IN THE EMPLOYMENT COURT
AUCKLAND
[2016] NZEmpC 74
EMPC 296/2015
IN THE MATTER OF
a challenge to a determination of the
Employment Relations Authority
BETWEEN
TAIRAWHITI DISTRICT HEALTH
BOARD
Plaintiff
AND
NEW ZEALAND NURSES
ORGANISATION INC
First Defendant
AND
LISA MARSHALL
Second Defendant
Hearing:
12 April 2016
(Heard at Auckland)
Appearances:
S Hornsby-Geluk, counsel for plaintiff
J Lawrie, counsel for defendant
Judgment:
14 June 2016
JUDGMENT OF CHIEF JUDGE G L COLGAN
Nature of case
[1]
This judgment decides a challenge to a determination of the Employment
Relations Authority1 about a disputed question of the interpretation, operation and
application of a Multi-Employer Collective Agreement (a MECA).
It deals, in
particular, with questions of status, seniority and salary steps where relevant
employees move between employers covered by the same collective agreement.
1
New Zealand Nurses Organisation v Tairawhiti District Health Board [2015] NZERA Auckland
275.
TAIRAWHITI DISTRICT HEALTH BOARD v NEW ZEALAND NURSES ORGANISATION INC NZEmpC
AUCKLAND [2016] NZEmpC 74 [14 June 2016]
[2]
The case of Lisa Marshall illustrates these questions in practice.
Ms
Marshall was, at relevant times, a member of the New Zealand Nurses Organisation
Inc (NZNO), a union party to the District Health Boards/NZNO Nursing and
Midwifery Multi-Employer Collective Agreement (2012-2015).2 Members of the
NZNO employed in nursing and midwifery positions in the 20 District Health
Boards (DHBs) across New Zealand are affected now by the successor collective
agreement’s provisions which are materially unchanged from the previous collective
agreement.
[3]
The seniority and, therefore, salary of affected DHB nurses and midwives are
determined, in part, by length of service with an employing DHB. The problem
arises, as in Ms Marshall’s case, when a nurse or midwife moves in the same role
from one DHB to another. In particular, the question is whether that employee’s
length of service and, therefore, salary continues at the same level as previously or
whether (for salary purposes) the seniority ‘clock’ is reset (potentially even to zero)
so that the employee must again start to accumulate service and salary increases
based on experience as if that employee had not previously been employed by
another DHB.
[4]
The relevant scales in the collective agreement provide for annual increments
for registered nurses and midwives in their first four years of service. The outcome
of the case affects not only how quickly a registered nurse or midwife can progress
in employment with a new DHB employer, but also and indirectly, questions of
recruitment and retention of staff by and between DHBs.
[5]
It is open to any particular DHB, which engages an employee who was
formerly employed by another DHB, to acknowledge and adopt the employee’s
complete previous service and to apply the full salary of the employee with the
previous DHB. However, this case concerns the entitlements in law of the relevant
parties in the absence of any such individual agreement. It is a case about what a
DHB employer can and cannot do in law.
2
I will refer to all the relevant multi-employer collective agreements by the letters “MECA”.
[6]
As was the case in the Authority, other DHBs have been notified of this
dispute pursuant to s 129(2) of the Employment Relations Act 2000 (the Act) and so
will, in effect, be bound by the outcome of the case.
No application for
representative intervener status has been received by the Court, despite the case
being notified to potentially interested parties.
[7]
Ms Marshall was employed by Bay of Plenty District Health Board
(BoPDHB) from 10 January 2011 until 18 September 2012. She began work at
BoPDHB on Step 1 of the salary scale (sometimes called the “New Grad” step) so
that, by the time of her resignation, she had completed more than a full year of
service.
[8]
For personal and professional reasons, Ms Marshall moved from the Bay of
Plenty to the Tairawhiti region (Gisborne) and was appointed to a nursing position
with Tairawhiti District Health Board (TDHB) on Step 2 of the salary scale. Had Ms
Marshall remained at BoPDHB, the anniversary date for her to have moved to Step 3
on the salary scale would have been 10 January 2013. However, TDHB declined to
move her to Step 3 on the scale until she had completed one full year of service with
it, that is until 24 September 2013.
Her relevant anniversary (for collective
agreement salary purposes) thereby became her date of commencement of service
with TDHB rather than with BoPDHB. From Ms Marshall’s viewpoint, she thereby
“lost” (for salary and seniority purposes) about eight months of service.
She
calculates this loss in her case to have been about $5,000 of salary.
The relevant facts in more detail
[9]
Ms Marshall attained her professional qualification of Bachelor of Nursing
and her professional nursing registration in 2010. She began employment with
BoPDHB on 10 January 2011. She entered a Nursing Entry to Practice programme,
completing this one year later on 10 January 2012, converting her nursing position
on a hospital surgical ward to a permanent one.
