10m claim of harassment, bullying and victimisation by former partner Christina Rich against 20 other partners will be heard in late 2008. The trial is expected to occupy up to 4 months.
Ms Rich who is a mother of three is claiming that there was a culture of sexual harassment and victimisation at PWC. She was PWC’s highest paid female partner earning a salary of A$900,000 as a transfer pricing expert. She is alleging unwanted sexual advances, breast touching and other inappropriate behaviour at work.
The Court was told that it was expected that 35-40 witnesses could be called in the matter. The case is one of a number of major claims in Australia being brought by highly paid executives against their employers.
$2.1M CLAIM AGAINST ANZ FOR ALLEGED
MISREPRESENTATIONS
The former head of institutional banking at ANZ is claiming more than A$2.1m over being misled about his career prospects. Steve Targett is claiming he was lured back to Australia from an A$1m a year position at Lloyd’s Bank in London. He claims the Bank misled him as to his prospects. Targett had hopes of being appointed the new CEO but in June his A$3.4m per annum job was terminated.
The claim for over A$2.1m follows several successful claims by other executives which resulted in record awards of damages.
RECENT DECISIONS INCLUDE: • A$2.3m awarded to Citigroup financial analyst David Walker
the basis for the award was the unlawful withdrawal of job offer before Walker started work
• Over A$0.5m awarded to Goldman Sachs financial adviser Peter Nikolich the Bank’s 119 page policy “Working With Us” that outlined
the bank’s policy on harassment and bullying was held to be contractually binding even though not part of Nikolich’s employment contract
EMPLOYMENT TEAM CONTACTS
OCTOBER 2007
QUICK REFERENCE
Executives Sue for Millions………..……...1 CEOs Australia & NZ – One Market?........2 Record Health and Safety Fine……..........2 Deathbed Dismissal?.................................3 Work of a Striking Employee?....................6 Sham Redundancy – Penalty Ordered......8 Further Health & Safety Prosecution……..8 Overseas Snippets....................................9 Employment Law Toolbox……………….10
SEMINAR PROGRAMME Making the Most of Mediation
Avoiding Traps and Pitfalls Before the Employment Relations Authority
Registration Form ...................................11
September 2007 Quigg Partners 2
RELEVANCE FOR N.Z. EXECUTIVES AND EMPLOYERS Since the introduction of the Employment Contracts Act in 1991, New Zealand executives up to the Chief Executive or even the Managing Director have had the right to bring employment claims. In 2000 the Employment Relations Act re-introduced reinstatement as the primary remedy for all successful personal grievance claims. Particularly from that point forward, executives who believe they have been unjustifiably treated by their employer or the Board have been in a strong legal position to bring claims to significant sums.
Such executives may take confidence from the claims and successes of their Australian counterparts. They will recognise however that success in the Courts does always deliver the best results on a long term basis. New Zealand is a relatively small market for executives. Unless an executive is prepared to pursue an issue of principle regardless of long term financial costs, there is a risk of “winning the battle, but losing the war”.
CEOS AUSTRALIA AND NEW ZEALAND – ONE MARKET? The possible impact of such Australian cases is supported by the recent survey results comparing the remuneration of Directors and CEOs in Australia and New Zealand. While the gap between Australia and New Zealand for the remuneration of Directors remains significant, the same cannot be said for CEOs. There are an increasing number of CEOs in New Zealand now who are Australian. Led by the likes of Ralph Norris, New Zealand CEOs are making their mark across the Tasman. Maybe if Ms Rich strikes it rich in her claim against PWC or the ANZ face a big judgment in New Zealand we may see more large claims. It has been a long time since John Hawkesby received his large payout.
WORKPLACE ACCIDENT COSTS FLETCHERS $500,000 Record Fine
A record fine has been imposed by the District Court on Stresscrete which is a trading arm of Fletcher Concrete and Infrastructure Ltd. After a 9 day trial Stresscrete was fined $250,000 and ordered to pay reparation of $20,000. Previously voluntary payments totalling some $250,000 had already been made to the family of the dead worker following a restorative justice conference.
