AFFCO New Zealand Ltd v New Zealand Meat Workers and Related Trades Union Inc
[2017] NZSC 135
•7 September 2017
For a Court ready (fee required) version please follow this link
AFFCO New Zealand Ltd v New Zealand Meat Workers and 5
Related Trades Union Inc
Supreme Court of New Zealand SC 131/2016; [2017] NZSC 135 10
20, 21 June; 7 September 2017
William Young, Glazebrook, O’Regan, McGrath and Arnold JJ
Employment law – Employee – Seasonal staff – Whether employees during period laid off for purposes of lock-out provisions – Employment Relations Act 15
2000, ss 6, 82(1)(b).
Employment law – Appeal to Court of Appeal – Whether Employment Court had erred in principle – Whether appeal on question of law – Employment Relations Act 2000, s 124.
Statutes – Interpretation – Definition “unless context otherwise requires” – 20
Whether and when statutory definition to be departed from – Employment
Relations Act 2000, ss 6, 82(1)(a) and (b).
AFFCO New Zealand Ltd (AFFCO) operated a number of slaughterhouses at which work was available seasonally. There was a collective employment agreement between AFFCO and the Union which expired on 25
31 December 2014. AFFCO’s employees were therefore employed for the remainder of that season under individual employment agreements containing the same terms as the collective employment agreement. These agreements provided for the re-engagement of seasonal workers in accordance with
seniority, which was calculated by reference to when they had first started 30 working for AFFCO. The second respondents were employees of AFFCO who
were laid off in mid-April 2015. In early June, AFFCO wrote to those who had been employed the previous season announcing its intention to reopen on 22
June. Those who wished to work were asked to attend a presentation at which
they were given the terms of new individual employment agreements. The 35
Union issued proceedings in the Employment Court seeking an injunction
preventing AFFCO from offering new individual employment agreements. The Union alleged that AFFCO’s actions amounted to an unlawful lock out. A “lock out” was relevantly defined by s 82(1) of the Employment Relations Act 2000
as “(a) the act of an employer … (iv) in refusing or failing to engage any 40 employees for any work …(b) done with a view to compelling employees to … accept terms of employment.” Whether AFFCO’s actions had amounted to an unlawful lock out depended upon whether the second respondents had been “employees” of AFFCO at the relevant time. Section 6 of the Act defined “employee” “unless the context otherwise requires” as “a person of any age 45 employed by an employer to do any work for hire or reward under a contract
of service” and included a person who had been offered and accepted work as an employee. The Employment Court held that the second respondents had
been employees under s 6 at the relevant time. On appeal by AFFCO, the Court of Appeal held that they had not been employees under s 6 but had been employees for the purposes of s 82(1)(b). AFFCO appealed to the Supreme Court.
Held: 1 Where the defined meaning of a statutory term was subject to a context qualification, strong contextual reasons would be required to justify departure from the defined meaning. The context had to relate to the statute rather than anything extraneous but was not otherwise constrained. The starting point would be the immediate context provided by the language of the provision
under consideration. Surrounding provisions could also provide context and it would be legitimate to test the competing interpretations against the statute’s purpose, against any other policy considerations reflected in the legislation and against the legislative history where those could provide assistance (see [62], [63], [64], [65]).
Police v Thompson [1966] NZLR 813 (CA) discussed.
Barr v Police [2009] NZSC 109, [2010] 2 NZLR 1 referred to.
2 The second respondents had not been employees as defined by s 6 of the Employment Relations Act 2000 at the relevant time. The parties had negotiated against the background that employment in the meat industry was
discontinuous and there was nothing in the collective employment agreement to negative the view that it contemplated discontinuous employment. Nor was a person who had left his or her name and address with AFFCO at the end of the season a person who had been offered and had accepted work as an employee (see [45], [47], [52]).
NZ Meat Processors, Packers etc IOUW v Alliance Freezing Co
(Southland) Ltd [1987] NZILR 537 (ArbC) referred to.
NewZealand Meat Processors, etc, IUW v Alliance Freezing Co (Southland) Ltd [1991] 1 NZLR 143, (1990) 3 NZELC 98,287 (CA) referred to.
New Zealand Meat Workers etc Union Inc v Richmond Ltd [1992] NZEmpC 218, [1992] 3 ERNZ 643 referred to.
Cruickshank v Alliance Group Ltd [1992] NZEmpC 240, [1992] 3 ERNZ 936 referred to.
New Zealand Meatworkers’ Union Inc v Alliance Group Ltd
[2006] ERNZ 664, (2006) 7 NZELC 98,350 (EC) referred to.
3 The relationship between AFFCO and the second respondents had been close enough to bring the latter within the scope of the word “employees” in s 82(1)(b). The context indicated that in s 82(1)(b) carried a broader meaning than existing employees including persons who had been offered and had
accepted work. The word “employee” was used in different senses in s 82(1)(a) and in s 82(1)(a)(iv) meant persons seeking employment. The second respondents had previously worked for AFFCO and AFFCO owed them contractual obligations including as to re-hiring, even though their employment had terminated at the end of the previous season. This interpretation conformed
with the legislative purpose. There was no difference in this context between seasonal workers who had a permanent employment clause and those who did not (see [75], [76], [78]).
(per curiam) it was not the case that an employer who refused to hire a new employee because the two were unable to agree terms would, for that reason
alone, have locked out the potential employee (see [78]).
4 The Court of Appeal had had jurisdiction to hear the appeal. The Employment Court had erred in principle by treating the geographic setting of AFFCO’s plants in small communities as part of the context, in distinguishing the previous authorities and failing to address the argument that those
authorities had been part of the background to the negotiations. The case also 5 depended crucially on the interpretation of legislation, in particular of
s 82(1)(b) (see [83], [84]).
New Zealand Air Line Pilots’ Association Inc v Air New Zealand Ltd
[2017] NZSC 111, [2017] 1 NZLR 948 followed.
Result: Appeal dismissed. 10
Other cases mentioned in judgment
AFFCO New Zealand Ltd v New Zealand Meat Workers and Related Trades
Union Inc [2016] NZCA 482, (2016) 10 NZELC 79-067.
AFFCO New Zealand Ltd v New Zealand Meat Workers and Related Trades
Union Inc [2017] NZSC 30. 15
Alliance Group Ltd v Cruickshank [1992] NZEmpC 240, [1992] 3 ERNZ 936.
AmcorLtd v Construction, Forestry, Mining and Energy Union [2005] HCA 10, (2005) 222 CLR 241.
Barr v Police [2009] NZSC 109, [2010] 2 NZLR 1.
Beaufort Developments (NI) Ltd v Gilbert-Ash NI Ltd [1999] 1 AC 266, [1998] 20
2 All ER 778 (HL).
FirmPI 1 Ltd v Zurich Australian Insurance Ltd [2014] NZSC 147, [2015] 1 NZLR 432.
Hughes v Riverlands Eltham Ltd EC Wellington WEC58/96, 18 September
1996. 25
New Zealand Air Line Pilots’ Association Inc v Air New Zealand Ltd
[2017] NZSC 111, [2017] 1 NZLR 948.
NewZealand Meat Processors, etc, IUW v Alliance Freezing Co (Southland) Ltd [1991] 1 NZLR 143, (1990) 3 NZELC 98,287 (CA).
New Zealand Meat Workers Union v Richmond Ltd [1992] NZEmpC 218, 30 [1992] 3 ERNZ 643.
New Zealand Meat Workers’ Union Inc v Alliance Group Ltd
[2006] ERNZ 664, (2006) 7 NZELC 98,350 (EC).
New Zealand Meat Workers & Related Trades Union Inc v AFFCO New
Zealand Ltd [2015] NZEmpC 204, (2015) 10 NZELC 79-057 35
New Zealand Meat Workers & Related Trades Union Inc v AFFCO New
Zealand Ltd (No 2) [2015] NZEmpC 94, (2015) 10 NZELC 79-056.
NZMeat Processors, Packers etc IOUW v Alliance Freezing Co (Southland) Ltd [1987] NZILR 537 (ArbC).
Police v Thompson [1966] NZLR 813 (CA). 40
Police v Thompson [1965] NZLR 935 (SC).
Sears v Attorney-General [1995] 2 ERNZ 121, (1995) 8 PRNZ 571 (CA).
Appeal
This was an appeal by AFFCO New Zealand Ltd from the judgment of the Court of Appeal [2016] NZCA 482 dismissing an appeal by AFFCO from the 45 judgment of the Employment Court [2015] NZEmpC 204, in favour of the New Zealand Meat Workers and Related Trades Union Inc, first respondent, and RK
Ratu and others, second respondents. Leave to appeal was granted by the
Supreme Court [2017] NZSC 30, the approved question being whether the
Court of Appeal was correct to find that a breach of s 82 of the Employment Relations Act 2000 had occurred when the applicant required seasonal workers to enter into new individual employment agreements before commencing work for the 2015/2016 season. The Court observed at [1] that “The approved
question allows for argument on the issues raised by the applicant in its leave submissions as well as the points identified by the respondents in their leave submissions as points they will advance in support of the Court of Appeal judgment on other grounds”. The Meat Industry Association of New Zealand Inc appeared as an intervener.
PR Jagose and GP Malone for AFFCO.
P Cranney and SR Mitchell for the Union.
JE Hodder QC and JW Upson for the intervener.
Jagose for AFFCO: A lockout is defined in s 82 of the Employment
Relations Act 2000 as an act of an employer with a view to compelling acceptance or compliance. “Compel” means pressuring into doing something (Spotless Services (NZ) Ltd v Service and Food Workers Union Nga Ringa Tota Inc [2008] NZCA 580); it does not mean overbearing or depriving of will. “Employee” is defined in s 6 and includes in s 6(1)(b)(ii) a person intending to
work, which means one who has been offered or has accepted work as an employee. Letting seasonal workers go constituted a termination of their employment agreement. The seniority and re-engagement provisions continued to apply even though the agreements were terminated (see s 103(1)(b) which provides for a personal grievance for breach of a condition which survives the
termination of an agreement). “Re-engagement” is defined in the collective agreement. Negotiations over a new collective agreement were still happening when the new season began and the employer offered individual agreements to the former employees. New agreements can offer new terms as long as they do not breach undertakings in previous agreements. A collective agreement is an
agreement between employer and union as to terms on which employees will be engaged. There are also agreements between the employer and the employees which continue in force after the collective agreement has expired. Seasonal employees knew that they would be made an offer which they might or might not accept (CA [58]–[62]). This was therefore not a lockout as they
were not employees at the time. The Court of Appeal overturned the Employment Court finding that employment continued through the off-season. The Employment Court did not interpret “employee” in general but asked whether the agreement provided continuous or discontinuous employment but the Court misread Tucker Wool Processors Ltd v Harrison [1999] 3 NZLR 576
(CA) at [109]–[117]. The Court of Appeal at [59] says that the issue is whether the continuing obligation renders the seasonal employees “employees” during the off-season. The expression “unless the context otherwise requires” refers to the statutory context not to the external circumstances (Police v Thompson [1966] NZLR 813 (CA); Saba Yachts Ltd v Fish Pacific Ltd
(2006) 3 NZCCLR 963 (HC); R v L HC Wellington CRI-2007-485-159,
11 April 2008). The meaning of statutory terms cannot be affected by the
factual circumstances (Sajo Oyang Corporation v Ministry for Primary Industries [2017] NZCA 182, [2017] NZAR 611, overturning Hartono v Ministry for Primary Industries [2015] NZHC 3307).
