IN THE EMPLOYMENT COURT AUCKLAND AC 50A/07 ARC 48/07. AND STEPHEN DEAN ABURN AND OTHERS Second Plaintiffs

Transcription

1 IN THE EMPLOYMENT COURT AUCKLAND AC 50A/07 ARC 48/07 IN THE MATTER OF proceedings removed from the Employment Relations Authority BETWEEN SERVICE AND FOOD WORKERS UNION NGA RINGA TOTA INC First Plaintiff AND STEPHEN DEAN ABURN AND OTHERS Second Plaintiffs AND SPOTLESS SERVICES (NZ) LIMITED Defendant Hearing: 17, 18 and 21 September 2007 (Heard at Auckland) Appearances: Peter Cranney and Timothy Oldfield, Counsel for Plaintiffs Shan Wilson and Katherine Burson, Counsel for Defendant Judgment: 26 November 2007 JUDGMENT OF CHIEF JUDGE GL COLGAN [1] The question for decision in this second round of litigation between the first plaintiff (now joined by the union members employed by the defendant) and Spotless Services (NZ) Limited ( Spotless ), the defendant, is whether Spotless is liable to the second plaintiffs for wages during periods when they did not work but the Court has concluded they were not locked out. A lockout of the second plaintiffs would have alleviated any liability for payments of wages to them: see s96 Employment Relations Act 2000 ( the Act ). The particular issues that must be decided if the employees are entitled to wages, include: SERVICE & FOOD WORKERS UNION INC & ANOR V SPOTLESS SERVICES (NZ) LTD AK AC 50A/07 26 November 2007

2 whether the second plaintiffs, had they not been purportedly locked out by the defendant, would probably have been on strike and therefore not entitled to wages with the exception of 5 minutes every hour of each employee s shift; whether the employees were in any event on strike during periods that the defendant purported to have locked them out, and so were not entitled to wages; whether the second plaintiffs whom the defendant purported to lock out were parties to a strike by other members of the first plaintiff and therefore not entitled to wages with the exception of wages for the period of 5 minutes in every hour; alternatively, whether the employees whom the defendant purported to lock out were nevertheless suspended lawfully as striking workers pursuant to s87 of the Act; whether the employees whom the defendant purported to lock out were nevertheless suspended lawfully on grounds of patient health and therefore not liable to wages; whether, if some of the second plaintiffs purportedly locked out by the defendant would, in any event, have been disentitled to wages because of the actions of members of the union in taking strikes that required the defendant to prevent some of the second plaintiffs from working in the interests of minimising risk to hospital patient health. [2] This is a separate proceeding for recovery of wages removed for hearing in this Court from the Employment Relations Authority where it was filed originally. The defendant has, not inappropriately, pleaded that it did lock out the second plaintiffs. I have already determined otherwise in the final judgment in the earlier litigation

3 between the parties 1. The defendant has sought the leave of the Court of Appeal to appeal against that judgment but that application for leave still awaits a hearing 2. It would not be right for me to revisit the decision I reached on 23 July and the reasons I expressed for that decision on 27 July in that earlier litigation and I do not intend to do so. This judgment proceeds, therefore, on the assumption that the employer s relevant actions did not amount to a lockout in law. Relevant statutory provisions [3] Ongoing, albeit diminishing, debate about whether the landmark 1951 waterfront industrial dispute was, or arose from, a strike or from a lockout is not simply rhetorical. It also illustrates the popular subjective interpretation of the words and, as with other words and phrases, their potential to bear both colloquial and specialist meanings in employment law. [4] To determine this case, I must adopt and apply the specialist meanings, the terms of art for those words, because what constitutes a strike or a lockout is defined precisely in the legislation and may differ from the colloquial understanding of these terms. [5] Section 81 defining a strike is as follows: 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 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 (iii) in breaking their employment agreements; or (iv) in refusing or failing to accept engagement for work in which they are usually employed; or 1 Service and Food Workers Union Nga Ringa Tota Inc v Spotless Services (NZ) Ltd AC 43C/07, 23 July 2007; AC 43D/07, 27 July Spotless Services (NZ) Ltd v Service and Food Workers Union Nga Ringa Tota Inc [2007] NZCA 514.

