IN THE EMPLOYMENT COURT AUCKLAND [2016] NZEmpC 17 EMPC 245/2015. Plaintiff. THE NEW ZEALAND MEAT WORKERS & RELATED TRADES UNION INC First Defendant

Transcription

1 IN THE EMPLOYMENT COURT AUCKLAND IN THE MATTER OF BETWEEN AND AND [2016] NZEmpC 17 EMPC 245/2015 proceedings removed from the Employment Relations Authority AFFCO NEW ZEALAND LIMITED Plaintiff THE NEW ZEALAND MEAT WORKERS & RELATED TRADES UNION INC First Defendant THE PERSONS LISTED IN SCHEDULES A-C OF THE PLEADINGS Second Defendants EMPC 381/2015 IN THE MATTER OF AND BETWEEN AND proceedings removed from the Employment Relations Authority THE NEW ZEALAND MEAT WORKERS & RELATED TRADES UNION INC Plaintiff AFFCO NEW ZEALAND LIMITED Defendant Hearing: Appearances: 25 February 2016 (by telephone conference) (Heard at Auckland) P Wicks QC, counsel for plaintiff P Cranney and S Mitchell, counsel for defendants Judgment: 26 February 2016 INTERLOCUTORY JUDGMENT OF CHIEF JUDGE G L COLGAN AFFCO NEW ZEALAND LIMITED v THE NEW ZEALAND MEAT WORKERS & RELATED TRADES UNION INC NZEmpC AUCKLAND [2016] NZEmpC 17 [26 February 2016]

2 [1] These directions for future trial of two causes of action between these parties are being given in the form of an interlocutory judgment. That is because not only do they have an unusual degree of interest to the parties and the employees, but the disputes also affect more broadly the communities where AFFCO s plants are located. Further, the Court has been asked to determine some controversial and important questions of the order in which the cases will be heard and whether at a single or multiple hearings. This involves examination and some preliminary interpretation of recently enacted legislation, or at least previously untested legislation. [2] First, however, I have urged the parties to re-consider seriously the Court s offers to facilitate a private mediation of these and related disputes between them with a view to settling these comprehensively so that they can get on with what they do best, that is processing livestock and producing meat products. This is, however, an exercise that will only be productive if both parties are committed, in principle at least, to resolving their differences by negotiation. Although the New Zealand Meat Workers & Related Trades Union Inc (the Union) has expressed its unqualified willingness to engage in such a mediation, AFFCO New Zealand Limited (AFFCO) has instructed Mr Wicks QC that it wishes to review its options in the knowledge of the outcome of its application to the Court of Appeal for leave to appeal against the full Court s judgment dated 18 November The matter of private mediation must, in these circumstances, therefore wait for a period but that should not be taken to indicate any weakening of this Court s view that such would be beneficial and cost-effective for both parties. [3] Next, I am satisfied (and the parties have now, through counsel, agreed) that all progress on the remaining litigation should not be held up while AFFCO awaits the outcome of its application for leave to appeal (referred to above) which is to be heard in the Court of Appeal on 14 March Although some rearrangements may be necessary as a result of the outcome of that application, progress can still be made and the following directions are given that will allow for that but will also provide the parties with some certainty as to a prospective fixture. 1 New Zealand Meat Workers & Related Trades Union Inc v AFFCO New Zealand Ltd [2015] NZEmpC 204.

3 [4] AFFCO s proposed timetable which I adopt as the Court s, based on its assessment that there are no known outstanding interlocutory issues between the parties, is as follows, with some amendments: (a) AFFCO is to file and serve any further evidence (that is in addition to the briefs it has filed already in the proceeding) and any additions to the already settled common bundle of documents, by 5 pm on 29 March (b) The Union is to file and serve any further or amended briefs of evidence by 12 April (c) Any further evidence by AFFCO in reply to the Union s evidence may be given viva voce at the hearing. [5] The next and more contentious issue is the order and manner in which the agreed three broad questions will be determined by the Court. [6] The first, in order of filing, is AFFCO s application under s 50K of the Employment Relations Act 2000 (the Act) for a determination as to whether bargaining has concluded because of difficulties in concluding bargaining (EMPC 245/2015). [7] Next is the Union s claim under s 50J of the Act for a determination fixing the provisions of the collective agreement being bargained for by the parties (EMPC 381/2015). An important secondary question arising out of this claim is whether, having been made to the Authority but removed to the Court for hearing at first instance, 2 it is the Authority or the Court which is to fix the terms and conditions of the collective agreement if the statutory tests for doing so have been made out. [8] On its face, the logical order of hearing these proceedings would seem to indicate that AFFCO s application under s 50K should be heard first. That is because, if the Court decides that AFFCO is entitled to an order declaring collective 2 Employment Relations Act 2000, s 178.

