Health and Safety: have any lessons been learnt?

According to news reports following the death of three construction workers in yesterday's Auckland storms a Department of Labour spokeswoman said the department were not involved as it appeared to be an ''act of God''. 

It is of course probable that the deaths may have been unavoidable in the circumstances but that hardly excuses the need for an investigation to determine if this was the case and whether precautions might be taken to avoid such tragedies in future.  Construction is a relatively high risk activity and large construction projects need to take account of a number of eventualities. One of these is unusual or freak weather events.  The storm which occurred yesterday was unusual in its intensity, including generating tornadoes, but  extreme weather events are not that uncommon and they certainly are not acts of god in the sense that they are extremely rare and unpredictable. One would expect therefore that construction projects would take the occurrence of such events into account in terms of site safety management and have in place procedures to monitor for such events, to shut sites down if necessary and to take other measures as appropriate. Indeed the possibility of adverse weather related safety hazards must be one of the most significant risk areas for large construction sites given the volume of material and machinary that may become hazardous if storms strike.

A proactive approach to health and safety requires an investigation as to whether proper procedures and processes were in place and whether proper precautions might have avoided the deaths.  Fault may not be found, but finding fault should not be the primary purpose of accident investigation: the most important function is to identify what went wrong and to determine if  future accidents might be avoided.

Facebook- again

Readers may have seen news reports relating to Smith v Trafford Housing Trust [2012] EWHC 3221 (Ch) brought by a christian employee of a UK housing trust who was demoted for some mild Facebook comments disagreeing with the celebration of gay marriages in churches.  One work colleague was apparently offended by these comments on the basis they were homophobic-a view the Court was to disagree with as it saw the comments as little more than the expression of an opinion widely held by christians and commonly expressed in the media and generally.  The Trust, presumably reflecting the view of many employers and HR managers that they are entitled to have total control over the lives of their employees, took disciplinary action.

Those of a legal inclination are likely to find the decision of Briggs J provides a robust and extremely sensible judgment on how such cases, and indeed Facebook cases in general, might be approached.  This case was not concerned with the fairness of the demotion decision (or in New Zealand terms its justification) but rather with the question of whether or not the demotion had constituted a breach of Mr Smith's contract of employment. 

A number of points were made in the judgment but I will mention only what most people (if not some HR managers) would regard as the more sensible. The first was that the mention of your employer and position as part of the abbreviated cv on a normal non-work Facebook page is unlikely to lead to lead to the assumption that comments on a Facebook page are made on behalf or or represent the views of that employer. The Court stated at :

[57] I do not consider that any reasonable reader of Mr Smith’s Facebook wall page could rationally conclude that his two postings about gay marriage in church were made in any relevant sense on the Trust’s behalf. I have two main reasons for that conclusion. The first is that Mr Smith’s brief mention at the top of the page that he was employed as a manager by the Trust (as part of a note form CV which also identified his school, his place of residence, his marital status and his date of birth) could not possibly lead a reasonable reader to think that his wall page consisted of, or even included, statements made on his employer’s behalf. A brief mention of the identity of his employer was in no way inconsistent with the general impression to be gained from his Facebook wall, that it was a medium for personal or social, rather than work related, information and views.

 and

[59] My second reason is that, viewing the entries on Mr Smith’s wall for the period in question as a whole, it is obvious, and would be obvious even to a casual reader, that he used Facebook for personal and social rather than work related purposes. As I have said, the other entries made on the same page during that short period related to sport, food, motorcycles and cars, none of which could have any relevance to his work and all of which were about his personal and social life. Nor were his postings about gay marriage in church themselves work related.

The Court was equally skeptical that  Mr Smith's remarks might bring the employer into disrepute:

[63] On the assumption that Mr Smith was not (as I have found) reasonably to be taken as seeking to express the Trust’s own views, I cannot envisage how his moderate expression of his particular views about gay marriage in church, on his personal Facebook wall at a weekend out of working hours, could sensibly lead any reasonable reader to think the worst of the Trust for having employed him as a manager.
[64] For those reasons I have come, without difficulty, to the conclusion that Mr Smith’s postings about gay marriage in church were not such as did, or even could, bring the Trust into disrepute.

The Trust also attempted to argue that  Mr Smith's Facebook page was work-related because some 45 colleagues were "Friends".  The Court was again emphatic in rejecting this argument on the basis that accessing the page and reading his comments was a purely voluntary and social activity.

