Whakaari sentencing decisions 

Following from our coverage of the Whakaari prosecutions in our February 2024 Edition, we now look at the high profile sentencing decisions of the Whakaari defendants. These provide a strong indication of current sentencing practice and the very significant costs attached to health and safety breaches.

WorkSafe New Zealand v Inflite Charters Ltd [2022] NZDC 5627

Inflite Charters Ltd was the first company to be sentenced in connection with the Whakaari eruption. This sentencing occurred in March 2022. The company was a booking agent which provided trips to Whakaari, engaging local subcontractors to conduct those tours. Inflite Charters pleaded guilty under section 36(2) of the Health and Safety at Work Act (HSW Act). The total fine was NZ $227,500 plus court costs of NZ $40,000.  

WorkSafe New Zealand v Whakaari Management Limited, White Island Tours Limited, Volcanic Air Safaris Limited, Aerius Limited, Kahu (NZ) Limited [2024] NZDC 4119

In this decision, the District Court issued fines and reparations to Whakaari Management Limited (WML), White Island Tours Limited, Volcanic Air Safaris Limited, Aerius Limited and Kahu Limited due to their involvement in the Whakaari eruption. The final figures that the Court reached are as follows:

• WML: total fine of NZ $1.045 million and reparations of NZ $4.88 million. WML had the highest fine as it had enabled the entire industry of tours on Whakaari. WML have recently announced that it will be appealing its conviction, which is due to be heard in August 2024.
• White Island Tours: total fine of NZ $517,000 and reparations of NZ $5 million. White Island Tours had exposed more people to risk than anyone else, but did have fine reductions for entering guilty pleas, co-operation with WorkSafe and demonstrating remorse. Its insurance cover was up to NZ $5 million, so its reparations were increased to match this. 
• Volcanic Air Safaris: total fine of NZ $468,750 and reparations of NZ $330,000. Volcanic Air Safaris had exposed significantly lower numbers of people to risk compared to White Island Tours. It had reductions to its fine for entering guilty pleas, co-operation with WorkSafe, remorse, good character and assisting in the aftermath of the eruption. 
• Aerius: total fine of NZ $290,000 payable within 5 years. None of its customers were exposed to the eruption, but this was purely luck. It had reductions to its fine for entering guilty pleas, co-operation with WorkSafe, remorse and good character.
• Kahu: total fine of NZ $196,000 payable within 5 years. Kahu had reductions to its fine for entering guilty pleas, co-operation with WorkSafe, remorse, good character and assisting in the aftermath of the eruption
• Institute of Geological Nuclear Sciences (GNS): In a separate judgment (WorkSafe New Zealand v Institute of Geological Nuclear Sciences Limited [2024] NZDC 4149), GNS faced a total fine of NZ $54,000. GNS had a good record and a history of public and scientific contribution, resulting in a lower fine being issued. 

Enforcing restraints of trade: Team Group Realty Ltd v Cardno [2024] NZHC 553

Team Group Realty Ltd v Cardno [2024] NZHC 553 involved a successful application by our Dentons team for an interim injunction, giving effect to restraints of trade in the contracts for services of a group of real estate agents. 

The applicant, Team Group Realty Ltd, operates the Harcourts real estate franchise in the Paremata and Porirua areas of greater Wellington (Harcourts). In December 2023, five Harcourts real estate agents (the respondents) all resigned within a matter of days of each other. Five weeks later a rival real estate agency, Bayleys, opened a new Paremata office 300 metres from Harcourts’ premises. All five respondents began advertising and marketing as new Bayleys’ agents. The respondents had varying levels of expertise, with three out of five of them having only a few years’ experience as real estate agents.

The respondents listed a property for sale within the first three days of opening the Bayleys’ office and within a few weeks, they had listed seven properties which had been appraised by four of the respondents whilst they were working with Harcourts. This was despite the respondents’ independent contract agreements with Harcourts containing various non-competition, confidentiality and non-solicitation obligations. Many facts suggested that the respondents had converted leads obtained whilst they were working at Harcourts. For example, the day before one of the respondents resigned they downloaded a CVS file of part of their Harcourts client database, containing 98 contacts and a month later a different respondent downloaded a CVS file from the database comprising 811 contacts, both without the knowledge or consent of Harcourts. 

