Employment Specialist Opinion

The Gloriavale Leavers fighting Gloriavale in the Employment Court

Paul Brown from PB Law contacted us and asked if we would be interested in him writing an article based on his knowledge of Employment Law and the Gloriavale Employment cases being heard in the courts during 2022. Here is his legal opinion:

This is a quick update on what has been happening in the Employment Court. I have attached a link to the media release from the Employment Court which describes the legal issues that the Court considered and a brief summary of why they found Hosea, Daniel, and Levi were all employees from the age of six years old, until they left Gloriavale.

https://www.employmentcourt.govt.nz/assets/Documents/Decisions/2022-NZEmpC-77-Courage-Ors-v-Attorney-General-Ors-Media-Release-10.05.22.pdf

The definition of an employee is found in s. 6 of the Employment Relations Act, which says that an employee is any person of any age employed by an employer to do any work for hire under a contract of service. The Court is not concerned with how people describe the relationship. For example, Gloriavale said the men were volunteers – the men said they were employees. What the Court had to do was look at what the men actually did and whether that fit into the legal definition of an employee.

And the short version to a long story is that when all was considered / what jobs they did / the control they were under / the economic benefit of that work to Gloriavale – the chief judge decided that they were employees. A great decision but this is only one step in quite a long journey. Obviously, the case for the girls is going on, and it is likely – but not certain – that they too were employees.

As an employment lawyer I think the next step will be far more difficult. Of all the different companies, trusts and entities that Gloriavale use for their various business operations, who was the actual employer? Given that work was done for all of these organisations at different times by different people, I am not sure how the court will be able to work this out.

And once you have worked out who the employer is, how much in wages should be awarded? Nobody will have any real records of the hours of work, so does that mean the Court should take an average of forty hours per week? The minimum wage will be easy to calculate, but then how far back do we go? The Statute of Limitations limits most claims to 6 years, and I don’t think the Court will go back longer than this.

But the sums of money may very quickly run into hundreds of thousands of dollars. For example, take the minimum wage and forty hours per week (for a full-time worker) to give an annual income of something like $40,000 per annum, multiplied by six years, is $240,000.  Multiply that by the successful number of claimants – possibly a little more for full-time workers – possibly a lot less for part-time workers, and the potential liability for Gloriavale is huge…….

So there are lots of difficult issues for the Court to wrestle with. And then we go back to the first point I made – exactly who should be paying this money? Should the court forget about the particular business the boys may have worked for and simply make Gloriavale responsible for wages?  That would probably make life a lot easier, but generally courts don’t go for the easy approach. They go for what a successful party can prove.

Then let’s say awards of hundreds of thousands of dollars are owed to those people who lived at Gloriavale for some time and then left. Wouldn’t practically every leaver (say older than a teenager) qualify as an employee? And if there were millions of dollars of wages owed, would Gloriavale actually pay this? Or would they try and restructure their business affairs to try to close all the companies down? The total asset base of Gloriavale is somewhere in the region of $45 million dollars (according to returns filed with the Charities Commission). Will this be enough to settle all wages claims over the next ten years or so, or could Gloriavale set up a trust for all leavers in lieu of wages? Imagine that – let’s say ten million dollars (or more) put aside as a fund solely to help any leaver from Gloriavale with any expenses that they may (reasonably) incur and not be able to (reasonably) meet?

So we will all continue to watch with interest how the girls are getting on, and I will write another update once I have read that decision. But winning in court is one thing – getting your hands on the money is quite something else.