IN THE EMPLOYMENT COURT AUCKLAND AC 3/08 ARC 35/07 IN THE MATTER OF BETWEEN AND a challenge to a determination of the Employment Relations Authority B.W. MURDOCH LIMITED Plaintiff MARK ANTHONY HORN, LABOUR INSPECTOR Defendant Hearing: 26 February 2008 (Heard at Auckland) Appearances: Mark Ryan, Counsel for the Plaintiff Casey Hurren, Counsel for the Defendant Judgment: 5 March 2008 JUDGMENT OF JUDGE C M SHAW [1] This case is about whether Mr Adri Honkoop was entitled to receive payment for public holidays which fell during the period of his temporary employment by BW Murdoch Ltd (Murdochs). [2] Mr Horn, a Labour Inspector, made a determination that Murdochs was required to pay Mr Honkoop 4 days' public holiday pay. When Murdochs advised that his conclusions were not accepted and it would not comply, Mr Horn applied to the Employment Relations Authority for orders that payment for the public holidays be made. B.W. MURDOCH LTD V HORN, LABOUR INSPECTOR AK AC 3/08 5 March 2008
The Authority s determination [3] The Authority agreed with Mr Horn. It held that Mr Honkoop was not a casual employee and was therefore entitled to payment for public holidays. It applied the test of what the real nature of the employment was and concluded that Mr Honkoop s employment was consistent with that contemplated under s66 of the Employment Relations Act 2000 in that it was agreed that the employment would end on a specified date or on the occurrence of a specified event. [4] The Authority determined that Mr Honkoop was entitled to payment for the public holidays which fell during his employment with Murdochs. Murdochs was ordered to pay the sum of $826.20 gross plus interest to the Labour Inspector for the use of Mr Honkoop. [5] Murdochs elected to challenge that determination and the matter was heard as a de novo hearing. The issues [6] Two main issues emerged from the evidence and the submissions from counsel: [1] Are casual employees entitled to payment for public holidays under the Holidays Act 2003 ( the Holidays Act )? [2] If so, whether the nature of Mr Honkoop s work meant that he was entitled to such payments. The facts [7] In March 2005 Mr Honkoop, who is retired, applied for a position of temporary store person at Murdochs construction site at Te Awamutu. Murdochs was building a dairy factory and had decided to set up a store and employ a storeman for the duration of that project which was to be 3-4 months. [8] Mr Honkoop met with Murdochs project manager, Mr Spurway. At their first meeting they discussed the nature of the work and when Mr Honkoop explained that he needed to have sufficient hours of work and pay to make his travel from Hamilton worthwhile, Mr Spurway agreed that if he was able to do other work for Murdochs, apart from the store work, his hours could be augmented up to around 40
hours a week. This was the first store that Murdochs had set up and the first time it had employed a store person. At that early stage they were unsure of the amount of work which would be required on stores work. Mr Honkoop was offered the employment. [9] At their second meeting they discussed the details of the employment agreement, Mr Honkoop negotiated a payment of $20 per hour plus 6% holiday pay. Mr Spurway had originally offered him $18.86 (the hourly rate Murdochs paid to its permanent workers) plus 6% but agreed to the higher rate to recognise the casual nature of his employment. There was no discussion or agreement between Mr Honkoop and Mr Spurway about payment for public holidays. The employment agreement [10] This was headed Employment Agreement (Casual Staff). Under the heading Term it stated: Please note that it is for casual project work. The hours and days to be worked are not fixed and are to be agreed between the Engineering Manager and yourself. [11] The agreement said the remuneration rate applied to every hour worked and reflected the short term project work it related to. [12] The agreement also had a requirement for timesheets to be completed each Monday, a 3 week trial period which Mr Spurway said was to cover the eventuality that the new venture of a store might not be successful and required 1 week s notice of termination. Hours of employment [13] Mr Honkoop commenced work on 14 March 2005 and from then on until the end of the project worked an average of 40.75 hours a week. The Employment Relations Authority conveniently summarised his hours of work and work patterns in a chart which I adopt with some minor alterations: Week Dates Mon Tue Wed Thurs Fri Total Hours 1 14-18 March 7 8 9 9 8.5 41.5 2 21-25 March 10 10 10 8 8* 46 3 28 Mar-1 Apr 8* 10 10 10 9 47 4 4-8 Apr 10 10 10 10 8.5 48.5 5 11-15 Apr 10 10 10 - - 30 6 18-22 Apr 10 10 10 10-40 7 25-29 Apr 10* 10 10 10 9 49
