New Zealand Public Association Te PÅ«kenga Here Tikanga Mahi Incorporated v Secretary for Education
[2025] NZCA 406
•18 August 2025 at 11:30 am
| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA8/2025 |
| BETWEEN | NEW ZEALAND PUBLIC SERVICE ASSOCIATION TE PŪKENGA HERE TIKANGA MAHI INCORPORATED |
| AND | SECRETARY FOR EDUCATION |
| Court: | Courtney and Collins JJ |
Counsel: | P Cranney for Applicant |
Judgment: | 18 August 2025 at 11:30 am |
JUDGMENT OF THE COURT
AThe application for leave to appeal is granted on the following question of law:
Did the Employment Court err in failing to apply the orthodox and required principles of contractual interpretation when interpreting the collective agreement?
BWe reserve costs pending the outcome of the appeal.
REASONS OF THE COURT
(Given by Courtney J)
Introduction
In July 2024, the Employment Relations Authority (ERA) determined a dispute between the New Zealand Public Service Association Te Pūkenga Here Tikanga
Mahi Inc (the PSA) and the Ministry of Education (the Ministry) in favour of the PSA.[1] The dispute arose from a change in management process started by the Ministry in response to the Government’s requirement for cost savings and concerned the interpretation of the parties’ collective employment agreement in effect for the period 1 March 2023 to 17 January 2025 (the collective agreement).[1]Public Service Association – Te Pūkenga Here Tikanga Mahi Inc v Secretary of EducationThe Ministry successfully challenged the ERA’s determination.[2] The PSA seeks leave to appeal the Employment Court’s decision.
Jurisdiction
Under s 214(1) of the Employment Relations Act 2000 (the Act), a party may, with leave, appeal from a decision of the Employment Court on questions of law “other than a decision on the construction of an individual employment agreement or a collective employment agreement”. Leave may be granted if the proposed question of law is one that by reason of its general or public importance or for any other reason, ought to be submitted to this Court.[3] The proposed question must be seriously arguable.[4]
[3]Employment Relations Act 2000, s 214(3).
[4]New Zealand Professional Firefighters Union Inc v Fire and Emergency New ZealandThe Ministry opposes the PSA’s application for leave on the ground that it is involves a question of construction of the collective agreement and is therefore outside the scope of s 214(1).
The PSA says that the proposed appeal does not fall within the proviso to
s 214(1) because it asserts an error by the Employment Court in applying the relevant principles.[5] It says that the correct application of the relevant principles is a matter of public importance because it affects thousands of public servants and other employees.[5]Citing New Zealand Air Line Pilots’ Association Inc v Air New Zealand Ltd [2017] NZSC 111, [2017] 1 NZLR 948 at [23]–[48] per Arnold, O’Regan and Ellen France JJ, at [105] per William Young J and at [155] per Glazebrook J.
Mr Cranney, for the PSA, acknowledged that, on its face, the proposed appeal concerns the interpretation of a collective agreement and would therefore be excluded by s 214(1). However, he submitted — correctly — that the proviso in s 214(1) is not to be read literally and that an appeal that raises “questions of interpretative principle” will fall within the scope of s 214(1).[6] Because the proposed appeal would assert that the Judge erred in principle, it was amenable to leave being granted. Relevantly, the fact that the applicable principles have been stated correctly does not preclude an error arising that involves a question of interpretative principle — a judge may still err in the application of the principles they have correctly stated.[7]
[6]At [48] per Arnold, O’Regan and Ellen France JJ, citing Bryson v Three Foot Six Ltd [2005][7]New Zealand Air Line Pilots’ Association Inc v Air New Zealand Ltd, above n 5, at [50]–[51] per Arnold, O’Regan and Ellen France JJ.
Mr Cranney cautioned that distinguishing between cases involving an error in interpretative principle, and those which merely assert error in the construction of the document, can sometimes only be achieved in the context of a hearing of the substantive appeal. He referred to Waitemata District Health Board v New Zealand Public Service Association,[8] where leave was granted provisionally, and New Zealand Professional Firefighters Union v New Zealand Fire Service Commission,[9] where the application for leave and substantive appeal were heard together. We do not, however, find these decisions to be of assistance, given they pre‑date the Supreme Court’s decision in New Zealand Air Line Pilots’ Association Inc v Air New Zealand Ltd,[10] which confirmed the scope of s 214(1).
The proposed appeal
[8]Waitemata District Health Board v New Zealand Public Service Association [2005] ERNZ 1058 (CA).