4 bargaining to have concluded by the date of hearing, there would be no need for it to determine the Union s claim to fix the terms and conditions of the collective agreement no longer being bargained over. [9] The Union argues, however, that a more subtle approach to the hearing methodology should be adopted in the particular circumstances of this case and after an examination of the detail of ss 50J and 50K. It is therefore appropriate to examine those sections in light of the full Court s judgment. 3 [10] First are the relevant findings of the full Court in its 18 November 2015 judgment. These are contained at [200] and following under the heading Good faith bargaining cause of action decision. The full Court concluded that AFFCO had breached s 32(1)(d)(ii) and (iii) of the Act in engaging or attempting to engage individual employees being bargained for collectively by requiring those employees to accept AFFCO s forms of individual employment agreements if they were to be re-engaged for the 2015/2016 season. [11] More particularly, the Court found that AFFCO acted in bad faith (in beach of ss 32(1) and 44 of the Act) in a number of ways. First, it did so by failing or refusing to involve the Union representing the individual employees by its direct approaches to those persons so represented. The Court found that the execution of this strategy was, directly or indirectly, likely to mislead or deceive the Union and the individual employees. 4 The Court concluded that AFFCO s actions were not active and constructive in maintaining a productive employment relationship with the Union and the second plaintiffs, and it was not communicative with the latter, all being in breach of s 4(1A)(b) of the Act. [12] Next, the Court concluded that AFFCO had acted in bad faith in that while collective bargaining was in progress, its strategy was a proposal to make a decision that would, or was likely to, have an adverse effect on the continuation of employment of those employees, a breach of s 4(1A)(c). 5 This required AFFCO to provide the employees with access to relevant information about that strategy and an 3 New Zealand Meat Workers, above n 1. 4 At [202]. 5 At [203].

5 effective opportunity to comment on that information before the employer put it into effect at quite short notice and, in particular, without advice to the Union. [13] Next, the Court found that these acts or omissions by AFFCO failed to recognise the role or authority of the Union as the entity chosen by the individual employees to be their representative or advocate in the collective bargaining and in matters relating to their employment generally. 6 [14] The Court also found AFFCO to have been in breach of s 32(1)(d)(ii) in that, during the course of current collective bargaining, it bargained directly with individual employees about matters relating to the terms and conditions of their employment. 7 That was while those employees were represented by the Union which was not given an opportunity to agree to AFFCO doing so. The company failed or refused to consult fully and openly with the Union about this. [15] At [209] of its judgment, the full Court concluded, alternatively, that the relevant actions of AFFCO undermined, or were at least likely to undermine, the collective bargaining and/or the authority of the Union in that bargaining. The Court concluded that once AFFCO had sufficient employees on its desired terms and conditions of employment recorded in individual agreements, it undermined the bargaining to the point of ineffectiveness by failing or refusing to continue with collective bargaining. The Court held that rendering ineffective and (from AFFCO s perspective) unnecessary, collective bargaining for a collective agreement was the undermining of that process. So, too, the Court found, were AFFCO s strategies in this regard, to undermine the authority of the Union in that bargaining. [16] From that summary of the relevant conclusions of the Court, I move to the constituents of ss 50J and 50K of the Act. [17] As the heading to s 50J states, it provides a remedy for serious and sustained breach of duty of good faith in section 4 in relation to collective bargaining. A successful application will empower the Authority (or potentially the Court upon 6 At [204]. 7 At [205].

6 removal to it of the Authority s proceedings) to fix the provisions of the collective agreement being bargained for rather than the standard way of doing so by agreement and compromise between the parties. The grounds, which must be made out before the Authority may fix the provisions, include both those set out in s 50J(3) and, in exercising a discretion, the Authority must also consider that it is appropriate, in all the circumstances, to do so (. The subs (3) grounds are cumulative in the sense that they must each be established before the Authority (or in this case the Court) considers whether, in its discretion, it is appropriate to make an order for fixing provisions of the collective agreement under subs (2)(b). Those cumulative grounds include: that there has been a breach of the duty of good faith in s 4 in relation to the bargaining; and that such breach was sufficiently serious and sustained as to significantly undermine the bargaining; and that all other reasonable alternatives for reaching agreement have been exhausted; and that fixing the provisions of the collective agreement is the only effective remedy for the party or parties affected by the breach of the duty of good faith. [18] Although s 50J requires the establishment of a number of cumulative tests, there appears to be no reason in principle why the establishment of each and all of them cannot be undertaken in the same hearing. For example, there is no requirement for the Authority or the Court to refer the parties elsewhere during a fixing claim under s 50J. In the event that the allegations of a party seeking a s 50J order are disputed, those are going to have to be established in evidence. It is likely that evidence will overlap the various tests in the sense, for example, that the occurrence of some events may relate to, and assist in establishing, one or more of those tests.

