IN THE EMPLOYMENT COURT AUCKLAND [2016] NZEmpC 68 EMPC 248/2015. MATTHEW PHILLIPS Defendant

Transcription

1 IN THE EMPLOYMENT COURT AUCKLAND IN THE MATTER OF BETWEEN AND [2016] NZEmpC 68 EMPC 248/2015 a challenge to a determination of the Employment Relations Authority MODERN TRANSPORT ENGINEERS (2002) LIMITED Plaintiff MATTHEW PHILLIPS Defendant Hearing: 5 April 2016 and by submissions filed on 8 April 2016 (Heard at Hamilton) Appearances: S Scott, counsel for plaintiff D Vinnicombe, advocate for defendant Judgment: 7 June 2016 JUDGMENT OF JUDGE CHRISTINA INGLIS Introduction [1] Mr Phillips was employed by the plaintiff company for a period of 42 days. The narrow issue that arises on the company s de novo challenge is whether the company can invoke a 90-day trial period provision which it says was contained within his employment agreement. The company says it can. Mr Phillips says it cannot. [2] There is no dispute that Mr Phillips signed an employment agreement. He says that he cannot recall it containing a trial period provision. The company is unable to produce a copy of the signed agreement. It says that that is because Mr Phillips personnel file, together with his employment agreement, went missing shortly before his employment was terminated. The company s case is that Mr MODERN TRANSPORT ENGINEERS (2002) LIMITED v MATTHEW PHILLIPS NZEmpC AUCKLAND [2016] NZEmpC 68 [7 June 2016]

2 Phillips removed his personnel file from an unlocked cabinet in the Office Manager s office. Mr Phillips disputes this. [3] Mr Phillips contends that even if the employment agreement contained a 90-day trial provision, the company cannot rely on it because it did not retain a copy of the agreement and has not been able to make a copy available on request. This appears to have been the conclusion reached by the Authority, which found that: 1 [45] [The company] having failed to fulfil the s 64 statutory requirements in the Act in regards to retaining a copy of the signed [agreement], I find that it cannot now seek to rely on the trial period provisions in the employment agreement to prevent Mr Phillips bringing a claim for unjustifiable dismissal. [46] Accordingly I determine that there is no valid trial period provision and that Mr Phillips is thereby not precluded from bringing a personal grievance claim against [the Company]. [4] Section 64 of the Act provides that: The facts 64 Employer must retain copy of individual employment agreement or individual terms and conditions of employment (1) When section 63A applies, the employer must retain a signed copy of the employee s individual employment agreement or the current terms and conditions of employment that make up the employee s individual terms and conditions of employment (as the case may be). (2) If an employer has provided an employee with an intended agreement under section 63A(2)(a), the employer must retain a copy of that intended agreement (3) If requested by the employee, the employer must, as soon as reasonably practicable, provide the employee with a copy of the employee s- (a) individual employment agreement [5] On around 10 December 2014 Mr Phillips met with Mr Annan, the company s Production Manager, to discuss an offer of employment which had been made to Mr Phillips by telephone shortly beforehand. This followed earlier discussions. Prior to the meeting, Mr Annan asked the company s accountant (Mr Flyger) to prepare a written employment agreement. The company has around 150 employees and uses a standard form agreement. For new employees the standard 1 Phillips v Modern Transport Engineers (2002) Ltd [2015] NZERA Auckland 254.

3 form agreement contains a 90-day trial period provision. There is no suggestion that the provision in the standard form agreement does not comply with the relevant statutory requirements. Mr Annan gave evidence that the company only ever uses the standard form agreement and does not deviate from this practice. Mr Flyger s evidence was to similar effect. Their evidence was not challenged on this point and I accept it. [6] During the course of the meeting, Mr Phillips skimmed the draft agreement and said that he would like to take it away. Mr Annan understood that this was for the purpose of seeking advice. He was happy to agree to the request and did so. No time limit was placed on any response. Mr Phillips evidence was that he took the agreement away, read it and signed it. [7] Mr Phillips says that he cannot recall the agreement containing a 90-day trial period provision, although I did not understand him to be precluding the possibility that it did. Given the company s invariable practice, and given that Mr Phillips was to be a new employee, I accept Mr Annan s evidence that he gave Mr Phillips a copy of the standard form agreement for new employees, which included the 90-day trial period provision, and that it was this agreement that Mr Phillips signed. [8] Further, it is notable that the standard form agreement for non-new employees has a large bolded redaction in it. It is unlikely that this would have escaped Mr Phillips notice had the standard form agreement, rather than the new employee standard form agreement, been provided to him in error. While Mr Phillips made the point a number of times that a lot of water had passed under the bridge since the events in question, it also emerged in evidence that he is no novice when it comes to issues relating to 90-day trial periods, having himself engaged employees under such terms. [9] Mr Phillips brought the agreement into the office around 12 December Mr Annan gave evidence that he countersigned the agreement in front of Mr Phillips, although Mr Phillips disputes this. I accept that the agreement was signed by both parties. Mr Annan s evidence in this regard was supported by the Office Manager s evidence, Ms Kennington. Mr Phillips asked for a copy of the signed agreement.

