The employer committed several breaches of the Holidays Act
In a recent labour case, the High Court has ruled against the union’s request for interim injunction as it “would not serve the interests of justice.”
Gate Gourmet provides airline flight catering services to various airlines. In 2019, a principal labour inspector employed by the Ministry of Business, Innovation, and Employment (MBIE) investigated Gate following a complaint by the union Aviation Workers United.
After the investigation, the labour inspector found that Gate had breached several minimum employment standards, primarily those in the Holidays Act 2003. The inspector decided the most appropriate way to address the breaches she identified was to enter an "enforceable undertaking" with Gate. If Gate fails to comply with this undertaking, the inspector could seek compliance and penalty orders from the Employment Relations Authority.
Between 2020 and 2022, Gate entered into three enforceable undertakings with the labour inspector. The first enforceable undertaking compelled Gate to calculate the arrears owed to its current and past employees. Due to delays in completing the calculation, Gate entered into another undertaking extending the deadline for calculating the arrears owed. After Gate had completed the calculation of arrears, it entered into a third enforceable undertaking which set out a remediation process for the identified arrears. Under that process, Gate was required to pay all current employees and use reasonable endeavours to contact and pay former employees owed arrears. The Gate was also obliged to provide the labour inspector with evidence of compliance with the third undertaking.
The labour inspector was in the process of reviewing the information Gate provided to decide whether Gate had complied with the undertaking. The Union applied for an interim injunction, asking the MBIE chief executive to instruct the labour inspectorate that "it will not, in any way, advise Gate" that it has complied with the enforceable undertaking, that it had rectified its breaches of the Holidays Act 2003 and that the enforceable undertaking no longer binds it.
The High Court noted that "what the plaintiffs are effectively seeking is an order, unconnected to the relief sought in the substantive claim, that the Labour Inspector may continue with her statutory process provided she does not reach a decision unacceptable to the plaintiffs."
The plaintiffs argued that the labour inspector is under a "novel" duty of care owed to those employees who are victims of an employer's failure to comply with employment standards. They asserted that the duty of care includes ensuring that the labour inspector uses their best endeavours to ensure compliance with the terms of any applicable enforceable undertaking.
The plaintiffs claimed that the inspector failed to take reasonable steps to ensure that Gate has a Holiday Act-compliant payroll system and that they pay "wash up" arrears. The plaintiffs also claimed that the inspector failed to take reasonable steps to include the plaintiffs in the investigation and remediation process. They asserted that since the inspector has assumed control over the enforcement of the undertaking, it is fair and reasonable to expect the inspector to exercise "reasonable skills and care" in carrying out that enforcement action.
The court explained that in determining whether to grant an interim injunction, the court must first inquire whether there is a serious question to be tried. If that threshold is met, the court considers whether the balance of convenience favours granting or refusing relief. The court further said that a plaintiff seeking interlocutory relief must adduce sufficiently precise factual information to satisfy the court that there is a real prospect of succeeding in the claim at trial.
The plaintiff's cause of action is rooted in the alleged damages they sustained, but the court found that the nature of the damages is unclear. "They are simply bland pleadings," the court wrote in its decision.
The court further said that the type of loss is not specified. Concerning the Union, it is not apparent what damage it allegedly suffered. The court recognised that the Union has a role of advocating for the employees, but the court could not discern the alleged loss.
The court also found that the plaintiffs alleged unlawful deductions of overpayments, but there are no positive allegations of such illegal deductions. The court pointed out that there is no pleading regarding which plaintiffs are said to be owed money and the amount owed.
The court concluded that it is impossible to discern from the pleadings what loss is said to have arisen from the alleged breaches. The court stressed that allegations of damage without more are insufficient to ground a claim.
The court pointed out that the inspector still needs to decide on whether Gate has complied with the undertaking. If the inspector determines that Gate has complied with what is required under the undertakings, that will not prevent the inspector from taking further action in response to a future complaint. The court said that the interim relief would constrain the labour inspector from continuing the remediation process.
Accordingly, the court ruled that granting an interim injunction in favour of the plaintiffs “would not serve the interests of justice.”