4 (v) in reducing their normal output or their normal rate of work; and (b) is due to a combination, agreement, common understanding, or concerted action, whether express or implied, made or entered into by the employees. (2) In this Act, strike does not include an employees' meeting authorised (a) by an employer; or (b) by an employment agreement; or (c) by this Act. (3) In this Act, to strike means to become a party to a strike. [6] Section 82 defines lockout to mean: 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. (2) In this Act, to lock out means to become a party to a lockout. [7] There is no issue at this stage of this case that, if either side had taken strike or lockout action per se and as defined above, it would have been lawful. So it is unnecessary to deal with ss83 to 86 that address those elements. [8] Section 87 is also relevant to the defendant s defence and provides: 87 Suspension of striking employees (1) Where there is a strike, the employer may suspend the employment of an employee who is a party to the strike. (2) Unless sooner revoked by the employer, a suspension under subsection (1) continues until the strike is ended. (3) The suspension under this section of all or any of the employees who are on strike does not end the strike and those employees do not, by

5 reason only of their suspension under subsection (1), cease to be parties to the strike. (4) An employee who is suspended under subsection (1) is not entitled to any remuneration by way of salary, wages, allowances, or other emoluments in respect of the period of the suspension. (5) On the resumption of the employee's employment, the employee's service must be treated as continuous, despite the period of suspension, for the purpose of rights and benefits that are conditional on continuous service. [9] Section 89 provides that where an employee is suspended under s87, the employer must indicate to the employee, at the time of the employee s suspension, the section under which the suspension is being effected. [10] Section 96 referred to in the opening paragraph of this judgment addresses employer liability for wages during a lockout and provides: 96 Employer not liable for wages during lockout (1) Where any employees are locked out by their employer, those employees are not entitled to any remuneration by way of salary, wages, allowances, or other emoluments in respect of the period of the lockout, unless the employer's participation in the lockout is unlawful. (2) On the resumption of work by the employees, their service must be treated as continuous, despite the period of the lockout, for the purpose of rights and benefits that are conditional on continuous service. Relevant facts [11] Many of these have already been set out in the earlier substantive judgment 3 dealing with the question of the lawfulness of the employer s actions and, in particular, whether these amounted to a lockout in law. [12] The Service and Food Workers Union ( SFWU ) is a registered union that has members employed by Spotless among others. The second plaintiffs, who number more than 800, are those employees of Spotless at the relevant time who were also members of the union.

6 [13] In June 2006 the SFWU initiated bargaining for a multi-employer collective agreement in the public health sector intended to cover the terms and conditions of its members employed by all district health boards and by companies, including Spotless, that provide by contract relevant services to those boards. There was a short, token strike of SFWU members for about 90 minutes on 13 December 2006 in support of that bargaining. Its intention was to show the employers the potential effect of strike action upon them and its consequence was to allow the union to make progress in the bargaining. [14] Negotiations continued from January to July As from 16 May 2007, however, the SFWU had begun to give notice of strikes by employees employed by Spotless. Nothing in the strike notices themselves or in other interchanges between the parties gave any indication that the union was other than serious and to be taken at its word that strike action would take place upon the expiry of the notices. In most cases where notice of strike action is given it is implicit that, if the giving of notice brings about a change in the recipient s stance in bargaining, the notified strike may not proceed. In such cases, the giving of the notice has achieved its aim, usually in part but sometimes entirely. [15] For tactical reasons, the union served literally thousands of strike notices on Spotless, each dealing with a different combination of employee/date/times/place. Spotless s response, also tactical, was to issue the union with notices of lockouts of its members for broadly similar, but not identical, periods. In general, while strike notices were of what is known colloquially as industrial action to take place for the first 55 minutes of each hour worked by each employee, the responsive lockout notices advised of the exercise of this remedy for the period of the first 23 hours and 55 minutes of each day. [16] For a time, the coincidence of strike and countervailing lockout notices persuaded both parties to waive their entitlements to strike and lockout and attempts at bargaining continued although ineffectually. The affected employees were ones 3 Service and Food Workers Union Nga Ringa Tota Inc v Spotless Services (NZ) Ltd AC 43D/07, 27 July 2007

7 who could ill-afford the financial consequences of repeated and/or prolonged strikes or lockouts. The nature of Spotless s business in hospitals meant that any industrial action suffered or inflicted by it would be extremely disruptive, not only to the defendant but to the area health boards, other hospital staff, and to patients in those institutions. For a good while, these countervailing imperatives meant that the strikes and lockouts threatened in the notices did not eventuate. [17] Eventually, however and not unnaturally, attitudes hardened. Having started out in presenting a united employer front to union claims, Spotless eventually found itself as the only employer that had either not settled or was otherwise apparently resistant implacably to the union s claims. First, the district health board employers reached an accommodation with the union. Next, the three other contracting companies appeared amenable to persuasion to do so. Union attention and resources became focused on Spotless. The numerous strike and lockout notices described in the earlier judgment then eventuated. Alternative ground of lockout unlawfulness [18] During the course of the hearing another potential ground for the invalidity of any lockout by the defendant emerged in evidence. I raised this with counsel for the parties who addressed it both in evidence and submissions. [19] Locking out from work in an essential service selected employees from a very large workforce spread across many work sites is a significant logistical exercise and especially if, as in this case, these selected lockouts were to be for a part only of each working day. The evidence illustrates that despite what were no doubt the defendant s good intentions and best efforts in these complex circumstances, it did not achieve compliance with the law s strict expectations of lawful lockouts in essential services. [20] Even if what purported to be lockouts had not been declared unlawful and therefore categorised as breaches of contract for the reasons determined in my oral judgment and the reasons for it delivered on 23 and 27 July 2007, this hearing has