[10]
Also during her new graduate year of 2011, Ms Marshall was accepted into a
five-year Health Workforce New Zealand Voluntary Bonding Scheme to work in
hard-to-staff nursing specialties. Surgical ward nursing was then one such hard-tostaff nursing specialty. The purpose of this bonding scheme was to encourage nurses
into such positions and to retain them there. There was a qualifying period of three
consecutive years’ work in the specialty position before Ms Marshall could obtain
any financial benefit from the scheme. Thereafter, she was entitled to the payment of
a sum of money which was earmarked primarily for the repayment of a student loan,
as she had.
[11]
During 2012, whilst at BoPDHB, Ms Marshall completed a Postgraduate
Certificate in Health Sciences from the University of Auckland. In mid-2012, Ms
Marshall wished to explore career development opportunities and applied for a
position with TDHB on its orthopaedic ward at Gisborne Hospital which, under the
bonding scheme, was also regarded as a hard-to-staff position.
[12]
In her discussions with TDHB recruitment staff, Ms Marshall advised that
she had started her nursing career with BoPDHB in January 2011. There was no
discussion with her about what would be the anniversary date for advancement up
the registered nurse salary scale if she was employed, and whether there would be
any change, for those purposes, to her commencement date at BoPDHB when she
joined TDHB.
[13]
In August 2012 Ms Marshall received a formal letter of appointment from
TDHB. This offered her employment (commencing on 24 September 2012) on the
basis that her salary would be “equivalent to Step 2 of the Registered Nurse scale in
the MECA”. That was at the same salary step as would have applied had she
remained in employment with BoPDHB in September 2012.
There was no
discussion with, or advice to, Ms Marshall about how TDHB proposed to calculate
her salary or, particularly, about when the anniversarial increases to this would take
place under the collective agreement.
[14]
At all relevant times, both with BoPDHB and TDHB, Ms Marshall was a
member of the NZNO and was covered by the collective agreement in her
employment with each of the employer parties bound to this MECA.
[15]
For a number of understandable reasons, including significant weekly
variations to her pay, depending upon factors such as shifts and overtime work, Ms
Marshall did not become aware that she remained on Step 2 of the salary scale after
what would have been her second anniversary of the commencement of her
employment with BoPDHB. At that time, if she had remained with BoPDHB, she
could have expected an automatic salary increase under the collective agreement. It
was only when comparing payslips with a colleague with whom she had trained and
graduated, that Ms Marshall became aware that her basic salary rate had remained at
Step 2, whereas her colleague, who had commenced nursing work at the same time
but had remained at BoPDHB, had advanced to Step 3.
[16]
When she took this concern up with her manager at TDHB, the matter was
referred to TDHB’s payroll section and Ms Marshall was then advised that she had
not been advanced to Step 3 of the salary scale because she had not provided a
certificate of service from BoPDHB when she had commenced at TDHB. Despite
having provided that certificate to TDHB in October 2012, Ms Marshall did so again
on 4 June 2013. On 25 June 2013 TDHB then advised her that her anniversary date
would be regarded by it as the date 12 months after she had commenced work at
TDHB (24 September 2012), so that she could not expect to advance up the salary
scale until after 24 September 2013.
[17]
Ms Marshall has calculated that she advanced to Steps 3 and 4 of the salary
scale in 2013 and 2014 respectively, eight months later than she would have, had she
either stayed at BoPDHB or had her BoPDHB anniversary date been used by TDHB.
[18]
Ms Marshall left employment with TDHB in August 2015 and has
subsequently taken employment as a registered nurse for the New Zealand Blood
Service under a different collective agreement
The relevant provisions of the collective agreement
[19]
The case turns on the provisions of the applicable 2012-2015 collective
agreement. These begin with the definition of “Service” at cl 5 which provides:
“Service” means the current continuous service with the employer and its
predecessors …, except where otherwise defined in the applicable clause.
As of the commencement of the previous MECA07 service will transfer
between DHBs and service shall not be deemed to be broken by an absence
of less than three months. However, where the employee remains actively
engaged on nursing or midwifery related work or study whilst absent, the
period of three months shall extend to twelve months. This period of absence
does not count as service for the purpose of attaining a service related
entitlement.
[20]
Clause 5 also defines the word “Employer” to mean “the relevant District
Health Board employing the particular employee”. “Employee” is defined as “any
person employed by an employer and whose position is covered by this MECA”.
[21]
Next, cl 8.0.1 contains a table setting out salary scales for a variety of
positions.
For registered nurses and midwives, this consists of five steps
commencing with step 1 for “New Grad” employees. At its foot the table says:
“Progression: by annual increment through all steps in each scale at anniversary
date”.
[22]
Under the heading “Operation of Salary Scales”, cl 8.1 of the collective
agreement provides:
…
(b)
…
(e)
[23]
On appointment, the employer shall place employees on any step of
the relevant scale, taking into account the following factors:
(i)
previous nursing/midwifery experience or other relevant
work and life experience – the employer may credit this
service;
(ii)
degree of difficulty in recruiting for specific skills and/or
experience required for the position.
Movement through the salary scales shall be by automatic annual
increment, except for senior nurses or midwives whose advancement
through the steps in their salary grade shall be annual, subject to
satisfactory performance which will be assumed to be the case
unless the employee is otherwise advised. Movement across senior
salary grades shall only occur with a change in position.