8 2-6 May 10 10-10 9 39 9 9-13 May 10 10 10 10-40 10 16-20 May 10 7.5 7 10 9 43.5 11 23-27 May 10 10 10 10-40 12 30 May-3 Jun 10 10 10.25 10-40.25 13 6-10 June 10* 10 10 10 9 49 14 13-17 June 10 10 10 10-40 15 20-24 June 10.5 10.5 9.5 10.25-40.75 16 27 Jun-1 July 10 10 10 10.25-40.25 17 4-8 July 10.5 10.5 10.5 11.75-43.25 18 11-15 July 10.75 10.75 10.25 10.25-42 19 18-22 July 10.25 10.25 10.25 10 10 50.75 20 25-29 July 10 10 10.25 - - 30.25 Public holidays are noted with an *. The hours on those dates are the hours claimed by Mr Honkoop as payment for public holidays although not worked by him. [14] In each of the first 4 weeks of his employment, Mr Honkoop worked 5 days a week and his hours exceeded 40 hours a week. After that, he was asked by his manager, Mr Skinner, to reduce his hours to bring them in line with the agreed 40 hours and after 1 week of 30 hours usually worked 10 hours a day, 4 days a week, Monday to Thursday although he did work on Fridays when requested on another five occasions. [15] He took one Wednesday off by agreement with his employer to attend a dental appointment. [16] The only evidence of discussions about his availability for work was Mr Skinner s request for him to reduce his hours after the first 4 weeks; his day s leave for his dental appointment; and one conversation with Mr Spurway about whether he was available to work one Friday. There was no evidence that the employer assessed and allocated the amount of work available for him each week or that it tailored Mr Honkoop s working hours accordingly. Mr Spurway did not have any discussions with him about his expectations for his work each week. No evidence was given by Mr Skinner. Mr Honkoop strongly denied that any regular discussions were held with him about that. I accept his account. [17] In the course of his employment, Mr Honkoop was offered and accepted forklift training for which he was paid by Murdochs. Public holidays [18] Of the four public holidays that fell during his period of employment, the first was Good Friday which fell at the end of his second week. The second was the
following Easter Monday. Anzac Day fell on Monday, 25 April and Queen s Birthday was on Monday 6 June. During each of these public holidays Murdochs store was closed and neither Mr Honkoop nor the 18 permanent employees were required to work on these days. The permanent employees were paid for these holidays. [19] Mr Spurway said in evidence that the $20 an hour was intended to be inclusive of public holidays providing the employee did not work on the day. However, he did not discuss this with Mr Honkoop at the time they entered into the employment agreement. [20] Mr Honkoop claimed payment for the public holidays on his timesheets which he submitted each week. The payments were not made and, after correspondence with Murdochs, Mr Honkoop realised that they would not be paying so he took the issue up with the Labour Inspector once he left work. Determination of employment [21] There is no suggestion that Mr Honkoop s work was anything other than satisfactory. His employment ended on 27 July 2005. In the letter of termination Mr Spurway said that the reason for terminating the contract was that Murdochs had reached near the end of the project works. The period of his employment was, in accordance with agreement, determined by the end of the project. The law [22] The outcome of this case depends on the interpretation and application of the Holidays Act 2003. [23] The purpose of the Holidays Act is to promote the balance between work and other aspects of employees lives by providing minimum entitlements to, inter alia, public holidays. It applies to all employers and employees 1 the latter having the same meaning as in s6 of the Employment Relations Act 2000: a person of any age employed by an employer to do any work for hire or reward under a contract of service. 1 Section 7(a)