The Court of Appeal applied orthodox principles of contractual interpretation. The exercise is to assess the natural and ordinary meaning of the words used in the context of the collective agreement and in the context of background circumstances known to the parties and with an eye for business or employment relations common sense (Air New Zealand Ltd v New Zealand Air 5
Line Pilots’ Association Inc [2016] NZCA 131, [2016] 2 NZLR 829; Firm PI 1
Ltd v Zurich Australian Insurance Ltd [2014] NZSC 147, [2015] 1 NZLR 432; Kumar v Nandan [2016] NZHC 935; Arnold v Britton [2015] UKSC 36, [2015] AC 1619; Beaufort Developments (NI) Ltd v Gilbert-Ash NI Ltd
[1998] UKHL 19, [1999] AC 266). Cases like New Zealand Meat Workers etc 10
Union Inc v Richmond Ltd [1992] 3 ERNZ 643 (EmpC) and NZ Meat
Processors, etc IUW v Alliance Freezing Co (Southland) Ltd [1991] 1 NZLR
143 (CA) may have been a long time ago but the parties have worked on the basis of those judgments ever since. The agreements cannot be interpreted as continuous as continued employment would give rise to annual leave, 15 minimum weekly payments and so on. The indicia of employment are missing during the off-season period (Ready Mixed Concrete (South East) v Minister of Pensions and National Insurance [1968] 2 QB 497; TNT Worldwide Express
Ltd v Cunningham [1993] 3 NZLR 681 (CA)). The Court of Appeal found that
in the light of such background a reasonable and properly informed third party 20 would look for clear evidence of intention to depart from the industry standard
of termination at the end of each season (at [49]) the collective agreement contained clauses that were only explicable if the parties intended employment to terminate at the end of each season (at [50] and [51]). Where contracting
parties use phraseology that has been judicially defined as having a particular 25 meaning, strong evidence is required to conclude that the parties intended some
other meaning. The Union had been a party to the three leading decisions which established the discontinuity principle (CA at [38]).
The question is not whether such people should be caught in fulfillment of
the statutory purpose but whether it was the purpose of the statute to capture 30 them. The definitions of strike and lock out are not symmetrical. A single employee can be locked out; a strike requires collective action. The statutory notice requirements for a lock out and the statutory reporting requirements assume that one is dealing with current employees. The reference to former employees in the definition of strike covers those who have lost their jobs. Does 35 “employee” in s 81(1)(b) mean the same as in subs (1)(a)? If so, collective refusal to take up a new offer would be a strike. The Act expands the definition
of “employee” where that is required and so in other cases the default definition applies. The employer took the steps required when there is no extant employment agreement. One cannot then take these steps to mean that the 40 people they dealt with were employees at the time. Nor can these steps be evidence of compulsion. There are many situations where former employees
have contractual rights to re-employment, for example parental leave when the post cannot be held open. The limited expansion by the Court of Appeal of the meaning of “employee” in s 82(1)(a) but not s 82(1)(b) does not deal with 45 points such as: the obligation to deal in good faith in s 4(1) applies between an employer and an employee employed by the employer; s 6(1)(b)(ii) extends employee to include a person who has been offered and accepted work which shows Parliament’s attention to when an interpretation beyond the primary
meaning is intended; s 80 recognises that an employer can pursue objectives at odds with the promotion of collective bargaining. “Some of the hallmarks of employment” is not enough to bring them within the Act’s regulation of employment relationships.
The argument that the Court of Appeal lacked jurisdiction cannot be raised as one of the “other grounds” in the leave decision as that requires that the respondent does not want the judgment below varied. [Reference also made in printed case to: Allenby v H [2012] NZSC 33, [2012] 3 NZLR 425; Barr v New Zealand Police [2009] NZSC 109, [2010] 2 NZLR 1; Beck v Beck
[1975] 2 NZLR 123 (SC); Black-Clawson International Ltd v Papierwerke AG [1975] AC 591 (HL); Claydon v Attorney-General [2002] NZCA 283, [2002] 1 NZLR 130; Conference of the Methodist Church of New Zealand v Gray [1996] 2 NZLR 554 (CA); Crusader Fisheries Ltd v Eno HC Nelson CRI-2007-442-5, 11 December 2007; Discount Brands Ltd v Westfield (New
Zealand) Ltd [2005] NZSC 17, [2005] 2 NZLR 597; Fonterra Co-operative
Group Ltd v The Grate Kiwi Cheese Co Ltd [2012] NZSC 15, [2012] 2 NZLR
184; Fonterra Co-operative Group Ltd v The Grate Kiwi Cheese Company Ltd [2011] NZCA 67; Gisborne Milk Co Op Ltd (in Liq) v Fonterra Co Operative Group Ltd [2012] NZHC 3439; New Zealand Airline Pilots’ Association v Air
New Zealand Ltd [1992] 2 NZLR 656 (CA); NZ Amalgamated Engineering, Printing & Manufacturing Union Inc v Witney Investments Ltd [2007] NZCA 599, [2008] 2 NZLR 228; Tasman Insulation New Zealand Ltd v Knauf Insulation Ltd [2015] NZCA 602, [2016] 3 NZLR 145; AFFCO New Zealand Ltd v Employment Court [2017] NZCA 123; AFFCO New Zealand Ltd v New
Zealand Meat Workers and Related Trades Union Inc [2017] NZSC 30; Bryson v Three Foot Six Ltd [2005] NZSC 34, [2005] 3 NZLR 721; Cruikshank v Alliance Group Ltd [1992] 3 ERNZ 936 (EmpC); New Zealand Air Line Pilots’ Association Inc v Air New Zealand Ltd [2016] NZSC 84; New Zealand Air Line Pilots’ Association Inc v Air New Zealand Ltd [2014]
NZEmpC 168, [2014] ERNZ 709; New Zealand Meat Workers & Related Trades Union Inc v AFFCO New Zealand Ltd (No 2) [2015] NZEmpC 94; New Zealand Meat Workers and Related Trades Union Inc v AFFCO New Zealand Ltd (No 2) [2016] NZEmpC 117; New Zealand Meat Workers and Related Trades Union Inc v AFFCO New Zealand Ltd (No 3) [2017] NZEmpC 33; New
Zealand Meat Workers’ Union Inc v Alliance Group Ltd [2006] ERNZ 664 (EmpC); Northern Caretakers Union v Bradbury Wilkinson & Co (NZ) Ltd [1990] 1 NZILR 660 (LC); NZ Meat Processors, Packers etc IUOW v Alliance Freezing Co (Southland) Ltd [1987] NZILR 537 (AC);Quay Park Arena Management Ltd v Great Lakes Reinsurance (UK) plc [2014] NZHC 2204;
Sajo Oyang Corporation; Secretary of Education v Yates [2004] 2 ERNZ 313 (CA); Silver Fern Farms Ltd v New Zealand Meat Workers and Related Trade Unions Inc [2010] NZCA 310, [2010] ERNZ 317; Spotless Services (NZ) Ltd v Service and Food Workers Union Nga Ringa Tota Inc [2008] NZCA 580, (2008) 6 NZELR 137; Tisco v Communication & Energy Workers Union [1993]
2 ERNZ 779 (CA); Trustees Executors Ltd v QBE Insurance (International) Ltd [2010] NZCA 608, (2011) 16 ANZ Ins Cas 61-874; Tucker Wool Processors Ltd v Harrison; Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5, [2010] 2 NZLR 444; Waitemata District Health Board v New Zealand Public Service Association [2006] ERNZ 1029 (CA).]
Hodder QC for the intervener: The Employment Court approach creates uncertainty on a number of issues. The Court suggested that the cases about seasonal employment in the industry are to be disregarded in the interpretation of the collective agreement as conditions have changed since those cases were
decided. But discontinuous employment has always been a feature of work in 5 the industry and the cases recognise that. Contracts are not made in a vacuum
and surrounding circumstances may affect meaning (Reardon Smith Line Ltd v Yngvar Hansen-Tangen [1976] 1 WLR 989 (HL) at 995). The interpretation is that of a reasonable person in the shoes of the parties having regard to the
surrounding circumstances, which include the legal background (Amcor Ltd v 10
Construction, Forestry, Mining and Energy Union [2005] HCA 10,
(2005) 222 CLR 241; Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5, [2010] 2 NZLR 444; Wood v Capita Insurance Services Ltd [2017] UKSC 24, [2017] 2 WLR 1095; J Burrows, J Finn and S Todd The Law of Contract in New Zealand (5th ed, LexisNexis, Wellington, 2016) at [6.2.2]; JW 15
Carter The Construction of Commercial Contracts (Hart Publishing, 2013)
[6.25] and following). The relevance of the cases the Employment Court referred to was not as binding precedents, but as part of the legal background known to the contracting parties. The Employment Court failed to look at the
cases in that light. The cases establish that seasonal employment is 20 discontinuous unless there is a clear indication the parties intended otherwise. There is no evidence of any such intention (CA [49]). It does not matter whether the older cases were correctly decided or would be decided the same
way today. The intervener is not attempting to establish an “industry standard”. [Reference also made in printed case to: AFFCO New Zealand Ltd v New 25
Zealand Meat Workers and Related Trades Union Inc [2016] NZCA 482,
(2016) 10 NZELC 79-067; Air New Zealand Ltd v New Zealand Air Line Pilots’ Association Inc; Amcor Ltd v Construction, Forestry, Mining and Energy Union [2005] HCA 10, (2005) 222 CLR 241; Arnold v Britton; Bank of Credit and Commerce International SA v Ali [2001] UKHL 8, [2002] 1 AC 251; 30
Cruickshank v Alliance Group Ltd [1992] 3 ERNZ 936 (EmpC); Firm PI 1
Ltd v Zurich Australian Insurance Ltd; Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 (HL); New Zealand Meat Processors, etc, IUW v Alliance Freezing Co (Southland) Ltd [1991] 1 NZLR
143 (CA); New Zealand Meat Workers IUW v Richmond Ltd [1992] 3 ERNZ 35
643 (EmpC); New Zealand Meat Workers’ Union Inc v Alliance Group Ltd
[2006] ERNZ 664 (EmpC); NZ Meat Processors, Packers, etc IUOW v Alliance Freezing Co (Southland) Ltd [1987] NZILR 537 (AC); Prenn v Simmonds [1971] 1 WLR 1381 (HL); Rainy Sky SA v Kookmin Bank [2011] UKSC 50, [2011] 1 WLR 2900.] 40
Cranney for the Union: the statutory scheme is important. The
fundamental objects of the Employment Relations Act are in s 3. One is the upholding of International Labour Organisation conventions including on free association and the right to collective bargaining. Section 3(a) refers to good
faith in broad terms, to the inherent inequality of bargaining power and to the 45 promotion of collective bargaining. The employment relationship includes relationships between employers and unions (s 4(2)). The duty of good faith includes recognition of the authority of representatives and not bargaining
directly with the represented persons or undermining collective bargaining. This lock out was unlawful as it did not relate to a collective agreement. Fixed term agreements are unlawful without genuine reason. “Genuine reason” does not include seasonal work.