It is common ground that Ms Marshall was not yet, at relevant times, a senior
nurse or midwife: this term applied to employees who had advanced to and beyond
the fifth step of the salary scale.
Cases for the plaintiff and the defendant
[24]
The case for the plaintiff DHB is that its placement of a transferring
employee on the scale is essentially and broadly discretionary so that, as in the case
of Ms Marshall, it was entitled in that exercise to take account of completed years of
service with another DHB but not to take into account a part-year of service with that
former employer. The logical and extreme extension of the plaintiff’s argument is
that the collective agreement would have entitled TDHB to have placed Ms Marshall
on any step of the salary scale, having taken into account, however, her previous
nursing or other relevant work and life experience, and the degree of difficulty in
recruiting for her specific skills and/or experience for the position to which it was
appointing her.
[25]
The defendant essentially supports the Authority’s determination and
reasoning. Readers are referred to that determination.3
Preliminary interpretation of the agreement
[26]
For reasons I will set out subsequently, I have reached a preliminary
conclusion that, by reference to the relevant words and phrases in the context of the
collective agreement, the interpretation and application of the collective agreement
is unclear. If the real question at the heart of this case is posed in the following form:
“What is the “anniversary date” for Ms Marshall’s progress by annual increment
through the salary steps at cl 8.0.1 of the collective agreement?”, the answer is not
made clear by the words alone, even read in the context of the agreement itself.
[27]
It is now well established that even where the provisions of a collective
agreement or an employment agreement are clear, it is useful to cross-check these by
reference to relevant extraneous materials so as to confirm the accuracy of an even
apparently unequivocal meaning.
In cases such as this where the collective
agreement on its face admits of uncertainty, then an essential aid to its interpretation
3
New Zealand Nurses Organisation v Tairawhiti District Health Board, above n 1.
and application will be the examination of relevant and probative extraneous
material.4
[28]
So, in these circumstances, the Court should have regard to pertinent sources
of relevant and probative information beyond the covers of the collective agreement.
I now do that under a number of relevant headings.
The circumstances in which the relevant collective agreements were
entered into
[29]
It is agreed that in 2007 when the collective agreement in its relevant form
was first settled, the particular imperatives for the parties in bargaining for a
successor to the 2004-2006 collective agreement were two.
[30]
It is common ground that when, in 2007, the parties came to negotiate a
replacement collective agreement for the expired 2004-2006 agreement, recruitment
and retention of professional staff covered by it was a significant and problematic
issue for the DHBs. Not only was this a question of attempting to retain trained
nurses and midwives in New Zealand generally, but it was also an issue for the
recruitment to, and retention of staff at, a number of (particularly smaller and
isolated and, thereby, hard-to-staff) DHBs within New Zealand. It was, therefore,
one objective in the 2007 bargaining for the collective agreement, which was the
immediate predecessor to that now in issue, that staff should not be inhibited from
transferring between DHBs and, in particular, not disadvantaged thereby in terms of
service and salary.
[31]
There was a concern that nurses and midwives working in the public sector in
New Zealand were being lost at significant rates to both overseas positions
(especially in Australia) and to private-sector nursing positions within New Zealand.
Recruitment and retention of nurses and midwives in the public health sector, and at
DHBs in particular, was the first subject of what was known as “interest-based”
bargaining.
4
Although this was primarily an interest for the employer parties,
See for example, Mercer v McIntyre [2016] NZEmpC 49 at [12], which cites (inter alia) Air New
Zealand Ltd v New Zealand Airline Pilots’ Association Inc [2016] NZCA 131; Arnold v Britton [2015]
UKSC 36, [2015] AC 1619 at [15].
focusing on this imperative also had benefits for the NZNO and its members through
the potential enhancements of terms and conditions of employment to address
recruitment and retention issues.
[32]
The second broad interest was what was then described as “work/life
balance”. Although this can be seen to have been principally an interest of the Union
and employees, this imperative also was not one-sided; the DHBs also had an
interest in having and maintaining a workforce that was productive and committed
and whose lives were not dominated completely by work.
[33]
The interests-based approach to bargaining involved identifying possible
solutions to these issues that could be addressed in collective bargaining.
The parties ranked both the importance and the operability in practice of those
suggestions, with a view to identifying areas of consensus in both.
[34]
The importance of this evidence in the present case is that it created an
agreed record not only of the matters discussed in bargaining, or at least those
matters related to these two imperatives, but also of the potential for their adoption in
the collective agreement. This evidence was contained in what the parties referred to
in their cases as a matrix, which was a copy of information displayed on a
whiteboard during negotiations.
Performance in practice of relevant clauses of the collective agreement
[35]
This is the next extraneous aid to interpretation. It is also well-established
that a party’s or the parties’ performance in practice of the terms and conditions of a
collective agreement is a guide to its interpretation in the sense that this may
illustrate the parties’ common intentions after execution and before the litigation
arose.5
[36]
In this case, both parties rely significantly on different instances of this
consideration, one element of which comes about as a result of unusual provisions in
5
For a consideration of the principles of contract interpretation as applied to collective agreements,
see New Zealand Airline Pilots’ Assoc v Air New Zealand Ltd [2014] NZEmpC 168 at [10]-[21].