[24] The Holidays Act provides minimum entitlements 2 which cannot be excluded, restricted, or reduced by an employment agreement. 3 [25] Annual holidays and public holidays are described and treated differently. The former are provided for rest and recreation; the latter for the observance of days of national, religious, or cultural significance. The difference and separateness of the two categories of holiday is made clear by s40 of the Holidays Act which provides that when public holidays arise during a period of annual holidays the public holidays must be treated as a public holiday and not as part of the employee s annual holidays. [26] Employees entitlements to public holidays are found in subpart 3 of the Holidays Act. It does not distinguish between types of employees such as casual or permanent: (1) An employee is entitled to public holidays, and payment for those holidays, in accordance with this subpart. (2) Public holidays are in addition to annual holidays that an employee is entitled to under this Act or otherwise. [27] Section 48 mandates how compliance with s46 is achieved. Two different situations arise when a public holiday falls on a day that would otherwise be a working day. [28] First, s46 is honoured if the employee does not work on the day that is a public holiday but would otherwise be a working day and is paid by his employer his relevant daily pay pursuant to s49. [29] Second, s46 is honoured if the employee does work on the day that is a public holiday but would otherwise be a working day; is paid time and a half pursuant to s50 and is provided with an alternative holiday pursuant to s56. [30] Mr Ryan relied in part on s28 to support the plaintiff s case. That section provides that annual holiday pay may be paid with the employee s pay if the employee is employed in accordance with s66 of the Employment Relations Act 2000 on a fixed term agreement to work for less than 12 months or on a basis that is so intermittent or irregular that it is impracticable for the employer to provide the employee with his annual holiday entitlement. 2 Section 6(1) 3 Section 6(3)
[31] Section 12 of the Holidays Act applies for the purpose of determining an employee s entitlement to leave and holidays including public holidays. When it is unclear whether a day would have otherwise been a working day for an employee, the Holidays Act requires an examination of the factors listed in s12(3) which are: (a) the employee's employment agreement: (b) the employee's work patterns: (c) any other relevant factors, including (i) whether the employee works for the employer only when work is available: (ii) the employer's rosters or other similar systems: (iii) the reasonable expectations of the employer and the employee that the employee would work on the day concerned. [32] In a recent Court of Appeal decision 4, Chambers J, delivering the decision of the majority, held that the question of whether a day would otherwise be a working day is an intensely practical one. The factors employers and employees are bound to take into account are very open-ended and flexible. [33] A similar approach was taken by the Employment Court in Progressive Meats Limited v Meat and Related Trades Workers Union of Aotearoa Inc 5. Colgan CJ dealt with whether employees at a meat plant in Hastings should have been paid no less than their relevant daily pay for the Queen s Birthday public holiday in 2004 in light of their particular patterns of work. [34] As the collective agreement did not adequately deal with the issue of the minimum weekly remuneration and, in order to determine the employees contractual rights and obligations, the Chief Judge considered what happened in practice at the workplace as a matter of fact by reference to custom and practice. He noted that what would otherwise have been a working day for the relevant employees was essentially a question of fact in each case. 6 4 New Zealand Fire Service Commission v New Zealand Professional Firefighters Union [2007] 2 NZLR 356, 359 5 WC 1/08, 7 February 2008 6 At para [36]
Discussion of Issues Issue 1: Are casual employees entitled to payment for public holidays? [35] As a matter of principle there is no basis for the plaintiff s proposition that, solely by reason of their status, casual employees are not entitled to payment for public holidays. [36] While the labelling of casual employees is common in employment practice, there is no statutory definition of a casual employee in the Employment Relations Act 2000. An employee is a person hired to do work under a contract of service regardless of the hours of work or length of the employment. [37] The starting point is that all employees, casual or not, are subject to the same statutes governing their employment including the Holidays Act which does not differentiate between types of employment except in one respect. In a legislative exception to the requirement in s27 that an employer must pay an employee entitlements to annual pay before the holiday is taken or as specified by