Thinking of shutting down your business? Don’t forget your consultation obligations!

It only takes a quick walk through the city to notice that New Zealand businesses have been feeling the strains of the current economic downturn. There has been a spike in businesses closing and subsequent job losses. Wellingtonians have lost many of their favourite cafes, and the Government is desperately trying to get public sector workers to come back into the city to spend money (rather than working from home).

Amidst the uncertainty of a potential business closure, it is easy for employers to overlook the consultation obligations that they owe to employees. In particular, when an employer is considering shutting down their business, they have a legal obligation to consult with affected employees. The fact an employer is contemplating shutting down the entire business (rather than only disestablishing certain roles) does not excuse them from having to go through a proper redundancy process. 

Redundancy consultation processes should include:

• A written proposal circulated to all employees likely to be affected before any final decisions are made.
• Reasonable time for employees to respond, comment, and / or suggest other options.
• Genuine consideration being given to employee responses before final decisions are made.

There are extreme risks and potential costs for an employer who fails to get this process right. 

Asking job candidates the right questions: Ford v Henry Brown and Co Ltd [2024] NZERA 574

The recent Employment Court case of Ford v Henry Brown and Co Ltd highlights the importance of asking the right questions when recruiting new workers.

Mr Ford applied for a project management role with Henry Brown and Co Ltd (the Company). During the recruitment process, Mr Ford was asked to provide referees. One of the referees he provided was a colleague from his previous job, but not his previous manager. The Company director asked the referee why Mr Ford had left his previous job, which was explained as being due to issues with the general manager and health and safety concerns. The Company director did not seek to speak to Mr Ford’s previous manager to explore what the issues may have been. The Company proceeded to appoint Mr Ford to the role. 

Clause 16 of Mr Ford’s individual employment agreement (IEA) with the Company stated that if his representations about his qualifications and experience were not true and correct the Company could take disciplinary action, including dismissal. 

Approximately one year into the role, the Company discovered that Mr Ford had been dismissed from his previous job. The Company summarily dismissed him relying on the representations clause. Mr Ford pursued a personal grievance for unjustified disadvantage and unjustified dismissal, which were both dismissed by the Employment Relations Authority. Mr Ford challenged the unjustified dismissal point in the Employment Court. 

The Court took a narrow interpretation of clause 16, finding that “qualifications and experience” did not include disciplinary action or grievances that may have occurred at previous workplaces. Clause 16 did not require the prospective employee to proactively disclose ‘everything’. On this basis, the Court held that Mr Ford was unjustifiably dismissed. He was awarded NZ$9,000 in compensation for hurt and humiliation and 9 weeks’ lost wages. 

Most IEA’s contain clauses that say if there has been a failure to disclose anything relevant it could lead to dismissal. This case indicates that these cannot be relied upon by themselves. Employers need to ask the candidate specific questions or otherwise confirm the precise areas for which they expect to receive disclosure, if they later want to take action because of any failure to tell the full story.

Personal grievances post-pandemic: Insights from Marsh v Jetstar Airways Limited [2024] NZERA 574

The COVID-19 pandemic and ensuing lockdown hit New Zealand over four years ago, but there has been an ongoing run of cases about the lockdowns and mandates which affected workplaces, and we are now seeing a number of decisions coming through. Any employee who raises a personal grievance then has three years to lodge a claim in the Employment Relations Authority. Grievances about vaccine mandates are likely to be nearing the end of this time limit. But for those employers who have not yet settled such complaints, Marsh v Jetstar Airways Limited serves up a warning.

In Marsh v Jetstar Airways Limited, an ex-Jetstar pilot was awarded NZ$20,000 in compensation after having his employment terminated for refusing to comply with the COVID-19 vaccine mandate. Mr Marsh refused to get the Pfizer vaccine as required under the COVID-19 Public Health Response (Air Border) Order 2021. He requested to remain employed and go on leave without pay until a different vaccine was available. Jetstar declined and dismissed him.

After analysing Jetstar’s process and decision, the Authority found:

• Jetstar had not fairly considered Mr Marsh’s leave without pay request, amounting to an unjustified disadvantage.
• Jetstar failed to ensure that all reasonable alternatives to termination had been explored before dismissing Mr Marsh, amounting to an unjustified dismissal.

The case highlights that employers will be required to uphold good faith obligations and undertake fair processes, even in the unprecedented and unusual circumstances of a pandemic.

As a related point, for those employers who inserted special clauses relating to vaccinations or pandemics in their employment agreements, now may be the time to revisit whether they remain necessary and appropriate.

An Immigration Update: Visas, Standards and Timeframes

Immigration New Zealand (INZ) has recently made a variety of notable changes to immigration rules.

Longer work visas for partners of New Zealanders:

• INZ announced that from 1 October 2024, the maximum duration for a work or visitor visa for partners of New Zealand citizens or residents that have been living together for at least 12 months will increase from two to three years.

Simpler Job Change process following business sales and restructures:

• INZ has simplified the requirements when transferring Accredited Employer Work Visa (AEWV) holders to a new entity following a business sale or restructure.
• If an AEWV holder remains in the same role and location, but their employer changes due to a sale or restructure, then the AEWV holder will need to apply for a ‘Job Change’ or variation of conditions. If the new employer holds or has applied for accreditation when INZ receives the Job Change application, INZ will be able to approve the Job Change before deciding the employer’s accreditation application. Notably, the new employer will not have to apply for a Job Check, which often requires the employer to advertise the role and test the market to determine whether there are any New Zealanders available to perform the role.
• INZ is currently taking 11 weeks to process employer applications for Accreditation and 12 weeks to process employer applications for a Job Check. Following a sale or restructure, the new employer may need to obtain accreditation, advertise the relevant role, and apply for a Job Check before the migrant employees affected by the sale or restructure are able to apply to vary the conditions of their visa. Migrant employees are unable to apply for an interim visa that allows them to remain in New Zealand until they have submitted their application to vary the conditions of their visa. This means that once the sale or restructure has taken effect and they are no longer able to meet the conditions of their visa, they are unlawfully in New Zealand and at risk of deportation. The new, more simple approach will ensure continuity for migrant employees and their new employers. It is a welcome change.

The Australian and New Zealand Standard Classification of Occupations (ANZCO) will be replaced:

• ANZCO is used by INZ when processing visa applications. It is a classification system that grades jobs according to its skill level. Certain visas require a minimum skill level to be granted.
• Statistics New Zealand will be introducing a new classification system, the National Occupation List, to be released on 20 November 2024. INZ will provide an update in 2025 once a switch over date is confirmed.

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.