4 Ms Kennington said that she took a copy when she had time and that she posted it to him. She also said that she filed the signed agreement in an unlocked cabinet, along with other employee personnel files. Mr Phillips says that he never received a copy of the signed agreement. [10] Mr Phillips started work on 5 January It is clear that issues arose shortly afterwards in respect of his manager. Mr Annan and Mr Flyger met with Mr Phillips on 16 February During the course of the meeting Mr Annan advised Mr Phillips that his employment was terminated pursuant to the 90-day trial period in his contract. I pause to note that the fact that Mr Annan referred to the 90-day trial period provision at this time tends to reinforce the earlier conclusions I have reached about the likelihood that such a provision was contained in Mr Phillips employment agreement. [11] Both Mr Annan and Mr Flyger described Mr Phillips reaction to news that his employment was being terminated pursuant to the 90-day trial-period provision as odd. They said that Mr Phillips response was to immediately ask for a copy of the written agreement and to query whether the company in fact had a copy of it. Given that Mr Phillips knew that an agreement had been signed (at the very least by himself) it was, as the company s witnesses observed, a rather strange query. [12] Mr Annan went downstairs to retrieve the signed agreement from the filing cabinet. He found that it was missing. Ms Kennington s evidence was that in her 13 years in the role this had never once happened. Further searches revealed that only one personnel file was missing and that it was Mr Phillips. Mr Annan returned to the meeting. Mr Phillips reiterated his request for a copy of the signed agreement and made it clear that if the company could not produce the signed agreement it could not validly terminate his employment. [13] Following the meeting a number of things occurred. Mr Phillips lodged a personal grievance with the Authority contending that he had been unjustifiably dismissed. Another employee, Mr Ganley, approached Mr Annan recounting a conversation which he said he had had with Mr Phillips some time beforehand and which had made him uncomfortable. Mr Ganley s evidence was that Mr Phillips had

5 come to visit him at his home on 14 February 2015, had been critical of the company and had, during the course of his visit, told Mr Ganley that he had his employment agreement. This visit was said to coincide with a period of time during which Mr Phillips had been in at work on a Saturday and a period of time during which Mr Phillips personnel file appears to have gone missing from the office cabinet. [14] It was put to Mr Phillips that he had gone into the office, removed his personnel file and then cleaned down the doorframe and walls to remove any finger prints. Mr Phillips accepted during the course of cross-examination that he had, on occasion, wiped down the doorframe and walls around his office space but explained that he is fastidious in terms of cleanliness. He disputed that he was undertaking such a task on Saturday 14 February 2015, strongly denied removing his file and denied having a conversation with Mr Ganley later that day. [15] I do not need to reach a concluded view on these factual issues given the conclusions I have reached in relation to the contents of the employment agreement that the parties signed. I am satisfied that Mr Phillips was given a draft written employment agreement with a 90-day trial period clause in it in the company s standard form. To the extent that it is relevant, I am also satisfied that he was given an opportunity to consider the draft agreement, apparently for the purpose of taking advice if that was what he wished to do, and that no timeframe was put on a response. The 90-day period was not buried in the agreement. While it did not have a separate heading it was highlighted in capital letters on page 2, together with a summary of the applicable legal requirements relating to it. It could not reasonably have escaped notice. In the event, Mr Phillips (who was no stranger to 90-day trial provisions) raised no issues in respect of the draft and it was signed and returned. Mr Annan countersigned the agreement. A copy was taken and it was sent to Mr Phillips, although he may never have received it. The signed agreement was filed in a cabinet with the company s other personnel records in accordance with the company s usual practice, and it subsequently went missing. [16] Mr Vinnicombe submitted that this Court has consistently held that unless there is strict compliance with ss 63A, 64 and 67A an employer will not be entitled to rely on a 90-day trial provision. The two judgments he drew my attention to in