[76] His Facebook wall was primarily a virtual meeting place at which those who knew of him, whether his work colleagues or not, could at their own choice attend to find out what he had to say about a diverse range of non-work related subjects.[my emphasis]

The principal basis for Mr Smith's demotion was that he was in breach of the Trust's code of conduct  that employees should treat their work colleagues with dignity and respect, being non-judgmental in approach and “not engaging in any conduct which may make another person feel uncomfortable, embarrassed or upset”. The Court accepted that if Mr Smith had expressed his views within the workplace this may have been unacceptable, as would posting comments about the morality of particular colleagues, but was clear that the facts of this case were not of that category:

[82] I have already concluded that, for the purposes of the prohibition on the promotion of religious and political views to colleagues, Mr Smith’s Facebook did not have the necessary work related context to attract that provision of the Code of Conduct. I have reached the same conclusion in relation to this part of the Code and the Policy,largely for the same reasons. The frank but lawful expression of religious or political views may frequently cause a degree of upset, and even offence, to those with deeply held contrary views, even where none is intended by the speaker. This is a necessary price to be paid for freedom of speech. To construe this provision as having application to every situation outside work where an employee comes into contact with one or more work colleagues would be to impose a fetter on the employee’s freedom of speech in circumstances beyond those to which a reasonable reader of the Cod and Policy would think they applied. On any view their main application is to circumstances where the employee is working for the Trust. For the reasons already given, Mr Smith’s use of his Facebook involved his work colleagues only to the extent that they sought his views by becoming his Facebook friends, and that did not detract to any significant extent from the essentially personal and social nature of his use of it as a medium for communication.

 Unfortunately Mr Smith's employer does not have seem to have been reasonable at any stage in these events. The Court noted that regardless of the Court's decision it had been made clear that Mr Smith would not be reinstated to his previous position although the news report now suggests the Trust has "accepted" the decision.

National Reverts to Form

The nature of the reforms announced by the Minister of Labour yesterday are encapsulated in the proposal for "Removing the 30-day rule that forces non-union members to take union terms and conditions". This piece of dissimulation typifies these reforms-one's heart bleeds for those workers "forced" to accept inferior working conditions. But opps doesn't the Act actually allow such workers to also agree to any terms not inconsistent with the collective agreement - such as higher wages.  Silly me, it appears that workers are to be freed from the obligation to accept decent conditions to that they can immediately be put on to whatever inferior conditions the employer determines.

What is quite clear is that the National Government and its Parliamentary allies are launching an attack on the most vulnerable groups of workers, the young and the precariously employed. The reduction in the minimum wage for under 18 year olds signaled an opening shot of this new campaign and yesterday's announcement carries on the offensive.   I will look at the reforms in more detail later but some points might be highlighted:

(a) the 6A exemption for SMEs of course leaves the employees of such firms even more vulnerable to employment insecurity and cuts in working conditions.  No doubt also many larger firms will be restructuring to take advantage of the SME exception.  It also seems likely that the implied warranty against unreasonably increasing employee entitlements will have a chilling effect on improving employee terms and conditions as existing employers seek to avoid legal risk.

(b)The changes to collective bargaining laws are likely to further undermine collective bargaining and provide employers with options to walk away from bargaining.  How these changes will affect the bargaining facilitation and determination provisions of the Act is not explained but is unlikely to be in a positive way.  One suspects that these changes may have some impact in the state sector by enabling state sector employers to stonewall bargaining with the still large state sector unions and then to seek a declaration that bargaining has ended. It was after all a state sector case that prevented an employer's attempt to declare that bargaining had ended.

(c) The rest and meal break provisions, one might recall, were introduced into Parliament some years ago to prevent the countries airports grinding to a halt along with other overstated and over-hyped consequences of allowing workers proper rests.  The country has got along well  without these reforms so the motive for them is obscure.  Unless, possibly, it is the provisions in the Bill that effectively allow employers to effectively eliminate breaks or to require employees to remain at work during breaks that the Government wishes to advance.

Just when you thought the boss looking at your Facebook was creepy..

