Novapay Comment

Thursday January 31st, 2013

As the long-running Novopay dispute shows no signs of reaching a conclusion, Dunedin employment relations consultant and mediator Phillip de Wattignar considers the place of what he sees as the elephant in the room - the employment agreement.

Novapay is being held responsible for continuing problems of non-payment and incorrect payment of salary and related entitlements to school staff. Ministry of Education and Government Ministers make excuses daily and various commentators, including computer experts and law academics, have issued statements on the matter. They have focussed on government relationships with contractors and broad contract law rather than issues related specifically to the employment relationship and contractual obligations to school staff.

Comment has avoided the issue of identifying that party which is responsible and legally liable for ensuring payment is correct and on time - the employer.

The obligation to make payment arises out of the contract of employment each affected school staff employee has with their employer.

The wage/work bargain is the centre of all employment law. It requires that to receive pay an employee must perform work for an employer who must then pay for worked performed.
Apart from exceptions for lawful strikes and lockouts, failure to provide work or make payment is defined as a breach of the employment agreement. Employees may sue their employer for each breach.

Are Boards of Trustees sufficiently resourced to meet their obligations under employment law? It would appear that, as a result of the Novopay debacle, they cannot even meet the most essential requirement of the wage/work bargain. To pay correctly and on time. How has this come about?

Since Tomorrow’s Schools made Boards of Trustees the employer of school staff, the status of employment relationships in the education sector has been uncertain and open to legal challenge.
A union case was referred to the Employment Court last year seeking a ruling that the Secretary of Education was liable as employer of school staff.

This case, not surprisingly, was unsuccessful. The Employment Court ruled that the Board of Trustees alone is the employer.

Novopay and the Government are not parties to the employment relationship. They owe no duty to school staff. The guarantee of correct and timely payment of salary and other payments due to school staff is an employer responsibility for which Boards of Trustees alone are liable.

However, the Novopay debacle highlights the issue of whether Boards of Trustees are truly independent and in possession of the capacity and resources to meet all of the obligations of an employment agreement to which they are not a party but nonetheless are covered by. (Most state schools are covered by collective agreements negotiated between the Secretary of Education for the Government and the education sector unions for many school staff. For the purposes of the State Sector Act 1988 and the Employment Relations Act 2000 the Secretary of Education and the Unions are the parties to these education sector collective agreements.)
A sample schools collective agreement clause requires that salaries shall be paid, fortnightly, by the board of trustees.

Where this does not happen the Employment Relations Act provides employees access to specific remedies of action for recovery of wages and breach of contract.

All affected school staff employees need to do is establish that they have a contractual right to salary payment according to the terms of their employment agreement (day and amount due) and that the term has been breached. They could claim for recovery of any overdue or default of payment and also apply to recover a penalty for breach of their employment agreement for each occasion on which there has been default by the employer.

There is sufficient publicity to indicate widespread and repeated default and breaches have occurred. Minister Steven Joyce indicated this week (Jan 29) things are likely to get worse.

After all these months it is astonishing nobody has taken proceedings in the Employment Relations Authority on behalf of school staff who have not been properly paid.

*Phillip de Wattignar is a former Department of Labour mediator now working as an employment relations consultant. This opinion was published earlier this month by the Otago Daily Times.