6 support of this proposition are Smith v Stokes Valley Pharmacy (2009) Ltd 2 and Blackmore v Honick Properties Ltd. 3 In Smith it was observed that: [83] The new sections are neither simple nor the very broad and blunt prohibition against bringing legal proceedings that is sometimes portrayed rhetorically. They provide a specific series of steps to be complied with cumulatively before a challenge to the justification for a dismissal can be precluded. There is a risk to the employer of disqualification from those immunities if these steps are not complied with. Significant obligations of good faith dealing remain upon employers. (Emphasis added) [17] While this observation, taken in isolation, may lend some support to the approach being advanced on behalf of the defendant, I do not read either Smith or Blackmore as authority for the proposition that a failure to comply with the statutory obligation to retain a copy of a signed employment agreement which contains a 90- day trial provision or to make a copy of such an agreement available on request automatically leads to a finding of invalidity. [18] In Smith the Court held that the employer could not rely on the 90-day provision in the employment agreement because the employee was not a new employee. 4 Accordingly the threshold contained within s 67A ( When employment agreement may contain provision for trial period for 90 days or less ) was not met. In Blackmore the Court found that the agreement, containing the 90-day trial provision, had been unfairly bargained for. The consequences of such a failure are, as the Court observed, set out in s 69 ( Remedies for unfair bargaining ). That section provides for a raft of remedies, including that the agreement may (but need not) be cancelled or varied. [19] The focus of the defendant s case was squarely on the alleged non-retention and provision of the signed employment agreement. Those obligations are contained within ss 63A and 64. Sections 63A and 64 make express provision for the consequences of a breach, namely a penalty imposed by the Authority. 5 Neither provision says anything about invalidity, cancellation or variation. Indeed s 63A(4) 2 Smith v Stokes Valley Pharmacy (2009) Ltd [2010] NZEmpC 111, [2010] ERNZ Blackmore v Honick Properties Ltd [2011] EmpC 152, [2011] ERNZ At [88]. 5 Sections 63A(3) and 64(4).

7 specifically states that failure to comply with the requirements of the provision does not affect the validity of the employment agreement. Reading in the additional consequences contended for by the defendant would, in my view, strain the words of the provisions to snapping point and lead to illogical consequences that could not possibly have been intended. A hypothetical example, which was put to the advocate for the defendant during the course of hearing, illustrates the point. What if an employer s building has burnt down and all the employment records have been destroyed? The employer can establish, other than by producing a copy of the agreement, that it contained a compliant 90-day trial period provision. Is such a provision nevertheless invalidated simply because the employer cannot produce a copy of the agreement? [20] It is clear that employers must comply with a number of obligations when entering into employment agreements, including agreements containing 90-day trial periods. I agree with the observation in Smith that s 67A carves out an exception to the established entitlement to pursue personal grievances for unjustified dismissals and that it ought to be read strictly. It does not however follow that every failure will automatically lead to the same result. [21] As I have said, ss 63A and 64 provide mechanisms for addressing any default in retaining and providing a copy of an employment agreement. No penalty action was advanced in this case and even if it had been, I would not have considered a penalty appropriate having regard to the circumstances. Nor (for completeness) would I have found that the agreement was unfairly bargained for in relation to the information or opportunity to seek advice required by s 63A; or considered the grant of relief provided for in s 69 appropriate, particularly having regard to the restrictions on s 69 relief contained within s 164. [22] The ultimate issue in this particular case is whether Mr Phillips employment agreement contained the relevant provision, not whether the company retained a copy of it or was able to provide a copy on request. Plainly an employer seeking to assert that employment was terminated pursuant to a lawful 90-day trial provision is likely to find it easier to do so if it is able to produce a copy of the agreement.

8 However the short point is that the mere fact that a written agreement cannot be produced is not the start and finish of the inquiry. Conclusion [23] Mr Phillips employment agreement contained a valid 90-day trial period provision. I do not accept the defendant s argument that it is unenforceable. Mr Phillips employment was terminated within the 90-day period. He cannot bring a personal grievance challenging his dismissal. [24] The challenge succeeds. This judgment stands in the place of the Authority s determination. [25] The parties are urged to seek to agree costs. If that does not prove possible the plaintiff may file a memorandum with supporting material within 20 days of the date of this judgment, the defendant filing a memorandum and any supporting material within a further 15 days and anything strictly in reply within 5 days. Christina Inglis Judge Judgment signed at 2.30 pm on 7 June 2016