The fundamental issue is the right to collective bargaining. The other issues arise as part of that. The employees here were pressured into taking part in unlawful bargaining. They were prohibited from attending meetings during working hours. Other trade union rights were not reinstated until the Employment Court judgment. In Ross v Moston [1917] GLR 87 the Arbitration
Court held that employees who had resigned en masse were taking part in a strike. This case was referred to by the Court of Appeal below but not in the
1987 AFFCO case. For a strike or lockout to be lawful it must be linked to a lawful ground and that ground must be the dominant motive. The motive must be to further collective bargaining, not to undermine it (McCulloch v New
Zealand Fire Service [1998] 3 ERNZ 378 (EmpC)). So you cannot lock out to make people go onto individual contracts. The Employment Court found clear evidence of blatant unlawful individual in breach of s 32(1)(d) which was the legislative response to New Zealand Fire Service Commission v Ivamy [1996]
2 NZLR 587 (CA). The seasonal staff got letters saying that if they wished to
return to work they had to attend briefings at the plant about the new individual employment agreement. It was not sent out with the letters. The employer alleges breach of natural justice in the findings against it but did not apply for recall of the judgment nor raise the issue at the time. The issue is moot in the sense that it depends on another issue which is before another Court.
As to whether the seasonal staff were employees under s 6(1), the 1990
Alliance case said this would be inconsistent with the award but we are not
necessarily stuck with the thinking of 27 years ago. Beaufort Developments at
269 says that it is sometimes appropriate to move away from a previous position. Richmond is different from this case as it said that the employees lost
all their rights on being laid off. In the 2006 Alliance case, the terms of the agreement were different and the reasoning in the Employment Court is not supported. Under the award system, if you were re-engaged you got the same terms as before. Richmond abolished the industry practice. Both the old award and the collective agreement here have elements of continuity and elements of
discontinuity. Lots of employment agreements involve substantial periods off.
There may be passages in the agreement which refer to termination at the end
of the season but the seniority provision refers to the commencement of employment, meaning the employee’s first season. If this point is arguable, then s 216 says that the Court of Appeal must defer to the expertise of the
Employment Court. The Employment Court made no error of principle and the Court of Appeal has no jurisdiction to interpret the employment agreement. The interpretation arrived at by the Employment Court was well within the Court’s scope. This Court is being asked to say that the Court of Appeal was right to say that the whole industry worked on discontinuous contracts but there was no
evidence of this. Each collective agreement must be looked at separately.
The 2006 Alliance case did not deal with the redundancy issue properly. The seasonal lay off is not redundancy and the mandatory provisions assume that the person is an employee. They are employees under s 6(1)(b)(ii) if not under s 6(1)(a). Staff who wished to work again did not have to sign anything
but just had to turn up in response to a letter or telephone call. If you do not come back within five days you are treated as abandoning the employment. The terms were effectively as agreed the previous year.
Under the pre-Employment Contracts Act legislation, the word was
“worker” not “employee”, ie a class of people rather than parties to a contract. 5 “Employee” in s 82(1)(b) means “worker”. Hence refusal to re-engage unless
new terms are accepted is a lock out. [Reference also made in printed case to: New Zealand Meat Workers and Related Trades Union v AFFCO New Zealand Ltd [2016] NZEmpC 7, [2016] ERNZ 20; New Zealand Meat Workers and
Related Trades Union v AFFCO New Zealand Ltd [2016] NZEmpC 117; New 10
Zealand Meat Workers and Related Trades Union v AFFCO New Zealand Ltd
[2017] NZEmpC 33; AFFCO New Zealand Ltd v Employment Court [2017] NZCA 123; Spotless Services Ltd v SFWU [2008] ERNZ 609 (CA); New Zealand Meat Processors etc IUW v Alliance Freezing Co (Southland) Ltd
[1991] 1 NZLR 143 (CA); New Zealand Meat Workers etc Union Inc v 15
Richmond Ltd [1992] ERNZ 643 (CA); ILO Complaint Against the New
Zealand Government Case 1698; New Zealand Meat Workers Union v Alliance
Group Ltd [2006] ERNZ 664, (2006) 3 NZELR 345.]
Jagose, replying: the definition of “worker” in the Industrial Relations Act
1973 was “any person … employed by an employer to do any work”. Under 20 s 63A of the ERA an employer is required to present proposed terms of employment to prospective employees. It cannot be right that once parallel negotiations on a collective agreement have commenced, an employer can no longer communicate with people who are not employees. Under s 18, the Union
is entitled to represent employees, not prospective employees. The offer of 25 individual employment agreements could not include union rights as there were
still being negotiated with the union. The “telephone clause” actually refers to employment terminating and the former employee is to leave contact details if they wish to be contacted about employment in the new season. In Beaufort,
Lord Hoffmann said that preceding judgments on similar sorts of contract were 30 important. That approach is particularly appropriate to collective agreements which reflect understandings beyond the parties concerned.
The reasons of the Court were given by
ARNOLD J.
Table of contents
Cur adv vult
35
Para no
Introduction [1] Factual background [8]
The statutory provisions [16] 40
The collective agreement [21]
Were the workers “employees” within the meaning of s 6? [29]
(i) Did AFFCO employ the workers under employment contracts of indefinite duration?
[30]
(ii) Were the workers persons intending to work? [48] 45
(iii) What is the meaning of “employees” in s 82(1)(b)? [54] Jurisdiction [81]
Table of contents
Para no
Decision [85]
Introduction
[1] The appellant, AFFCO New Zealand Ltd (AFFCO), operates a number of meat slaughtering and processing plants in the North Island, including at Rangiuru in the Bay of Plenty, at Imlay in Whanganui and at Feilding in Manawatu. Slaughtering at the plants is seasonal, so that most of those who work at them are not required to work all year round. When one season ends,
the workers are laid off until the new season starts, when most return to work.
In the interim, they are free to work for other employers (assuming other
employment is available).
[2] The first respondent, the New Zealand Meat Workers and Related Trades
Union Inc (the Union), had a collective employment agreement with AFFCO
covering its plants, including the three just mentioned. However, the collective no longer applied from the end of December 2014, with the consequence that the second respondents and other employees at the plants were employed for the remainder of the 2014/2015 season on the basis of individual employment agreements containing the same terms as the collective.1
[3] The second respondents claimed that, when they presented themselves for work at the beginning of the 2015/2016 season, AFFCO locked them out unlawfully because it required them to agree to new individual employment agreements containing terms that were substantially less favourable than those contained in the expired collective and carried over into their individual
25 employment agreements. The Union and the second respondents issued proceedings. Initially they sought an interim injunction restraining AFFCO from offering new terms of employment in individual employment agreements, but their application was unsuccessful.2 The matter then went to trial, where a Full Court of the Employment Court upheld the unlawful lockout claim.3 The
Court of Appeal also upheld the claim, although for different reasons than those adopted by the Employment Court.4 This Court granted leave to appeal on the question whether the Court of Appeal was correct to find that AFFCO locked the workers out in terms of s 82 of the Employment Relations Act 2000 (the
ERA) when it required them to enter new individual employment agreements
before beginning work for the 2015/2016 season.5
[4] The essential question in the appeal is whether those who presented themselves for work at the beginning of the 2015/2016 season were at that time “employees” for the purposes of s 82(1)(b) of the ERA. If they were, it is
1 See the Employment Relations Act 2000, s 61(2).
2 New Zealand Meat Workers & Related Trades Union Inc v AFFCO New Zealand Ltd
(No 2) [2015] NZEmpC 94, (2015) 10 NZELC 79-056 [AFFCO (Interim injunction)] per
Chief Judge Colgan.3 New Zealand Meat Workers & Related Trades Union Inc v AFFCO New Zealand Ltd
[2015] NZEmpC 204, (2015) 10 NZELC 79-057 [AFFCO (EC)] per Chief Judge Colgan,
Judge Perkins and Judge Ford. The Court also found that AFFCO had breached its
obligation of good faith bargaining in relation to a collective agreement: at [201].4 AFFCO New Zealand Ltd v New Zealand Meat Workers and Related Trades Union Inc
[2016] NZCA 482, (2016) 10 NZELC 79-067 [AFFCO (CA)] per Ellen France P,
Harrison and Toogood JJ.5 AFFCO New Zealand Ltd v New Zealand Meat Workers and Related Trades Union Inc
[2017] NZSC 30.
accepted that there was an unlawful lockout.6 Mr Cranney also sought to support the outcome that the workers were “employees” by raising the issues of jurisdiction under s 214 of the ERA (which, if accepted, would have left the Employment Court’s reasoning intact) and mootness. As he did not develop these points in submissions, however, we will not address mootness at all, and 5
will deal with jurisdiction only briefly at the end of the judgment.7
To resolve the question whether the workers were “employees” in terms of s 82(1)(b), it is necessary to consider two issues:
(a) The first is whether the workers were “employees” as defined in s 6 of
the ERA. This requires consideration of the nature of their 10 employment arrangements with AFFCO. Specifically, it requires consideration of whether the workers had an on-going employment relationship with AFFCO across seasons even though they were not required to work (or entitled to be paid) during the off-season, or whether their employment was discontinuous in the sense that they 15 were employed only for a particular season, were not employed by AFFCO during the off-season and were then re-employed for the next season. In addition, there is an alternative analysis, namely whether
the workers came within the definition of “person intending to work”.8
(b) The second issue arises if the workers do not fall within the s 6 20 definition. The question then becomes whether the word “employees”
in s 82(1)(b) bears the defined meaning or whether the context requires that some broader meaning be given to it and, if so, whether this broader meaning covers these workers.
As will be explained in more detail below, the Employment Court held 25 that the workers were “employees” within the meaning of s 6, so that they were unlawfully locked out by AFFCO,9 although the Court did also outline an alternative analysis leading to the same conclusion.10 The Court of Appeal disagreed with the Employment Court’s primary reasoning that the workers
were employees within the meaning of s 6,11 but nevertheless upheld the result 30 it reached.12 The Court did so on the basis that the word “employees” was used
in s 82(1)(b) in a broader sense than the definition in s 6, which is expressly subject to the qualification “unless the context otherwise requires” (for ease of reference, we will refer to these words as the “context qualification”).13
We have concluded that the Court of Appeal’s analysis is correct. We do 35 not agree with the Employment Court that the workers were “employees” in terms of s 6 at the relevant time. However, we consider that the term “employees” in s 82(1)(b) has a broader meaning than the definition in s 6 and covers the workers at issue. The result is that we agree with both Courts below
that AFFCO locked the workers out unlawfully. Given the view which we have 40 reached, we will deal with the s 6 arguments more briefly than otherwise we might have and will focus on the s 82(1)(b) arguments.