8 established the existence of an independent conventional basis for the illegality of these purported lockouts in any event. [21] Using the example of union members at Southland (Kew) Hospital, Spotless gave the union written notice of its intention to lock out selected employees for specified periods each day for a number of specified days commencing on the very early morning of Thursday 12 July Although Spotless served these lockout notices on the union, they were not sent on to affected employees at work sites around the country. Spotless did not send copies of the statutory lockout notices to its local managers responsible for effecting the lockouts. The statutory notices did not circulate below head office levels in the company and the union, even although not all SFWU members were to be locked out on particular days. [22] On Wednesday 11 July, however, Spotless placed on notice boards, where they would come to the attention of union members, detailed notices about the intended lockout. These notices were completed by local managers using a universal template for both forthcoming lockouts and announced strikes. Much of these notices dealt with detail that is irrelevant to the issues in this case. Material parts of the notices posted at Kew Hospital were as follows: NOTICE TO SFWU MEMBERS OF SOUTHLAND HOSPITAL WHO ARE LOCKED OUT FROM 12 JULY 2007 EXPECTATIONS DURING INDUSTRIAL ACTION Spotless Services (NZ) Limited has received strike notices covering the period from 7.00 am on Thursday 12 July until pm on Wednesday 25 July. The strikes state that all SFWU members will withdraw their labour for the first 55 minutes every hour and will work only for the last 5 minutes every hour. In response to these strikes and due to concerns for patient health during the strikes Spotless has issued lockout notices for employees in the following service(s) at this hospital: Food Services Orderly Services Domestic Services

9 These lockouts cover the entire period from midnight on Wednesday 11 July to 11.55pm on Wednesday 25 July. If you are employed in any of the above services then you have been legally locked out from the hospital site and are not permitted to be on the hospital grounds at any time from midnight on Wednesday 11 July. (emphasis added) [23] Although the statutory lockout notices given to the union specified that selected identified employees would be locked out for certain times each day and on certain dates, the plain words of the notice just summarised would reasonably have conveyed to employees that all SFWU members working in the specified services at Kew Hospital would be locked out as from midnight on Wednesday 11 July until pm on Wednesday 25 July, the entire period between these dates. Union members who had not known of the precise terms of the statutory lockout notices given to their union would reasonably have concluded that all SFWU members engaged in the three specified services at Kew Hospital would be locked out continuously from midnight on Wednesday 11 July to pm on Wednesday 25 July. That was not, however, the nature of the lockout of which Spotless had given statutory notice to the union. [24] Similar circumstances applied at other hospital sites. Less selective lockouts than those of which statutory notice had been given to the union, that is in accordance with the written advice summarised above, were what Spotless managers posted to employees and purported to enforce. [25] I have concluded, independently of the decision reached on 23 July, that the employer s actions and intended actions did not amount to a lockout and even if they had been so, that the defendant failed to comply with the legislative provisions for notice of such a lockout in an essential service as this has been long interpreted and applied by this Court and the Court of Appeal. The defendant gave otherwise valid statutory lockout notices to the union, but then posted notices to affected employees, before the start of what it intended to be the lockouts, that differed significantly in their descriptions of the employer s actions from those that had been provided previously to the union. An employer (in respect of lockouts) or a union (in respect

