Employment Echo - October 2024 edition

Health and Safety consultancy held liable for breach of Health and Safety at Work Act 2015: WorkSafe New Zealand v Safe Business Solutions Limited

Safe Business Solutions Ltd (SBS) is a consultancy which offered its client Westown safety advice, including assistance with a site traffic management plan. They recently pleaded guilty to exposing an individual to the risk of death, serious injury or serious illness. This is the first time a safety consultancy has been prosecuted under the Health and Safety at Work Act.

One of the SBS directors, person "A" as they were described in the case, was allocated the job of preparing an appropriate traffic management plan, and subsequently undertook all of the consultant visits to Westown. Person A did not have the necessary expertise to draw a traffic management plan, but Westown were unaware of this. Despite person A noting that there was a desperate need for a traffic flow plan, no interim traffic management measures were put in place. Six months later, the lack of an effective traffic management plan resulted in one of Westown's workers being hit by a moving vehicle, causing significant injuries.

SBS was ordered to reimburse Westown NZ$28,403, which was 50% of the amount that Westown had already paid the victim for emotional harm and consequential loss (Westown was convicted and sentenced earlier). They were also ordered to pay a penalty of NZ$382,500, although, for reasons that were suppressed, the amount SBS actually had to pay was NZ$70,000. However, SBS were ordered to contribute NZ$15,460 towards WorkSafe's legal costs.

This case was not only significant as the first time a consultancy has been convicted, but it also highlights that multiple parties may end up contributing to reparation awards, even if they are sentenced at different times. However, uncertainty remains regarding the personal liability of directors, with WorkSafe not prosecuting person A despite their role in the incident. WorkSafe has previously prosecuted directors for breaching their duties as an 'officer', and we are seeing an increasing willingness by WorkSafe to do so.

This sentencing should serve as a warning to consultants providing health and safety advice, that just because they are "advisors", it does not mean they are exempt from liability. WorkSafe will be willing to prosecute a consultancy when their failures place a worker's safety at risk.

Redeployment obligations for multinational companies: Stellar Elements New Zealand Ltd v Amesbury

The Employment Court recently confirmed that an employer with international offices should have considered overseas redeployment opportunities when making an employee redundant.

Mr Amesbury was employed by Stellar Elements New Zealand Ltd (Stellar), which is part of the multinational Amdocs Group (Amdocs).

Mr Amesbury claimed he was unjustifiably dismissed after being made redundant and was granted interim reinstatement in the Employment Relations Authority. Stellar challenged this in the Employment Court, arguing that the interim reinstatement order should not have been made.

The Employment Court observed many unique features of the Amdocs company structure, noting in particular that there was interconnectedness between its New Zealand and Australian staff. Its judgment focused upon the following factors:

• The organisational chart for one of the teams recorded the persons engaged in that work being within both New Zealand and Australia.
• Mr Amesbury's direct report was a manager (Mr Mutch) who reported to Mr Lazaro. Both of these people were not employed by Stellar but by a relevant Amdocs Australian entity, with Mr Lazaro being described as "the Australian and New Zealand Manager".
• Mr Amesbury stated that his work involved receiving instructions from Amdocs' employees, including managers, in Australia. He said he also worked with Amdocs' employees in Canada, USA, Israel, Singapore and the United Kingdom.
• Stellar did not produce any evidence to suggest the company was independent from any other Amdocs entity in the ANZ region.
• The restructure was part of a wider drive to reduce costs, not only within Australia and New Zealand, but elsewhere.

The Employment Court held that a fair and reasonable employer in these circumstances would have explored redeployment opportunities overseas. Other defects in the restructure procedure were also found, such as failing to provide sufficient information to Mr Amesbury. Accordingly, the Employment Court upheld the interim reinstatement.

Until now, employers would not normally consider redeployment opportunities overseas when undertaking a restructure. This case suggests a different approach is required when there are high levels of integration and interconnectedness between a New Zealand company and its overseas group companies. It will remain possible to take into account the logistical difficulties which are likely to arise if contemplating an international relocation, but in some cases the option must at least still be considered.

When "casual" employees are actually permanent: Carrington Resort Jade LP v Grant

Ms Grant first worked for Carrington Resort under an employment agreement which said her engagement was casual. Following that she was employed under another 'casual' employment agreement with a related company, Carrington Holiday Park. She then moved back to Carrington Resort, but with no written employment agreement. After about five months, Ms Grant was dismissed with one day's notice, leading her to raise a personal grievance for unjustified dismissal. In the Employment Relations Authority, it was determined that Ms Grant was a part-time, permanent employee in each employment period, irrespective of the "casual" written employment agreements. Hearing the case afresh, the Employment Court undertook an analysis of the real nature of the relationship between the parties. The Court was satisfied that there was an ongoing regular working arrangement in each period of employment. The Court found that:

• Ms Grant worked each and every week during each period of employment, unless on sick leave, on holiday or during the COVID-19 lockdowns.
• There was a consistent expectation Ms Grant would work weekly.
• Ms Grant was paid the wage subsidy during the COVID-19 lockdowns, showing that there was an expectation she would have been expected to work.
• To terminate her employment in the second period, Ms Grant gave two weeks' notice, indicating she did not feel she could terminate her employment immediately.
• Detailed wage and time records signalled that the reality of the employment arrangement was not casual.

The Court concluded that Ms Grant worked on a permanent basis according to a part-time roster. The Court agreed with the Authority that there was no substantive or procedural justification for the termination and upheld its award of NZ$29,000 in compensation for hurt and humiliation plus three months' lost wages. It also separately awarded NZ$10,000 in penalties for delay and obstruction of the Authority's investigation.

This decision offers a strong reminder of the significant risks and liabilities attached to calling employment "casual" when it is in fact regular and ongoing. Employers need to consider carefully the real nature of the work when employing someone, both at the outset and then as the relationship develops.

This newsletter contains contributions from: Harriet Phillips and Emilie Aitken.

For further information on employment related matters, please visit our Global Employment hub, where you can find updates from many jurisdictions, including New Zealand, or reach out to one of our partners - Charlotte Parkhill, Greg Cain, James Warren or Renee Butler.

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