See below at [35].
See below at [81]–[84].
Section 6(1)(b)(ii) of the Employment Relations Act provides that “employee” includes a
“person intending to work”, which is further defined in s 5: see below at [19].
AFFCO (EC), above n 3, at [174]–[180] and [194].
See the discussion below at [54]–[56].
11 AFFCO (CA), above n 4, at [49]–[54].At [72]–[73].
At [58]–[62].
Factual background
[8] There was no dispute about the factual background, which can be stated briefly.
[9] The collective agreement between AFFCO and the Union had an expiry
date of 31 December 2013. While it was in force, the collective, together with any relevant site agreement, set out the terms of employment of AFFCO’s workers at its plants.14 Because AFFCO and the Union had begun negotiations for a new collective before the 31 December 2013 expiry date, the collective continued in force for the period of the negotiations, but subject to a time limit
of 12 months.15 As no replacement collective had been agreed by the end of
December 2014, AFFCO’s workers were employed for the balance of the
2014/2015 season under individual employment agreements containing the same terms as the collective.16
[10] Taking the Rangiuru plant (which was the first of AFFCO’s plants to
re-open for the 2015/2016 season) as an example, the 2014/2015 processing season ended in mid-April 2015 and most workers at the plant were laid off. In early June 2015, AFFCO wrote to workers who had been employed at the plant in the previous season notifying them of its intention to open the plant for the
2015/2016 season on 22 June 2015 and inviting them to attend an
“introduction presentation” at the plant for a new individual employment agreement for the season. As AFFCO’s letter noted, the proposed individual employment agreement contained changes from the agreement which had applied in the previous season.
[11] At the introduction presentation, workers were supplied with copies of
an explanatory handout and the proposed individual employment agreement.
The handout advised that the introduction presentation was not an induction
meeting for employment purposes. Rather, it was to introduce the proposed individual employment agreement. Among other things, the handout said:
The company requires a signed employment agreement to be entered into
with each employee before they commence work. None of the previous expired [individual employment agreements] (including [those] based on the expired Collective Agreement) continued automatically past the layoff season end. All employers are required to offer an intended Employment Agreement in writing and to have an employment agreement signed by
both the employer and employee.
[12] While no explanation of the terms of the proposed individual employment agreement was given, the handout did reiterate that some of the terms of the proposed individual employment agreement had changed from those previously offered. The handout advised workers of their right to take
independent advice and offered individual meetings with a company representative, with the opportunity to bring a support person or representative. Among the changes proposed by AFFCO was the following clause:
28. GENERAL CONDITIONS
Subject to any enactment to the contrary, the employee shall not attend
any meetings organised by anyone else on site, either before, during or after work hours or offsite during work hours, without the prior
14 It may be that some workers had additional, individual conditions.
15 Employment Relations Act, s 53.
16 Section 61(2).
express permission of the employer.
There seems to have been a suspicion that this was aimed at the Union, which at the time was still engaged in collective bargaining with AFFCO although those negotiations had stalled. In any event, AFFCO eventually removed the clause. 5 [13] On 9 June 2015, the Union issued proceedings in the Employment Court, in which it sought an interim injunction restraining AFFCO from offering the workers new terms of employment in individual employment agreements. The Union claimed that AFFCO’s actions constituted an unlawful
lockout. Chief Judge Colgan held that the Union had an arguable case but 10 declined to issue an interim injunction on balance of convenience grounds.17
Almost all members of the Union then signed AFFCO’s individual employment agreement without seeking any changes, but without prejudice to their rights, whereupon AFFCO engaged them for the 2015/2016 season, which began on
22 June 2015. 15
A similar process was followed at the Imlay and Feilding plants. They
re-opened for the 2015/2016 season on 5 August 2015. Prior to that, those who had worked at the plants in the previous season were contacted and invited to attend introduction presentations in relation to new individual employment
agreements, which were in substantially the same terms as the Rangiuru 20 agreement.
Before we go on to discuss the issues, we should set out the terms of the key statutory provisions and then some of the more important terms of the collective agreement.
The statutory provisions 25
The purpose of the ERA is set out in s 3. That section provides in part:
3 Object of this Act
The object of this Act is—
(a) to build productive employment relationships through the
promotion of good faith in all aspects of the employment 30 environment and of the employment relationship—
(i) by recognising that employment relationships must be built not only on the implied mutual obligations of trust and confidence, but also on a legislative requirement for good
faith behaviour; and 35 (ii) by acknowledging and addressing the inherent inequality of
power in employment relationships; and
(iii) by promoting collective bargaining; and
(iv) by protecting the integrity of individual choice; and(v) by promoting mediation as the primary problem-solving 40 mechanism other than for enforcing employment standards;
and
(vi) by reducing the need for judicial intervention; ...
Two features of this stand out for present purposes: first, the recognition
of an inherent inequality of power in employment relationships and second, the 45 promotion of collective bargaining.
Section 82 gives the meaning of lockout. Relevantly, it provides:
AFFCO (Interim injunction), above n 2.
82 Meaning of lockout
(1) In this Act, lockout means an act that— (a) is the act of an employer—
(i) in closing the employer’s place of business, or suspending or
discontinuing the employer’s business or any branch of that business; or
(ii) in discontinuing the employment of any employees; or
(iii)in breaking some or all of the employer’s employment agreements; or
(iv) in refusing or failing to engage employees for any work for which the employer usually employs employees; and
(b) is done with a view to compelling employees, or to aid another employer in compelling employees, to—
(i) accept terms of employment; or
(ii) comply with demands made by the employer.
This definition has two elements – the employer must: (a) commit one of the specified acts; (b) for one of the specified purposes. Of central significance in this case is the second requirement that the employer act with a view to compelling employees to accept terms of employment or comply with the
employer’s demands.
[19] Relevantly, the word “employee” is defined in s 6(1), as follows:
6 Meaning of employee
(1) In this Act, unless the context otherwise requires, employee—
(a) means any person of any age employed by an employer to do any
work for hire or reward under a contract of service; and
(b) includes—
...
(ii) a person intending to work; ...
The phrase “person intending to work” is defined in s 5 to mean “a person who
has been offered, and accepted, work as an employee”.
[20] Finally, we should note that lockouts (and strikes) are not per se unlawful. Section 83 provides that participation in a lockout or a strike is lawful if certain conditions are met and s 85 provides protections for those who participate in lawful lockouts or strikes. Section 86 sets out the circumstances
in which participation in a lockout or strike is unlawful and ss 86A and 86B set out the notice requirements for strikes and lockouts respectively.
The collective agreement
[21] The collective agreement contains numerous provisions which have their origins in earlier awards governing the meat industry.18 Some of its provisions
favour the view that employment is discontinuous, as argued by AFFCO; others indicate a longer term employment relationship, as urged by the Union.
18 Awards were an instrument of delegated legislation providing minimum legally enforceable terms and conditions of employment and minimum wages: Gordon Anderson Reconstructing New Zealand’s Labour Law: Consensus or Divergence? (Victoria University Press, Wellington, 2011) at 31–33.
We do not propose to set out all those provisions which might be relevant to one or other view. Rather, we propose to identify the main provisions by way of example.19
An important series of provisions is cll 29–31 of the collective. Clause 29 provides: 5
29. SEASONAL EMPLOYMENT
aSeasonal employees are employed for a season and shall be given five (5) calendar days’ notice of seasonal lay off such notice to be given on or before 10.00 am of the first day of such period.
bSeasonal employment will not necessarily finish on the same day 10 for all employees; for example a night shift may start later and finish earlier; or where two day shifts are running, they will revert
to one day shift when demand drops off, or some areas of work may finish before others and or numbers employed in any department may decrease as the season starts or draws to a close. 15
c All things being equal, layoffs and re-employment will be based
on departmental and/or site (as appropriate) seniority and will operate on a last on first off basis, subject to the experience, employment record, competency and skills of the individuals, also
the need to maintain an efficient, balanced workforce. (The 20
Department Supervisor shall consult with the Union Delegate
prior to lay-offs of employees before making a recommendation to the Plant Manager).
d The employee acknowledges that the nature of the industry is
such that available stock numbers change rapidly and as a result 25 a decision to cease or lower production and give notice of a layoff
is made within a tight timeframe. As a result the employee agrees that:
i A notice of lay-off may be rolled over or extended by the employer; 30
ii Depending on stock availability, factory and processing
requirements there may be inter-season lay-offs for periods affecting all or some staff. Selection of staff will be on the basis advised for end of season lay-offs.
eUpon termination at the end of the season the employee is 35 responsible for keeping the employer advised of their current address and phone number if they wish to be contacted for employment at the commencement of the next season.
There are several features of this provision which support the view that employment under the collective is discontinuous rather than continuous, in 40 particular the reference in cl 29(a) to seasonal employees being employed for
a season; the reference to layoffs and re-employment in cl 29(c); and the terms of cl 29(e), for example, “[u]pon termination at the end of the season.
Mr Cranney for the Union placed particular emphasis on cll 30(a) and
31(b), neither of which, he said, were in the award on which the collective 45 agreement was based. He also emphasised the heading to cl 30, which provided:
A comprehensive description of the terms of the collective agreement can be found in the
Employment Court’s judgment: see AFFCO (EC), above n 3, at [34]–[83].
30. SECURITY OF EMPLOYMENT
a The employer acknowledges the value of a stable, competent and trained workforce which is familiar with the processing methods and procedures required.
b Re-engagement is dependent upon employees completing the employer’s induction process and signed acceptance of terms of employment (being any terms applying in addition to those set out in this Agreement and applicable Site agreements).
Mr Cranney said that the reference to security of employment showed that the
collective contemplated a long-term employment relationship, as was acknowledged explicitly in cl 30(a).
[25] Clause 31 provided for employees to acquire seniority based on length of service with AFFCO. Seniority would, in general, determine the order of layoffs and re-engagement. The clause provided:
31. SENIORITY
a Employees shall have seniority in accordance with the date of
their commencement of employment with [AFFCO] and in accordance with the provisions of this agreement.
b All things being equal, layoffs and re-employment will be based
on departmental and/or site (as appropriate) seniority and will operate on a last on first off basis, subject to the experience, employment record, competency and skills of the individuals, also the need to maintain an efficient, balanced workforce. (The Department Supervisor shall consult with the Union Delegate
prior to lay-offs of employees before making a recommendation to the Plant Manager.)
c A seniority list shall be prepared for each department and/or site and be made available to the delegate each season prior to the commencement of end of season lay-off and again at
re-engagement at the commencement of the season.
d Approved absences due to sickness or injury shall not break
seniority providing the employee has not been employed elsewhere during the period of absence (unless so directed by the Accident Compensation Corporation).
e Seniority shall be broken in the following circumstances:
i Where an employee voluntarily leaves the company or is
dismissed;
ii Where an employee fails to return from a seasonal layoff.