10 of strikes) required to give notice of such industrial action in an essential industry or service, cannot give inconsistent advice to those affected during the period of notice. Such will, if given, invalidate the notice previously given and thus deprive the subsequent strike or lockout action of its lawfulness. There are numerous cases to this effect but I will cite only the most pointed and authoritative one. [26] In Secretary for Justice v New Zealand Public Service Association Inc [1990] ERNZ Sel Case 601, [1990] 2 NZLR 36, the Court of Appeal considered whether communications purporting to modify industrial action but given subsequently to strike notice, impugned its validity. The communications in question were expressed to be summaries of the previous notices but contained apparent variations to them. The Court held that a formal notice may reasonably appear to have been modified or be partly superseded by subsequent communication. If the giver of the notice accompanies or follows it by other communications likely to give rise to uncertainty about the intended action, the notice cannot then be relied on. In that case the summaries sent to the employer created uncertainty as to the effect and extent of the proposed strike action and the notices were therefore invalid and the proposed strike unlawful. [27] Here, the notices of intended lockout action delivered to the union specified by name the employees to be locked out. Separate notices were issued in respect of each workplace (hospital facility) and the notices were also precise as to the times and dates of the intended lockouts, being the periods of the first 23 hours and 55 minutes of each calendar day. There could, therefore, have been no doubt about the position of each individual employee and whether and, if so, when he or she would be locked out. [28] Before the commencement of the lockouts, however, Spotless posted on staff notice boards advice to union members of the lockout that was to take place. This was misleading in several material respects. The notices advised: Spotless has issued lockout notices for employees in the following service(s) at this hospital:.

11 Each notice then set out a description of a Spotless service at the hospital, for example, Food Services, Orderly Services, and Domestic Services. The notice advised employees: These lockouts cover the entire period from midnight on Wednesday 11 July to pm on Wednesday 25 July. The notice continued: If you are employed in any of the above services then you have been legally locked out from the hospital site and are not permitted to be on the hospital grounds at any time from midnight on Wednesday 11 July. The remainder of these standard form notices dealt with questions of access to the hospital sites and are not relevant to this aspect of the case. The notices concluded: NB This notice will also apply to any lockouts which occur after [25 July 2007]. [29] Despite the original statutory lockout notices being selective in the sense of identifying particular named employees who were to be locked out, leaving some union members not locked out, a plain reading of the passages of the notices quoted above would have given employees the impression that if they were employed in the named services and were SFWU members, they would be locked out. At Kew Hospital (Southland) the evidence establishes that there were employees in named services who were not the subject of the statutory notices given to the union. [30] Second, the notice gave the clear impression that the lockouts would cover the entire period from (in this instance) 12 to 25 July (inclusive) whereas the statutory lockout notices given to the union had been for a series of discontinuous lockouts over that period interspersed with brief periods of work each day. This obvious discrepancy is, alone, fatal to the validity of notice.

12 [31] Applying the reasoning of the Court of Appeal in the NZPSA case, these misleading notices to staff put up shortly before the commencement of the intended lockouts so confused the position that they invalidated the earlier notices and thus deprived any lockout that took place, or was to have taken place, of its lawfulness. How to categorise in law the employer s actions [32] Spotless asserted that its lockouts (actual and future) were lawful under s84. The judgment of 27 July in this case, determining the lawfulness of the employer s actions and intended actions, had to make a fundamental determination. That was whether the employer s tactics amounted to a lockout as defined in the Act. I determined that they did not. What the employer was doing and intending to do was not, in law, a lockout. It is therefore inappropriate to categorise it as one, albeit an unlawful one. So it was unnecessary to determine whether any lockout was justified by reference to s84. [33] If the employer s actions did not amount to a lockout, what were they? This is not an academic or superfluous question because the liability of the defendant in this case depends upon a categorisation in law of what it did or did not do. In the course of submissions, both sides accepted that, if not a lockout, this must have been a breach of contract by Spotless in respect of all employees purportedly locked out. [34] The evidence also establishes that for at least a substantial majority of the second plaintiffs, the defendant did not perform its part of the wage work bargain, its individual employment contracts with the employees. It did not provide their usual work to them in return for which they might have expected to earn wages. Further, the evidence establishes that, consistent with its view that it was locking the employees out, Spotless prevented the affected employees from performing their work by excluding them from their workplaces, at least for all but 5 minutes in every 24 hours. In so doing, the employer breached the employees contracts of employment on each occasion when it did so. That was Spotless s intention believing it was entitled to do so by such breaches being characterised as lockouts.

13 [35] Subject to the employees being ready and able to perform their work on those occasions, they would be entitled to the remuneration they would have received but for the employer s breach. Thus, the second plaintiffs claims are for lost remuneration attributable to breach of contract. That involves a standard contractual analysis of breach and consequential loss. The Court must assess the relevant probabilities had there been no breach. In this case, therefore, the Court must make an assessment whether, if there had been no breach by the employer, the employees would have worked and therefore been entitled to wages. Absent the breaches, would there have been strikes? [36] It is clear that there was a good deal of confusion in the minds of many including employees, union officials and Spotless managers, not to mention the news media, as to whether employees were on strike or locked out or both. Little, if anything, should be read into what news media accounts produced in evidence made of these events, especially if the purpose of interpreting and applying news media accounts to the determination of difficult legal and industrial issues is to be attempted. As already noted, there are both popular and legalistic concepts of strike and lockout action and the two do not always coincide. Even what the parties themselves may have said at the time was not always an accurate statement of the position in law and must be scrutinised carefully and objectively. [37] The timing of any strike or lockout action on 12 July 2007 was crucial to the determination of the status of union member employees on the days for which wages are claimed. Although the union had given statutory notice of strike action beginning at 7 am on Thursday 12 July and running, intermittently, until pm on Wednesday 25 July, Spotless trumped this by giving notice of, and then imposing, lockouts starting 7 hours earlier on 12 July. Employees were to be locked out for all but the last 5 minutes of each day. Having been so excluded from working by the employer, it was not possible conceptually for those same employees to have commenced a strike that began later and then ran contemporaneously with the lockout.