Faulty Crane
The fine arose as a result of Stresscrete instructing its employees to continue using a faulty gantry crane even although it knew it was a threat to worker safety. A crane serviceman had been called to address a problem with the crane. He informed the Operations Manager at the plant that an important component of the crane was “stuffed” and without it the crane had no limits. The operator of the crane found that without the limit switch he had difficulty stopping the crane’s movement. The problem was compounded by the fact the buttons on the control unit sometimes failed. The crane operator raised his concerns with his supervisor. He was told that he should continue to use the crane as he was experienced. He was told that others however should not use the crane.
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Fatal Accident
5 days before the fatal accident that led to the prosecution the limit switch failed and as a result the crane failed causing damage. It was out of action for 2 days while repair work was undertaken. It returned to service a day before the fatal accident.
The crane operator using the crane at the time of the fatality was being assisted by a work mate who was guiding panels. As the panels were being lifted the crane again failed causing the load to be dropped. The 1700 kilogram lifting beam struck the worker on the head killing him instantly.
Critical Evidence
The Court noted that Stresscrete had “hotly defended the charges”. Whilst accepting the company’s remorse and apologies that it had expressed, the Court paid tribute to the prosecution witnesses. It particularly noted that without the evidence of the crane operator and the crane serviceman, it may well be that the charges would not have been proved. The Judge praised them for their courage when giving evidence in the face of extensive cross examination.
Company Knew of Risk
The Department of Labour prosecuted Stresscrete under the rarely used section 49 of the Health and Safety in Employment Act. That section requires proof that the person or company knew that an action or omission was likely to cause harm but nevertheless proceeded.
Most prosecutions occur under the lesser section 50 - a strict liability section that does not require proof of knowledge. A Department of Labour official noted that cases under section 50 are incredibly difficult to prove, because “[k]nowledge has to be attributed to someone high enough up in a company that it could be considered that ‘the company’ was aware that serious harm might result”.
The Judge admonished Stresscrete for placing productivity ahead of worker safety.
CHOVEAUX V ACC – A DEATHBED DISMISSAL? The Employment Relations Authority has released its decision in a case involving an employee who was found to have been dismissed while at her father’s deathbed.
The case involved two claims made by the employee Georgia Choveaux. The first was that the Accident Compensation Corporation had failed to provide a safe workplace. The second was a claim that it unjustifiably dismissed her. ACC maintained that she abandoned her employment. FACTS Ms Choveaux was initially employed on a casual basis providing administration assistance for Tim Boyd-Wilson. In 2006, Mr Boyd-Wilson became the target of offensive emails that appeared to have been sent by an ACC employee. Some of these (incorrectly) alluded to a relationship between Ms Choveaux and Mr Boyd-Wilson. One such email inelegantly described Ms Choveaux as:
“a stupid student who has nothing to do at work but to run around flirting and reading story books and joking around along with flirting with Mr Boyd-Wilson and dressing in quite revealing outfits”
ACC attempted to locate the author of the emails. Despite the involvement of the Police, Microsoft and a forensic consultant, the culprit could not be found. Ms Choveaux remained very concerned. She told ACC that the situation was causing her difficulties at work.
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Further emails arrived. Although these were neither addressed nor provided to Ms Choveaux, she obtained copies. She believed (reasonably in the Authority’s view) that one of the emails referred to her in an offensive manner, alongside sadistic sexual fantasies.
Ms Choveaux’s complaints to ACC’s HR department resulted in reassurance and suggestions of alternative arrangements such as a shift to a separate floor or to ACC’s call centre. Ms Choveaux suggested other avenues of inquiry but rejected ACC’s suggestions on the basis that she should not need to make changes as she had done no wrong. ACC did not undertake further investigation as it believed that nothing further could reasonably be done to trace the author of the emails.
Ms Choveaux took matters into her own hands, contacting ACC’s forensic consultant directly. She also instructed a lawyer who outlined her complaints to ACC and raised a personal grievance.
ACC replied offering Ms Choveaux reiterating the options previously offered to Ms Choveaux and setting a deadline by which a response was required. It also noted that it was aware that she had contacted the forensic consultant and noted that this might require further investigation.