...
h While seniority shall be taken into account in determining layoff and re-engagement final suitability shall be as determined by the employer subject to clause 31b).
As can be seen, this clause provides support for both sides. On the one hand, it recognises and rewards length of service in the concept of seniority, suggesting
continuity of employment. On the other hand, it talks of “layoffs and re-employment”, which is consistent with AFFCO’s argument that employment is discontinuous.
[26] Another feature relied on by the Union was the fact that the collective agreement conferred certain benefits on workers on the basis of their length of
service with AFFCO. So, for example:
(a) Clause 22(c) provided that after six years’ continuous service, workers employed before 1 June 2006 were entitled to an extra week’s annual holiday.
(b) Clause 23 provided for special holidays to recognise long service. By
way of illustration, a worker who had completed more than 20, but 5 less that 25, years of service was entitled to a special holiday of three weeks.
(c) Clause 24 provided that an employee’s sick leave entitlement (normally 40 hours per year) could accumulate to a maximum of 340 hours “provided the employee’s periods of service with [AFFCO] are 10 in consecutive seasons.
(d) Appendix A provided for redundancy.20 Redundancy payments were calculated on the basis of a worker’s period of “continuous service”21 with AFFCO and increased with the years worked.22
The collective agreement also gave AFFCO rights which carried over 15 beyond a particular season. For example, cl 34 created a warnings process for disciplinary matters. Clause 34(c) provided in part:
Warnings shall be issued in three stages and shall lapse after one year from the date of recording, with the exception that final warnings shall lapse
after two years from the date of recording. 20
We will return to the collective agreement in the discussion which follows. We begin with the first question in the appeal, namely, whether the workers were employees within the definition of s 6.
Were the workers “employees” within the meaning of s 6?
As we have foreshadowed, there are two alternative bases on which it 25 might be argued that the workers were employees within the meaning of s 6:
(a) The first is that they were employees because they were employed on employment agreements of indefinite duration.
(b) The second is that they were employees because they were people who
were “intending to work” within the meaning of s 6(1)(b)(ii), as 30 further defined in s 5.
We begin with the first line of argument.
(i)Did AFFCO employ the workers under employment contracts of indefinite duration?
The Employment Court held that the workers had a continuous 35 employment relationship with AFFCO and were employed on employment agreements of indefinite duration, so that they were “employees” within the meaning of s 6.23 In reaching this decision the Court considered a number of matters, four of which require mention.
Mr Cranney noted that redundancy was not provided for in the award.
“Continuous service” as it applied to seasonal employees was defined in cl 23 (long
service leave) to mean “service by any seasonal employee employed by [AFFCO] for a
period of at least two calendar months in each consecutive season. Where [AFFCO] can
only offer employment for less than two calendar months, this lesser period shall suffice,
provided that the employee has not refused an employment offer earlier in the season”:
cl 23(d).The entitlement was four weeks pay for service of between one and 12 months, with an
extra two weeks pay for each additional year: Appendix A, cl 5.
AFFCO (EC), above n 3, at [174]–[180] and [194].
[31] The first is the terms of the collective agreement.24 The Court concluded that, while there were indications both ways, taken as a whole the collective’s provisions favoured the Union’s position of continuity of employment between seasons rather than AFFCO’s position that employment was discontinuous.25
[32] The second is the context in which the collective was agreed and operated.26 The context to which the Court referred was the geographic setting of the relevant plants, many of which were in small towns where the plant was the major employer and often employed several members of the same family.
Many workers served with the company for years on end in what were
semi-skilled jobs, in circumstances where their skills were not transferrable. [33] The third matter is a series of earlier decisions which indicated that seasonal work in the meat industry was generally discontinuous.27 These cases were NZ Meat Processors, Packers, etc IOUW v Alliance Freezing Co (Southland) Ltd (Alliance (1987)),28 New Zealand Meat Processors, etc, IUW v
Alliance Freezing Co (Southland) Ltd (Alliance (1991)),29 New Zealand Meat Workers Union v Richmond Ltd (Richmond),30 Alliance Group Ltd v Cruickshank 31 and New Zealand Meatworkers’ Union Inc v Alliance Group Ltd (Alliance (2006)).32 The Court considered that these cases were distinguishable,
first because there were differences in the terms of the awards at issue in the
earlier cases and the collective agreement in the present case and second, because the cases had been determined in circumstances which were very different and so had been overtaken by events. The Court explained:
[175] The nature of employment generally and its regulation have changed significantly over the last 30 or so years in New Zealand, including at times
when a number of the cases which concluded that seasonal meat industry work was discontinuous, were decided. Some of those cases go back to the period when industry-wide awards were made by the Court’s predecessor. These governed a large number, perhaps all, of the meat industry companies in New Zealand. Awards were quasi-statutory or regulatory
instruments and did not take much, if any, account of the particular employment relationships between individual companies and their employees or, especially, particular plants owned by those separate companies and their employment practices.
[176] By contrast now, not only is there a combination of collective
agreements and [individual employment agreements] entered into by meat companies but, as this case illustrates, there are differences between plants owned by individual companies which are illustrated by separate site agreements.
24 At [33]–[84].
25 At [83].
26 At [85]–[90].
27 At [118]–[161].
28 NZ Meat Processors, Packers etc IOUW v Alliance Freezing Co (Southland) Ltd [1987]
NZILR 537 (ArbC) [Alliance (1987)].
29 New Zealand Meat Processors, etc, IUW v Alliance Freezing Co (Southland) Ltd [1991]
1 NZLR 143, (1990) 3 NZELC 98,287 (CA) [Alliance (1991)].
30 New Zealand Meat Workers Union v Richmond Ltd [1992] NZEmpC 218,
[1992] 3 ERNZ 643 [Richmond].
31 Alliance Group Ltd v Cruickshank [1992] NZEmpC 240, [1992] 3 ERNZ 936.
32 New Zealand Meat Workers’ Union Inc v Alliance Group Ltd [2006] ERNZ 664,
(2006) 7 NZELC 98,350 (EC) [Alliance (2006)].
[177] In these circumstances, we consider that it is appropriate to determine this question of continuity or discontinuity of employment by reference primarily to the contractual terms and conditions in each particular case and the conduct of the working relationships in practice.
[178] In the case of AFFCO’s North Island plants and on the evidence of 5 the three directly concerned in this proceeding but which we understand to
be typical of all of AFFCO’s plants, we have concluded that employees ... are engaged by AFFCO on employment agreements of indefinite duration. Their employment is not terminated at the end of each season and new
employment entirely is not entered into between the parties for the 10 following season. To maintain, as AFFCO does, that its recent current arrangements for the employment of meatworkers reflect those traditional patterns reinforced by court decision in the past, is now an artificial, unrealistic and strained account of the reality of the situation at its plants
and under current employment law. 15
Finally there is the scheme of the current employment legislation. The Court emphasised that the legislation promoted and protected orderly collective bargaining conducted in good faith.33
The Court concluded that there was a lockout and that it was unlawful.34
AFFCO had accepted that the lockout did not relate to bargaining for a 20 collective agreement that would bind each of the workers35 and, in any event, AFFCO had not given the workers the required notice.36
The Court of Appeal disagreed with the Employment Court’s view that the workers were employed on employment contracts of indefinite duration.37
Having outlined the principles of contractual interpretation, the Court of Appeal 25 said that “the central feature of the context and genesis of the collective agreement is the body of case law which has determined disputes about the continuity of employment in the meat industry”.38 These decisions were part of
the background against which the parties negotiated. The Court considered that
the authorities affirmed “the industry standard of termination of the 30 employment relationship between meat processor and seasonal worker at the
end of each killing season”39 and said that the Employment Court had ignored this “decisive background factor” in interpreting the collective.40 Having considered the collective’s provisions, the Court concluded that some were
explicable only on the basis that the parties intended that the workers’ 35 employment would be terminated at the end of each season.41 The Court said
that the Employment Court was wrong to distinguish the earlier authorities on the basis that they were decided in a different era.42 Although it disagreed with
AFFCO (EC), above n 3, at [188].
At [197]–[199].
At [199]. See also Employment Relations Act, s 83(b)(i).
At [199]. See also Employment Relations Act, 86B.
AFFCO (CA), above n 4, at [54].
At [32].
At [38] (footnote omitted).
At [39]. We note that Chief Judge Colgan did raise this issue with counsel for AFFCO in
the course of the hearing but it was not addressed in the Employment Court’s judgment.
At [50].
At [52].
the Employment Court on this point, however, the Court of Appeal agreed that AFFCO had unlawfully locked the workers out. As we will develop later in these reasons, the Court held that the workers were “employees” within the meaning of s 82(1)(b).43
[37] In this Court, Mr Cranney sought to support the Employment Court’s judgment on the ground that it was right to conclude that the workers were employed by AFFCO on employment contracts of indefinite duration. He argued that the Court of Appeal was wrong to identify an “industry standard” of discontinuous employment and was critical of the what the Court had taken
from the earlier authorities. He identified a number of differences that he said were material between the collective agreement and the award that was the subject of most of the earlier decisions and argued that, to the extent that the decisions supported the view that employment in the meat industry was discontinuous, they should be discarded as the products of an earlier and very
different labour relations era. For AFFCO, Mr Jagose argued that the Court of Appeal’s analysis of s 6 was correct, as did Mr Hodder QC for the Intervener. [38] We begin with the approach to the interpretation of employment contracts. This Court addressed that topic in New Zealand Air Line Pilots’
Association Inc v Air New Zealand Ltd (NZALPA).44 As with other contracts,
the essential approach is that described in Firm PI 1 Ltd v Zurich Australian
Insurance Ltd:45
[60] ... the proper approach is an objective one, the aim being to ascertain “the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been
available to the parties in the situation in which they were at the time of the contract”. This objective meaning is taken to be that which the parties intended. While there is no conceptual limit on what can be regarded as “background”, it has to be background that a reasonable person would regard as relevant. Accordingly, the context provided by the contract as a
whole and any relevant background informs meaning.
However, the special features that characterise employment bargaining may also be relevant to interpretation in some circumstances.46
[39] Turning now to the authorities discussed by the Employment Court and
Court of Appeal, we accept that at least some held that employment in the meat
industry was discontinuous, on the basis of awards which contained many of the same terms as the collective agreement. We refer to four of the authorities in particular. First is the decision of the Arbitration Court in Alliance (1987).47
The Arbitration Court was required to determine whether there had been a strike by certain slaughtermen who refused to take up employment at the
commencement of a new killing season. The Court held that there was no binding contract of employment between the employer and any individual slaughterman during the off-season, even assuming that the employer’s
43 At [70]–[71].
44 New Zealand Air Line Pilots’ Association Inc v Air New Zealand Ltd [2017] NZSC 111,
[2017] 1 NZLR 948 [NZALPA] at [71]–[77].
45 Firm PI 1 Ltd v Zurich Australian Insurance Ltd [2014] NZSC 147, [2015] 1 NZLR 432
(footnotes omitted).