7 [19] Turning to s 50K (under which AFFCO has applied), this addresses both some of the same issues that fall under s 50J but also deals quite differently with the resolution of roadblocks to collective bargaining. Rather than allowing an independent person to determine the terms and conditions of a collective agreement (s 50J), s 50K draws particular bargaining to a statutory end but, on conditions, allows further bargaining to take place between the same parties with a view to continuing to leave it to those parties to determine the terms and conditions of a collective agreement. [20] Specifically, the overall grounds for determining whether bargaining has concluded are that there are difficulties in concluding bargaining :: s 50K(1). Clearly, this very generally stated rationale is insufficient alone. Much ultimately successful collective bargaining is the subject of difficulties. Under the Act, difficulties in bargaining may also be addressed by an application for facilitation, under ss 50A-50I of Part 5 of the Act, which not only does not go so far as to allow an independent third party to set terms and conditions, but also leaves the ultimate terms and conditions of the bargaining in the hands of the parties. Even more commonly, difficulties in bargaining manifesting themselves in strikes or lockouts may be addressed and assisted by mediation and these industrial actions in some sectors will require a reference to mediation. So, difficulties in bargaining alone will not constitute grounds for a fixing order. [21] Mediation is, indeed, the first requirement of the Authority (or the Court) which is asked to consider an application under s 50K. Pursuant to s 50K(2), consideration must be given to whether an attempt has been made to resolve the difficulties by use of either mediation or facilitation. Apparently irrespective of whether either or both of these roadblock-moving mechanisms have been engaged previously, the Authority may nevertheless direct the parties to try to resolve their difficulties by those means: s 50K(2)(b). Indeed, if any of the grounds for facilitation in s 50C(1) are found to exist, the Authority (or the Court) must direct that facilitation be used (under ss 50B-50I) before the Authority can investigate the

8 s 50K application unless it considers one of four alternative scenarios exists. Those are that the use of facilitation: 8 will not contribute constructively to resolve the difficulties; or will not, in all the circumstances, be in the public interest; or will undermine the urgent nature of the process; or will be otherwise impractical or inappropriate in the circumstances. [22] It follows that the Authority (or the Court in a case such as this) can, and indeed in some circumstances must, short-circuit the parties to facilitation if that problem-solving mechanism has not been employed in the particular case, and the tests outlined above are not met. [23] Section 50K does not elaborate on what will constitute the conclusion of bargaining. That will be left to the expert determination of the Authority or the Court based on their knowledge and assessment of collective bargaining in New Zealand generally and, to the extent that may be relevant, on previous case law. For example, the judgment of the Court, under the previous regime in New Zealand Public Service Association v Secretary for Justice, 9 may indicate that for parties who are still engaging in at least some bargaining after the application for declarations has been made, but before the investigation or hearing of that application, this may be a persuasive indicator that bargaining has indeed not concluded. [24] If the Authority (or the Court) does determine that bargaining has concluded, it is obliged to make a declaration to that effect: s 50K(3)(a). Contrary to that, if the determination is that bargaining has not concluded, the Authority or the Court is authorised to recommend to the parties the process that they should follow to resolve their difficulties. In such circumstances, there are restrictions on further s 50K applications being made until that recommended process has been followed. 8 Section 50K(2)(c) 9 New Zealand Public Service Association Inc v Secretary for Justice [2010] NZEmpC 11, [2010] ERNZ 46 at [28].

