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Wise bosses likely to pay staff locked out by quakes

The Dominion Post –Tuesday 16 October 2013


Many readers will have found themselves locked out of work as a result of the recent Wellington earthquakes.

Many businesses, particularly those in the CBD's high-rise buildings, had to send staff home fora few days. Some buildings that I can see from my office are still empty. Employers will have lost productivity while workers, potentially, lost pay. But who carries the loss for this so-called act of God? The building owner, the employer or the worker?

Government workers in the United States are facing something similar right now. As a result of the inability of the US Congress to pass a budget for the current fiscal year,which began on October 1, the US Government has "shut down". Unlike the earthquakes, this isn't an act of God but rather an act of man. About 800,000 workers have been sent home indefinitely while another 1.3 million continue to work without pay. When a budget is ultimately agreed to, these staff will likely receive back pay, although this period will be hard on them.

Problems resulting from workplace closures are not new and readers may well imagine that the Christchurch earthquakes have brought about litigation on the topic. They have.

Tony Day was employed by Agmech. After one of the 2011 aftershocks, power was cut off at the Agmech premises and Day did not work for three days. He reported to work on the first two days but was told to go home. On the third, Day received a text telling him not to come in. Interestingly, some other staff were allowed to work and were paid.

The Employment Relations Authority decided that Day was entitled to be paid for the three day she did not work. The employment relationship had not ended as the stand-down was only temporary. Secondly, Day was willing to work. Where an employee is on a salary or has a guaranteed number of work hours, there is generally no contractual basis on which an employer can halt payment if the employee is willing to work. Thirdly, as other staff were allowed to work, the employer had no valid reason for making Day stay home.

The interesting case heard in the Court of Appeal about the plight of Russian fishermen also offers guidance. The fishermen were brought to New Zealand by their employer, Karelrybflot, to serve for six months on fishing vessels chartered by Abel Fisheries. Unfortunately for both the employer and the fishermen, Abel Fisheries had committed some offences related to its fishing quota and was facing charges in the District Court. It was convicted of the charges and, as a consequence, the vessels it had chartered were forfeited to the Government. At this point the fishermen still had five weeks left to work on their contracts.

Karelrybflot argued, perhaps with some conviction, that, as the ships had been seized and the fishermen could no longer fulfill their duties, the employment relationship was terminated by frustration.

The Court of Appeal, however, found that the contacts were not frustrated, as Karelrybflot must have known that Abel Fisheries was facing court proceedings. Furthermore, provisions in the legislation governing the forfeiture of the vessels allowed for release of the vessels to be negotiated. It was therefore possible that the fishermen might be able to resume their responsibilities before their contracts expired.

As a result, the court decided that, because the fishermen were contractually guaranteed a certain number of hours of work each day, even when on land, the employer was required to continue paying wages after the seizure of the boats.

Even if not contractually obliged to do so, a wise and generous employer would generally have paid wages for the two to three days most buildings in Wellington were closed. Larger employers are normally able to absorb the cost on behalf of their staff; it is the small employer who will struggle the most.

The pay problems like those caused by gridlock in the US Congress and southern-hemisphere earthquakes are widespread but they are best resolved by agreement between the parties. While the courts are prepared to apportion responsibility for the cost of a close down, the fact there are so few of these cases is indicative of the compassion and commonsense displayed by those affected in both Christchurch and Wellington.

Cullen - The Employment Law Firm was one of the first eleven law firms in New Zealand approved to provide employment law services to Government and the public sector.

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