(While the conclusion in this case was reversed on appeal, the principles of interpretation as
expressed in the judgment were affirmed).
the collective agreement itself. I deal first with this factor, which arguably favours
the plaintiff’s interpretation.
[37]
The collective agreement established a working methodology for dealing
with interpretation and operation questions which arise during its performance. This
was intended principally to attempt to ensure that there was consistent application of
the collective agreement by all DHBs. Accepting the reality that there may be
disputes such as the present one, this system attempts to address them other than by
litigation where possible. The methodology establishes a working party to identify,
agree upon and record such potentially problematic provisions and the parties’
common intentions about their operation in practice.
This is not, however, a
substitute for the parties’ statutory rights to take such disputed questions to the
Authority for independent determination but, in practice, reduces significantly the
potential for litigation as a first-strike strategy.
[38]
In this case, the plaintiff says, this mechanism agreed upon and recorded the
way in which the question now before the Court was to be interpreted and applied.
The consequent settled resolution was applied for some time by the NZNO and the
employer parties to the collective agreement. That being so, the outcome of that
process is a valuable interpretive tool in the dispute now before the Court.
[39]
This unusual, if not unique, feature of the collective agreement and its
interpretation is what is described as “the MECA Implementation Sub-committee”
(the MISC).
This body consisted of equal numbers of NZNO and DHB
representatives. Among its tasks was to determine interpretation and application of
clauses in the collective agreement.
To ensure consistent interpretation and
application, it was agreed that decisions made by the MISC would bind (at least
morally, if not strictly legally or ultimately) the NZNO and the 20 DHBs. The MISC
was initially established as part of a Joint Action Committee (JAC) but this was
subsequently replaced by another body called the National Bipartite Action Group
(known colloquially as National BAG), also a bipartite union and DHB forum.
[40]
In late 2008, that is during the term of the first collective agreement in which
these provisions appeared, one of the issues brought to the MISC for consideration
was labelled:
“What is the [employee’s] anniversary date when they are re-
employed/move to another DHB?”.
This appears to have been raised by the
employing DHBs but did not arise from any particular case, and certainly not from
Ms Marshall’s case. This question was discussed at the MISC meeting on 17
November 2008 but not resolved. It was raised again subsequently, the question
being altered slightly to read: “What is the [employee’s] anniversary date if they are
employed by a new DHB or re-employed by a prior DHB – in terms of salaries.”
This re-worded issue was discussed at the MISC meeting on 13 October 2010.
[41]
The plaintiff’s case is that the decision reached was that the anniversary date
of the commencement of employment, for salary progression purposes, “was reset
when starting with the new DHB”. Agreement was ultimately reached along these
lines and the Minutes of the MISC meeting record that this issue (numbered 89) was
discussed and a solution reached. The MISC’s recommendation was that: “Start
date is date of appointment with DHB for salaries – anniversaries annually
thereafter”. Under a comments column, the following is recorded:
Different anniversaries possible for different entitlements e.g. Leave and
salary increments – each employer is a new entity. Relevant prior service is
evaluated for determining starting salary – however new anniversary applies.
Generally for leave and gratuity redundancy actual date of start of qualifying
service will apply.
[42]
The MISC’s recommendation was submitted to, and endorsed by, the
National BAG at its meeting on 7 March 2012 and thereafter became applicable to
employment under the collective agreement at all 20 DHBs.
[43]
A successor collective agreement was settled subsequently. The terms of
settlement of this instrument (which is to be the New Zealand Nurses Organisation
Multi-Employer Collective Agreement 1 March 2012 – 28 February 2015) include
the following statement:
11.6
MECA Interpretation Sub Committee (MISC)
The MISC committee have been meeting since 1998 and have
agreed by consensus a number of MECA interpretations put forward
by either NZNO or the DHBs. The parties agree that the
interpretations, where there has been a consensus agreement will
become binding on all DHBs from the date the MECA comes into
force. A full list of these agreed interpretations is appended to this
terms of settlement (see Appendix Four).
Any future interpretations provided they follow the DHB process,
once there is a consensus agreement will automatically become
binding on the DHBs.
[44]
Appendix Four referred to includes the agreement on issue 89, summarised in
[41] above.
[45]
The plaintiff concedes that although the parties to the current collective
agreement have bound themselves to an ad hoc agreement interpreting or applying
the provisions of the collective agreement in the National BAG process, this does not
prohibit a party’s right of access to the statutory dispute resolution process by which
this case has come to court.
It is, however, relevant to the now disputed
interpretation of the clause at issue.
[46]
As was the Authority, however, I am not satisfied to the requisite standard of
probability that what was discussed and adopted at the MISC meeting on 13 October
2010 was the position in Ms Marshall’s case. The question to the MISC then was:
“What is the [employee’s] anniversary date if they were employed by a new DHB or
re-employed by a prior DHB – in terms of salaries.”
