Authority probes cross-border employment arrangement within multinational company
The Employment Relations Authority (ERA) recently dealt with a complex case involving a civil engineer who worked on projects in both Australia and New Zealand.
The dispute centered around the question of who the worker's true employer was and which country's employment laws should apply.
At the heart of the matter was whether the worker could pursue personal grievance claims in New Zealand, despite having an employment agreement governed by Australian law.
The case highlighted the intricacies of cross-border employment arrangements within multinational companies.
Cross-border employment arrangements
The worker, a New Zealand civil engineer, initially worked for an Acciona company in New Zealand on a motorway project. He then moved to Melbourne, Australia, to work for Acciona Australia on a large project there.
In early 2020, as the COVID-19 pandemic took hold, the worker returned to New Zealand and began working remotely on the Australian project. Soon after, he was offered a role on the Auckland Eastern Busway Alliance (EBA) project.
The worker accepted the EBA role, which was initially indicated to be for a six-month period. However, he continued working on the project for nearly a year, until July 2021.
Corporate structure and project arrangements
The case involved multiple Acciona entities and a complex project structure. Acciona Australia had initially been involved in submitting the tender for the EBA project.
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Once successful, an alliance was formed that included Acciona New Zealand instead of Acciona Australia.
The alliance was an unincorporated group, with no single legal entity. This arrangement added to the complexity of determining the worker's true employer.
Throughout his time on the EBA project, the worker's role and reporting lines evolved. Initially, he was to report to an Integration Manager employed by Acciona Australia but acting in an Acciona New Zealand role.
Later, his day-to-day reporting shifted to a manager employed by Acciona New Zealand. These changes in reporting structure and the involvement of personnel from both Acciona entities contributed to the uncertainty about the worker's employment status.
Who was the true employer?
The key question in this case was whether the worker remained employed solely by Acciona Australia or became jointly employed by Acciona Australia and Acciona New Zealand.
Acciona Australia argued that it remained the worker's sole employer throughout his time on the EBA project. They pointed to the fact that they continued to pay his wages in Australian dollars and make superannuation contributions in Australia.
The worker, on the other hand, contended that he was either jointly employed by both Acciona companies or had become employed by Acciona New Zealand. He emphasised that his day-to-day work and reporting were to Acciona New Zealand personnel.
The ERA's decision
After considering various factors, including the practical realities of the worker's situation, the ERA concluded:
"Both companies retained ongoing significant involvement with [the worker] as an employee. An objective observer, focusing on substance rather than form, would consider that from when [the worker] started on the EBA project, he was jointly employed by Acciona Australia and Acciona NZ."
This finding was significant, as it opened the door for the worker to potentially pursue personal grievance claims under New Zealand employment law.
Jurisdiction and forum issues
The ERA then had to grapple with whether the worker could bring his claims in New Zealand, given that his original employment agreement specified Victorian law as the governing law.
The Authority considered the landmark New Zealand Supreme Court decision in Brown v New Zealand Basing Ltd, which established a framework for determining the jurisdictional reach of New Zealand's employment legislation in cases with international elements.
“The Supreme Court in Brown referred to the paradigm case for the application of the Act's personal grievance provisions is that the employee working in New Zealand at the time it is alleged that the personal grievance right was infringed,” the Authority noted.
“In the present case there are substantial connections with New Zealand – [the worker] is a New Zealander and in the relevant period he was working solely in New Zealand on a New Zealand project. I have found that one of his joint employers was a New Zealand company,” it said.
“I take into account the Act's emphasis on employment as a relationship rather than simply a contractual connection. The unjustified dismissal rights create fundamental rights regarding the circumstances in which an employee's employment can be terminated, designed to override any contractual entitlement to dismiss in any situation purely on notice,” it added.
Applying this framework, the ERA concluded:
"[The worker] has the right to bring his unjustified dismissal and unjustified disadvantage claims under the Act." The Authority also determined that New Zealand was the appropriate forum for hearing the case.
When can the ERA decline proceedings?
The decision said that Regulation 19B of the Employment Relations Authority Regulations 2000 (the Regulations) specifies how the forum non conveniens question is dealt with in Authority matters.
It gives the Authority the discretion to decline to hear proceedings where an overseas party is involved if it is satisfied that all of the criteria are met:
- It is more appropriate for the matter to be resolved in a place outside New Zealand
- The applicant will have a fair opportunity in the place to make the applicant's case
- The applicant will receive proper justice in the place
- The respondent will suffer unfair disadvantage if the proceedings are heard in New Zealand.
In this case, the ERA said that the criteria were not met under the Regulations. Among some of the factors, it said:
“Transferring the matter to Australia would require [the worker] to start over again at further time and cost to him, recognising it was his choice to start in New Zealand.”
“It is submitted that the employment laws of New Zealand and Victoria are similar enough to ensure Acciona Australia will receive commensurate treatment by the Authority as it would before the Fair Work Commission. This is not objected to by the Acciona parties,” it added.
This case highlights the complexities that can arise in employment arrangements that span multiple countries, particularly within multinational companies.
It demonstrates that the practical realities of an employment relationship may override formal contractual arrangements when determining the true employer and applicable law. The decision also emphasises the importance of carefully considering jurisdictional issues in cross-border employment disputes.