Which jurisdiction governs an NZ employee transferred to the USA?

In a recent case, the Employment Court of New Zealand considered which jurisdiction should govern a New Zealand citizen working for the New Zealand Defence Force (NZDF) in the USA.

The plaintiff was employed by the Chief of the Defence Force (CDF). She commenced working in Washington DC in October 2010 and continued there for eight years until her employment abruptly ended in 2018.

The plaintiff performed various roles, and her employment was covered under New Zealand’s Defence Act 1990 s 90A and the NZDF Civil Staff Code of Conduct 2006. Despite this, her employment agreement provided that the employment relationship would be subject to “United States of America Labor Laws and Legislation”.

In June 2018, the plaintiff was abruptly dismissed. The CDF regarded her as an “at will” employee which, in the USA, provides for the right to terminate an employee at any time and for any reason.

The plaintiff claimed this was an unjustified dismissal, with no cause and without any process being undertaken beforehand. 

The issues for the Court were:

• whether New Zealand or USA law applied to the matter
• whether the Employment Relations Authority had jurisdiction to hear the matter

On the first issue, the defendant submitted that the employment agreement expressly provided that the relationship was governed according to USA law. The plaintiff asserted that this choice of law was not bona fide and that, when all employment documents were considered together, “it could not be said that there was an unambiguous choice of USA law”.

The Court held that the reasonably informed bystander would conclude that the parties intended to apply USA law, primarily because, under the Defence Act s 90A, the plaintiff was considered a “locally employed civilian in Washington DC”.

Regarding the second issue, the Court held the Employment Relations Authority had jurisdiction to apply foreign law “in the same way the Court does and for much of the same reasons”.

Further, given New Zealand was home to both parties, together with the anticipated substantial litigation cost in the USA, the Court was satisfied that New Zealand was the appropriate forum to hear the matter.

Ultimately, although the choice of law was USA law, the Court held that the Employment Relations Authority must consider all of the documents comprising the employment agreement, including the New Zealand Code and other imported concepts from New Zealand employment law.

Key Takeaways:

• Jurisdictional disputes may arise where an employee works in another country