The question does not
distinguish between cases of continuous service and discontinuous service as these
are dealt with in cl 5 of the collective agreement. The answer may well, therefore,
relate to the position of discontinuous service, in which case the answer may well be
correct. But Ms Marshall’s case was one of deemed continuous service under cl 5.
[47]
Next, it refers to an employee’s anniversary date if that employee is “re-
employed by a prior DHB”. On its face this seems to contemplate the possibility of
an employee being employed by a DHB, then resigning to pursue some other activity
so that employee’s service is discontinuous pursuant to cl 5, but then applying again
for employment to the original DHB employer. That, too, is not Ms Marshall’s
situation, both because she was not applying again to her previous employer for new
employment or, as already noted, her circumstances did not meet the definition of
her service being discontinuous.
[48]
So I do not consider that it is safe, without more, to conclude that the parties
agreed, during the operation of the relevant clauses, upon an interpretation that is
now advanced by the plaintiff. Even if that were not so, the provision is aimed
primarily at consistency of application across DHBs rather than as a definitive
interpretive tool for the collective agreement in operation. It is a process which
reserves to the parties the entitlement to have their collective agreement interpreted
independently and authoritatively by the Authority or the Employment Court and
indeed that is a statutory entitlement out of which it the parties cannot lawfully
contract.6
[49]
There is a second extraneous factor relating to performance of the collective
agreement in practice, which the defendants rely upon in support of their
interpretation. After ratification of the 2007-2010 collective agreement, the DHBs
conducted collectively what they described as an ‘implementation roadshow’ to
ensure that each of the (then) 21 DHBs around the country was aware of the contents
of the new collective agreement and, in particular, any changes to its predecessor.
There is evidence about the content of this roadshow by which the plaintiff seeks to
persuade the Court that its current position was that which was bargained for by both
parties.
[50]
Although this evidence is direct in the sense that it affects the DHB’s
interpretation and application of the collective agreement it had just entered into,
there is indirect evidence of the Union’s similar intention, thus making this evidence
of commonality. That is in the sense that the Union participated in the roadshow
and, in addition to not dissenting from the DHBs’ advice to its managers, indeed
endorsed that application and practice of what had been agreed between the parties.
[51]
Among the roadshow materials in writing affecting the questions at issue in
this case was the following:
· Service related benefits transfer with them, i.e. annual leave entitlement,
long service leave, PDRP, salary.7
6
See Employment Relations Act 2000, s 238.
“PDRP” is an allowance paid in addition to an employee’s salary when a level of competence is
achieved, such employees being required to demonstrate the relevant competence every three years to
retain this allowance.
7
[52]
The plaintiff now says that the reference to “salary” in the bullet point quoted
above was erroneous so that DHBs should not have been advised by their bargaining
representatives that “recognition of service between DHBs has been included so staff
transferring are not penalised and that service related benefits to transfer with them
between DHBs include “salary”.” The defendants say that this advice by the DHB
negotiators to those whom they represented, given very close in time to the
settlement of the agreement, is strong evidence of the plaintiff’s intention for the
interpretation and application of the clause at issue. The defendants say that, in all
the circumstances, it is simply implausible that, as the plaintiff would have it, this
was simply an error made at the time which was uncorrected subsequently.
[53]
This second example of extraneous evidence of the collective agreement in
practice supports the defendant’s interpretation, which I prefer independently by
interpretation of the words and phrases of the collective agreement against the
context in which it was settled. However, the significance of these comments by the
DHBs’ negotiators, immediately after settlement had taken place, is not a sure
reiteration of what the parties intended in bargaining. It could have been, as the
plaintiff now claims, a slip in the written and oral advice given by its representatives.
Although that is an exculpatory explanation that is more improbable than probable,
the significance of those events does not assist much in determining what the parties
agreed would be the means by which Ms Marshall’s anniversary date was calculated.
Comparison with the 2004-2006 predecessor collective agreement
[54]
In the next cross-check of the words and phrases at issue in the applicable
collective agreement, changes to similar or identical provisions by the parties in
other related collective agreements are a potentially valuable interpretive tool.
Although the precise words and phrases at issue in this case first appeared in the
parties’ 2007-2010 collective agreement,8 it is necessary to go back to the
predecessor
document,
the
District
Health
Board/NZNO
Multi-Employer
Nursing/Midwifery Collective Agreement 1 July 2004 – 31 December 2006. At cl 5
the definitions of the words “Employee” and “Employer” meant “any person
8
Although subsequent CAs covered the plaintiff’s period of employment at TDHB, they repeated the
relevant 2007 provisions.
employed by an employer and whose position is covered by this MECA” and “the
relevant District Health Board employing the particular employee”, respectively.
[55]
Next, and significantly, the definition of “Service” was:
… the current/continuous service with the employer (previously known as
Hospital and Health Services, Crown Health Enterprises, Regional Health
Authorities, Health Funding Authority, Area Health Boards and Hospital
Boards), except where otherwise defined in the applicable clause.
