Michelle Urquhart – Senior Associate at Tompkins Wake – covers a recent Employment Court decision that emphasised the nature of an employment relationship is special and must be viewed as relational, and not simply contractual:

Le Gros v Fonterra

In Le Gros v Fonterra, the Employment Court had to decide whether the long service clause of a collective agreement applied to Mr Le Gros, a long serving employee of Fonterra.  He had worked for Fonterra since 2003 under the provisions of an individual employment agreement (IEA).    The IEA did not have any express terms for long service leave, but Fonterra had a general long service leave policy which did apply to Mr Le Gros.

However, as the result of a restructure in 2022, Mr Le Gros was redeployed into a role covered by a collective agreement.  The collective agreement contained long service leave terms that were superior to those in its leave policy for staff employed under IEAs.  The collective agreement allowed for an additional 2 weeks’ special holiday for any employee who had completed 15 years of service from the start date of their employment.

At the time of the restructure in 2022, Mr Le Gros had completed 20 years of service.  He believed that this meant he was eligible for the additional 2 weeks special leave.  Fonterra did not agree.  Its position was based solely on its contractual interpretation of the terms of the collective agreement.  Fonterra said that because Mr Le Gros was employed under the terms of an IEA when he reached the 15-year milestone and was not covered by the collective agreement at that anniversary, he was not eligible for the superior terms in the collective agreement he was subsequently employed under.

Legal Insight: Beyond Contracts to Human Dynamics

The Court agreed that the usual principles of contractual interpretation of commercial contracts applied in employment law cases.  However, the Court went on to say that there are special features of an employment relationship that go beyond mere contractual interpretation which a Court in any employment jurisdiction must consider.  Chief Judge Inglis said that employment relationships involve people and human interactions, and have multifaceted obligations of good faith, fidelity and fair dealing.  This means that any analysis of employment terms must be viewed with this broader context in mind.

Ultimately the Court found that Mr Le Gros was eligible for the long service leave described in the collective agreement.  Important in the analysis was that Fonterra had chosen to recognise long service by its employees, and the wording of the relevant collective agreement clause contained no caveats or exceptions to the eligibility of employees in Mr Le Gros’s situation.

Takeaway for Employers: A Holistic Approach to Employment Relations

This case is an important reminder that employers must look beyond the written terms that govern any employment relationship in times of trouble.  It will not be enough to look narrowly at what the agreement states without also considering the wider obligations an employer has that underpins all employment relationships.

If you have any questions relating to an employment matter, please get in touch with one of Tomkins Wake’s employment specialists listed on their website www.tompkinswake.com