New Zealand Professional Firefighters Union

:: Applicant's Opening Submission - Presented by Peter Cranney - 2 May 2005

UNDER THE HOLIDAYS ACT 2003
BEFORE THE EMPLOYMENT COURT
AT WELLINGTON

NO. WEC 18/04

BETWEEN

NEW ZEALAND PROFESSIONAL FIREFIGHTERS UNION
of P.O. Box 38213, Petone

Applicant

A N D

THE CHIEF EXECUTIVE NEW ZEALAND FIRE SERVICE
of P.O. Box 2133, Wellington

Respondent

___________________________________________________________

APPLICANT’S OPENING SUBMISSION

Dated this 2^nd Day of May 2005

___________________________________________________________

PRESENTED FOR FILING BY:

OAKLEY MORAN
Solicitors, Wellington.
P.O. Box 241    DX SP20003
Phone:     (04) 472.3055
Fax:         (04) 472.6657
Person Acting: Peter Cranney

May it please the Court

1. As far as public holidays are concerned, the Holidays Act 2003 is a visionary and far reaching statute, and is in many ways a culmination of a trend which began with this Court’s decision in Labour Inspector v Telecom Networks & Operators Limited [1992] 3 ERNZ 993.

2. In that case, the Chief Judge held that section 7A of the Holidays Act 1981 entitled an employee who worked on a public holiday to “a day in lieu”. The Court of Appeal upheld the Employment Court’s decision: Telecom Networks & Operators Limited v Vevers [1993] 3 NZLR 425.

3. Over the years, this Court has endeavoured to “fill the gaps” in the legislation as to what is and what is not required in relations to days in lieu.

4. In Small v NZFS AEC 21/96, the Court held that it was lawful for the parties currently before the Court to use prior existing arrangements for leave, however they may be described, to satisfy the employer’s statutory obligations under the 1991 amendments to the Act.

5. The 2003 Act goes much further than the 1991 amendment. The new Act contains detailed statutory provisions relating to what are now called “alternative holidays”. Those provisions tip the balance very decisively in favour of the employee.

6. The Union seeks to enforce its members’ rights under the new Act.

7. It is common ground that the negotiations for a new collective employment agreement commenced between the parties before the expiry of the then current 2001 Collective Employment Agreement (CEA), which expired on 29 June 2001 (Statement of Defence, paragraphs 30 and 31).

8. The Chief Executive, at paragraph 32 of the Statement of Defence, has admitted that he was aware that the Holidays Act 1981 was being reviewed, but he says he had no knowledge of the final form any new legislation would take (Statement of Defence para 32). Notwithstanding that, he agreed and signed a CEA which expressly bound him to demonstrate compliance with the intent and entitlement of the new Act.

9. The matter of the expected new legislation was addressed at clause 2.7.1 of the new agreement, which came into force 1 July 2003. Clause 2.7.1 provided:

2.7.1 ….each worker shall be granted annual leave periods, without deduction of pay, at the rate of 14 consecutive days (inclusive of Sundays) in each 160 days employment.

(a) The parties to this Agreement agree that the formula of 14 days’ leave within each 160 days employment gives each employee annual holidays in excess of the three weeks’ minimum provided in section 11 of the Holidays Act 1981

(b) The parties further agree that the additional holidays in 2.7.1(a) above, provide compliance with the Holidays Act 1981, section 7a for work performed on statutory holidays prior to or since the passing of the Holidays Amendment Act 1981.

(c) The parties recognise that, at the time that this agreement came into force, the government had introduced new legislation governing holidays. When these provisions come into force, the Fire Service will be required to demonstrate compliance with the intent and entitlements of the new legislation.

10. Clause 2.7.1 therefore recorded the parties’ agreement that there were “additional holidays” in the 14 days in 160 which “provide[d] compliance” with the 1991 Act, but left open the issue of “compliance with the intent and entitlements of the new legislation”. The employer expressly assumed an obligation to demonstrate compliance with the Holidays Act 2003.

The 2003 Act – The Sections Relied Upon

11. The Union’s case is that if a public holiday falls on a day that would otherwise be a working day, and the employee works in accordance with his or her employment agreement on any part of that day, the Chief Executive must provide the employee with an alternative holiday (Holidays Act 2003 section 56(1)(a) and (b), and 56(2)).