[56]
scales
Clause 8 dealt with salary scales at 8.0.1 and, immediately following the
for
employees,
including
registered
nurses,
contained
this
note:
“Progression: By annual increment through all steps in each scale at anniversary
date.”
[57]
The final relevant passage from the 2004-2006 collective agreement was
cl 8.1 (“Operation of Salary Scales”) which, although previously set out, is at the
heart of the case and provided materially:
…
(b)
(c)
…
(e)
On appointment, the employer may place employees on any step of
the relevant scale, taking into account the following factors:
(i)
previous nursing/midwifery experience or other relevant
work and life experience – the employer may credit this
service;
(ii)
degree of difficulty in recruiting for specific skills and/or
experience required for the position.
For new appointees to designated senior nurse/midwife positions,
placement on the scale will be based on job size, job content,
responsibility, experience and qualifications. These shall reflect the
outcomes of the Senior Nurse/Midwife job scoping exercise to be
undertaken in 2005.
Movement through the salary scales shall be by automatic annual
increment, except for senior nurses/midwives whose advancement
through the steps in their salary grade shall be annual, subject to
satisfactory performance which will be assumed to be the case
unless the employee is otherwise advised. Movement across senior
salary grades shall only occur with a change in position.
Relevant changes between the 2004-2006 and 2007-2010 collective
agreements
[58]
The 2007-2010 collective agreement differed, in some respects significantly,
from its predecessor relating to matters at the heart of this case. Whilst the cl 5
definitions of “Employee” and “Employer” remained unchanged, there was an
extended definition of “Service” in cl 5, which is at the nub of the decision and is as
follows:
“Service” means the current continuous service with the employer and
its predecessors (Hospital and Health Services, Crown Health
Enterprises, Regional Health Authorities, Health Funding Authority,
Area Health Boards and Hospital Boards), except where otherwise
defined in the applicable clause. As of the commencement of this
agreement service will transfer between DHBs.
As of the commencement of this agreement, service shall not be
deemed to be broken by an absence of less than three months.
However, where the employee remains actively engaged on nursing or
midwifery related work or study whilst absent, the period of three
months shall extend to twelve months. This period of absence does not
count as service for the purpose of attaining a service related
entitlement.
[59]
The salary scales at 8.0.1 of the 2007-2010 collective agreement remained
unaltered (except as to amounts of annual salaries) as did the note immediately
following those scales about progression which had also been set out in the previous
(2004-2006) collective agreement.
[60]
There were some changes made to what had previously been cl 8.1 and which
retained this number. In the 2007-2010 collective agreement, the word “may” in the
2004-2006 collective agreement phrase “on appointment, the employer may place
employees on any step of the relevant scale …”, was changed in 2007 to “shall”.
Previous cl 8.1(c) was also altered by reduction in the number and nature of the
relevant Background factors affecting salary scale placement. In the 2007-2010
collective agreement this was changed to read:
(c)
For new appointees to designated senior nurse or midwife
positions, placement on the scale will be based on job size, job
content, responsibility, experience and qualifications.
[61]
For completeness, the following words were understandably omitted from the
previous collective agreement: “These shall reflect the outcomes of the Senior
Nurse/Midwife job scoping exercise to be undertaken in 2005.”
[62]
In 2007 there were no other material changes to the earlier agreement.
No material changes between the 2007-2010 and 2010-2011 collective
agreements
[63]
The collective agreement in force when Ms Marshall commenced
employment with TDHB was the one that was current between 1 April 2010 and 30
September 2011, and to which I refer as the 2010-2011 collective agreement. In this
latter collective agreement there were no material changes to any of the previous
relevant clauses under the 2007 collective agreement.
No material changes between the 2010-2011 and the 2012-2015 collective
agreements
[64]
Finally, and to complete the picture, the collective agreement in force when
Ms Marshall concluded her employment with TDHB was that with operational dates
1 March 2012 – 28 February 2015 (the 2012-2015 collective agreement). There
were no material changes to the provisions of this collective agreement, as in the
case of its predecessor, the 2010-2011 collective agreement.
So the focus of the
interpretative exercise must be upon the changes made to relevant parts of the 20042006 collective agreement when it was succeeded by the 2007-2010 collective
agreement’s provisions.
Interpretative significance of collective agreement changes
[65]
Such relevant changes as occurred in the collective agreements leading up to
and including that at issue in this case, tend to favour the defendant’s contended for
interpretation. The most significant of these was the express inclusion in cl 5 of the
sentence: “As of the commencement of the previous MECA07 service will transfer
between DHBs …”. The accompanying clarification that some broken service
periods were deemed to include continuous service in circumstances such as Ms
Marshall’s when employees transferred between DHBs, further reinforces the
defendant’s case.
