John Farrow, Partner at Anderson Lloyd, discusses the recent Suhkjeet Sandhu and others v Gate Gourmet New Zealand Limited and Shaun Joils [2020] NZERA 259, by examining whether an employee can be said to be ready, willing and able to work.
In one respect, the full Court decision of Gate Gourmet New Zealand Limited was a little bit of an anti-climax. Don’t get me wrong, I think it was correctly decided and well-reasoned. But I was waiting for a definitive decision about whether an employee can be said to be ready, willing and able to work in a Government-imposed lockdown.
Instead, the decision focussed on entitlements under the Minimum Wages Act 1983 and what constitutes ‘work’. Judges Holden and Beck delivered the majority decision with Chief Judge Inglis dissenting.
The Majority
The majority determined that the key issue is whether there is an entitlement under s6 of the Act and found that the case turned on whether s6 requires wages to be paid in circumstances where the employee is not working – as distinct from whether they are ready, willing and able to work.
The Minimum Wage Act does not define ‘work’. The majority found that the core concept of s6 was exchange of payment for work. That concept has been central to a line of cases that commenced with the ‘sleepover case’, Idea Services Limited v Dickson.
The specific factors to be considered in determining whether an activity is ‘work’ are:
- the constraints placed on the freedom the employee would otherwise have to do as they pleased;
- the nature and extent of responsibilities placed on the employee; and
- the benefit to the employer of having the employee perform the role.
The majority concluded that when the defendants stayed home, they were not working for the purposes of s6 of the Minimum Wages Act which was therefore not engaged and no statutory minimum wage entitlement arose.
Dissenting Judgment of the Chief Judge
Without meaning any disrespect to the majority, the Chief Judge’s reasoning is somewhat more lateral. In her view, the correct approach to s6 is to ask:
“Whether, under the applicable terms and conditions, the employee has been engaged to provide work and, if so, does the agreement provide for the employee to be remunerated. The relevant question is not whether the employee is actually engaged in performing work at the particular point in time a claimed unlawful deduction is made, but rather whether their terms and conditions would have them do so.”
Section 7(2) prohibits a deduction in respect of time lost by any worker unless that is caused by the worker’s default, illness or accident.
Gate Gourmet and Business New Zealand argued that where work is not performed, wages are not payable and, therefore, s7(2) has no effect. In disagreeing with that submission, the Chief Judge referred to the widely-understood common-law rule that where there are agreed hours of work cancelled by the employer, wages remain payable provided the employee was ready and willing to work those hours.
There is of course the question, to what extent common-law rules are relevant to statutory interpretation. However, the Chief Judge went on to analyse ss6 and 7(2) in more detail. She correctly identified that the reference to deductions is from ‘wages payable’, as distinct from ‘wages paid for actually working’.
In conclusion the Chief Judge stated that there is no dispute that the workers were engaged to carry out work. The pandemic intervened and they could not work the guaranteed hours. However, the reason why they could not work had nothing to do with their default, illness or accident and therefore the employer was not entitled to make any deduction from the minimum wage they would otherwise be entitled to receive.
Comment
While the Chief Judge’s reasoning focussed on statutory interpretation, it also referenced the terms and conditions of the employment agreement. On one interpretation, the sleepover factors do not necessarily require an employee to actually be engaged in performing work, as distinct from being obliged to work by the terms and conditions of their employment agreement.
Constraints can be placed on the freedom of the employee, even if they are not physically at work. The enactment of ‘availability provisions’ is testimony to this. Similarly, the employer can derive benefit from having the employee available to perform the role, even if they do not actually perform the role. The nature and extent of the responsibilities placed on the employee are arguably the same, whether they are required to be available to work or whether they are actually engaged in performing work.
In my opinion, it is possible to reconcile the Chief Judge’s analysis with the Idea Services factors expressed by the majority and reach the conclusion that the employees were working, without actually being engaged in performing work. It has been suggested by some commentators that this decision may be appealed. We will have to wait and see whether that is the case and, if so, how the Court of Appeal views the issues of work and an employee’s willingness to perform that work.
John Farrow is the Partner leading Anderson Lloyd’s National Employment and Health and Safety Team. He is a member of the Institute of Directors, a LEADR accredited mediator and a past president of the Otago branch of the New Zealand Law Society. Contact John at john.farrow@al.nz or connect via LinkedIn
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Disclaimer: The opinions expressed in this article are those of the writer and do not purport to be specific legal or professional advice