12. The alternative holiday must:

12.1. Be taken by the employee on a day that would otherwise be a working day for the employee (section 57(1)(b)).

12.2. Be taken on a day that is agreed between the employer and the employee (section 57(1)(a)).

12.3. Be a whole working day off work for the employee, regardless of the amount of time the employee actually worked on the public holiday (section 57(1)(c)).

13. Section 57(1)(a) requires agreement between the employer and the employee as to when the alternative holiday is to be taken. However, the Act also realistically deals with the situation where the employer and the employee “cannot agree under subsection 1(a) on when an alternative holiday is to be taken”: section 57(2)(a).

14. In those circumstances, the alternative holiday may be taken “on a date determined by the employee”. The employee is obliged, however, to take into account “the employer’s view as to when it is convenient for the employee to take the day” (section 57(2(a)).

15. The Act also provides that an employee cannot be required to take an alternative holiday on a date determined by the employer, except in certain carefully prescribed circumstances. The employer may require the employee to take an alternative holiday only if (section 58(a) to (c)):

15.1. Twelve months have passed since the employee’s entitlement to the alternative holidays arose; and

15.2. The employer and the employee have not been able to agree under section 57(1)(a) on a date on which the employee will take the day; and

15.3. The employer has given the employee at least 14 days’ notice of the date on which the employer requires the alternative holiday be taken.

16. If an employee takes an alternative holiday, he or she must be paid a sum “not less than the employee’s relevant daily pay for the day which is taken as the alternative holiday” (section 60(1)).

17. If the alternative holiday is taken on a day on which the employee, had he or she worked, would otherwise have received payments for overtime, those payments must be included in the amount of “relevant daily pay” paid for the alternative holiday.

18. There is then provision for an employee to exchange his or her entitlement to an alternative holiday “for a payment” (section 61(1)). That can only occur “if 12 months have passed since the employee’s entitlement to the alternative holiday arose” (section 61(2)(a)).

19. The employer is obliged to keep a “leave record” that complies with section 81(2) of the Act. Section 81(2) requires that the leave record include, among other things, the following:

19.1. The days on which the employee “actually works, if the information is relevant to the calculations of entitlements or payment for entitlements under the Act” (section 81(2)(c)).

19.2. The dates of, and payments for, any public holiday on which the employee worked (section 81(2)(i)).

19.3. The number of hours that the employee worked “on a public holiday” (section 81(2)(j)).

19.4. The date on which the employee became entitled to any alternative holiday (section 81(2)(k)).

19.5. The details of any payment to which the employee is entitled under section 61(3), which relates to payment in exchange for an alternative holiday (section 81(2)(n)).

20. The Act also gives guidance in three other important areas, each of which is relevant in this case.

21. First, the Act makes clear that each entitlement under the Act is a minimum entitlement (section 6(1)). This expressly overrules, in the Union’s view, the “totality of arrangements” approach taken by the Court in Small v New Zealand fire Service.

22. Second, the Act provides that any employment agreement that excludes, restricts or reduces an employee’s entitlements has no effect to the extent that it does so (section 6(2)).

23. Third, the Act contains a specific section, section 12, dealing with the concept of “what would otherwise be a working day”.

24. It will be submitted that the employment agreement before the Court is absolutely clear as to whether a day is a working day for the employee. The agreement provides the specific days to be worked; the hours on each day; and the days which are rostered off or leave days (including clauses 2.3.2; 2.3.2.1; 2.3.3; 2.3.6.1; 2.4.1-2.4.12; 2.7.1).

25. The CEA expressly refers to time worked “outside” of the employee’s “usual rostered shifts” as overtime, and that is paid at time and a half for the first three hours, and double time thereafter (clause 2.6.10), except that after 1200hrs on a Saturday or on the whole of Sunday or on a public holiday, the overtime is paid at double time.

26. The Respondent’s case leads to the inevitable conclusion that an employee who takes an alternative holiday during the 14 days in 160 must be paid overtime rates for that holiday. That follows section 9(1)(a) and 9(1)(b)(ii) of the 2003 Act.

27. The requirement in the CEA that overtime be paid for time worked outside of the employee’s “usual rostered shifts” has an interesting consequence.

