Welcome to Bartlett Law’s Crystal Ball. In this issue we spotlight some current trends in employment law and look ahead – what do we see for the future?

Current Trends

Work Trials

The case of Howe-Thornley v The Salad Bowl Ltd concerned a 2½ hour “work trial” of a cafe employee who was subsequently dismissed.  The Employment Relations Authority concluded that because there had been an exchange of labour for remuneration, the fundamental characteristics of an employment agreement were present.  It held that an unjustified dismissal had occurred and awarded compensation to the employee.

On appeal, the Employment Court noted that while an interview alone, or a prospective employee’s observation of a workplace, was unlikely to be considered “work”, the line between “trial” and “work” is crossed most commonly where the employer gains an economic benefit from the employee’s activity.  In the Salad Bowl case, the worker performed a number of tasks which would have been undertaken by her had she continued to work for the plaintiff.  Although her performance may not have been optimal, she was nevertheless performing work for the plaintiff and contributing to its business.

The Court observed that the employer could have included in an individual employment agreement with a trial period of up to 90 days pursuant to s 67A of the Employment Relations Act, but did not.

If you would normally pay someone for doing what you want the prospective employee to do, then  it is probably not a true “work trial”. In such a case, an employment agreement with a trial period may be a far safer option.

The limits of garden leave

A common method used by employers to extend the effective duration of a restraint of trade came under scrutiny in the case of Air New Zealand v Kerr.  Mr Kerr was the general manager of the Air New Zealand owned business Air Nelson, and was approached by an executive search company to take up a role with rival airline JetStar.  Upon advising Air New Zealand of his resignation he was informed that Air New Zealand would be placing him on garden leave for the duration of his six month notice period and for the following six months it intended to enforce the contractual non-competition restraint of trade provision (effectively preventing Mr Kerr from working for JetStar for 12 months).  Mr Kerr sought relief from the Employment Court claiming the restraint period was unreasonable.

The Court held the extent of garden leave should be taken into account when considering the duration of any post employment restraint covenants.  The Court was satisfied that the six month period Mr Kerr spent on garden leave was long enough to provide Air New Zealand with all the protection it needed in respect of its proprietary confidential commercial information.

Misconduct outside work

The decision of the Employment Court has upheld the Employment Relations Authority that the dismissal of a senior Forsyth Barr employee for out-of-work misconduct was justified.

The employee, Mr Hallwright, had been convicted of  inflicting grievous bodily harm in an out of hours road rage incident.  His employer dismissed him after extensive media coverage linking his offending with the company brand.

The Court found that there was sufficient connection between the out of work conduct and the employment relationship and accepted that there was reputational damage suffered by the employer and Mr Hallwright’s ability to perform his role (which required media contact) was compromised.

Being open and communicative

Employers have an obligation to be open and communicative when delivering bad news, but pragmatic employers will keep the lines of communication open in good times as well.

Frequent communication assists in breaking down the barriers between management and employees and can help address problems at an early stage. Keeping your finger on the pulse of the workplace by an informal chat with employees each morning signals to employees that their input is valued and can increase engagement and productivity.

Future Predictions

Facebook used in worker dismissal

In what may be a harbinger of things to come, a flight attendant fired by Air New Zealand after a dispute over sick leave was ordered by the Employment Relations Authority to hand over details of her Facebook activities during the dates of the disputed “sickness”.

The decision is a logical extension of the “best evidence” rule.  Although competing interests in the material, (including privacy interests),  must be considered, an employee challenging a dismissal may be fairly said to have waived his or her privacy interests in materials relevant to the dispute. We expect more cases of this type in coming months.

New legislation

The Select Committee report on the Employment Relations Amendment Bill 2013 is due back by 12 December 2013.

The Worksafe New Zealand Act 2013 has passed its final reading and will commence on 16 December 2013. It creates a new Crown agency responsible for overseeing health and safety in the workplace.

Outdated individual employment agreements causing problems

From time to time, we see out-of date employment agreements. These can cause problems in the event the working relationship deteriorates.

If your employment agreements might be showing their age, we can help.  We can check your existing individual employment agreements for compliance with the current statutory minimums (rather like a warrant of fitness) or upgrade your individual employment agreements to a completely up-to-date model tailored to your particular business requirements.

If you need advice or would like to inquire about these services, please contact us.


Employment Law Articles