Do your aspirations amount to contractual obligations?
Many collective agreements, as well as individual employment agreements, may contain aspirational statements about what the employer aims to do in respect of change or other processes within the organisation. In the recent decision of Television New Zealand Limited (TVNZ) v. E Tū Incorporated [2024] NZEmpC 93, the Employment Court was asked to determine how those aspirational statements should be interpreted in the context of a collective agreement and TVNZ's restructuring process.
In this groundbreaking decision, the court held that the "aspirational" statements in the collective agreement were more than a mere purpose statement. In fact, they amounted to contractual obligations.
Media services around the globe had been experiencing a decline in revenue. There was a new trend towards online digital services in the industry and, in order to adapt to the emerging market, global media services had to transform their platforms also. TVNZ was no exception. As part of its transformation process, TVNZ was intending to cancel various shows and make a substantial number of positions redundant.
In March 2024, TVNZ proposed organisational changes, and some staff were given notice that their positions have, or would be, disestablished. E tū Incorporated (E tū) raised a concern that TVNZ had not complied with its obligations under the collective agreement in respect of their change process.
Collective agreement
The particular clause at issue (clause 10.1.1) stated that:
"TVNZ will support the active participation of staff in the development of the organisation and changes in workplace practices. This requires acknowledgement and respect for the role of staff organised in the independent organisation of their union and assisting staff to be involved in the developmental stages of decision making processes and in the business planning of the organisation.
TVNZ acknowledges that change is an evolutionary process and employees will be involved throughout.
The aim of this participation will be to discuss all relevant information openly and honestly and to reach agreement and to make recommendations to management. TVNZ will enter these discussions with an open mind and will fully consider options and proposals put forward by staff. TVNZ will take any recommendations fully into account as far as possible when making final decisions."
TVNZ argued that these statements were not prescriptive and were intended to be aspirational. In TVNZ's view, it was free to formulate its own restructuring proposal and engage with staff in the usual way, particularly where the organisation was facing significant challenges. E tū claimed that this clause placed enhanced obligations on TVNZ and that TVNZ should have engaged with staff on the nature and extent of the difficulties that TVNZ was facing during the developmental stages of the proposal, so that they could discuss possible options for dealing with those issues, together.
The court agreed with E tū's interpretation and held that the clause at issue in the collective agreement created enhanced obligations for TVNZ. In order to comply with clause 10.1.1, the court stated that, among other things:
- Instead of reviewing the relevant information, deciding what the way forward would be, and formulating the restructure proposal "behind closed doors," TVNZ's Executive team should have provided the relevant information to staff and engage with them.
- TVNZ should have engaged with staff in problem solving at an early stage so that they could actively participate in developing possible solutions and agreeing, where possible, recommendations to put to TVNZ, before a well-advanced proposal was put forward for consultation.
- TVNZ should have attempted to consider options and proposals put forward by staff prior to the proposal to cancel shows, and to reach agreement with staff.
While the court recognised the potential operational and financial impact on TVNZ, it ultimately decided that the importance of upholding the collective agreement, promoting collective bargaining, and the benefits of staff participation in decision-making processes outweighed these concerns.
Interpretation can vary
This decision means that some of the clauses in the collective agreement (particularly if they were meant to be aspirational) may not be interpreted in the usual way. We recommend checking collective agreements and seeking advice if the agreements contain any wording that may be interpreted in a different way in light of this decision.
We expect that based on the Employment Court's decision in this case, we will see other cases dealing with similar wording in the collective agreements (such as a recent decision from the Employment Relations Authority in the Public Service Association – Te Pūkenga Here Tikanga Mahi Incorporated v. Secretary for Education [2024] NZERA 432). We recommend keeping an eye out on any updates on those cases, also.
Sherridan Cook is a partner at Buddle Findlay in Auckland, specialising in commercial litigation, employment and health and safety, and intellectual property disputes. Sarah Lim is a senior solicitor at Buddle Findlay in Auckland, specialising in employment law.
