New Zealand’s conflict of laws rules relating to employment matters are plagued by uncertainty. Is the Employment Relations Act 2000 (ERA) subject to ordinary choice of law rules? Do parts of the ERA have overriding mandatory effect? To what extent does the Employment Court/Employment Relations Authority have jurisdiction to apply foreign employment law? Although the Supreme Court had an opportunity to provide some clarity on these questions, its decision in Brown v New Zealand Basing Ltd [2017] NZSC 139, [2018] 1 NZLR 245 only seems to have contributed to the confusion. This was particularly evident in a recent case, Radford v Chief of New Zealand Defence Force [2020] NZEmpC 35, where the Employment Court had to determine whether the ERA was applicable to Ms Radford, a civilian working for the New Zealand Defence Force overseas, and whether the Employment Relations Authority (or the Employment Court) would have jurisdiction to determine the claim if it was governed by foreign law.
The claimant was employed to work for the New Zealand Defence Force in Washington DC. After eight years, the Chief of Defence Force terminated her employment without providing reasons, which he believed to be consistent with the law in Washington. The claimant returned to New Zealand and brought proceedings for, amongst other things, unjustified dismissal under the ERA. The Chief of Defence Force protested jurisdiction, arguing that the parties had agreed on Washington law being applicable, that the Court/Authority did not have jurisdiction to determine the claims pursuant to foreign law, and that in any case Washington was the appropriate forum. In this post, I will focus on the first two issues.
Applicable law
The Defence Act 1990 expressly provides that the Employment Relations Act applies to “Civil Staff” working for the New Zealand Defence Force (s 69). However, the claimant was not employed as a member of “Civil Staff” but as a “locally employed civilian” under s 90A of the Act. According to the Employment Court, there was nothing in the Act preserving the application of the ERA to locally employed civilians, even though the Chief of Defence can freely choose whether to employ a person overseas as Civil Staff or a locally employed civilian (at [88], [93], [94]).
The claimant further argued that, despite the Court’s interpretation of s 90A, it was still open to the Court to conclude that the ERA had overriding mandatory effect. The claimant relied on the Supreme Court’s decision in Basing to support this argument (even though the Court did not use the concept of “overriding mandatory rules” to conclude that the ERA applied in that case, holding instead that the question was purely a question of statutory interpretation: at [76], see Hook & Wass The Conflict of Laws in New Zealand (LexisNexis, 2020) at 4.114ff). The Employment Court seemed to have some sympathy for this argument. Yet it did not consider whether the ERA did, in fact, have overriding mandatory force, concluding instead that its application to the claimant would not be excluded if the law applicable to the agreement was New Zealand law (at [103]-[104]). The reason for this approach is unclear.
Applying traditional choice of law rules, the Employment Court held that the parties’ agreement was governed by the law of Washington, but that the parties had intended to incorporate the ERA into their employment relationship by signing the NZDF Civil Staff Code of Conduct 2006, which referred to the ERA (at [122]). Whether this incorporation of the ERA was effective was a matter for the proper law of the contract, the law of Washington (at [126]). Under Washington law, proceedings were only available to a claimant if the reason for the dismissal was a prohibited ground of discrimination or, potentially, if there was a breach of contract (at [126]).
This analysis demonstrates the difficulty of navigating between the Supreme Court’s approach – based on statutory interpretation – and traditional choice of law rules. Although it may be possible to reconcile the two approaches (see The Conflict of Laws in New Zealand at 4.124-4.126), further appellate guidance would clearly be beneficial. In particular, the Supreme Court left open the question whether a personal grievance claim based on the right not to be unjustifiably dismissed could still be characterised as contractual, which would lead to the application of ordinary choice of law rules rather than principles of statutory interpretation (at [57] per William Young and Glazebrook JJ, at [86] per Elias CJ, O’Regan and Ellen France JJ):
“… the more contractual a particular right may appear to be, the easier it may be to construe the right as applying only where the proper law of the employment agreement is that of New Zealand. This is a consideration which may be of some moment where the personal grievance right invoked is the right not to be unjustifiably dismissed.”
This was precisely the issue confronting the claimant in this case.
Subject-matter jurisdiction
In light of its conclusion that foreign law was applicable, the Employment Court had to consider whether the Court/Authority had jurisdiction to determine cases pursuant to foreign law, or whether their subject-matter jurisdiction was limited to cases governed by New Zealand law.
In Brown, William Young and Glazebrook JJ had drawn a distinction between contractual and statutory claims for this purpose. They pointed out that the Employment Court had jurisdiction over a range of claims, including claims for breach of contract, and they considered that there was “no reason why such claims should not be determined by reference to foreign law if such law is the proper law of the contract” (at [47], see Royds v FAI (NZ) General Insurance Co Ltd [1999] 1 ERNZ 820). They did not specifically consider the position of the Authority (as opposed to the Employment Court). Moreover, they did not form a view on whether the Employment Court “would have jurisdiction to give effect to statutory rights arising under a foreign statute which correspond generally to our personal grievance rights” (at [49]).
The main form of relief available to Ms Radford under Washington law appeared to be a breach of contract claim so to that extent – based on William Young and Glazebrook JJ’s reasoning – it was clear that the Employment Court would have jurisdiction to determine the claim. The Employment Court further decided that there was no principled reason why the Authority should be treated any differently, concluding that “Parliament intended the Court and the Authority to be able to entertain cases which involve the application of foreign law” (at [138]). It found support for this conclusion in the breadth of the Authority’s personal jurisdiction over foreign defendants (at [150], [151]).
The Employment Court did not distinguish between jurisdiction over contractual and statutory claims (at [129]-[131]), as William Young and Glazebrook JJ had done. On the facts, the distinction may not have been material, but it seems to be rather fraught in any case. Which types of claims would be characterised as contractual, and which as statutory? What would be the basis for the distinction in principle? The distinction reflects the Supreme Court’s bifurcated approach to choice of law more generally – treating the cross-border scope of statutory employment rights as a question of interpretation that falls entirely outside of the conflict of laws, while retaining conflict of laws reasoning for “contractual” employment matters. A better approach would be to recognise that all employment claims are “sui generis” (cf Brown at [77]) and in need of an integrated conflict of laws/statutory interpretation analysis (see The Conflict of Laws in New Zealand at 4.124-4.126, 6.79-6.85).
As to the more general question whether the Employment Court and/or Authority have subject-matter jurisdiction to determine employment matters governed by foreign law, it is worth noting that the broad powers for service out of the jurisdiction may not necessarily be indicative of a power to apply foreign law, as the Employment Court in Radford concluded. On the contrary, because the rules for service out are accompanied by a relatively restrictive discretion to decline jurisdiction, there is an argument that they are more consistent with an already limited subject-matter jurisdiction (that is because, if the Court’s/the Authority’s subject-matter jurisdiction is already largely confined to claims governed by New Zealand law, New Zealand is necessarily more likely to be the appropriate forum): see The Conflict of Laws in New Zealand at 2.312. One may also wonder about the practicalities of applying foreign employment law in a New Zealand court, when such rights often go hand in hand with procedures and infrastructure that could not be recreated here. These considerations are far from determinative, but they suggest that the question may not be as straightforward as the Employment Court might have thought.