14 [38] I have concluded on the balance of probabilities that, had they not been subject to what purported to be, but was not, a lockout on the same dates, the union member employees would probably have taken the strike action of which they had given Spotless notice. Being on strike, they would not have been entitled to wages. There is little, if any, cogent evidence that employees would have withdrawn their strike notices at that time in the absence of threatened or actual lockouts. The evidence that strike action as notified would take place is more persuasive. [39] The reasons for this conclusion include: The levels of dissatisfaction in negotiations had built up and the union s particular dissatisfaction was by then with Spotless alone. It had settled, or was confident of settling, with the other employers in the sector. Some of its members were to benefit from those other putative settlements. Those employed by Spotless, that the union regarded as intransigent, looked unlikely to benefit, at least at the same time. A previous strike had been effective in moving the negotiations along. Bargaining with Spotless was stalemated and the union needed a similarly strong pressure on Spotless to persuade it to agree to what the other employers had. By June and July 2007, the union had demands of Spotless that the other employers had conceded but which the union was confident Spotless could be persuaded to agree to by the application of strong industrial pressure through strike action and strong public opinion pressure that it then had. Although previous notices of strike action had been withdrawn, producing potential progress in negotiations, this appeared to have come to an end.

15 Notices of strike action had been given and not withdrawn by the union as previously. Many union members considered themselves to be on strike even after what purported to be, and they were told was, the imposition of lockout action against them. In one instance at Middlemore Hospital where Spotless acknowledged that it could not have locked out lawfully because of a failure to sign a statutory notice, affected employees took strike action in reliance upon the strike notices that the union had previously given. Employees who, because of their recent enrolment with the union, were not able to be subject to the lockout, nevertheless took strike action against Spotless. [40] Not only was it more likely than not, in my assessment, that strike action would have taken place on 12, 13 and from 17 July onwards, but that probability was to a high degree, not merely on balance. [41] As to the probable duration of any strike action, this is difficult to predict, even on the evidence before me. The duration of the purported lockout of employees was governed largely by the proceedings in this Court and, in particular, the purported lockout concluded on 23 July with an injunctive order against Spotless made on that date. As well as I am able from the evidence, I conclude that strike action that would have taken place had the defendant not breached the employment contracts of the second plaintiffs by purporting to lock them out, would have lasted for at least as long as did the employer s action that was determined to have been unlawful. The union s own publicity material circulated at the time boasted of strong support from other employees, members of other unions, and the general public. This was both moral and financial support. Although hard on low-paid employees, the union was equipped for a strike of more than token duration and to the extent that I can predict after the event, I conclude strikes would have taken place.

16 [42] It follows (and as Spotless has conceded in this event), that except for the period of 5 minutes of each hour that each of the second plaintiffs would have worked on the relevant dates, absent Spotless s breaches of contract there would probably have been strike action. The second plaintiffs claims to wage arrears must fail except to the extent now noted and conceded by the defendant. The second plaintiffs, except the 102 identified by Spotless whose cases are still to be determined, are entitled to wages for the period until 0700 hours on 12 July and thereafter for 5 minutes of each hour that they would have worked on 12, 13, 17, 18, 19, 20, 21, 22 and 23 July This defence having succeeded, it is strictly unnecessary to go on to consider the others advanced by Spotless. Nevertheless, I will do so, albeit briefly. If not locked out, suspended lawfully? [43] This first alternative defence for Spotless invokes s87 of the Act set out at paragraph [8] of this judgment. For an employer to be able to suspend the employment of an employee who is a party to a strike, there must be a strike. On 12 July that did not occur and could not have occurred if the exclusion from work was the suspension. The earliest time at which strike action was notified to the employer to begin, and could lawfully have begun, was at 0700 hours on that day. The employer, however, purported to lock out with effect 7 hours earlier. If, as Spotless says, its action on that day was a suspension rather than a lockout, it did not meet the statutory criteria for a suspension under s87 because it was not implemented in circumstances of a strike. It preceded any strike action. [44] There are further irresistible arguments against this being a statutory suspension. The first is that at no relevant time was either a suspension, or more particularly one under s87, ever referred to by the defendant in its many dealings with the union and staff despite these being in clear legal language and sometimes communicated by Spotless s solicitors. Categorisation of the employer s action as a suspension emerged only after the lawfulness of that action was challenged and the defendant put in the position of having to justify it in law. It is inherently very