Discussion
[66]
Supportive more of the defendant’s position is the analysis of the background
to the settlement of the relevant collective agreement. The bilateral desirability for
terms and conditions of employment that protected and promoted recruitment and
retention of nursing and midwifery staff, related not only to the losses being
experienced by public sector DHBs collectively (to Australia and elsewhere to the
private sector) but also between the DHBs themselves. The parties were concerned
to address inter-DHB recruitment and retention and this too favours the defendants’
interpretation. ‘Difficult-to-staff’ situations within and between DHBs appear to
have been addressed by such mechanisms as were used by Ms Marshall to attract her
to, and to retain her in, such difficult-to-staff positions. These rewarded monetarily
those nurses and midwives who took up those positions and remained within them,
even upon transfers between DHB employments. But so too did making it more
attractive for DHB staff to remain within the DHB system overall, rather than risking
losing them to the private sector, mean that the collective agreement did not act to
penalise staff transferring between different regions for good reasons, as Ms
Marshall did. The defendant’s interpretation of the collective agreement is more
consistent with the parties’ then imperatives of encouraging retention of nurses and
midwives within the public DHB system, even if such staff changed between
hospitals under different DHBs’ management.
“Anniversary date”
[67]
An employee’s service by which salary was assessed is identifiable by
reference to that employee’s “anniversary date”. How that is set must be consistent
with the notion either of when continuous service commenced with the former
employing DHB (the defendant’s case), or when it started with the new DHB
employer (the plaintiff’s position). Although it clearly means the date when a year
has passed, its significance lies in the question “since when?”.
[68]
The meaning of the phrase “anniversary date in cl 8.0.1 may, on its face,
apply equally, in the circumstances of Ms Marshall, to the anniversary of the date of
her commencement of work with BoPDHB or to the date of commencement of work
with TDHB.
Nor can an employee’s anniversary date be determined without
considering the meaning of the phrase “service-related entitlement”.
[69]
First is the definition of “Service” in cl 5 in the 2012-2015 collective
agreement. Although out of sequence, I start with the second sentence of that clause.
It reads:
As of the commencement of the previous MECA07 service will
transfer between DHBs and service shall not be deemed to be broken
by an absence of less than three months.
[70]
There follows some fine tuning of those break-in-service provisions but they
are not applicable in this case.
[71]
The word “service” in the second sentence of cl 5 is defined in the first
sentence as meaning “… the current continuous service with the employer and its
predecessors … except where otherwise defined in the applicable clause”.
“Predecessors” refers to the statutory antecedents of DHBs and is not applicable in
this case.
[72]
The reference in the first sentence in cl 5 defining “Service” to be “service
with the employer” can only sensibly mean, in this case, with BoPDHB. In other
cases it may mean service with one or more previous DHB employers, but it cannot
logically mean, in Ms Marshall’s case, service with TDHB. That definition of the
phrase “service with the employer” is consistent with the definitions of “Employer”
and “Employee” also contained in cl 5.
[73]
So the purport of cl 5 in circumstances such as Ms Marshall’s is that
accumulated service with previous DHB employers will transfer with the employee
to a new DHB employer “… except where [service is] otherwise defined in the
applicable clause”.
A “service-related entitlement”?
[74]
Was Ms Marshall’s salary at the relevant time a “service-related entitlement”?
I conclude that it was, both by reference to the phrase at the conclusion of cl 8.0.1
that progression was to be by annual increment, and by reference to the provisions of
cl 8.1(e). Although this sub-clause is not expressed entirely clearly, I interpret it to
define movement through the salary scales of employees covered by the collective
agreement to be in one of two ways. For “senior nurses or midwives” (of whom Ms
Marshall was not one), advancement through the steps of their salary scale was to be
annual but was only to occur with a change in position. Nurses and midwives other
than senior employees were to move through the relevant scales expressed by years
of experience, by automatic annual increases subject to satisfactory performance,
which was to be assumed unless the employee was otherwise advised.
[75]
In these senses, therefore, Ms Marshall’s remuneration was a service-related
entitlement which, in her circumstances, was to transfer from her former
employment with BoPDHB to her new employment with TDHB.
[76]
The case for the plaintiff relies essentially on the interpretation and
application of one phrase in cl 8.1 (“Operation of Salary Scales”) of the collective
agreement. That is that in circumstances such as Ms Marshall’s, “[o]n appointment,
the employer shall place employees on any step of the relevant scale, taking into
account the following factors …”. As already set out, those factors include previous
nursing/midwifery experience or other relevant work and life experience, and the
degree of difficulty in recruiting for specific skills and/or experience required for a
position. Does this claimed ability for the new DHB employer to place an employee
such as Ms Marshall “on any step of the relevant scale”, mean that the exception to
continuous service contained within cl 5 is of no effect because “current continuous
service” is “otherwise defined in the applicable clause [of the collective
agreement]”? I consider it does not.
Decision
[77]
Although not without difficulty because of a lack of clarity within the
collective agreement, I find the defendant’s interpretation of the relevant provisions
affecting Ms Marshall’s circumstances to be correct. I conclude that, as a matter of
interpretation and application of the collective agreement, TDHB applied a wrong
commencement anniversary date to Ms Marshall’s circumstances.
[78]
Also as a matter of interpretation and application of the collective agreement,
I conclude that the ability of a new employing DHB to place a midwife or nurse “on
any step of the relevant [salary] scale”, does not amount to an applicable clause
which otherwise defines “Service” pursuant to cl 5.
