Sourced from: www.sundaystartimes.co.nz

‘Mystery’ action costs company, says Sunday Star Times report (24 June 2012), written by Rob Stock

New Zealand’s Employment Relations Authority has found that service provider Pacific Flight Catering had acted cynically in hoisting its employees’ wages just before those people were transferred to a competitor which had won from it an airline catering contract. Here’s the complete Sunday Star Times’ report, which could have ramifications for all NZ service providers.

Exactly why a company which lost a lucrative airline catering contract raised the pay rates and holiday entitlement of staff just before they transferred to a rival that had won the contract remains a mystery.

Under the Employment Relations Act (ERA), employees in industries where there are frequent contract changes must be offered the opportunity to continue their employment with the new contract holder on the same terms and conditions, with benefits and entitlements, including accrued annual leave.

But when staff from Pacific Flight Catering (PFC) transferred to its rival LSG Sky Chefs, which had won the contract from PFC to supply food to Singapore Airlines, “wages rates and annual leave balances were increased, substantially in some cases” the Employment Relations Authority has reported.

There was concern at LSG, which won the contract in 2010, and among the transferring staff, the authority reported in a determination earlier this month which awarded penalties of $20,000 against PFC for refusing to hand over workers’ pay and time records.

In its determination, the authority found PFC had acted “dictatorially and cynically with very little regard to the employee’s rights to information”.

The case before the authority was brought by the Service & Food Workers’ Union which became involved because it was concerned that the law protecting workers’ rights to transfer from one contractor to another when a contract changed hands was at risk of being discredited.

The union asked members who were transferring to give it authority to seek their pay and time records, which they have an absolute entitlement to.

The case might never have been heard though. The union and workers have told Sunday Star-Times that each transferring worker was offered $500 by PFC in return for withdrawing their authority to the union.

Four members chose not to, and the legal tug of war over the records continued which ended up before the authority, and on June 13 it found for the union and its members Va’a Ngakau, Sonny Tuiti, Kevin Mehana and Sala Parker.

The Star-Times asked PFC’s Gerda Gorgner to explain why workers’ pay rates and holiday entitlement were increased, but she declined to comment “as further legal proceedings are under way.”

An explanation was provided to the authority by Gorgner, but it did not find the explanation convincing, and did not report it in its determination.

Authority member Alastair Dumbleton said in his determination: “It has not been a function of the authority in this investigation to determine why wages rates and annual leave balances were increased, substantially in some cases, for some employees (and were not increased for some others) just before the employees transferred to LSG.

“Such explanations as Ms Gorgner gave about this to the authority were interesting but not convincing, as were her attempts to distance herself from having any responsibility or knowledge about the keeping of the wages and time records and recording correct information in them.”

He dubbed Gorgner an “unreliable witness” and that legal arguments to avoid having to hand over the employees’ wages and time records were “a smokescreen”.

“I am also satisfied that Ms Gorgner knew that the wage and time records and the information contained in pay slips given to the employees would likely raise in the mind of the new employer, LSG, questions about the accuracy or authenticity of that information and for that reason she ought to have known that the employees, through their union, were likely to seek clarification from the source wages and time records themselves.”

The union was not prepared to voice its theory on why pay rates and leave entitlements were raised just before workers transferred.

LSG Sky Chefs, which is a foreign-owned company and is separately engaged in a dispute with the taxman over its tax treatment of “prepaid discounts to customers”, would also not comment.

LSG said it expected its tax dispute to be concluded within a month.