agreement, s28 provides for two situations where it is appropriate to pay annual holiday pay in regular instalments. While the term casual is not mentioned, it is obvious that reference in s28 to persons who are employed for short terms or who work intermittently or on an irregular basis covers those commonly referred to as casual workers. [38] Whether a person is employed on a short-term agreement under s66 of the Employment Relations Act 2000 or on an intermittent or irregular basis does not change their entitlements to annual holiday pay, but they may agree, as did Mr Honkoop, to have this entitlement paid regularly at 6 percent of his gross earnings. [39] Mr Ryan argued that as s5 of the Holidays Act defines holiday as annual holiday or a public holiday, the statutory intention is that public holiday pay may be paid in regular instalments in the same way as annual pay under s28. He submitted that this could be so because s28 does not expressly exclude application to public holidays. [40] I do not accept that submission. It is clear from the scheme of the Holidays Act that this regular method of payment is limited to payments of annual holiday pay. Section 28 is contained in Part 2 subpart (1) of the Holidays Act which is subtitled Annual Holidays. All references to entitlements to and payments for
public holidays is in subpart (3). Payment for public holidays is therefore discreet and unrelated to payments for annual holidays. This is reinforced by s46 which states that public holidays are in addition to annual holidays. [41] The Holidays Act does not differentiate between entitlements to public holidays on the basis of the type of employment. Any employee is prima facie entitled to public holidays and payment for them 7 whether the employee is required to work on those days or not. [42] I do not accept the plaintiff s submission that, because Mr Honkoop was not asked to work on the public holidays in question, he had no entitlement to payment. Section 49 expressly deals with this situation. [43] The plaintiff s stance on this point is also inconsistent with its payment of permanent employees for public holidays when its plant is not open on those days and those employees do not work. The plaintiff recognises its obligations under the Holidays Act to those employees but is mistaken in its belief that those obligations cannot extend to casual employees. [44] I conclude that in principle there is no basis for treating casual and permanent employees differently when assessing their entitlement for payment for public holidays if they do not work on such holidays. The question to be asked for all employees is whether, pursuant to s49, the public holiday would otherwise be a working day for the employee. This is a question of fact. Where the situation is not clear, as is more likely in the case of short term or casual employees, the factors in s12(3) of the Holidays Act are to be taken into account. Issue 2: Did the nature of Mr Honkoop s work entitle him to payment for public holidays? [45] The plaintiff relies on the terms of the employment agreement and the intention of the parties at the time the agreement was entered into as determinative of the nature of his employment 8. Mr Ryan submitted that agreements were made from week to week about what work was to be offered to Mr Honkoop and he could accept or reject those offers. The fact that he accepted virtually all the work offered 7 Section 46 8 TNT v Cunningham [1993] 3 NZLR (CA)
does not, in Mr Ryan s submission, change the underlying agreement that was entered into between the parties that the work patterns would be not fixed. [46] The Authority approached the matter by analysing the working relationship to determine the real nature of the relationship. It used by analogy the test in s6 of the Employment Relations Act 2000 to reach the conclusion that elements of Mr Honkoop s employment agreement such as notice and trial periods are not consistent with casual employment. It concluded that those factors and the terms of the job advertisement, as well as the agreements between the parties, meant that Mr Honkoop was not a casual employee. [47] While I reach the same conclusion as the Authority about Mr Honkoop s entitlement to payment for public holidays, I hold that the correct approach is to analyse the relationship according to the factors set out in s12(3) of the Holidays Act which are expressed to be for the purpose of the parties reaching agreement on the matter or for the Labour Inspector to take into account in reaching a determination on