Ms Choveaux’s lawyer sought a seven-day extension as Ms Choveaux father had been diagnosed with a terminal illness. This extension was provided together with special leave. A further extension was granted on the basis that it was “the final extension”.
Mediation proved unable to resolve the issues. Ms Choveaux was asked to be in contact with Ms Moon (ACC’s HR Representative) to arrange her return to work. The Authority found that she did not register this request and shortly thereafter returned to Dunedin to her father’s bedside.
Ms Choveaux’s requests for further alternatives or paid special leave were declined. Eventually ACC advised Ms Choveaux that unless she was in contact within 3 days, she risked “an allegation of abandonment of employment”. At this point, Ms Choveaux was acting as full time support person for her gravely ill father. She did not contact Ms Moon, but rather contacted Mr Boyd-Wilson, whom she advised of her whereabouts and the reason for her absence. Mr Boyd-Wilson unfortunately did not pass this information on to ACC’s HR department.
ACC then wrote to Ms Choveaux advising that if she did not attend work within 5 days, she would be deemed to have abandoned her employment. Her lawyer’s request for permission to communicate with Ms Moon on Ms Choveaux’s behalf was declined.
Ms Choveaux became aware that her employment had been terminated on the basis of abandonment the day before her father died. Her subsequent requests for reinstatement were firmly declined.
ABANDONMENT - THE LAW The Authority noted Court of Appeal precedent to the effect an employer should be cautious in drawing an inference of abandonment of employment and must face a high threshold in contending that an employee has terminated his or her employment in such a manner. It noted that employers should generally make inquiries in circumstances where the employee has not clearly indicated an intention to finally end his or her employment. However, the Authority also noted that this duty to be responsive and communicative “has to be reciprocated by .. employees”.
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CASUAL EMPLOYMENT? The Authority noted that ACC’s labelling of Ms Choveaux employment as casual did not affect her claims before the Authority. ACC could not have lawfully terminated her employment at the end of each engagement (as envisaged), as there was ongoing work available for Ms Choveaux.
ISSUE ONE – THE SAFETY DISPUTE The Authority accepted the information from the forensic consultant that despite its best efforts, it could not locate the source of the emails. It held that Ms Choveaux’s suggested alternative methods would have required intrusion into a large number of ACC’s employees’ time, focus and potentially individual rights “without any demonstrable prospect of success”. Further, ACC had put the allegations to the person Ms Choveaux believed was the emailer and was met with a full denial.
It was found that ACC had been supportive of Ms Choveaux in offering counselling, alternative seating and different job. It noted that “while Ms Choveaux was entitled to her view that it could be seen as unfair that she was the one who had to change when she had done nothing wrong, ACC was taking steps to try and minimise the risk to her.” Accordingly, it was held that ACC had taken all practicable steps to provide a healthy and safe environment.
ISSUE TWO – ABANDONMENT wThe Authority held that ACC could have been under no illusions as to the gravity of Ms Choveaux’s situation or of her susceptibility to pressures. However, it also noted that Ms Choveaux could have been more communicative “had she really wished to do so”. It was noted that Ms Choveaux was not informed of ACC’s policy regarding abandonment until the week before her employment was terminated. Furthermore, the policy was not (as is usually the case) contractual. The policy provided, relevantly:
“An employee who fails to attend work and continues to be absent from work without notifying or obtaining approval from their manager for a period of more than 3 working days is deemed to have abandoned employment with ACC.”
ACC contended that “or” should be construed as meaning “and”. Ms Choveaux argued that the clause meant all she was obliged to do was to notify her manager of her absence. She had done this by calling Mr Boyd-Wilson. The Authority noted that:
“it was not Ms Choveaux’s fault that Mr Boyd-Wilson did not, because he was trying to keep out of the dispute, inform Ms Moon or any other manager in ACC about the call from Ms Choveaux.”