17 unlikely in these circumstances that Spotless intended to suspend employees or did so. [45] Not unconnected with that but separately, s89 provides that where an employee is suspended under s87, the employer must indicate to the employee at the time of the suspension the section of the Act under which it is being effected. Compliance with that section was entirely absent. It might be arguable that a technical failure simply to comply with s89 would not deprive an employer of the protections of s87 in other circumstances. I find in this case, however, that if Spotless had intended to suspend under s87 and acting as it then was on legal advice and through a solicitor, compliance with s89 would have taken place if the action was a suspension rather than the lockout it purported and was held out to be. This defence was a belated makeweight and fails utterly. Lawful suspension at common law for patient health? [46] This form of suspension was said in opening submissions by counsel for Spotless, Ms Wilson, to be non-statutory and therefore the exercise of a power at common law but nevertheless one which had not previously been identified by judgments of courts. To support the existence of a power at common law for an employer to suspend employees on grounds of health and safety, Ms Wilson relied on the decision of this Court in Graham v Airways Corporation of New Zealand Ltd [2005] 1 ERNZ 587. That judgment, and its reasoning, are very distinguishable from the events at issue in this case and it is not authority for the proposition advanced by the defendant. In Graham, an employee subject to serious performance concerns, abandoned unilaterally and suddenly her position as an air traffic controller. Pending an inquiry into these events, the employer stood down the employee, in substantial part because of a concern about her temperamental inability to perform air traffic control duties but this stand-down or suspension was on full pay and without other disadvantage to the employee. The case is authority for the proposition that an employer may, in appropriate cases, and especially where issues of health and safety are involved, not need to conduct an inquiry in which the employee participates into whether there should be a suspension. The suspension in Graham involved a

18 continued performance of all of the contractual obligations on the parties except that the employer required the employee not to perform her duties for a period. Although applicable to cases of dismissal or disadvantage in employment arising from misconduct or performance issues, the rationale is not applicable to strikes and lockouts as in this case and the defence is not made out. Disqualification of remedies in equity and good conscience [47] As another alternative defence to the claims that might otherwise be made out, the defendant says that the conduct of the second plaintiffs, the employees, should disqualify them from receiving any wages to which they might otherwise be due. [48] This defence relies on s189(1) of the Act giving the Court: for the purpose of supporting successful employment relationships and promoting good faith behaviour, jurisdiction to determine them in such manner and to make such decisions or orders, not inconsistent with this or any other Act as in equity and good conscience it thinks fit. [49] Ms Wilson relied particularly on the judgment of the Labour Court in NID Distribution etc IUOW v Ullexco [1989] 1 NZILR 837 for the proposition that a claim for wage arrears should fail because the employees produced the situation leading to their suspension and declined the opportunity to return to full work when given that. In Ullexco employees had taken strike action and then been issued with invalid suspension notices. The Labour Court relied in turn for its authority on earlier judgments including Co-operative Wholesale Society v New Zealand (except Westland) Meat Processors etc IUOW [1971] 7 BA 596, 599 (Judge Blair): The principle is that employers are not liable to payment for periods of no work when the reason for there being no work cannot be said to be the employers responsibility. It follows that the workers cannot found a claim for payment of wages for a period during which they were not working, such a state of affairs having been caused by their own actions.