Again as a matter of
interpretation, I conclude that the discretion permitted a new employer DHB by
cl 8.1(b), is limited to placing a transferring employee such as Ms Marshall on a
higher step of the relevant scale than that employee was on with a previous DHB
employer. It also allows a new DHB employer to place on the salary scale a new
employee who does not have current continuous service (as defined in cl 5) with a
former DHB employer or its predecessor. Such cases other than Ms Marshall’s give
new employer DHBs a greater, but not entirely unfettered, discretion to fix the salary
scale at commencement of employment and thus the anniversary date for automatic
increase purposes. In such cases, the discretion to place such new employees on the
salary scale must take account of the factors set out in cl 8.1(b)(i) and (ii).
[79]
It follows that the phrase “at anniversary date” in cl 8.01 is the anniversary of
the employee’s commencement of current continuous service as defined in cl 5. In
Ms Marshall’s case, that was the date of her commencement of work for BoPDHB.
[80]
This interpretation takes account of the parties’ imperative to recruit and
retain qualified staff in the bargaining for, and settlement of, the 2007-2010
collective agreement. This was to be effected, in cases such as Ms Marshall’s by
ensuring that DHBs like Tairawhiti could recruit trained staff and that these staff
could be retained within the public health system in New Zealand.
[81]
In these circumstances, the plaintiff’s challenge fails. The determination of
the Authority was correct, although for slightly different reasons than those I have
found.
A recommendation to DHBs generally
[82]
Penultimately, I have already noted the absence of reference to this important
element of her employment having been apparently absent from the recruitment
process of Ms Marshall by TDHB. That was very unfortunate. It left Ms Marshall
unclear as to when she might expect to progress up the salary scale. In some cases,
although it is not suggested in Ms Marshall’s, this might be a factor which
determines whether a prospective employee of a DHB may take up the position.
[83]
Section 4 of the Act requires parties to employment relationships to deal with
each other in good faith. Not only must an employer, in the circumstances of
TDHB’s engagement of Ms Marshall, not, directly or indirectly, do anything to
mislead or deceive the other, but also it must not do anything that is likely to mislead
or deceive. The TDHB’s failure to clarify this important matter misled Ms Marshall
in breach of s 4. This case illustrates the desirability of TDHB, and many other
DHBs in the same position, of specifying precisely to a prospective employee when
he or she might expect to enjoy the benefits of the “anniversary date” under cl 8.0.1.
If they do not do so already, the Court would expect DHBs to do so in future.
A post-script
[84]
There is an anomaly apparent in cl 5 of the collective agreement which,
although it does not affect either Ms Marshall’s circumstances or my interpretation
of the words and phrases that decide her case, might be clarified by the parties in
their next successor collective agreement. It arises in the following part of cl 5:
However, where the employee remains actively engaged on nursing or
midwifery related work or study whilst absent, the period of three
months shall extend to twelve months. This period of absence does not
count as service for the purpose of attaining a service related
entitlement.
[85]
These sentences follow immediately the deeming of up to three months’
absence between employments not to constitute discontinuous service. The first
sentence of the foregoing passage appears likewise to deem a break in service of
between three and 12 months’ service not to create discontinuity if the employee is
engaged in related work or study. The next sentence, however, says that “[t]his
period of absence” (which I infer strongly refers to the 3-12-month break) will not
count as service for the purpose of attaining a service-related entitlement. If an
automatic salary increase calculated by reference to length of service is a “service
related entitlement” as I also consider strongly arguable, then this appears to
contradict the previous sentence. It is, at best, a matter of confusion.
[86]
I am not determining this point because Ms Marshall’s case does not raise the
issue, but I do draw it to the parties’ attention as a matter for clarification.
Costs
[87]
This was a case of a genuinely disputed and ambiguous clause in a collective
agreement, the resolution of which will enable the parties to act with greater
certainty and, if they wish to do so, to amend or continue this provision in future
collective agreements. I consider, therefore, that the most just course is for costs to
lie where they fell in relation to this challenge. Counsel agreed with this course of
action.
[88]
The Authority said that “Costs in a dispute on the interpretation of the terms
of a collective agreement would generally lie where they fell …” but noted NZNO’s
wish that costs be reserved.9 The Authority gave the parties an opportunity to
address these but set a time limit of 28 days from the date of delivery of its
determination for any application to be made to it and said that the parties would be
held strictly to this timetable.
[89]
No subsequent costs’ determination appears on the Authority’s electronic
database of determinations and I will assume, in these circumstances, that no
application was made to it for it to settle costs, so that there is no determination in
9
New Zealand Nurses Organisation v Tairawhiti District Health Board , above n1 at [39].
this regard to set aside. If the parties themselves concluded Authority costs, then I
would consider it appropriate for them to revisit any such agreement (if made) in
light of the outcome of this challenge and the Court’s refusal to make any order for
costs.
GL Colgan
Chief Judge
Judgment signed at 12.30 pm on Tuesday 14 June 2016