Last year a full bench of the Employment Court released a decision which fundamentally changed the landscape of some 27,000 relief carers in New Zealand. As things stood prior to the decision this significant work force had no employment rights and received what can only be described as inadequate compensation for the work they did. For example providing relief care for a full 24 hour period gleaned a relief carer a mere $75.00 from the Carer Support Scheme Fund; which itself is financed by the Ministry of Health and District Health Boards. That equates to approximately $3.00 an hour; well below the minimum wage.
Challenging the definition of Employee
The seeming unfairness of being paid $3.00 an hour led to one relief worker seeking “lost wages” from either the Ministry of Health or relevant District Health Board. The issue was whether the relief carer was an employee within the definition of section 6 of the Employment Relations Act. If she was, then it naturally followed she should have been paid the minimum wage for every hour she worked. If she wasn’t then she was only entitled to the “subsidy” as provided by the Carer Support Scheme.
A potentially costly decision
Of course, the decision had wider ramifications given the 27,000 (or thereabouts) relief carers in New Zealand. If the Ministry of Health and/or the District Health Boards throughout New Zealand were required to pay relief carers a minimum wage going forward, as well as for “lost wages”, the cost would be astronomical. If, however, the Ministry of Health was correct in paying only the “subsidy” then relief carers would continue to receive the pittance available under the Carer Support Scheme.
Decision of the Employment Court
As I said a full bench of the Employment Court found the “test” relief carer (that is the relief carer who applied to the Court seeking lost wages in the knowledge there were 27,000 others who would stand to benefit if she won) was an employee notwithstanding the fact she was neither employed nor contracted by the Ministry of Health (or the relevant District Health Board). The Court reached this conclusion by finding she was a “homeworker” which was a type of person included within the definition of an employee. The Employment Court reserved the issue of remedies, not setting out how much “lost wages” the relief carer was entitled to, but the decision naturally meant she was entitled to the minimum employment wage.
The Ministry of Health and relevant District Health Board did not agree with the decision and sought leave to appeal to the Court of Appeal. Leave was granted and the matter was heard in June of this year.
Decision overturned by Court of Appeal
In a reserved decision the Court of Appeal overturned the decision of the full bench of the Employment Court. In doing so the Court of Appeal expressly disagreed with the Employment Court’s finding the relief carer was a homeworker, and therefore an employee of the Ministry of Health and/or District Health Board. This was largely due to the lack of control that either the Ministry of Health or the District Health Board had over the relief carer. In effect, the Court held, relief carers are engaged by the fulltime carer; with the Carer Support Scheme simply subsidising the use of the worker rather then engaging them to perform work.
Obviously the decision has huge consequences, for not only the Government but also for thousands of individuals nationwide.
When I read the decision I was struck by the seeming unfairness of being paid $3.00 an hour to provide a very important service; and not an easy one at that.
This seeming unfairness may have had an impact on the full bench of the Employment Court as the lawyer for the relief carer sought to include his client’s vulnerability (and inadequate pay) as reasons for the Court of Appeal to find she was a homeworker, and therefore an employee.
However, the Court of Appeal held it had to interpret the Employment Relations Act rather than decide the case on the basis of fairness.
The decision really highlights the need for clear and unambiguous language in all areas of Employment Law. When terms are clear they can be imposed even if fairness may dictate another outcome (there are, of course, always exceptions). Clarity is key.