19 [50] Ms Wilson submitted that the phrase as the case may require in s131(1) of the Act that addresses recovery of arrears of wages lends weight to the ability of the Court to exercise its equity and good conscience jurisdiction in such cases. Counsel submitted that this phrase suggests that there is an element of discretion in determining the extent to which wage arrears should be awarded in any given case. Counsel submitted that the discretion here should be exercised against recovery except for the period of 5 minutes in every hour being the periods during each work shift that the second plaintiffs would not have been on strike. [51] Grounds advanced by the defendant for disqualifying the second plaintiffs in equity and good conscience include the following. First, Ms Wilson submitted that the union had waited until the proverbial 11 th hour to bring interim injunction proceedings, having previously indicated that it would bring a claim for damages. This does not avail the defendant for several reasons. It was the union that made decisions about bringing proceedings, not employees, either individually or collectively, who should not, in fairness, be penalised for any tactical decisions taken by the union. Next, that lateness has already counted against the union in the exercise of my discretion to refuse interim relief. It would not be in equity and good conscience to impose a double penalty, this time against the employees themselves. Finally, the union has now done what it originally told Spotless it would do, brought proceedings for damages in the sense of recovery of wages, so that it would again be hardly equitable in law and good conscience to penalise the second plaintiffs simply because they have now done what the union signalled from the outset. [52] Next, Spotless says that had the union s application for injunctive relief been filed earlier, it could have been heard well before the lockout or strike action was due to begin and no lockout would have taken place had the Court then ruled as it did after a number of days of lockout action. This argument does not avail Spotless either. This proceeding for recovery of wages could only have been brought after there had been a wrongful refusal to provide work and/or pay wages. The claim for wage recovery for breach of contract could not have been brought earlier than it was in the Employment Relations Authority before being removed to this Court. Proceedings to restrain strikes and lockouts are almost inevitably filed late, if not at

20 the proverbial 11 th hour, because of the uncertainties attaching to whether the action will take place, attempts to settle including in bargaining and other employmentparticular contingencies. [53] Next, Spotless says that the union should have lifted strike notices for the days between 13 July when an arguable case of illegality was identified by the Court and 23 July when this was affirmed substantively. Over that period of 10 days there were 7 days of lockout action and the employer says, as a matter of equity and good conscience, no wages should be payable because it was entirely within the power of the [union] to avoid the lockouts and consequent lost wages for affected members by simply lifting strike notices for those 7 days. That is not a convincing argument for not awarding remedies. The Court had not ruled on the legality of the notified strike action and there has been no suggestion that it would have been unlawful. If any party had an incentive to pull back from the brink, it may well have been Spotless whose intended action had been found to be arguably unlawful but who had received the benefit of discretionary considerations in not prohibiting that. At best, this is a neutral factor and it would not have been equitable or in good conscience to have penalised employees otherwise entitled to arrears of wages simply because their union decided not to withdraw lawful notices of strike action. [54] Nor should it count against the employees that, as Spotless says, the union s strike action was intended to cause maximum disruption in the public hospital system. Strikes (and lockouts) are extreme tactics designed to cause loss and disruption but they are not prohibited in the public health sector if statutory prerequisites are met. It would not have been equitable to have penalised the second plaintiffs for exercising a legal right, especially having forborne to do so for a considerable period until mid-july. [55] Next, as it did in the earlier injunction proceeding, Spotless submits that if the plaintiffs had modified the nature of their intended strike action, lockouts might have been avoided. As I determined in that case, however, it is not for the employer or for the Court to dictate to the plaintiffs how they will exercise a power lawfully available to them in any particular case before the occurrence of industrial action. It

21 smacks of paternalism, although disguising self interest, for Spotless in this way to again contend that the union and its members ought to have conducted themselves in the way commended by the employer and, failing this, to argue that the employees should not be entitled to remuneration they might otherwise receive as a result. Although the legislation encourages consensus in employment relations, I do not think that this extends to enforced consensus about the nature of strikes and lockouts, at least when one party s independent decision making should be penalised subsequently by invoking the Court s good conscience jurisdiction. [56] Although Spotless has sought to make much of the comments I made in declining interim injunctive relief to the union on discretionary grounds, these must be read in the context of the case then before the Court. The defendant now seeks to apply these comments more widely and, in my view, inappropriately, in seeking to deprive employees of remuneration to which they might otherwise have been entitled. [57] For all the foregoing reasons, I would have declined to invoke equity and good conscience under s189 to deprive the second plaintiffs of remedies to which they might otherwise have been entitled. All or nothing or lost chance remedies? [58] I have determined that it is more probable than not that if Spotless had not breached the employment contracts of the second plaintiffs (the purported lockout), these employees would not have worked because they would have taken strike action at the same times. How does this affect the remedies they seek? Because of the decision on the balance of probabilities just referred to, does this mean that they recover nothing? On the other hand, did they simply lose a chance to work, earn money and therefore to be paid, which should be reflected in a loss of chance assessment of damages being an award of less than 50 percent of what they would have earned had they worked, but more than a nil award?