In the High Court, Justice Isac made an order against the first four respondents giving effect to the restraints of trade and required them to comply with their obligations relating to Harcourts’ confidential information and property, in particular returning and/or destroying any confidential information belonging to them and returning any other property belonging to Harcourts. The injunction term was for three months.  

Mount Cook Airline Ltd v E tū Incorporated [2024] NZCA 19 

The Court of Appeal has confirmed the approach to minimum wage entitlements for part time employees. 

Mount Cook Airline Ltd (Mount Cook) employs both part-time and full-time cabin crew. The union E tū Incorporated (E tū) represents Mount Cook’s cabin crew. Every fortnight, the part-time crew work six days while the full-time cabin crew work nine days. All members of the crew are paid by the fortnight. The part-time cabin crew receive a pro-rata salary equivalent to two thirds of the salary of the full-time cabin crew. 

E tū had successfully challenged Mount Cook’s pro-rata salary approach under the Minimum Wage Order 2021 (the Order) in the Employment Court. At the time of the case, clause 4(d) of the Order stated that the minimum rate of wage payable to an adult worker per fortnight is NZ $1600 (due to the recent minimum wage increase, this is now NZ $1,816.00). In the Employment Court, Judge Smith held that the language in clause 4 is clear; where an employee is employed by the fortnight, they should be paid a minimum of NZ $1600 regardless of the number of hours or days worked. It was held that the salary of both full-time and part-time cabin crew needed to comply with the Order. Effectively, this meant that the Mount Cook part-time cabin crew would need to be paid NZ $1600, as if they were full-time. 

Mount Cook successfully appealed this decision in the Court of Appeal. The Court of Appeal held that clause 4(d) in the Order specifies a minimum rate of wages, not a minimum monetary sum. It explained the use of the word ‘rate’ anticipates a proportional relationship between two things, one commonly being a unit of time. Here, the unit of time is the hours worked, calculated against a full-time salary. On this interpretation, the fortnightly minimum wage rate applies to employees working 80 hours over a fortnightly period and should be adjusted proportionally for those working fewer hours.

Key takeaways

• The amount set out in clause 4(d) of the Order is a rate of payment per fortnight, based on a full-time worker employed to work 80 hours over a two week period.
• The entitlement to minimum wage for part-time salaried employees should be prorated.
• The calculation for part-time salaried employees is: x/80 multiplied by the relevant sum specified in clause 4(d) of the Order. Where x equals the number of hours worked or agreed to work (whichever is greater). 

Changes to the Accredited Employer Work Visa 

The New Zealand Government has made changes to the Accredited Employer Work Visa (AEWV) scheme. These changes will affect both employers and employees alike. 

The changes place greater obligations on employers in seven key areas:

1. Ensuring the applicant is suitably qualified and skilled 
   • Before sending migrants a job token, employers must ensure they are suitably skilled and meet the minimum standard of English required for the job. 
2. Hours 
   • Employers must now employ workers on an AEWV for at least 30 hours per week.
3. Suspension 
   • Employers undergoing investigation for any breach of accreditation may now have their accreditation suspended.
4. Australian and New Zealand Standard Classification of Occupations (ANZSCO) skill levels 
   • Introduction of ANZSCO skill levels to the assessment criteria of AEWV applicants.
   • Additional obligations have been introduced when filling an ANZSCO level 4 and 5 job.
5. Definition given for ‘suitable and available New Zealanders’ 
   • Employers must check and declare that nobody who applied for the job meets this new definition. Suitable and available New Zealanders must be given preference.
6. Notifying Immigration New Zealand 
   • When an AEWV worker leaves their employment a month or more before their visa expires, employers must notify Immigration New Zealand.
7. Franchisee accreditation ending in late 2024 
   • Those affected by this change can apply for standard, high-volume, or triangular employment accreditation. 

This newsletter contains contributions from: Harriet Phillips and Emilie Aitken.

For further information on employment related matters, please visit our Global Employment hub, where you can find updates from many jurisdictions, including New Zealand, or reach out to one of our partners – Charlotte Parkhill, Greg Cain, James Warren or Renee Butler.