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The Employment Court in Austin v Silver Fern Farms Limited [2014] NZEmpC 30 has turned the spotlight on an ACC accredited employer and how that role relates to the core employment obligations such as good faith.

FACTS OF THE CASE:
Silver Fern Farms Limited (SFFL) was an accredited employer for accident compensation purposes. This means an employer assumes what would otherwise be the rights and obligations of the Accident Compensation Corporation (ACC) in respect of its employees’ work-associated accidents. SFFL’s specific scheme directly linked the employee’s incapacity as a result of an accident and the employment relationship, including potentially its termination.

Mr Austin, a SFFL employee, was involved in a non-work related accident from go-kart racing in January 2009. This resulted in bruising to his backside. Mr Austin continued to work normally at SFFL until he injured his back at work nine days later. Mr Austin then claimed accident compensation coverage from SFFL which was granted. SFFL later became aware of the bruising from the non-work related incident through a medical report and discontinued the compensation. They concluded that the current incapacity arose from the non-work related injury rather than the work related injury.

Mr Austin was terminated for medical incapacity in August 2009. He raised a personal grievance for unjustified disadvantage and dismissal however the personal grievance was raised after the legislative 90 day time limit had expired.

THE COURT’S DECISION

The Court was required to decide whether they would grant leave to the employee to pursue his personal grievance outside of the 90 day time frame. In doing so the Court needed to decide firstly whether exceptional circumstances existed and secondly whether it was just to grant such leave.

In determining the above matters the Court recognised the complex inter-relationship of the Employment Relations Act 2000 (ERA) and The Accident Compensation Act 2001 since SFFL was an accredited employer. Because the accident coverage scheme was part of Mr Austin’s terms and conditions of employment the Court determined decisions made in regard to this must attract the good faith requirements.

SFFL was required to deal with Mr Austin in good faith, to not mislead or deceive him or to do anything that was likely to mislead or deceive him, whether directly or indirectly. SFFL were also required to provide Mr Austin with all relevant information before they made the decision to cease accident compensation coverage and provide Mr Austin with an opportunity to comment.

The Employment Court determined that exceptional circumstances did exist and it was just to allow the grievance to be raised out of time.

WHAT DOES THIS MEAN FOR YOU?

If you are an ACC accredited employer the obligations of good faith apply to the decisions you make under that scheme. For example an employer that is making a decision about coverage and compensation needs to tell the employee any decisions they are proposing to make, provide the employee with all the relevant information and give the employee an opportunity to comment before they make that decision.

Relevant information could include medical reports, the relevant job description, rehabilitation information etc. Put simply, anything the employer will be considering when they make their decision must be put to the employee for comment before any decision is made.

This decision is significant because the ACC legislation does not specifically require ACC to act in good faith and provide the employee with an opportunity to comment on all relevant information. Accredited employers are therefore held to a different standard than ACC.

Disclaimer:  We remind you that while this article provides commentary on employment law topics, it should not be used as a substitute for legal or professional advice for specific situations.  Please seek guidance from your employment lawyer for any questions specific to your workplace.
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