Employment Law

Balance of power

When it comes to employees and employers, the orthodox view is that employers are in a stronger position, right?


Industrial action these days has shifted the balance of power towards the employees. Traditionally a strike may have been countered by a lockout, which lead to the employees receiving no wages and the employer having no output. A classical no-win situation which sooner or later forces the parties to a settlement. Now, in Thompson and Ors v Norske Skog Tasman Ltd [2011] the Employment Relations Authority had to decide whether the employer was entitled to cut the wages of employees who engaged in a strategic strike. A strategic strike is a strike which only affects some part of the employees usual work, but usually the part which affects the employer’s business the most. A post office may still sell stamps and accept letters and parcels, but simply not deliver them. Supermarket staff may still operate the counter, but just five, instead of 25 counters in peak times. You get the idea.

Now, the question was whether the employer was allowed to respond to such a strategic strike also in a strategic fashion. If the employees were only doing 5% of their normal duties, 95% of the pay is deducted. Sounds logical and fair. But the Authority held otherwise and concluded that an employer’s only response is to lock out, but not to deduct. So its either full pay or nothing.

But wait, that’s not the end of the story. In another decision, Southern Local Government Officers Union Inc v Christchurch City Council [2007] the Employment Court held that a technical lockout was lawful. In the case, the council ordered some workers to no longer do stand-by work and cut their pay accordingly. This was lawful, held the Court. An employer is allowed to lock employees out of some but not all of their duties, provided the deduction in pay is directly linked to the locked-out duties.

So where does that leave the employer? Although the partial lockout sounds like a clever idea, it can only ever apply in situations where the employees duties are very distinct. Shift work comes to mind, where the employer may lock-out employees from night shift work, but let the day shift in. But with pretty much all admin or clerical work the employee provides just “one” service, which leaves only the full lockout.

Where no one really wins.

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