The Authority concluded that, especially in light of Ms Choveaux’s lawyer’s request to contact Ms
Moon, ACC acted unreasonably by pursuing abandonment, despite Ms Choveaux’s defaults. It found that ACC knew or ought to have known that Ms Choveaux had genuine reasons for her absence and ignored them so as to rely on the abandonment policy. It noted that this was “not sufficient to meet its obligations of good faith”. The Authority held in the alternative that ACC could not rely on the abandonment clause because Ms Choveaux had in fact contacted her manager.
As the Authority had found that Ms Choveaux’s termination was a dismissal rather than an abandonment, it was held that there could be no justification for it. The Authority noted:
“Ms Choveaux was at her father’s deathbed and as ACC accepted, if leave was sought, consideration would have been given to it. No fair and reasonable employer would have denied an employee leave in these circumstances”.
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RECOMMENDATIONS Special care needs to be taken in the drafting of abandonment clauses When relying on abandonment clauses, employers must ensure that the steps covered in the
clause have been satisfied before dismissing an employee
REMEDIES Reinstatement - The Authority concluded that despite Ms Choveaux having sought reinstatement, this was impracticable not only because little of her role still remained, but also because it would place her back in the situation that had caused her so much anguish.
Hurt and Humiliation - Compensation was awarded, but only for the fact of dismissal at a time when “a fair and reasonable employer would have been supportive of her because of her family and personal circumstances”. No compensation was available in respect of Ms Choveaux’s other claims. The Authority ordered compensation in the sum of $10,000 for hurt and humiliation.
Lost Remuneration - The Authority also awarded lost remuneration from the date of Ms Choveaux’s dismissal. However, it was not satisfied that she had mitigated her losses – she could not provide evidence of efforts to find work prior to her actually finding work in late November. However, in light of the Authority’s finding that she was entitled to take several weeks to recover from the loss of her father and to seek reinstatement, she was awarded three weeks’ remuneration.
Contribution - The Authority found that the case had “involved the parties becoming locked into a battle of wills, which extended even through their representatives.” It noted that Ms Choveaux’s behaviour was “not id ea l” and that she had apparently become fixated on discovering the identity of the emailer. She had also clearly taken confidential ACC information to the forensic consultants without authority– a matter that could (in a disciplinary context) have had serious repercussions. However, the remoteness of that issue in time and place from Ms Choveaux’s dismissal led the Authority to
consider it was no more than a minor contributory factor warranting a 20% reduction in remedies. Accordingly, ACC was ordered to pay $8,000 in compensation and $1,619.97 in lost remuneration.
THE WORK OF A STRIKING EMPLOYEE? In Finau & Ors v Southward Engineering Company Limited, a Full Court of the Employment Court considered the legal issues relating to strike breaking and the suspension of non-striking employees. Because of the important issues raised, the case also involved Business New Zealand and the Council of Trade Unions as interveners.
FACTS The issues arose from collective bargaining between Southward Engineering (Southward) and members of the Engineering, Printing and Manufacturing Union (EPMU) in 2005. When some EPMU staff members took strike action in September of that year, other employees were instructed to operate a vacant machine. When these employees refused to do so on the grounds that they did not want to perform the work of striking employees, they were suspended under section 87 of the Employment Relations Act for being parties to the strike.
The employees were trained to use the machine and their employment agreements permitted Southward to require them to transfer to other tasks if they were competent to perform them.
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THE ISSUES The facts of the matter were to be determined by the Employment Relations Authority. However, the matter had been removed to the Employment Court on questions of law. These were:
What do the words “the work of a striking or locked-out employee” mean in s 97 of the ERA? Does an employee who refuses to perform a striking employee’s work thereby become a party
to the strike and thus liable to suspension? Does a union member become a party to a strike solely by reason of their union membership?
First Issue Section 97 of the ERA allows the work of striking or locked out employees to be performed by other people only in certain circumstances. Essentially, these are limited to situations where either:
the replacement employee is already employed when the strike occurs, is not employed principally as a ‘strike breaker’ and agrees to do the work –s 97(3); or
the work is considered necessary for health and safety reasons and is performed only to the extent necessary for these reasons – s 97(4).
The EPMU argued that “the work of a striking or locked-out employee” meant the particular work the striking employee would have been doing. This would entail employers only being able to use other people to perform striking employees’ particular work where one of the s 97 exceptions applied.