28. As already stated, the CEA is clear as to what days are working days for the employee, and what are not.

29. The Union will submit that even if the CEA is not clear as to which days are working days (which is denied) all of the factors listed at section 12(3) support its contention that none of the 14 days in 160 are days that would otherwise be a working day for the employee concerned.

30. The evidence will establish that the employees work a defined roster, which begins at 0800 on the first day of a roster cycle. The first day is worked from 0800 until 1800 and the same hours are worked the following day. On the third day, work commences at 1800 and continues until 0800 the following morning. That same day, the employee starts work again at 1800 and the work cycle concludes at 0800 on the fifth day, after a total of 48 hours have been worked over 5 calendar days.

31. On the sixth, seventh and eighth calendar days, there is no work. The cycle then recommences on the ninth calendar day, all over again.

32. This is sometimes called the “four on four off” roster, because clause 1.3.4 of the contract defines “day” as:

“A day means a period of 24 hours. Each day shall commence at the starting time for the first duty shift for that day.”

33. Although called a “four on four off” roster, in calendar day terms an employee works on five of the eight days.

34. The evidence will establish that the eight day cycle is repeated 18 times (being a total of 144 days).

35. Leave of 14 days then commences at the end of the last of the 18 days cycles, that is, after the rostered days off at the end of that last cycle.

36. The evidence will be that after the 14 days’ leave, there are two other days which are, in effect, “rostered off” days rather than leave days, and then the whole cycle starts again.

37. Although it has been said that there is an ”average” of 32 days per year (and that was common ground between the parties in Small, and therefore accepted by the Court in that case) as will be seen, that is not correct when looking at any individual employee. It is not uncommon for employees to work three full calendar years receiving 28 days per year, and averaging, for the three year period, only 28 days per year. Only in the fourth year is the “average” of 32 days actually reached. The average then drops away again. The conclusion in Small, based as it was on an agreed approach of the parties in that case, that employees actually receive 32 days’ leave per year, is therefore wholly unsafe when looking at individual entitlements. A similar comment can be made about the assumption that an employee works an average of 5.5 public holidays per year. There is no useful averaging that can be conducted. Under the new Act, for alternative holidays purposes, each employee is now entitled to the actual number of alternative holidays due to him or her. That can be has high as 9 or 10 per year, or as low as 5 or 6. The Small averaging approach, again, adopted by the Court as a result of common consent of the parties in that case, is no longer relevant or useful and is wholly inconsistent with the Holidays Act 2003. The evidence will establish that the numerical basis of the Small approach was probably incorrect in any event, notwithstanding that both parties adopted that course by consent. For present purposes, it is sufficient to say any averaging is not useful or lawful under the new Act, for alternative holiday purposes.

38. The Union’s case is that the practice endorsed by Small, that is, that a pre-existing leave entitlement could be used to satisfy the employer’s obligation for days in lieu, can no longer stand. The new Act entitles each employee who works on a public holiday to an alternative holiday on a day that would otherwise be a working day for the employee, and ultimately gives the employee the choice as to what day to take.

39. By declining to allow any of the employees to take alternative holidays on days that would otherwise be working days, the Chief Executive is in breach of the Act. It was open to him to conclude a different agreement than the one he signed. He could have insisted on an agreement that expired on 1 April 2004, to coincide with the new legislation. He did not do so. Instead, he signed an agreement which recognised that the 14 days in 160 gave days in excess of the three week annual leave entitlement, and that the extra days provided compliance with the Holidays Act 1981. Although he knew the Act to be under review, he expressly agreed to demonstrate compliance with the intent and entitlements of new provisions, the contents of which, on his own admission, he was aware not of. He must now be held to his bargain, and in any event, he is bound by the new Act.

40. As the Court will be aware, this matter was initially to be subject to the Court’s trial management regime, because it was set down for 5 days.

41. When the matter was reduced to two days, the trial management process was abandoned. By that time, both parties had exchanged and filed the trial management memoranda, although the final stage of the process, that is, a meeting with the Court with a view to reaching a common view as to what the issues are, never occurred.

42. The issues for the Court, in the Union’s submission are as follows:

42.1. The ultimate issue is whether the Chief Executive in breach of the 2003 Act. Specifically, for each employee:

42.1.1. Are the 14 days leave in 160 “days that would otherwise be a working day for the employee” within the meaning of sections 12 and 57 of the Holidays Act 2003, and the Act as a whole?