46 See NZALPA, above n 44, at [75]–[77].
47 Alliance (1987), above n 28.
obligations to re-hire on the basis of seniority were enforceable.48 As a result, there was no “strike” when the workers refused to take up employment at the beginning of the new season.
Next is the decision of the Court of Appeal in Alliance (1991).49 The issue was whether six particular workers were employed on a permanent basis 5 or on seasonal contracts of employment. The workers worked in the general services department, which had traditionally not been affected by seasonal layoffs. The workers claimed that they had been assured by a company representative that they would be employed in the department on an all year round basis. When they were laid off at the end of the season, they alleged that 10 this was a breach of their employment terms and gave rise to a personal grievance.
Having noted that the Labour Relations Act 1987 provided that an award prevailed over a contract of service to the extent that there was any inconsistency between the two, the Court of Appeal analysed the terms of the 15 relevant award. It expressed its conclusion on this aspect of the case succinctly:50
The award is designed for a seasonal industry. The seasonal engagement of workers is a basic premise underlying the award. That is clear from
cl 29(g), cl 30 and the leave provisions earlier referred to. Thus cl 30(c) 20 providing for layoffs and re-employment to be based on departmental and/or group seniority, and cl 30(d) requiring a seniority list to be prepared for each department or group prior to the commencement of seasonal layoffs, necessarily govern the position of general services department workers. In order to uphold the claim of unjustifiable 25 termination as advanced for the six workers, it would be necessary to disregard those award provisions. They are truly inconsistent with the
co-existence of a contractual provision for permanent employment.
As will be obvious from the references in this passage, the provisions of the award were, materially, identical in some respects to provisions in the collective 30 agreement.
The Employment Court followed these decisions in Richmond.51 Certain workers alleged that a meat company had locked them out unlawfully at the commencement of a new slaughter season. This raised the question whether the workers were employed under continuous contracts of employment, by virtue 35 of which they were “employees” in the off-season, or whether their employment was discontinuous. By a majority, the Employment Court held that
the workers were not employed under continuous employment contracts; rather, their employment was discontinuous.52 Chief Judge Goddard dissented.
Finally, we mention Alliance (2006), a decision of the Full Court of the 40
Employment Court.53 Section 63 of the Holidays Act 2003 gave certain leave
entitlements to employees who had completed specified periods of “current continuous employment” with their employer. The Employment Court was required to assess how this provision applied to meat workers; specifically, the
At 543.
Alliance (1991), above n 29.
At 150.
Richmond, above n 30.
At 684–685 per Finnigan J and at 704 per Palmer J.
Alliance (2006), above n 32.
Court had to determine whether meat workers who worked on a seasonal basis resumed work at the beginning of a new season as new or as continuing employees. The Court concluded the meat workers’ employment was terminated when they were laid off for the season and they were re-employed
at the beginning of the new season. This was on the basis of the earlier authorities and the contractual arrangements between the parties.
[44] Both Mr Jagose and Mr Hodder argued that the question whether these decisions were right or wrong was not one the Court had to consider. They submitted that the significant point was that the decisions were undoubtedly
part of the shared background against which both parties (whom the Court of Appeal described as “embedded in [the] industry”)54 negotiated the collective agreement; the collective agreement carried over many of the award’s provisions and should be interpreted consistently with that shared background. [45] We agree with this submission. The authorities are firmly based on the
view that seasonal employment in the meat industry is discontinuous. On an objective view, this was an important part of the background against which both AFFCO and the Union negotiated the collective agreement (and therefore the workers’ individual employment agreements).55 This is not to say that parties cannot negotiate different arrangements. The Court of Appeal gave the
following provision from a collective employment contract as an example of an alternative arrangement:56
Although the work available to many employees is of a seasonal nature, for the purposes of continuity of employment, all employees shall be deemed to be permanently employed by the employer pursuant to the terms of this
contract, although some may not be required to attend work nor be entitled to receive any remuneration during seasonal lay-off. Therefore, the employer shall continue to engage every employee in each season, subject only to the provisions for termination and redundancy.
But absent some such explicit provision, we consider that the parties must be
treated as having negotiated against the background that seasonal employment in the meat industry was discontinuous, which raises the question whether there is some such explicit indication to the contrary in the collective agreement. [46] One feature of the collective agreement (and the individual employment agreements based on it) is that it contains a number of provisions which were
35intended to confer continuing benefits or rights, or to impose continuing obligations. The presence of such provisions supports the continuous employment analysis as adopted by the Employment Court. However, we do not see this feature as a decisive indication as parties may have arrangements
54 AFFCO (CA), above n 4, at [49].
55 Other courts have recognised that judicial interpretations may be part of the relevant
background: see, for example, in Beaufort Developments (NI) Ltd v Gilbert-Ash NI Ltd
[1999] 1 AC 266, [1998] 2 All ER 778 (HL), where Lord Hoffmann accepted that the
evolution of some forms of contract was often the result of interaction between drafters
and court, so that some provisions could not be understood properly without reference to
the meaning which judges had given to their predecessors over time: at 274. In Amcor
Ltd v Construction, Forestry, Mining and Energy Union [2005] HCA 10, (2005) 222
CLR 241 the legislative background was part of the context in which a redundancy
agreement had to be construed: see at [13] per Gleeson CJ and McHugh J, at [50] per
Gummow, Hayne and Heydon JJ and at [64]–[65] per Kirby J (who referred also to
judicial interpretations of awards and other employment agreements).56 AFFCO (CA), above n 4, at [49] citing the expired collective employment contract at a
meat processing works in Hughes v Riverlands Eltham Ltd EC Wellington WEC58/96,
18 September 1996 at 3.
(as to re-employment, for example) which remain binding and enforceable even though employment terminates at the end of each season. Equally, we do not see it as decisive the other way that workers have a period where no work is offered and they have no right to any pay; that feature is seen in its most
extreme form in “zero hours” employment contracts. 5 [47] While we acknowledge the point made by the Employment Court that conditions have changed since the awards were in force and some of the earlier cases were decided, we consider that the meaning of the collective agreement (and therefore the individual employment agreements) is clear. We agree with
the Court of Appeal that it contemplates discontinuous employment. We 10 consider that the language of key provisions such as cll 29, 30 and 31,57 viewed
in the context of the whole agreement, points strongly to discontinuous employment. While we accept Mr Cranney’s submission that some provisions in the collective impose continuing obligations, that does not, as we have just
said, necessarily mean that there was a continuing employment relationship – 15 pre-acquired rights can survive termination of a contract. The background provided by the earlier decisions of the Arbitration Court, Court of Appeal and Employment Court confirms this view of the collective’s meaning. There is nothing in the collective sufficient to negative the view that it reflects the approach established in the earlier authorities – quite the reverse, in fact.58 20
(ii) Were the workers persons intending to work?
We turn now to the question whether the workers were persons intending to work in terms of s 6(1)(b)(ii) (as defined in s 5). The Court of Appeal held that the second respondents did not fall within this definition, because the
formal elements of an employment contract were required, rather than simply 25 an intention by the workers to take up employment.59
Mr Cranney argued that the second respondents were, during the off-season, persons intending to work within the s 5 definition, because they had been offered and had accepted work. Both the employer and the workers
were parties to an ongoing agreement, although the workers had not yet begun 30 work. The workers did not need to agree a new contract with AFFCO before
they re-commenced work at the beginning of the new season because the collective (and individual employment agreements based on it) continued to apply.
Two provisions of the collective agreement are particularly relevant to 35 this argument, cll 29(e) and 30(b). Although we have quoted them earlier,60 we reiterate their effect:
(a) Clause 29(e) provides that on termination at the end of the season employees are responsible for keeping AFFCO advised of their current addresses and of the phone numbers on which they wish to be 40 contacted for employment at the beginning of the following season.
(b) Clause 30(b) provides that re-engagement for the new season is dependent upon employees completing AFFCO’s induction process
See above at [23]–[25].
We acknowledge that there may be rare situations where contracts have been negotiated
against a background of judicial decisions as to the interpretation of particular clauses but
where it is nevertheless arguable that those interpretations have become inappropriate for
some reason: see Beaufort Developments, above n 55, for an example of this in the context
of a construction contract.AFFCO (CA), above n 4, at [56]–[57].
See above at [23]–[24].
and signing an acceptance of terms of employment “(being any terms applying in addition to those set out in this Agreement and applicable Site agreements)”. [Emphasis added.]
[51] The result was, Mr Cranney argued, that if workers had supplied their
contact details, all they had to do was wait. Re-engagement was “mandatory and automatic” unless the particular person was surplus to requirements for skill or other reasons. The terms of re-engagement were essentially settled. [52] While this argument has some attraction, it does seem to us something of a stretch to describe a person who has left his or her name with AFFCO at the
end of the season “a person who has been offered, and accepted, work as an employee”.61 Clearly, a person who has left his or her name has no obligation to present him or herself for work with AFFCO at the beginning of the next season. It might be argued that by responding to AFFCO’s invitation to attend
the initial presentation about the new season, a worker accepts an offer of
employment made by AFFCO through the mechanism of the continuing provisions in the collective agreement (or the individual employment agreements based on it), but that argument was not developed in submissions and is not something that we need to decide in the present case.
[53] Accordingly, we prefer to deal with the case on the basis of the next
argument, to which we now move.
(iii) What is the meaning of “employees” in s 82(1)(b)?
[54] The Employment Court accepted an alternative analysis to its principal analysis that the second respondents were “employees” in terms of s 6. The Court considered that even if the workers were not employees after the end of
the 2014/2015 season, they had been locked out unlawfully by AFFCO when it required them to agree new individual employment agreements in order to work for the 2015/2016 season. The Court said:
[197] Combined with its actions in current collective bargaining for a collective agreement with which the Union did not agree, AFFCO’s refusal
to re-engage the [workers] amounted to a lockout under s 82 of the Act.
They were the acts of the employer of those employees in refusing or
failing to engage those employees for work for which the employer usually employed employees, with a view to compelling those employees to accept terms of employment or, alternatively, to comply with the employer’s
demands (s 82(1)(a)(iv) and (b)).
[198] AFFCO was prepared to accommodate the [workers] on some minor issues, and to withdraw particularly egregious and arguably unlawful provisions. However, the evidence persuades us that AFFCO was intent upon achieving its outcomes in difficult collective bargaining, by
purporting to re-engage the employees for the coming season effectively on its desired collective terms and conditions of employment, but contained in [individual employment agreements] rather than a collective agreement. provisions. However, the evidence persuades us that AFFCO was intent upon achieving its outcomes in difficult collective bargaining,
by purporting to re-engage the employees for the coming season
61 Employment Relations Act, s 5.
effectively on its desired collective terms and conditions of employment, but contained in [individual employment agreements] rather than a collective agreement.
