E Tu Incorporated v. Carter Holt Harvey LVL Ltd [2022] NZ EmpC 141
The full employment Court (three judges deciding, rather than one) has unanimously found that a Carter Holt Harvey (CHH) company was not entitled to require employees to take annual leave in April 2020 during the COVID-19 Alert Level 4 lockdown.
On 23 March 2020 the CHH Group Chief Executive told the employees at a manufacturing plant at Marsden Point that they would be paid in accordance with their employment agreements up to 8 April 2020. Between 9 and 22 April employees would need to take eight days’ leave which would be taken from their annual holiday entitlement in the first instance, followed by any other types of leave that the employee might have available.
Half of the workforce at the CHH plant were members of the E Tu union at the relevant time. The union wrote to CHH twice saying that workers should not be required to use their annual leave first during lockdown. No response was received, other than a confirmation that CHH had been granted the wage subsidy.
The Employment Court acknowledged the pressure created by the pandemic for all entities and individuals in March 2020 but added “however, there was no suspension of employee rights or employer obligations”.
Section 18(3) of the Holidays Act 2003 provides that when an employee takes annual holidays “is to be agreed”. Section 19(1)(a) provides that an employer may require an employee to take annual holidays if both are unable to reach agreement under section 18(3). In those circumstances the employer must give the employee not less than 14 days’ notice of the requirement to take the annual holidays.
CHH accepted that it was required to be responsive and communicative. It argued that the circumstances were rare and exceptional, required the company to make urgent decisions, and there was no time or capacity for it to reach agreement with individual employees prior to the business closing down on 25 March 2020.
The Court did not accept the company’s arguments. It held that not only was there no attempt to engage with the individual affected employees (and several of them had work email addresses), there was no attempt by the company to contact or in any way engage with the union. In short, the company could not say it was “unable” to reach agreement with the employees on the timing of annual holidays because no attempt had been made.
The decision illustrates the importance of taking the time to consider the legal and other implications of a decision, even if you think the situation may be urgent. At Bartlett Law we pride ourselves on being available at short notice to talk to you.
If you have any questions about the case, the Court’s findings, or any other matter, we would be very happy to hear from you.