Supreme Court judges mull interpretation of Employment Relations Act in Affco, meatworkers case

Affco was the first company to apply for an end to bargaining under the legislative changes.

The Supreme Court is concerned an overly broad interpretation of the Employment Relations Act could limit employers' negotiating powers, as Affco and the Meat Workers Union continue their dispute in the country's highest court.

The case is the first judicial test of amendments to the Employment Relations Act introduced in March 2015, which allowed firms to opt out of multi-employer agreements and removed the duty under good faith bargaining for both sides to reach an agreement.

Affco was the first company to apply for an end to bargaining under the legislative changes and has mounted continuous but as-yet unsuccessful legal challenges to an Employment Court ruling in favour of the Meat Workers Union. Leave to appeal to the Supreme Court was granted on one question - whether Affco had breached a section of the act defining the meaning of "lock-out" when it required seasonal workers to enter into new individual employment agreements before commencing work for the 2015/2016 season.

The Employment Court ruled that Affco unlawfully locked out meat workers when collective bargaining talks were still underway, and breached the act by not acting in good faith while negotiating a new collective agreement. That decision was significant in finding that seasonal workers were engaged by Affco on employment agreements of indefinite duration rather than ending when the season ended.

In the second and final day of the hearing, Justice Terence Arnold repeated concerns raised yesterday by Affco's lawyer Pheroze Jagose about the consequences of an open-ended interpretation on the ability of an employer to negotiate with new potential employees.

"We don't want to be ending up with an interpretation the impact of which we don't fully understand," Justice Arnold said. "One way of exploring whether the language bears particular meanings is looking at the consequences - it can't be right that if an employer says to somebody who's asking for twice the normal salary, I'm not going to employ you, and a whole lot of his friends come along with the same demands, I'm not employing any of you on that basis."

Peter Cranney, lawyer for the Meat Workers Union, said the important distinction was the workers in this case had had re-engagement rights as part of their old contracts.

"If there's an employment agreement which gives you re-engagement rights, and then you refuse to re-engage, it's a lock-out. I'm an incrementalist, what I'm asking for is not the type of thing that could cause problems," Cranney said. "It used to be fashionable to plead every breach was also a lock-out - we used to do these silly things in the '90s. A command by Air New Zealand that people shave their beards was pleaded to be a lock-out. Let's just worry about these workers with re-engagement rights that were told not to come back until they signed the agreements."

Affco's Jagose, in his reply following Cranney's submissions, reiterated the company's argument that the workers were not considered employees following the end of the season.

"That really is the golden thread running through this, it informs every aspect of the statute, it informs every aspect of the claims that are faced and decisions made," Jagose said. "Everything about the appellant's case is about discontinuation of employment."