...there comes this new app for the HR department.  Not yet in New Zealand but no doubt it will arrive soon.  The boss may not be surreptitiously checking emails when meeting you but updating your profile as he notices the telltale signs of too much drinking or high blood pressure!  Interesting legal issues may arise around obtaining the source data

[link has been corrected]

The Fuel Espresso case rises again

The most recent issue of NZLawyer contains an article by Blair Scotland and Kelly Scott on overpayments to employees.  In it they quote Hammond J’s remark in Fuel Espresso Ltd v Hsieh [2007] 2 NZLR 651 at [21] that “Agreements are made to be kept.”  This remark seems to have assumed considerable importance in the legal community and is treated as if it indicates a major change not only in the law of restraint of trade but on employment contracts as a whole.  How it has assumed this importance is difficult to understand.  First Fuel Espresso was an interim injunction case heard on 8 March with a decision delivered the next day.  The legal reasoning in the case, to be charitable, is brief and on the question of the reasonableness of restraint clauses largely non-existent.  Indeed the whole issue of reasonableness occupies only two paragraphs as follows.

The balance of convenience

[21] It is very difficult to see how this case can be, as the Judge saw it to be: a “finely balanced” one. The restraint is plainly reasonable. Agreements are made to be kept. Mr Hsieh was employed and trained, but then left in face of a clear contractual provision preventing him from doing what he has done. In the absence of an interim injunction, any relief to Fuel will, in the time-honoured phrase, be nugatory. This is a clear case for an interlocutory injunction.  

[22] It may be that on other, and much more extreme facts, a low salary set against a harsh restraint would be relevant to the exercise of the Court’s discretion, but that sort of fact-pattern does not arise in this case.

On the very particular facts of the case in front of the Court the balance of convenience decision may have been justifiable although the facts are not entirely clear.  Nevertheless it does seem that Mr Hsieh had set up a coffee cart and was attracting some Fuel customers.

However let us put this to one side and concentrate on whether one sentence in a one paragraph statement that fails to discuss, or arguably even appreciate, the basic principles of the relevant law should be regarded as heralding a major change in important areas of employment law and restraint of trade in particular.  What is wrong with this argument is the fundamental error that validity of a restraint clause is determined on the basis that “agreements are made to be kept.”  The correct position is stated clearly by Gault J in  Gallagher Group Ltd v Walley [1999] ERNZ 490 at [20] where, after having noted that the employee had “no complaint .. of the duration of the restrictions to which he had agreed voluntarily” stated:

But all this rather misses the point. Covenants restricting the activities of employees after termination of their employment are, as a matter of legal policy, regarded as unenforceable unless they can be justified as reasonably necessary to protect proprietary interests of the former employer and in the public interest: Mason v Provident Clothing & Supply Co Ltd [1913] AC 724, 733.

In other words agreement is irrelevant-the question is whether as a matter of law a restraint is reasonable, the point seemingly overlooked by Hammond J.  What is clear is that if well-established legal principles had been applied some aspects of the restraint might have been upheld to protect customer connection but this would have required modification of the relevant clause to operations within a reasonable radius of where Mr Hsieh actually worked prior to his resignation.  The clause as written went well beyond this and read:

As a Barista you will have access to how the Employer runs the business and  provides a competitive product. In order to protect the business you may not for three months following the termination of your employment:

Work in a competing espresso bar/café or coffee company within a100 metre radius of an [sic] Fuel operation; and/or

Set up a similar competing business within a 5-kilometre radius of an existing Fuel operation.

This restraint of trade shall apply to all of New Zealand and continue for three months from your last day of duty. You agree that this restraint is reasonable and necessary to protect the Fuel’s business interests.

Mr Hsieh was a barista-he made coffee!  Like probably several hundred other employees in Wellington let alone New Zealand.  Mr Hsieh may well have made very good coffee and have been well trained. But on what possible basis could this justify a prohibition of his working as a barista in much of Wellington, let alone New Zealand!  Apart from a very limited customer connection Fuel Espresso had no conceivable proprietary interest that justified such a restraint. Hammond J’s comment that Mr Hsieh was “was employed and trained,” by Fuel does not demonstrate such an interest.  Training costs may be able to be recovered in some cases but the provision of training does not justify a restraint-a restraint cannot be used to protect an employer from mere competition by a former employee.

This week I began teaching first year law students case analysis and precedent-this case might be mentioned but it will not be as an exemplar of either judicial reasoning or of the doctrine of precedent.

Shining the Light on Naughty Employers: Now There's an Idea!