42.1.2. If so (which is denied), have the employee and the employer agreed on a day that the alternative holiday be taken, within the meaning of section 57(1)(a) of the Act?

42.1.3. If so (which is denied), what specific days, if any, have been agreed?

42.2. Related to that is a very important subsidiary issue, namely, for the employees concerned does a public holiday run from 0001 – 2400 or from 0800 on the public holiday until 0800 the following day. On this issue, the contending positions, as apprehended by the Applicant, are:

42.2.1. Applicant’s position: The public holidays are as defined by section 44(1) of the Act. There has been no agreement pursuant to section 44(2) to transfer any of them from 0800-0800. In any event, on its proper construction, the contract provides that public holidays, run from 0001-2400, that is, the Fire Service “day” commences part way through a public holiday. Any employee working on any part of a public holiday, 0001 to 2400, is entitled to an alternative holiday.

42.2.2. Respondent’s position: The contractual definition of Day means that a public holiday runs from 0800 to 0800.

42.3. The final issue arises only if the Chief Executive is prima facie in breach of the Act. The issue is whether the Union and its members are precluded from a remedy because of either the doctrine of res judicata or the doctrine of issue estoppel. The Union’s position as previously submitted is that there is no estoppel because it was not a party or privy to the Small litigation and in any event there was no legal or factual issue determined by Small that can be regarded as a final determination of any factual or legal issue in this proceeding. The Union will also submit that the Chief Executive is also estopped himself from asserting an estoppel because of the terms of the current employment agreement which he freely entered into (clause 2.7.1(c)). Finally it will be submitted that even if the asserted estoppel is made out it is defeated because it is contrary to public policy and public interest. It cannot lie so as to hinder the Chief Executive’s statutory obligations imposed by the Holidays Act 2003 and cannot be countenanced because it would lead to a situation precluded by the law.

43. The Respondent has included the following as one of its issues:

What is the status of these 11 days (Respondent’s Trial Memorandum 1.5(i))?

44. The Applicant does not accept that that is an issue properly before the Court. There is no pleading of mistake, non est factum, misrepresentation (innocent or fraudulent), and no application for remedies pursuant to the Contractual Remedies Act 1979. Throughout this matter, the Respondent has never sought to suggest that he contracted in any terms other than those contained in the collective employment agreement. What is in dispute is the obligations imposed upon the Chief Executive by the Holidays Act 2003 and the CEA.

45. The unspecified remedy as to the “status” of the 14 days in 160 cannot now be advanced. The status of those days is determined only by the terms of the collective agreement itself, that is, that there was agreement that the formula of 14 days in 160 gives annual holidays in excess of the three weeks’ minimum (clause 2.7.1(a)); that those “additional annual holidays” provide compliance with section 7A of the 1981 Act for work performed on statutory holidays (clause 2.7.1(b)); and that the parties recognised that new legislation had been introduced, and when it comes into force, the Fire Service would be required to demonstrate compliance with the intent and entitlements of the new legislation (clause 2.7.1(c)).

46. The Applicant’s position is that in addressing all of those issues, it is not necessary to go beyond the four corners of the Act, and the four corners of the employment agreement.

47. For that reason, the Applicant’s initial evidence was limited, essentially, to a very brief description of the background to the Small case, with no reference to any facts not mentioned in that decision itself. This provoked a torrent of evidence, particularly from Mr Summers, aimed at urging the Court to accept a certain perspective on both the 1992 negotiations and also the various terms of the existing agreement.

48. Some of the evidence also appears to be directed at some kind of unpleaded estoppel by conduct argument.

49. It has therefore been necessary for the Union to provide more comprehensive evidence in rebuttal, and that has been done. Mr Best will provide the Union’s evidence.

50. The Union will also call one of its members, Jaron Philips, to give evidence as to the actual numbers of public holidays worked. It was he who prepared the table and attachments which tabulate how many public holidays are actually worked by each of the forty leave groups. It had initially been hoped that such evidence could have been made available by consent, but agreement has not been able to be reached.

Peter Cranney
Counsel for Applicant
2 May 2005

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