Southward contended that the phrase meant work of the general type performed by the striking employee. Accordingly, if the type of work came within the normal duties of the non-striking employees, then they were not being asked to do a striking employee’s work, but their own work.
The Court preferred the latter interpretation on the grounds that the EPMU approach would tilt the balance that s 97 was intended to reflect too far towards the interests of employees. The Court noted that it would prevent employers re-arranging rosters to efficiently use non-striking employees.
The “work” of a striking employee was held to be “tasks which the employee regularly or routinely performs in the course of employment” . It did not include tasks an employee might occasionally do pursuant to a “catch all” provision in an employment agreement. Accordingly, if the employee did not regularly or routinely perform the tasks, performance of the work would be prohibited except under s.97.
Issue Two The second issue concerned situations in which an employee is requested to do a striking employee’s work but in reliance on s 97(3) of the ERA refuses to do so. Southward contended that such an employee would become a party to the strike and thus liable for suspension.
The Court considered it clear that s 97(3) entailed a derogation from the common law principle that an employee must comply with an employer’s lawful and reasonable instructions. On the basis that an agreement under that section must be informed and freely given, no employment agreement provision contrary to such agreement or unqualified instruction by the employer requiring performance of the work would be effective.
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Accordingly, an employee who refused to do a striking employee’s work under s 97(3) would not be ‘striking’ but rather exercising a statutory right and thus could not be liable for suspension.
Issue Three The final issue was whether simply by being a member of a union whose members were striking, an employee could become a party to a strike and thus liable for suspension under section 87. The Court rejected this assertion. It noted that mere membership is insufficient without more cause (such as for instance ‘go-slow’ behaviour) to establish that the employee is a party to the strike.
SHAM REDUNDANCY - PENALTY ORDERED In Sharma v Medictronix New Zealand Ltd, the Employment Relations Authority ordered an employer (Medictronix) to pay a penalty for failing to conduct itself in good faith. Medictronix was found to have instituted a “complete sham” redundancy, in which no consultation or advance notice of termination was given.
In addition to finding the dismissal unjustifiable and awarding $6,057 as reimbursement, $8,000 as compensation, $10,451.36 as arrears of wages and interest, the Authority ordered Medictronix to pay a $3,000 penalty under s 4A(b)(ii) of the Employment Relations Act.
FURTHER HEALTH AND SAFETY PROSECUTION The North Shore District Court has recently fined an Auckland engineering company $25,000 after the death of an employee. The company additionally paid the employee’s wife $79,500.
Nu-Con Engineering was fined over the death of Brendon Thickpenny in March 2006. Mr Thickpenny was killed after an industrial metal lathe he was operating flew apart sending metal objects - each weighing approximately 2kg - into his legs and abdomen at speeds up to 260kph.
The accident was caused by the operating speed of the lathe’s cutting head increasing to 3350 rpm. This was more than 6 times its maximum permitted speed. An investigation conducted by the Department of Labour showed that Mr Thickpenny had pressed the machine’s ‘reset’ button. Rather than returning the machine’s settings to zero, this resulted in it being set to the settings of a previously installed program.
The Department of Labour criticised Nu-Con’s planning and control systems, noting that there was no formal management of the computer programmes. The District Court held that Mr Thickpenny’s death was preventable and that he was in no way at fault for the accident. Nu-Con admitted responsibility for the lathe’s unsafe programming.
Employers are obliged to take all practicable steps to ensure employees’ safety in the workplace. In this situation, the Department of Labour noted that a practicable step would have been for Nu-Con to ensure that the machine was properly programmed, and that employees understood the safe use of machinery including that programming.
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OVERSEAS SNIPPETS DETECTIVE DIRECTOR
Managing director and detective drama fan Tony Price recently received attention in Britain when his plans to require staff to submit to DNA tests were leaked to the media.
Mr Price had become angry when he found gum squashed under a desk. He sent a memo demanding that his 80 staff take DNA tests in order to identify the culprit.
When contacted, Mr Price claimed he was only joking. He noted that he now planned to locate the employee who contacted the media using a lie detector.