And indeed the Canadians have already thought of it. David Doorey's Workplace Blog- to which there is a link in the side bar-reports that "The Conservative government in Alberta has followed the Ontario lead by publishing Bad Employers on a government website." These sites only list the worst employers- those who have been prosecuted for labour law violations and have refused to pay resulting fines. The lists also appear to cover only government prosecutions, not for example enforcement actions for unpaid damages (such as unpaid damages in personal grievance cases).

However a start has to be made somewhere and the Department of Labour might consider this a useful addition to the web information it provides!

Employees, Contractors and Sham Contracts

The problem of distinguishing between an employee and other workers who are required to provide personal performance is one that most employment lawyers have been aware of, if not since time immemorial at least shortly thereafter.  In New Zealand the approach to this question is now subject to the statutory direction in s 6 of the ER Act that the Authority or Court must determine the “real nature of the relationship” taking into account all relevant matters that indicate the intention of the parties and that any statement of intention is not to be treated as determinative.  This direction and its effect has been considered in a number of cases including the Supreme Court in Bryson v Three Foot Six Ltd [2005] NZSC 34.

The issue of the employee-contractor distinction was, in mid-2011 also considered by the United Kingdom Supreme Court in Autoclenz Limited v Belcher [2011] UKSC 41.  This case, a unanimous decision of the Court, was notable for its very realistic approach to employment contracts and for its willingness to cut through the legal sleight of hand to determine the true nature of the relationship.

The facts of the case were relatively typical and straightforward.  Autoclenz, who provided car-cleaning services to various companies, decided to change the employment status of its valeters to that of contractor.  This was done by means of a contract that placed great emphasis on the workers being “self-employed independent contractors”, that contractors were free to sub-contract to approved persons and that they were free to refuse to provide their services on any particular occasion. These contracts were offered on a take it or leave it basis, the workers having little or no input into the terms. In practice of course little changed and valeters worked much the same as previously although the nature of paying for the work, liability for taxes etc changed as a result of the change in employment status.

It is not necessary here to provide a detailed legal analysis but rather to highlight some of the more interesting points of the Supreme Court’s decision.

The first is that a clear line was drawn between commercial contracts and employment contracts and the Court was very clear in pointing out that “Nothing in this judgment is intended in any way to alter those principles, which apply to ordinary contracts and, in particular, to commercial contracts.”   In the case of employment contracts, said the Court:

“the circumstances in which contracts relating to work or services are concluded are often very different from those in which commercial contracts between parties of equal bargaining power are agreed. I accept that, frequently, organisations which are offering work or requiring services to be provided by individuals are in a position to dictate the written terms which the other party has to accept. In practice, in this area of the law, it may be more common for a court or tribunal to have to investigate allegations that the written contract does not represent the actual terms agreed  and the court or tribunal must be realistic and worldly wise when it does so. ...”

It was accepted that one of the factors that the worldly-wise courts should take into account was

“The concern to which tribunals must be alive is that armies of lawyers will simply place substitution clauses, or clauses denying any obligation to accept or provide work in employment contracts, as a matter of form, even where such terms do not begin to reflect the real relationship.”

Employment Court judges in New Zealand, to whom the statement is equally applicable, might take heart from the Court’s quote from Sedley L J where he stated the following “with characteristic clarity and brevity”: ‘Employment judges have a good knowledge of the world of work and a sense, derived from experience, of what is real there and what is window-dressing’.”

New Zealand readers, alert to TNT Worldwide Express (NZ) Ltd v Cunningham [1993] 3 NZLR 681 (CA), might note that the Supreme Court expressly doubted the view that contractual documents are to be regarded as expressing the true intentions of the parties unless there was a sham intended to deceive third parties.  Statements of intention, and particularly those effectively dictated by the employer, must give way to the reality of the actual working relationship. The impact of Autoclenz in New Zealand is perhaps limited given the presence of the statutory direction but it does serve as a common law reinforcement of that direction and of the need to discern the reality of the “working” rather than the legal intention. 

The importance of this case is twofold.  First it reinforces the view that what is critical in determining the true nature of an employment relationship is the real, on-the ground, operation of the relationship: the real nature of the relationship to use the New Zealand parlance.

And second, that an employer should not be able to draft your way around this reality.

Readers interested in an analysis of the case might refer to Julie McClelland “A Purposive Approach to Employment Protection or a Missed Opportunity?” (2012) 75(3) MLR 387–436.