[10]New Zealand Air Line Pilots’ Association Inc v Air New Zealand Ltd, above n 5.
The issue in the Employment Court was the proper interpretation of cls 11.15.1 and 11.16 of the collective agreement, which provide:[11]
[11]Employment Court decision, above n 2, at appendix.
11.15.1 Details of Conditions and Options
During this period the PSA and the Ministry will meet to reach agreement on the options which are appropriate to the circumstances and will be available to surplus employees will be agreed.
The following options may be available:
(a)Leave without pay
(b)Enhanced early retirement
(c)Retraining
(d)Redeployment/job search
(e)Severance (case by case basis)
(f)Retirement
(g)Voluntary Redundancy
How these options, or other options, including the types and levels of financial assistance) are implemented, will be negotiated on a case by case basis between the Ministry and the PSA.
Leave Without Pay
There is provision for special leave without pay within a defined period without automatic right of re‑engagement (this excludes parental or sick leave). This may include an opportunity for training.
Enhanced Early Retirement
As an alternative to the severance option, members who are within 10 years of eligibility for National Superannuation and have 10 years total service may have their severance paid as enhanced early retirement, and may use the payment to make up the actual superannuation annuity payable. Service does not have to be continuous nor is membership of a superannuation scheme relevant to eligibility for this alternative.
Enhanced early retirement may be made available at any time to eligible employees not declared surplus if a surplus employee seeking redeployment replaces them.
Retraining
Retraining is an efficient and worthwhile option for dealing with employees surpluses. To this end the Ministry will, as far as it’s able:
1.Identify particular skill shortages in the Education Service or elsewhere in the state services.
2.Assess where there are generally job opportunities in the Public Service and/or in the private sector.
When an employee’s surplus is identified the Ministry (and the State Services Commission where appropriate) will consider the skills, training, etc of the members who are surplus and will determine whether there are retraining opportunities for them for work either in the Public Service or the private sector.
If retraining opportunities are identified specific retraining programmes will be designed. Examples of financial assistance which may be available are:
(a)Teacher retraining (Secondary, Primary and Early Childhood) - up to two years salary maintenance and, if necessary, up to six months leave on pay while waiting to commence the training course.
(b)Individual retraining - The minimum financial assistance available for Individual Retraining is payment of salary equivalent (as at last day of duty in the Public Service) for the length of the course up to one academic year (usually 38 weeks).
Members whose course is more than one year may be paid their salary equivalent for the weeks of the long vacation before the course recommences in the following year provided that the Ministry can guarantee employment and wishes to employ them during this time.
Additional finance is available for expenses up to a maximum equivalent to the average severance payment calculated for all employees in that particular surplus, had severance been an option. Expenses may include, for example: salary whilst training if the course is longer than one academic year; books and equipment; transfer costs if applicable; leave on pay whilst awaiting commencement of the course in certain circumstances. In some cases the maximum additional finance available is varied to take account of particular training needs.
Redeployment
The redeployment provisions in Clause 11.15 will apply.
11.16 Severance
Following agreement that the option of a redundancy payment is to be made available and where it is mutually agreed on the individual ceasing service (as per Clause 11.16) the formula for severance is detailed below.
…
The issues in the Employment Court were whether cl 11.15.1 required the parties to reach agreement on the appropriate options that would be available to surplus staff, whether implementation of the options had to be negotiated change process by change process or on an individual basis with each employee, and whether an employee could be made redundant without the agreement of the PSA.[12]
[12]At [4]–[5].
The PSA wishes to challenge two aspects of Judge Holden’s decision. The first is the Judge’s conclusion that the Ministry’s obligation in cl 11.15.1 to negotiate with the PSA on a “case by case” basis how the available options for surplus employees are to be implemented means the relevant options must be negotiated between the Ministry and PSA for each change management process, not for each individual employee. Discussion of an employee’s individual circumstances would be dealt with separately.[13]
[13]At [55]–[56].
The second aspect of the decision the PSA would challenge is the Judge’s conclusion that cl 11.16 means that a redundancy payment would be paid only if both the union and employer agreed that one should be made.[14]
[14]At [52].
The PSA submits that the proposed appeal raises three questions of law, namely whether the Employment Court Judge erred by:
(a)failing to apply the orthodox and required principles of contractual interpretation;
(b)disregarding evidence of prior collective agreements; and
(c)concluding that there is an extra‑contractual managerial prerogative to dismiss public servants for redundancy.
Is the proposed appeal within the scope of s 214(1)?
