Employment Court ruling set to shake-up the workplace

The Employment Court has ruled against airline catering company LSG Sky Chefs in what unions believe could set a precedent for labour hire employment arrangements. Photo / 123RF

Unions are claiming a big win for labour hire workers after the Employment Court ruled two airline catering staff were employed by the firm where they worked, not the hire company that paid their wages.

The Employment Court yesterday ruled against airline catering company LSG Sky Chefs, which was taken to court by two of its workers, Kamlesh Prasad and Liutofaga Tulai.

The two plaintiffs obtained their jobs via labour hire company Solutions Personnel, also trading as Blue Collar, which paid their wages and was in turn paid by LSG.

"It is however clear that LSG did little to inquire into what was — or was not — being passed on by way of pay to the workers it took on from Solutions," the Employment Court decision says.

The court was told that Tulai once worked 34 days in a row without a break and that the young mother worked up to 62.8 hours a week on minimum wage.

She worked for the company for about four years and Prasad worked on average 45 hours a week for some two years.

"It is fair to say that Ms Tulai and Mr Prasad were in a vulnerable position. They had very little appreciation of New Zealand employment law, or the documentation they were asked to sign by Solutions," the decision says.

It was evident that such a labour hire arrangement suited LSG as it was "not troubled by the usual responsibilities and liabilities associated with an employment relationship".

When both signed up with Solutions, they were given a document purporting to be an independent contractor agreement.

According to the decision, Tulai and Prasad claimed that they were employees and that their employer was LSG.

LSG said that they were independent contractors and, if not, they were employees of Solutions. Solutions and Blue Collar said that Tulai and Prasad were independent contractors and, if not, they were employees of LSG.

The court found that a labour hire agreement did not represent an "impenetrable shield to a claim that the 'host' is engaging the worker under a contract of service".

"We conclude that each of the plaintiffs worked for LSG under a contract of service."

E tu, the union representing the workers that took the case to court, declared the decision "a huge victory for the labour hire workers at LSG".

"It is also a victory for the growing number of workers who aren't directly employed by the firms they work for and are deprived of their rights under New Zealand employment law," said assistant national secretary John Ryall.

Both plaintiffs worked for years for minimum wage or just above with no holiday, sick leave or KiwiSaver entitlements. They also had to pay their own ACC cover.

"The Employment Court has recognised that the use of labour hire is a way to shift all the employment risk on to very vulnerable workers and to avoid employment obligations," Ryall said.

The union called on the airline industry to get rid of labour hire completely and for all airlines to take responsibility for this issue.

First Union, which represents thousands of labour hire workers, said the decision confirmed the concerns it had been raising with employers for years about how they used the labour hire system.

It sent out a warning to other major retail chains and logistics companies that the days of such hiring arrangements were over.

First Union spokesman Jared Abbott said major companies, such as Foodstuffs, would have to change employment practices.

Supermarket company Foodstuffs said it had recently come to an agreement that would result in more permanent roles for people working at its subsidiary site CTD Nesdale.

"Those who have completed our extensive three-month training programme and given five months' continuous service through labour hire companies will now be offered permanent roles."

Foodstuffs offered a range of benefits including market competitive wages and health insurance for families.

"Labour hire companies will continue to provide a valuable resource for us, particularly through the peak periods."