WITCHES AND WIZARDS
Also in Britain, a former teaching assistant has settled a claim with her employer after she accused it of dismissing her because she was a witch. She noted that the school had forbidden her wearing a pentagram and colleagues had compared her beliefs to communism. The school contended that she had been dismissed for poor attendance.
At the other end of the spectrum, a teaching assistant failed in her discrimination claim against her London school. She had been disciplined for preventing a child from reading Harry Potter, which she claimed glorified witchcraft. She was unsuccessful in her claim that this amounted to the school discriminating against her Pentecostal Christian beliefs.
FUEL OF THE FUTURE? An Iowa maintenance technician has been dismissed after drinking industrial ethanol that pooled on the ground from leaking equipment.
Cory Neddermeyer, a recovering alcoholic, drank a considerable amount of the pure alcohol (which was intended for use in cars) in order to satisfy his curiosity. He was quoted as saying:
"Curious about the taste and its effects, I dipped into this lake of liquor and drank what I considered to be 2 to 3 ounces."
A colleague subsequently discovered Mr Neddermeyer extremely intoxicated and unable to answer simple questions. He was taken to hospital, where he was found to have a blood-alcohol content of 0.72, nearly double what could potentially be fatal for someone with a lower tolerance and nearly ten times the state’s limit for driving.
AUSTRALIA - CRIMINAL LIABILITY FOR EMPLOYING ILLEGAL WORKERS As from 19 August 2007 it will be a criminal offence in Australia to knowingly or recklessly allow an illegal worker to work for you. An employer company will face a fine of up to A$66,000 per illegal worker. An individual employing an illegal worker faces a fine of up to A$13,200 and/or 2 years’ imprisonment.
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EMPLOYMENT LAW TOOLBOX
To keep Managers and staff up to date with developments in employment law and best practice Quigg Partners will be offering Employment Law Toolbox sessions. These can be held in your workplace or in our private seminar rooms. The programme can be tailored to suit your needs.
There are 3 ready to go options. These will be available shortly and during 2008. the options can be fore one hour, two hours, or half day sessions. They can also be combined into a one day programme to meet your requirements if you wish.
The current options are:
A Effective Disciplinary Procedure
B Restructuring
C Bill or Rights, Privacy, OIA and Codes of Conduct.
Other topics may also be available upon request.
ENQUIRE NOW
On a no obligation basis enquire now about the option(s) that may best suit you by contacting:
Michael Quigg on 474 0766 or email [email protected]; or
Deirdre Marshall on 474 0765 or email [email protected]
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Level 7, The Bayleys Building, 28 Brandon Street, PO Box 3035, Wellington, New Zealand
Telephone 04 472 7471, Fax 04 472 7871
SEMINARS ‘Making the most of Mediation’
‘Avoiding any Traps and Pitfalls when before the Employment Relations Authority’
We are holding two seminars on ‘Making the most of Mediation’ and ‘Avoiding any Traps and Pitfalls when before the Employment Relations Authority’. To register for the Mediation Seminar and/or Employment Relations Authority Seminar please complete this form and return. Please enclose your cheque for $85.00 (GST inclusive) or $150 (GST inclusive) for both or we can send you an invoice.
Any queries please contact Evelyn Pong on (04) 474 0767 or email [email protected]
Mediation – ‘Making the most of Mediation’ Co-Presenter, David Hurley (Mediator) Wednesday 10 October 2007 (12.15pm-2pm)
Venue: Level 8, The Bayleys Building, 28 Brandon Street, Wellington
Employment Relations Authority – ‘Avoiding any Traps and Pitfalls when before the Employment Relations Authority’ Co-Presenter Denis Asher (Authority Member) Wednesday 24 October 2007 (12.15pm-2pm)
Venue: Level 8, The Bayleys Building, 28 Brandon Street, Wellington
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Team Members:
Michael Quigg [email protected] +64 4 474 0766
Jol Bates [email protected] +64 4 474 0759
Deirdre Marshall [email protected] +64 4 474 0765
Tim Sissons [email protected] +64 4 474 0758
Registration Form