The PSA does not criticise the Judge’s statement of the relevant principles, namely those described by the Supreme Court in Firm PI 1 v Zurich Australian Insurance Ltd.[15] Rather, the criticism is directed towards how those principles were applied.
[15]At [21]–[22], citing Firm PI 1 Ltd v Zurich Australian Insurance Ltd [2014] NZSC 147, [2015]The first complaint is that, in considering the natural and ordinary meaning of the text, the Judge failed to have regard to the whole of the clauses and instead used an “ellipsis methodology”. That is, in analysing the relevant provisions, the Judge recorded only selected parts of the clauses and failed to examine aspects of the omitted portions which — the PSA say — indicate that negotiation was required in relation to individual employees. These would support its argument that “case by case” refers to individual employees, not to change processes.
In the body of the judgment, the Judge set out part of the preamble, and parts of cls 11.14, 11.15.1 and 11.16. The sub‑headings in cl 11.15 — “Leave Without Pay”, “Enhanced Early Retirement”, “Retraining” and “Redeployment” — were set out, but without any part of the provisions beneath them.[16]
[16]Employment Court decision, above n 2, at [7].
Mr Kynaston, for the Ministry, pointed out that the Judge identified the parts of cl 11.15.1 and cl 11.16 set out in the body of the judgment as “the most relevant parts” of cl 11, and that cl 11 was annexed to the judgment in its entirety so that, while the Judge did not refer in detail to the omitted parts, she had clearly considered them.[17] He submitted, further, that the Judge referred to the parties’ submissions, albeit briefly, and therefore did take them into account.
[17]At [7].
In our view it is arguable that the Judge failed to consider the various specific sub‑clauses on which the PSA’s argument relied. While the Judge recorded aspects of the PSA’s argument, she did not refer to its reliance on the sub‑clauses relating to “Leave Without Pay”, “Enhanced Early Retirement”, “Retraining” and “Redeployment” as affecting the meaning of “case by case”. As a result, the fact that the entirety of cl 11 was annexed to the judgment, does not necessarily assist in determining whether this aspect of the PSA’s argument was considered.
The PSA’s second complaint is that the Judge failed to consider the historical collective agreements between these parties. We are not satisfied that any arguable error appears in this aspect of the judgment. The Judge expressly referred to the history but treated it as background. The complaint is essentially as to the weight the Judge put on this evidence, which does not amount to an appealable error.
The final point relates to the Judge’s statement that:
[49] If the collective agreement does not deal with what happens where there is no agreement, the position will be as in general. The Ministry had the managerial prerogative to determine the way in which the Ministry is to operate, but must act in good faith and as a fair and reasonable employer could in the circumstances.
The PSA wishes to argue that “managerial prerogative” is not part of the law relating to the core public service and that the Judge erred in treating it as such. However, earlier in her judgment, the Judge had expressly considered the effect of
cl 11.3 of the collective agreement, under which the PSA recognised “the right of the Ministry to plan, manage, organise and finally decide on the operations and policy of the Ministry” and concluded that the principles recognised in that clause were orthodox principles that recognised a managerial prerogative.[18] There is no apparent error in this part of judgment.
Costs
[18]At [40].
The need for the application for leave to appeal does not arise from any default by the PSA, and we see no reason to depart from the normal approach of reserving costs pending the outcome of the appeal.[19]
Result
[19]Court of Appeal (Civil) Rules 2005, r 53G(3).
The application for leave to appeal is granted on the following question of law:
Did the Employment Court err in failing to apply the orthodox and required principles of contractual interpretation when interpreting the collective agreement?
We reserve costs pending the outcome of the appeal.
Solicitors:
Oakley Moran, Wellington for Applicant
Buddle Findlay, Wellington for Respondent
[2024] NZERA 432.
[2024] NZEmpC 248 [Employment Court decision].
[2021] NZCA 60, [2021] ERNZ 54 at [20].
NZSC 34, [2005] 3 NZLR 721 at [20], n 21. See also Ports of Auckland Ltd v Maritime Union of
New Zealand Inc [2018] NZCA 575, [2018] ERNZ 446 at [11]–[12]; Ovation New Zealand
Ltd v New Zealand Meat Workers and Related Trades Union Inc [2019] NZCA 146 at [10]; and New Zealand Steel Ltd v E Tū Inc [2024] NZCA 386, [2024] ERNZ 767 at [9]–[10].
[2011] NZCA 595, [2011] ERNZ 360.
1 NZLR 432 at [60]–[63] per McGrath, Glazebrook and Arnold JJ.
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