entitlements to holiday pay. If these are applied, it is not necessary to categorise the real nature of the relationship for the purpose of establishing rights to payments of public holidays. Section 12(3) Factors [48] These are to be assessed as a matter of fact. The employment agreement [49] The agreement is expressed to be casual but is linked to a short-term project. In light of the terms requiring notice and trial periods, I find it is not unequivocally one or the other but more likely to have been a fixed term contract with an end point at the conclusion of a specified project. [50] The agreement addresses annual leave through the payment of 6 percent but is silent as to public holidays. There was no discussion, let alone oral agreement, between Mr Spurway and Mr Honkoop about payments for public holidays being incorporated into the $20 an hour payments. Even if they had, that is expressly prohibited by s52(3) of the Holidays Act. [51] There was agreement about the hours to be worked each week. This was initially 40 hours more or less but there was no specific arrangement as to which
hours would be worked until the after the 4th week when Mr Honkoop was asked to keep his hours closer to 40 hours and he decided to work 4 ten-hour days a week. The employee s work pattern [52] For the first 4 weeks Mr Honkoop worked a 5-day week although these were interrupted by public holidays. After that, generally although not exclusively, he worked 4 days a week between 7 and 11.75 hours a day. Each Monday, except for public holidays, he worked at least 10 hours. [53] I find that Mr Honkoop worked regular and predictable hours each week. Did he work for his employer only when work was available? [54] The evidence establishes that there was sufficient work to keep Mr Honkoop busy for an average of over 40 hours a week. His work was not governed by rosters but was recorded by him on weekly timesheets after the event and accepted by Murdochs. [55] For the period of his employment his employer made sufficient work available to keep him employed full time which, by arrangement, was done over 4 rather than 5 days. Reasonable expectations of the employee and employer [56] While the plaintiff submitted that his employment agreement gave Mr Honkoop the ability to decline work at any stage, in practice this did not mean that there was no regularity or certainty about when Mr Honkoop would work. [57] Mr Honkoop began work on the first Monday and continued to work regularly from Monday of each week except when Monday was a public holiday. He expected that he would work each week in this way and I find that that was also the expectation of his employer. Neither Mr Honkoop nor Murdochs attempted to make the hours of employment more ad hoc. The employment pattern was set from the beginning and accepted by both. Conclusion [58] On the basis of these factors, I find without doubt that each public holiday which fell on a Monday would otherwise have been a working day for Mr Honkoop. [59] The public holiday for Easter Friday is not as clear cut. The working pattern for the entire 19 weeks shows he did not work consistently every Friday. However,
s12(3)(iii) refers to the expectation that the employee would work on the day concerned. This indicates that the statute intends that each public holiday has to be looked at separately in the light of the work patterns around it. [60] During the weeks before and after Easter Mr Honkoop worked on Fridays. He expected to work on Friday and his employer paid him for those days. When his total hours of work were later queried, it was Mr Honkoop who altered the work pattern to 4 days of longer hours to comply with the 40 hours required by his employer. [61] I find that, at the time Easter Friday fell in the early part of his employment, it was a day that would otherwise have been a working day although that changed later in the course of Mr Honkoop s employment because of his election not to work most Fridays. [62] For these reasons, I conclude that Mr Honkoop was entitled to payment for each of the public holidays which fell during the term of his employment. The gross sum of $826.20 plus interest is to be paid to Mr Horn in his capacity of Labour Inspector for the use of Mr Honkoop. Costs [63] As this case is one that has clarified an aspect of the law and will be of use to the Labour Inspectorate in the exercise of its duties under the Holidays Act, counsel agreed that costs should lie where they fall. There will be no order for costs. Judgment signed at 1.00pm on 5 March 2008 C M SHAW