22 [59] The Court of Appeal recognised this conundrum in Benton v Miller & Poulgrain (a firm) [2005] 1 NZLR 66 and, in particular, at paragraph [44] of the judgment of Glazebrook and William Young JJ: The law as to when Judges should take all or nothing or a loss of chance approaches to causation and damages is, to say the least, difficult. The cases are not easy to reconcile. Where reconciliation is attempted the distinctions drawn are often artificial. [60] The Judges distinguished the circumstances of historical facts that might be determined on a balance of probabilities approach and, as here, an assessment of what would have happened had the breach not occurred, a hypothetical question. A further distinction drawn in the judgment of the majority in Benton was between hypothetical facts involving what the plaintiff would have done and what a third party would have done. The Judges adopted the approach in an English case, Allied Maples Group Ltd v Simmons & Simmons [1995] 4 All ER 907, 915: Although the question is a hypothetical one, it is well established that the plaintiff must prove on the balance of probability that he would have taken action to obtain the benefit or avoid the risk. But again, if he does establish that, there is no discount because the balance is only just tipped in his favour. [61] Benton was discussed by the Court of Appeal in a subsequent employment case, Waitakere City Council v Ioane [2006] 2 NZLR 310. A loss of chance approach to the question of whether an employee would nevertheless have been dismissed had the employer acted fairly, reasonably and, in law, correctly which had been endorsed by William Young J, was considered but the Court noted that the case had not been advanced at first instance on this basis. [62] Here, the question is complicated because it is not only the hypothetical actions of the employees collectively that are in issue, but also the distinct hypothetical actions of the union and how these may have influenced the actions of the second plaintiffs. The reality of strike actions among widely dispersed workforces in low paid occupations in which use of replacement labour is relatively easier than in some others, is that union and peer solidarity is significant. The role of the union in decision making about strike action cannot be discounted.

23 [63] I am very conscious that this case was not argued for either side on a loss of chance basis but, rather, in a convention all or nothing manner. As was the Court of Appeal in Ioane (although the circumstances differ of course), I am loath to venture alone into a method of analysis of loss that either did not occur to the parties or was not sufficiently attractive to either or both that it was advanced. Had a loss of chance approach been advanced by either side, it is almost inevitable that additional evidence about relevant factors would have been called and upon which I should not speculate. [64] Although the Court, and the Court of Appeal in employment cases, have signalled clearly a preparedness to deal with such questions on a loss of chance basis, this is not the case in which that boat should be pushed out and I have determined the plaintiffs claim on an all or nothing basis founded on the probabilities of the hypothesis of readiness, willingness and ability to work by the second plaintiffs. The implications of section 96? [65] Although in pre-trial meetings Mr Cranney for the plaintiffs signalled a possible reliance by them on s96 of the Act 4 this was not pursued at trial and it is therefore unnecessary to deal with whether this section enables the plaintiffs to succeed irrespective of the hypothetical probabilities. Second plaintiffs disentitled by being parties to a strike? [66] In view of my conclusion that the second plaintiffs would probably have undertaken strike action had the defendant not prevented them from working when it purported to lock them out, it is unnecessary to determine whether some of them would have been parties to strike action by others of them. 4 This section disqualifies an entitlement to wages during a lockout: the converse argument is that there is an absolute statutory entitlement to wages if what purports to have been a lockout was not so.

24 Summary of judgment [67] Except to the extent of the first 7 hours on 12 July and for the periods of 5 minutes per hour on 12, 13, 17, 18, 19, 20, 21, 22 and 23 July if employees would have worked, the second plaintiffs claims to wages fail and are dismissed. Leave is reserved to apply further in respect of the 102 second plaintiffs the defendant says were not locked out. The parties are to attempt to settle the amounts in issue with the assistance of a mediator and/or a labour inspector but leave is reserved to apply for further specific directions if settlement cannot be achieved. Costs [68] These are reserved in the expectation, or at least hope, that the parties may now be able to resolve outstanding issues between themselves and in light of my following comments. If, however, any party seeks costs, application should be made by memorandum filed and served within the period of 2 months of this judgment with the respondent to that application having the period of 1 month to respond likewise. Postscript [69] The dispute in July out of which this litigation arose was particularly bitter and divisive. At times during the trial it was clear that these sentiments remained only just below the surface and I detect that there is much essential bridge building between the employer, the union and many employees still to be undertaken. Restorations of trust and confidence after bitter and divisive industrial disputes are rarely easy or quick exercises but should, in my view and nevertheless, be focused on by these parties. Reality is that Spotless is a significant employer of labour in public health sector ancillary services and the Act now requires all parties, the employer, the union and employees, to engage positively in good faith behaviour for the promotion of productive employment relationships. This litigation has been costly and divisive for all parties and has necessarily distracted them for some time

25 from the need to settle their bargaining and rebuild productive employment relationships. I urge the parties to now focus on that objective. Each has been successful and unsuccessful in aspects of this litigation. The inherent and long-term value of those successes may, however, be questionable unless elements of negativity in the relationships (employer/union and employer/employees) are now left in the past. GL Colgan Chief Judge Judgment signed at 1 pm on Monday 26 November 2007