9 Even if the Authority or the Court determines that bargaining has not concluded but does not make a recommendation under s 50K(4)(a), none of the parties to that bargaining may make another subs (1) application earlier than 60 days after the determination, at least without the agreement of the other party or parties concerned pursuant to subs (5). [25] Section 50K is subject to s 50KA which provides that an order determining that bargaining has concluded cannot be made and the application therefore must be dismissed if the party seeking the order has failed to observe good faith as described in subs (3). Relevant to this case, as already noted following the advice of counsel for the defendant, s 50KA(2) does not preclude the Authority or the Court from making a declaration or determination that bargaining has concluded if the party seeking the declaration has failed to observe good faith but has rectified that failure. The failures to observe good faith are those of not complying with the s 4 good faith obligations if they relate to the collective bargaining in respect of which the declaration is sought and the failure has undermined the collective bargaining. Such a failure to observe good faith can also be a failure to deal in good faith in any mediation or facilitation directed by the Authority under s 50K(2). Under s 50K(5) the Authority is empowered to make recommendations in respect of how a party, who has failed to observe good faith, may rectify that failure. [26] So, commensurate with the draconian nature of the remedy under s 50K, the statutory tests and exemptions are complex. They too, as in the case of s 50J, will depend upon an assessment of all of the relevant evidence of the parties dealings, including especially in the collective bargaining and, again, some of that evidence will be relevant to more than one test to be established. It would be appropriate, also in the case of s 50K, that this evidence is considered at one hearing and I would conclude, also, that there is nothing in principle to prevent a combined hearing of the ss 50J and 50K questions arising out of the same employment relationship in the same collective bargaining. The order in which the decisions are made will be important and it will be open to the Court to attribute its necessarily numerous conclusions to particular pieces of evidence adduced at such a hearing.

10 [27] I deal now with the submissions of counsel as to how their cases should be heard. First, Mr Cranney for the Union submits that it has a judgment in its favour finding that AFFCO conducted himself other than in good faith in respect of the collective bargaining in which it was engaged last year with the Union. Unless and until that judgment may be upset on appeal, the Union says that it will be entitled to rely on the full Court s findings to prove the necessary constituents under s 50J(3), that a breach of the duty of good faith in s 4 has occurred in relation to the bargaining and that this was sufficiently serious and sustained to significantly undermine the bargaining. Counsel submits that this constituent having been established, albeit in another cause of action, and assuming it survives appeal, it will be preferable to continue to first hear and determine the other statutory elements of s 50J. I do not propose to set out Mr Wicks s arguments because I agree with them and propose to apply them. [28] It follows that, subject ultimately to at least some elements of any judgment issued by the Court of Appeal if leave is granted in the earlier proceedings, the ss 50J and 50K claims may justly be considered after a single hearing of all evidence and submissions relevant to those claims. [29] I conclude that it would not be right to fix the latest point in time at which AFFCO s conduct is to be assessed in terms of good faith, as being either at the time of the hearing before the full Court on 5-6 October 2015 or at the time its judgment was given on 18 November As Mr Wicks points out, subsequent conduct by AFFCO might be found to have cured or at least ameliorated previous bad faith dealings by AFFCO, even if, contrary to its position, it did so act towards the Union. So, for example, counsel submits that AFFCO s conduct in any collective bargaining that may have taken place since the hearing before the full Court in 2015 may now ameliorate the cumulative test of serious and sustained (or at least the latter of those requirements) so that the collective bargaining is now no longer undermined. In that event, counsel submits, the s 50J application would fall over. [30] If that argument is to succeed, however, AFFCO may need to concede that there has been recent collective bargaining which may, in turn, cause difficulties for

11 its s 50K application (that bargaining has concluded), that is by contradicting its necessary assertion that bargaining has concluded. [31] Although either course for the hearing of these remaining proceedings may require a degree of artificiality and certainly a deliberate series of sequential findings, I conclude that the fairest and most just course is for there to be a single hearing on all issues with an acknowledgement by the Court that it will determine them in the sequence accepted by AFFCO. That is, the Court will determine, first, AFFCO s application under s 50K, followed by its determination of the Union s claim under s 50J including the subsidiary question of the identity of the person to undertake fixing if the requisite tests are made out. [32] There will be a resumption of the telephone directions conference with counsel at 9 am on Friday 18 March 2016 at which time counsel have told me that they are hopeful that they may either have a judgment from the Court of Appeal or, alternatively, an indication of the likely outcome of those proceedings, so that further directions can be made to a hearing in this Court. [33] In the meantime, the Court has set aside, tentatively, the two sitting weeks beginning on 18 July 2016 in Auckland for hearing of these proceedings by a full Court. [34] Costs are reserved as is leave to any party to apply for any further directions or orders on reasonable notice. GL Colgan Chief Judge Judgment signed at 4.50 pm on Friday 26 February 2016