[199] The lockout was unlawful. The company accepts that the lockout did
not relate to bargaining for a collective agreement that would bind each of 5 the employees concerned (s 83(b)(i)). It related to individual bargaining
for [individual employment agreements] with the [workers]. Although [AFFCO] has conceded this exclusory factor, we may otherwise have had some doubts that the lockout was unrelated to the collective bargaining but
both parties agree that this is so. It was, without doubt, unlawful in that it 10 was imposed without the required notice to the employees. The defendant’s actions purported to be a lockout, but we find that this was an unlawful lockout.
This extract appears to refer back to a passage earlier in the Employment Court’s judgment, when the Court noted that the s 6 definition began with the 15 words “In this Act, unless the context otherwise requires”. The Court said:
[115] Can it be said that the “context” of the use of the words “employee” and “employer” in s 82 of the Act defining a lockout requires a different meaning to that provided in ss 5 and 6? Does the context of bargaining (especially collectively) mean that the words “employer” and “employee” 20 and the plurals of those referred to in s 82(1), mean not only persons who
have currently an employment relationship under s 4(2)(a) of the Act but also persons who have had previous relationships of seasonal employment and who are both wishing to engage in a further seasonal employment
relationship after a seasonal lay-off? In that analysis, the reality of both the 25 applicable history between the parties, and the relevant contents of the collective and/or [individual employment agreements] which governed
their previous relationship as defined by ss 5 and 6 of the Act, will be relevant. This question applies particularly to s 82(1)(a)(iv):
... the act of an employer— 30
...
(iv) in refusing or failing to engage employees for any work for which the employer usually employs employees; and
(b) ... with a view to compelling employees ... to
(i) accept terms of employment; or 35 (ii) comply with demands made by the employer.
[116] We conclude that, at least in s 82(1)(a)(iv), the words “employees” and “employer” may extend to cover persons who are subject to a current employment agreement or who have not yet been offered and accepted employment. This meaning accommodates such seasonal employees as the 40 second [respondents], even if [AFFCO] is correct that there is no ongoing employment relationship in the off-season.
[56] Although not entirely clear, we interpret these extracts as adopting a similar analysis to that which found favour with the Court of Appeal, namely that “employees” in s 82(1)(b) has a broader meaning than the definition of “employee” in s 6.62 Mr Jagose challenged this interpretation of s 82 strongly.
[57] Mr Jagose drew attention to the Court of Appeal’s statement of its conclusion:63
[70] It follows that we are satisfied the contractual and legislative context requires the word “employees” in s 82 to include the seasonal workers in this case. The unlawful lockout provisions must extend to and protect
former employees – in this case, seasonal workers – who enjoy existing contractual rights to an offer of re-employment from a party refusing to engage them unless they accept new terms of employment inconsistent with those existing rights. It is the enduring nature of the seasonal workers’ entitlements and the employer’s obligations which survive outside of a
current employment relationship that provide the necessary contextual justification for extending the scope of the unlawful lockout provision in this case.
He submitted that the Court of Appeal had misconstrued s 82 and argued that the Court had usurped the function of the legislature by relying on
circumstances extrinsic to the Act itself in its consideration of context, specifically, the contractual arrangements between the parties to the effect that the workers had a right to apply for re-employment and AFFCO had a “correlative duty” to offer re-employment subject to certain conditions.64
Mr Jagose argued that the word “employees” in s 82 could only refer to
persons who were employees at the time of the alleged lockout. In this case, the Court of Appeal had accepted that the second respondents were not employed by AFFCO at the time of the alleged lockout.
[58] We begin our consideration of this aspect of the case by outlining the approach to be taken to context qualifications. The Court of Appeal discussed
this topic in Police v Thompson.65 The issue in that case was whether the word
“bar” in s 259(7) of the Sale of Liquor Act 1962 included a bottle store. At the
request of an adult friend, the defendant, who was 19, accompanied another friend in a car to a bottle store to pick up two kegs of beer which the adult friend had previously paid for. After the two had put the beer kegs into the boot
of the car, they went back into the bottle store to collect the taps for the kegs.
At that point, they were seen by a police constable. Upon being questioned, the
defendant acknowledged that he was 19. He was subsequently charged with being in a “bar” under-age (at that time, under 21), contrary to s 259(7). Although “bar” was defined in the legislation in a way that included a bottle
62 We interpret the Employment Court’s judgment differently to the Court of Appeal on this point. The Court of Appeal appears to have considered that the alternative analysis referred to by the Employment Court at [195] of its judgment (AFFCO (EC), above n 3) was that AFFCO’s actions amounted to a refusal to engage prospective employees within the meaning of s 6(1)(b)(ii): AFFCO (CA), above n 4, at [4] and [57]. While the Court of Appeal noted that the Employment Court had “touched on” the possibility of another alternative analysis under s 82, it stated that the Employment Court did not develop the analysis, going no further than simply “asking rhetorically within its continuity inquiry whether the ‘context’ of the use of the words ‘employee’ and ‘employer’ in s 82 requires a different meaning to that provided in ss 5 and 6”: AFFCO (CA), above n 4, at [58].
63 AFFCO (CA), above n 4.
64 At [69].
65 Police v Thompson [1966] NZLR 813 (CA).
store, both the Magistrate at first instance and Hardie Boys J on appeal66 held that the context of the relevant provision meant that the ordinary meaning of “bar” applied rather than the extended meaning in the statutory definition and that, on its ordinary meaning, the word “bar” did not include a bottle store. Accordingly, the charge against the defendant was dismissed. The Court of 5
Appeal were unanimous in allowing the Crown’s appeal, on the basis that the
statutory definition applied.
Three judgments were delivered. North P summarised the approach to be taken to context qualifications as follows:67
The view I take is this: where a statute contains a definition section giving 10 a word or phrase an extended meaning beyond its ordinary meaning, a Court of construction should commence its inquiry by assuming that the Legislature intended the word or phrase to have its statutory meaning. I would think that only rarely indeed will the Court be justified in departing
from that meaning. It is entitled to do so only if the language of the section 15 under construction requires a different meaning.
According to this extract, the focus of the contextual analysis is the language of the particular provision.
In his judgment, Turner J seems to have been prepared to take a wider
view of the relevant context. The Judge said:68 20
If “context” is used in its broadest sense, it may perhaps include the policy of the Act and the history of the legislation, and the consequences of a given interpretation, as well as the text surrounding the provision under examination. Hardie Boys J took all these into account. Before noticing
his observations on these matters I will for myself say that all of them lead 25 me to the conclusion that the definition in s 2 is applicable to the word
“bar” in s 259(7).
His Honour then went on to discuss the policy and legislative history of the provision.
Finally, having noted that, if the statutory definition applied, a bottle 30 store was a “bar” for the purpose of the particular provision, McCarthy J made
the following observation:69
The definition is to be used “unless the context otherwise requires”. This merely expresses the general law controlling the construction of statutes. It
is indubitably the law that in order to arrive at the true meaning of any 35 particular phrase in a statute that phrase is not to be viewed detached from
its context in the statute, but is to be read with the whole context. Nevertheless, it would take a conflict of unmistakeable character, in my view, to justify a Court departing from a specific meaning which a statute
expressly requires to be applied, if it reasonably can: ... . 40
To summarise, all members of the Court agreed that, where a word or phrase is defined in a statute, there is a high threshold to be crossed before a court will conclude that the definition was not intended to apply to the word or phrase in a particular provision in the statute. However, it is not clear whether
Police v Thompson [1965] NZLR 935 (SC).
Thompson, above n 65, at 818.
At 820–821.
At 823.
the members of the Court agreed on what constituted relevant context. North P seemed to focus on the language of the particular provision under consideration, as did McCarthy J, whereas Turner J was prepared to give “context” a broader meaning, so as to include legislative history and policy
considerations (including the consequences of particular interpretations).
[63] It may be that the different articulations of the test do not reflect
significant differences in approach as a practical matter, however. Although North P referred to the language of s 259(7) as being the key contextual consideration, he also gave prominence to policy considerations, as follows:70
Approaching the appeal in this way, in my opinion it is manifest that there is no difficulty in fitting the defined meaning of the word “bar” into s 259(7) and indeed, in my opinion, there are cogent reasons why the Legislature should be concerned to keep minors away from that part of premises where liquor is sold.
Moreover, the approach to interpretation mandated by the Interpretation Act
1999 (s 5(1) in particular)71 needs to be borne in mind in this context, as in
others.
[64] In Barr v Police, Wilson J, delivering the judgment of this Court, cited with approval the following statement from the then current version of Burrows
and Carter Statute Law in New Zealand (citing Thompson):72
A statutory definition is only displaced where there are strong indications to the contrary in the context. That is particularly so where the definition is the stipulative kind that extends the meaning of the word.
Wilson J went on to say:73
Such indications as there are in the present context, however widely the context is understood, cannot be said to point strongly to giving the plain words other than their ordinary meaning. The definition is, in a sense, “stipulative” in nature because it restricts the meaning of the word “test” to a meaning that is not its usual meaning of subjecting blood to examination.
[65] Summarising what we consider to be the correct approach, where there is a defined meaning of a statutory term that is subject to a context qualification, strong contextual reasons will be required to justify departure from the defined meaning. The starting point for the court’s consideration of context will be the immediate context provided by the language of the provision under
consideration. We accept that surrounding provisions may also provide relevant context, and that it is legitimate to test the competing interpretations against the statute’s purpose, against any other policy considerations reflected in the legislation and against the legislative history, where they are capable of providing assistance. While we accept Mr Jagose’s point that the context must
relate to the statute rather than something extraneous, we do not see the concept as otherwise constrained.
[66] Against this background, we turn to consider s 82.
70 At 818 (emphasis added).
71 Section 5(1) of the Interpretation Act 1999 provides: “[t]he meaning of an enactment must
be ascertained from its text and in light of its purpose”.
72 Barr v Police [2009] NZSC 109, [2010] 2 NZLR 1 at [11]. The quoted extract appears in
the current version of Ross Carter Burrows and Carter Statute Law in New Zealand
(5th ed, LexisNexis, Wellington, 2015) at 439. See also the discussion at 438–441.73 At [11].
We have set s 82(1) above.74 It will be recalled that it requires two elements:
(a) a specified act by an employer (s 82(1)(a)); and
(b) which is done for a specified purpose (s 82(1)(b)).
Two of the acts specified in s 82(1)(a) are “discontinuing the employment of 5 any employees” (s 82(1)(a)(ii)) and “refusing or failing to engage employees
for any work for which the employer usually employs employees” (s 82(1)(a)(iv)). In the first of these, the word “employees” obviously refers to existing employees. That is not true of the second, however. In the phrase “refusing or failing to engage employees”, the word “employees” must cover 10 persons who are not employees in fact but rather are seeking employment, as
Mr Jagose acknowledged in his submissions.
