| Restrictions | OK |
|---|---|
| Jurisdiction | Employment Relations Authority - Auckland |
| Reference No | AA 326/10 |
| Hearing date | 28 Apr 2009 |
| Determination date | 19 July 2010 |
| Member | Y S Oldfield |
| Representation | N Bush ; B Quarrie |
| Location | Auckland |
| Parties | New Zealand Nurses Organisation v Whangaroa Health Service Trust |
| Summary | DISPUTE - Interpretation of Collective Employment Agreement (“CEA”) - Dispute as to interpretation, application and operation of Retirement Gratuity provisions in CEA - Retirement gratuities were “grandparented” when respondent took over provision of health services formerly provided by Northland Health Limited (“NHL”) - Respondent became employer of staff covered by CEA between applicant and NHL - Clause provided that employees retiring who had no less than 10 years service with NHL and respondent may be paid retirement gratuity - Respondent claimed payment of gratuity discretionary - Claimed in “private commercial contractual relationship” discretion vested in one party restricted only by requirement that it “must not be exercised arbitrarily, capriciously or unreasonably” - Applicant claimed all employees from time respondent became employer who reached service requirement entitled to gratuity on retirement - Applicant claimed if Authority not prepared to find entitlement to gratuity in all cases should at least be rebuttable presumption gratuity to be paid - Claimed respondent’s exercise of discretion should be subject to consultation, transparent, and legitimate - Applicant cited authority for proposition may be circumstances in which context required gratuity be construed as payment as of right - Authority accepted submission but noted in case cited clause provided gratuity “shall be” paid while in present case clause provided gratuity “may be” paid - Authority took guidance from limited case law available - Found relationship between parties was employment relationship, not “private commercial contractual relationship” and so had own special character, determined by reference to specialised body of jurisprudence - Found parties’ overarching statutory obligations to act fairly and reasonably and in good faith must inform exercise of any discretion - Found gratuity was discretionary payment, discretion must be exercised in good faith, each case must be considered on own merits, payment should be made unless fair and reasonable grounds exist for declining to do so, and every affected employee should be consulted on question whether discretion should be exercised in their favour - Second issue was to whom gratuity applied - Authority found retirement gratuity provisions applied to staff retiring who meet all following criteria: had been employed by both NHL and respondent, had at least ten years service in total between two organisations, and were hired before specified date |
| Result | Questions answered ; Costs reserved |
| Main Category | Dispute |
| Cases Cited | Sibly v Christchurch City Council unreported, P Cheyne, 20 Sep 2001, CA 44/01;South Canterbury District Health Board v Milner unreported, Palmer J, 12 Apr 2002, CC 9/02;Wellington Regional Council v Edwards [1997] ERNZ 100 |
| Number of Pages | 11 |
| PDF File Link: | aa 326_10.pdf [pdf 38 KB] |