The evolving jurisdiction of the Employment Relations Authority


Claims between employers and employees which may previously have been pleaded as a claim in tort and heard in the ordinary courts must now be determined in the Employment Relations Authority (ERA). This is the result of the recent judgment of the Supreme Court in FMV v TZB [2021] NZSC 102.

The case concerned a claim in negligence by an employee against her employer, alleging duties of care related to providing a safe and healthy work environment had been breached. The appellant employee argued that, as the claim had been pleaded in tort, it fell within the jurisdictional exception in s 161(1)(r) of the Employment Relations Act 2000 (the Act) and she was free to pursue it through the ordinary courts.

The appellant relied on the judgment of the full court of the High Court in BDM Grange Ltd v Parker [2006] 1 NZLR 353, which held the ERA’s jurisdiction was not intended to extend to causes of action intort or equity.  The Supreme Court was invited to confirm BDM Grange as the correct approach and to depart from the Court of Appeal’s later decision in JP Morgan Chase Bank NA v Lewis,[2015] 3 NZLR 618 where the Court held that any claim (irrespective of how it is pleaded) will fall within the exclusive jurisdiction of the ERA if it “directly and essentially concerns the employment relationship.”  

The Supreme Court agreed that there were difficulties with the test expressed in JP Morgan. However, contrary to the invitation of the appellant to confirm BDM Grange as to correct approach the majority, supported by the separate judgment of William Young J (Glazebrook J dissenting), afforded an even broader interpretation of the jurisdiction provision in s 161 of the Act, effectively consigning BDM Grange to history.  

The effect of this broader interpretation is that if a claim can be framed in terms of the examples in s 161(1)(a)-(qd),it must be brought in the ERA as an employment relationship problem.  Whether that is so, is a factual enquiry.  The tort exception ins 161(1)(r) was held to be confined to matters that could not be framed as falling within the any of examples listed in the foregoing provisions.  With such a restrictive application it is difficult to conceive of a situation where the exception could have any practical relevance.    

The judgment effectively prevents collateral attacks on the employment relationship in the ordinary courts by use of legal craftsmanship in drafting the pleading.  If a problem arises in the work context between an employer and an employee – an employment relationship problem – it will now almost invariably be required to be resolved through employment mediation services and/or investigated and determined by the ERA. Problems will also need to be raised within the limitation periods prescribed by the Act.  For example, where a claim against an employer may previously have been subject to the more generous limitation periods in the Limitation Act 2010 if brought as a claim in tort in the ordinary courts, it will now be required to be framed (if possible) as a personal grievance and raised within the prescribed 90-day period.  

All the Supreme Court judges in FMV v TZB recognised the difficulties involved in affording a sensible interpretation to the language used in the provision.  Complexities may arise where the ERA’s exclusive jurisdiction conflicts or overlaps with other exclusive jurisdictions and where multi-party claims only partially concern an employment relationship problem.  How those matters will be dealt with by the ERA or the courts (and whether some legislative reform will be required) remains to be seen.