Turning to the purpose element in s 82(1)(b), the purposes identified are: to compel employees, or aid another employer in compelling employees, to
“accept terms of employment” or “comply with demands made by the 15 employer”. Mr Jagose submitted that in the purpose provisions, “employees”
was limited to those employed by the employer at the time of the relevant act. He argued that this reflected the fundamental characteristic of a lockout – there had to be an underlying employment relationship from which the employee
could be locked out. The employer’s action had to be directed at compelling an 20 employee, who already had terms of employment under his or her existing employment agreement, to accept new terms of employment. While there were provisions in the collective and individual employment agreements which carried over beyond termination (at least as to priority for re-engagement),
those provisions were insufficient to constitute the minima necessary for an 25 employment relationship. Mr Jagose pointed to other sections in the
ERA which made explicit provision for people who were not at the relevant time employees: for example, the references in s 56A(6) to persons whom the employer might employ in the future and in s 63A(7) to certain employers’ obligations extending to “prospective employees”. 30 [69] In this context, Mr Jagose also drew attention to the strike provision,
s 81. Relevantly, s 81(1) provides:
81 Meaning of strike
(1) In this Act, strike means an act that—
(a) is the act of a number of employees who are or have been in the 35 employment of the same employer or of different employers—
(i) in discontinuing that employment, whether wholly or partially, or in reducing the normal performance of it; or
(ii) in refusing or failing after any such discontinuance to resume
or return to their employment; or 40 (iii) in breaking their employment agreements; or
(iv) in refusing or failing to accept engagement for work in which they are usually employed; or
(v) in reducing their normal output or their normal rate of work;
and 45 (b) is due to a combination, agreement, common understanding, or
concerted action, whether express or, as the case requires, implied, made or entered into by the employees.
At [18].
Mr Jagose emphasised the opening words of s 81(1)(a): a “strike ... is the act of a number of employees who are or have been in the employment of the same employer” (emphasis added). This showed that the legislature was well aware of the distinction between current and former employees and included the latter
where necessary. There was no similar language in s 82. Mr Jagose submitted that this was a further contextual indication that the definition of “employee” in s 6 applied in relation to s 82(1)(b).
[70] We are not persuaded by these submissions. Before we explain why, however, we need to address the “carry over” provisions in the collective
agreement and in the individual employment agreements based on it.
Mr Jagose accepted that even though the individual employment agreements
terminated at the end of the 2014/2015 season, AFFCO was contractually obliged to offer re-employment for the 2015/2016 season in accordance with the seniority provisions in the agreements. However, Mr Jagose suggested in
argument that other apparently continuing provisions in the agreements did not continue to apply after termination. Perhaps the most significant example is cl 30(b), which provided:
Re-engagement is dependent upon employees completing the employer’s induction process and signed acceptance of terms of employment (being
any terms applying in addition to those set out in this Agreement and applicable Site agreements). [Emphasis added.]
The reason that this provision is important is that it seems to identify the terms that would apply on re-engagement, that is, the previously applicable terms (subject, of course, to any others that might be mutually agreed). If it is
interpreted in this way, the clause limits AFFCO’s ability on re-engagement to require workers to accept individual employment agreements that contain less advantageous terms.
[71] The term of the collective agreement was 1 May 2012 until
31 December 2013. Accordingly, it was intended to run across at least two
seasons (more if the statutory extensions are taken into account). Given its multi-season coverage, it is to be expected that the agreement would address the terms to apply at the beginning of the new season while it was in effect. The critical question is, what happens when the collective and its statutory extensions come to an end? If, as Mr Jagose accepted, the re-engagement
requirements based on seniority continue to apply, why do the other continuing provisions not also continue to apply, especially as there are continuing provisions for the benefit of both workers and AFFCO?
[72] One objection raised by Mr Jagose to the continued application of cl 30(b) was that it would mean that employment, although seasonal, was
effectively perpetual, that is, as each new season commenced, AFFCO would have an obligation not only to offer re-employment based on seniority but to do so on the same terms as in the relevant expired agreement (subject to any agreed variations). It is difficult to see, however, why that raises any difficulty of principle. Putting fixed term contracts to one side, employment contracts are
generally perpetual, in the sense that they apply until the employee resigns or retires, or until he or she is terminated for cause or as a result of redundancy. In any event, the parties no doubt contemplated that the collective agreement would be replaced by another collective, given that they starting negotiating for a new one before the old one expired. More importantly, however, it is difficult
to see any principled basis on which one continuing obligation (to offer re-employment) survives termination, but others do not. It is not possible, in our view, to differentiate between the various continuing obligations in the agreements in this way.
In the result, then, we consider that there are continuing obligations in 5 the collective agreement, and in the individual employment agreements based
on it, which survive termination. One of these is AFFCO’s obligation to offer re-engagement in accordance with seniority at the start of the new season. Once it is accepted that the obligation to offer re-employment survives, we consider
that the other continuing clauses also remain in effect, including cl 30(b). 10 [74] We turn now to the reasons for rejecting Mr Jagose’s submissions on the meaning of “employees” in s 82(1)(b).
First, we consider that the word “employee” is used in s 82(1)(a) in different senses, one of which does not fall within the s 6 definition, that is, “employees” in s 82(1)(a)(iv). As we have said, there is no dispute that 15 “employees” in that context means persons seeking employment. We also consider that the context indicates that “employees” in s 82(1)(b) carries a broader meaning than simply existing employees (including persons who have
been offered and have accepted work as employees). One of the specified purposes is compelling employees to accept terms of employment. Given that 20 existing employees will already have terms of employment, it might have been expected that the provision would have used language such as “new”, “different” or “more onerous” terms of employment had the intention been to
limit the specified purpose to compelling existing employees. As written, the language is apt to include persons seeking employment (subject to the 25 qualification expressed below).75
Second, s 82(1)(a)(iii) refers to the act of an employer “in breaking some or all of the employer’s employment agreements”. In a seasonal employment situation where employment is terminated at the end of the season
and re-engagement occurs at the beginning of the new season, there may be 30 terms of employment that carry over beyond termination, as in the present case.
The Act recognises in other contexts that an employer may breach such a term, even after employment has ended.76 If such a continuing obligation was breached by an employer and the employer’s act was intended to compel the particular worker and/or similarly placed workers to accept new and less 35 advantageous terms of employment, there is no linguistic reason that “employees” in s 82(1)(b) should not be read as applying to those workers. Moreover, we consider that this interpretation conforms with the legislative purpose. We see no substantive difference in this context between seasonal workers who have a permanent employment clause and seasonal workers such 40 as the second respondents who do not.
Third, although a direct comparison cannot be made between the strike and lockout provisions given their different requirements,77 we think it significant that a strike may involve acts by persons who are no longer employees. In principle, there seems to be no reason why the lockout 45 provisions should not apply to acts committed by an employer for the purpose
See below at [78].
Employment Relations Act, s 103(1)(b).
Whereas s 82 requires an act committed for a purpose, s 81 requires an act that results
from a combination or concerted action by employees.
of making a person accept particular terms of employment, in circumstances where the person is owed employment obligations by the employer, although he or she is not actually employed at the time.
[78] We must make explicit a limitation that is implicit in what we have said
in the preceding paragraphs. It is not the case that an employer who refuses to hire a new employee because the two are unable to agree terms of employment will, for that reason alone, have locked out the potential hire. As we have emphasised, the second respondents in this case were not, in contractual terms, strangers to the employer. Rather, they were people who had previously worked
for AFFCO and to whom AFFCO owed contractual obligations, including as to re-hiring, even though their employment had terminated at the end of the previous season and they were seeking to be re-engaged for the new season. That feature of termination plus re-engagement under the umbrella of a number of continuing obligations distinguishes this case. Like the Court of Appeal, we
consider that the relationship between AFFCO and the second respondents was sufficiently close to bring the latter within the scope of the word “employees” in s 82(1)(b).
[79] Mr Jagose argued that even this limited approach was over-broad. It created the risk of “collateral damage” as there were others who might be
caught within it, such as people on parental78 or volunteer79 leave. As we understood it, Mr Jagose’s point was that although there will be no difficulty
where an employee’s position is held open, in the relatively rare situations where the employee’s position cannot be held open, so that the employee is left with a preference for re-employment, there is a real risk of the employer being
found to have “locked out” the employee if the Court of Appeal’s approach is accepted. As he put it, if the Court of Appeal is right, there is now no ability to distinguish between a straightforward offer of employment and an offer that constitutes a lockout.
[80] We do not agree. The examples given relate to matters which are the
subject of particular legislation, and it is that legislation that will determine the rights and obligations of employees and employers in the particular settings. Nor do we agree with Mr Jagose’s argument that the Court of Appeal’s decision means that an offer by AFFCO to a returning worker of identical terms of employment to those which he or she enjoyed during the previous season
would amount to a lockout. On the basis of cl 30(b), those terms and conditions would continue to apply unless and until the parties agreed alternative terms and conditions, so the issue of lockout does not arise.
Jurisdiction
[81] Finally, we come to the question of jurisdiction under s 214 of the ERA.
As we have said, Mr Cranney raised the question whether the Court of Appeal had jurisdiction, an argument that, if accepted, would have left the decision and reasoning of the Employment Court intact. As Mr Cranney did not develop the point in submissions, we will deal with it briefly.
78 Parental Leave and Employment Protection Act 1987.
79 Volunteers Employment Protection Act 1973.
This Court discussed the relevant principles in NZALPA.80 We have no doubt that there is jurisdiction in this case, for two reasons. As the Court of Appeal noted in Sears v Attorney-General, the authorities established that the Court was:81
... not precluded from examining questions of principle going beyond a 5 particular term of a contract and that where the Employment Court errs in principle in how it goes about interpreting the contract, that is an error of
law for appropriate consideration by this Court ...
The Court then went on to say that the same applies where crucial questions concern the interpretation and application of legislation.82 The present case 10 illustrates both elements of this.
First, the Employment Court erred in principle in its treatment of context. As we have said, the Employment Court treated the geographic setting of AFFCO’s plants (in small communities) as part of the context against which
the collective agreement had to be interpreted and distinguished the earlier 15 authorities discussed above on the basis that they were decided in circumstances which were very different from those currently applying. It did
not address at all the argument that the earlier authorities were part of the background against which the parties to the collective agreement negotiated, although the Chief Judge did raise the point with counsel in the course of 20 argument. This approach constitutes an error of principle in the interpretation of
the collective agreement sufficient to found jurisdiction.
Second, as is obvious, this case depends crucially on the interpretation of certain legislative provisions, in particular s 82(1)(b) of the ERA, so that the Court has jurisdiction for that reason also. 25
Decision
The appeal is dismissed. The appellant must pay the first respondent costs of $35,000 plus reasonable disbursements. We certify for two counsel.
Orders
(A) The appeal is dismissed. 30 (B) The appellant must pay the first respondent costs of $35,000 plus
reasonable disbursements. We certify for two counsel.
Solicitors for AFFCO: MAC Williams (Hamilton).
Solicitors for the respondents: Oakley Moran (Wellington).
Solicitors for the intervener: Chapman Tripp (Wellington). 35
Reported by: Bernard Robertson, Barrister
NZALPA, above n 44, at [21]–[66].
Sears v Attorney-General [1995] 2 ERNZ 121, (1995) 8 PRNZ 571 (CA) at 125.
At 125.
9
13
1