EMPLOYMENT LAW NEWS

May 2006 Issue No: 7

There have been a few developments in the law since the last newsletter so we thought we had better let you know what they are. The heading given to this newsletter is ‘Who really makes the laws in NZ; the Courts or Parliament?’
The first case we discuss involves a question of law relating to the admissibility of evidence of statements made during mediation provided by the Mediation Services division of the Department of Labour. The case is called, Jesudhass v Just Hotels Ltd WC 3/06.
This is a judgment of the full bench of the Employment Court and it effectively reverses the Court’s earlier judgment involving Shepherd v Glenview Electrical Services Ltd [2004] 2 ERNZ 11. In the Shepherd case, the Court described the confidentiality provisions of Mediation like this;
(7) The combined effects of s148 (1) and (3) of the ERA were clear, absolute and draconian. They even appeared to make evidence of the commission of criminal offences by people at mediation, such as attempts to pervert the course of justice, and unlawful threats, inadmissible. It was not right that such absolute and unassailable confidentiality was required in the interests of justice in all cases. It’s illogicality was illustrated by it’s inhibition upon people who sought to judicially review the actions or omissions of mediators which the ERA expressly allowed. The Court expressed concern that s148(3) would have the unintended consequence of dissuading parties from settling in, or even entering into, mediation, if the conduct of their opponents in that forum was beyond the reach of the law in any practical way. (Paras 46 and 47) And then;
(8) Whilst it was arguable that the intending plaintiff could have his application to cancel the settlement under the Contractual Remedies Act 1979 heard, s148(3) of the ERA placed insuperable difficulties upon him or any other person proving that claim.
That judgment was delivered on the 19th August 2004 and right at the time the Government was in the process of reviewing the Employment Relations Act 2000 in terms of the various Judgments of the Court and the Court of Appeal as to how the Act was being interpreted. Amendments were made based on the government’s approval or disapproval of the judgments and as a result the majority of amendments can be linked to case law.
Mediators were asked to make submissions on issues that needed attention. Two significant submissions were made that related to –
1. Experiences with death threats being made at mediation, and;
2. Blackmail being used to encourage settlement.
Despite those submissions nothing changed except for one small amendment to the mediation process which can be linked back to the Shepherd judgment. The Employment Relations Amendment Act (No 2) 2004 came into force 4 months after the Shepherd judgment. That amendment added Subsection (ab) to the existing section 149(3) which now reads as follows.
149 Settlements
(1) Where a problem is resolved, whether through the provision of mediation services or otherwise, any person —
(a) who is employed or engaged by the chief executive to provide the services; and
(b) who holds a general authority, given by the chief executive, to sign, for the purposes of this section, agreed terms of settlement,—
may, at the request of the parties to the problem, and under that general authority, sign the agreed terms of settlement.
(2) Any person who receives a request under subsection (1) must, before signing the agreed terms of settlement,—
(a) explain to the parties the effect of subsection (3); and
(b) be satisfied that, knowing the effect of that subsection, the parties affirm their request.
(3) Where, following the affirmation referred to in subsection (2) of a request made under subsection (1), the agreed terms of settlement to which the request relates are signed by the person empowered to do so,—
(a) those terms are final and binding on, and enforceable by, the parties; and
(ab) the terms may not be cancelled under section 7 of the Contractual Remedies Act 1979; and] ( Emphasis added)
(b) except for enforcement purposes, no party may seek to bring those terms before the Authority or the Court, whether by action, appeal, application for review, or otherwise.
Subsection (1) says
“Except with the consent of the parties or the relevant party, a person who —
(a) provides mediation services; or
(b) is a person to whom mediation services are provided; or
(c) is a person employed or engaged by the Department; or
(d) is a person who assists either a person who provides mediation services or a person to whom mediation services are provided —
must keep confidential any statement, admission, or document created or made for the purposes of the mediation and any information that, for the purposes of the mediation, is disclosed orally in the course of the mediation.
As an aside to the point we note that the Mediation Services of the Department of Labour do not comply with the amendment as it has not been included in it’s standard settlement form, nor is it communicated to the parties during mediation. The consequence of this non compliance by the Mediation Services is unknown. So although the Court had previously found that despite the difficulties in proving the case, there may be an ability to use the provisions of the Contractual Remedies Act 1979, that possibility was shut down by the Section 149 (ab) amendment to the Act highlighted above. No other issues were taken with the Shephard judgment and so we believed that the Mediation service was meant to be as the Court described it in that judgment. But recently in,Jesudhass v Just Hotels Ltd WC 3/06 the full bench of the Employment Court declared the Shepherd judgment to have gone too far and that it was therefore wrongly decided on the point. That case concerned an employee being told in mediation by a Mediator of the Department of Labour that he was dismissed and it was that evidence that the court had to decide on, as to whether it was admissible as falling outside the umbrella of confidentiality. The Employment Court reversed it’s position held in Shepherd and now certain statements made in mediation are admissible in the Authority or the Court. The Court did this on the basis that Parliament cannot have intended the confidentiality provisions to go as far as stated in Shepherd. However one is left wondering why, if the Court is right, the government didn’t do something about it during the review of the Act when it had the perfect opportunity to do so. So the point to all of this is simply this; when in mediation limit statements to matters that promote settlement of the issues in lawful ways.
Confidentiality or on the record
The next point relates to the confidentiality of the Mediation Services and the issue of inadmissibility of statements made and documents used for the purpose of mediation. Confidentiality during mediation can be waived with the consent of the parties. This consent provision should not be overlooked when parties are in mediation trying to sort out an employment relationship problem that is serious which could, if not resolved, lead to litigation. In a recent case involving Nimon and Sons Ltd v Buckley, The Employment Relations Authority found that the conduct of the Company during the week before the employee’s resignation and after mediation had taken place to try and fix the problem, was unjustifiable and such that it was reasonably foreseeable that Mr Buckley would resign. The fact that the employee took legal advice and engaged in mediation in an attempt to sort matters out, mattered not to the Authority. In the Buckley case all the work undertaken by the parties and their representatives during mediation was not able to be placed before the Employment Relations Authority, and for this reason the Authority could pay no mind to it. The Authority seems to have taken the view that because Mr Buckley resigned, mediation must have been an unhelpful experience, rather than give any thought to the possibility that the Company might have been trying it’s best to resolve Mr Buckley’s issues. If the mediation discussions and behaviour were made available to the Authority member the outcome of the case may well have been different.
The case is under appeal at the moment but the point to the commentary is this; if you find yourself being asked to attend mediation regarding an ongoing employment relationship problem, think carefully about whether it is in your interests to have everything on the record and if so make that a stipulation before engaging in the process. And finally, if you find yourself facing a claim by an employee and you learn that another existing employee is giving evidence in support of the claimant,(a witness) remember not to confront the witness and put any pressure on that person to leave, or otherwise discourage them from giving evidence. In the recent case of Pipes and Pipes v Raymond AC24/06 the trial Judge had some strong comments about the conduct of the employer using the mediation services to assist in the resolution of his “problem”, which was that he had an employee that he didn’t want because she was giving evidence against him in another hearing. So concerned was the Judge that the Mediation Services were used to reach an agreement to end the employment that he directed the registrar to forward the judgment and the trial transcript to the Solicitor- General for his consideration.