Tread carefully when negotiating employment agreements

Many of our rural clients rely on seasonal workers over this busy Spring period. In the lead-up to Spring we prepare a lot of employment agreements for calf rearers and relief milkers. It is not uncommon for seasonal workers to return to the same farm each season.

The Supreme Court recently considered the employment status of returning seasonal workers in the decision of Affco New Zealand Ltd v NZ Meat Workers and Related Trade Unions Inc.

The case concerned meatworkers returning to Affco for a new season. Affco refused to engage them for the new season unless they accepted a new employment agreement, the terms of which were substantially less favourable to the meatworkers than the agreement under which they had been employed in the previous season.

The meatworkers argued that their employment was continuous from one season to the next. The Court disagreed.

The Court noted there is significant legal authority as to the status of meatworkers as seasonal, discontinuous employees. The Court considered this would be at the front of the minds of both sides - employers and meatworkers - when negotiating employment agreements. The Court held that because of this legal authority, unless the employment agreement explicitly provided for an alternative arrangement, the parties must be treated as having negotiated on the basis that the meatworkers’ employment was discontinuous.

However, the Court found that the lockout provisions in the Employment Relations Act 2000 (“ERA”) applied. Under the ERA a lockout is unlawful if it is done with a view to compel an employee to accept terms of employment or comply with an employer’s demands. The Court found that the term “employee” in this context had a broader meaning than used elsewhere in the ERA.

 

The Court considered that Affco had continuing obligations to the meatworkers under their employment agreement, and those obligations survived termination of the agreement at the end of the previous season. For example, Affco had an obligation to offer re-engagement according to seniority at the start of each season. The Court found Affco had unlawfully locked out the meatworkers by refusing to re-engage them for the season unless they accepted the new employment agreement.

This is a timely opportunity for employers to review their precedent employment agreements for seasonal workers, particularly the nature and scope of any continuing obligations they may owe seasonal employees. But the case is not cause for panic. The Court clarified that it is “not the case that an employer who refuses to hire a new employee because the two are unable to agree terms of employment will, for that reason alone, have locked out the potential hire.”

If you would like guidance on reviewing and updating your precedent employment agreements, our Business Team is available to assist.