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Employment Court hears claims of employee blacklists in test case on name suppression

13 Oct 2023

| Author: Reweti Kohere

Asked what impact the publication of his name would have on him, the plaintiff known only as ‘MW’ told the court it would destroy him. “Just the fact you had a dispute, there’s nothing good about that. I work in the same business, I’ve been living here for eight years. A lot of people know me. It could destroy my reputation,” he said.

MW could not have been clearer when he appeared on Monday before a full bench of the Employment Court, which was hearing his application for permanent name suppression in what is regarded as a test case for non-publication orders in the specialist employment jurisdiction.

MW wouldn’t have been in court at all, had his former employer respected the confidentiality of their mediated settlement agreement, put together after an employment dispute between MW and the suburban Auckland restaurant where he was employed. The parties had agreed to keep the terms of their settlement confidential and not disparage one another.

Yet afterwards, other people came to know about the dispute and the settlement: one person contacted MW to say he’d been warned about the restaurant worker during a conversation with a third party about “money and employment”.

MW said he hadn’t told anyone about the terms of the settlement, claiming the restaurant breached both the confidentiality and non-disparagement clauses. He took his matter to the Employment Relations Authority for compliance and nonpublication orders, penalties for the alleged breaches and costs.

The authority agreed with MW: the director who signed the settlement agreement on behalf of the restaurant was liable for the breach. However, while the restaurant was ordered to pay a penalty, it was not ordered to comply with the settlement as the “discrete event” of the breach had passed. Moreover, the authority declined to keep MW’s name secret, saying a permanent non-publication order was unlikely to cure the fact that the “horse has bolted” and people in his industry already knew about his dispute.

 

‘It’s never-ending’

Before the Employment Court, MW is arguing that the authority was wrong to refuse him permanent name suppression and that the protection he’s afforded by the confidentiality clause in the settlement will be toothless if his name is made public. In the meantime, the court has continued an interim non-publication order it put in place when MW indicated he intended to appeal that part of the authority’s determination.

MW’s reputation and financial concerns reflect a broader access-to-justice issue the court is aware of: the informal practice of “blacklisting” employees. The court heard that workers are told at mediation to settle there and then rather than take meritorious claims to the authority as their names would most likely be published in determinations, which employers can later search online when screening job applications. The court was also told that employers have a legitimate interest in knowing whether prospective employees have been involved in employment-related litigation, for few reasonable employers would want to take them on.

The confidential nature of mediation was absolutely vital to him, MW told the court, as was the non-disparagement clause. “We had a settlement but to this day, I have never spoken to anybody about what happened,” he said, not even telling his friends or family.

”It’s been two years right now since that started happening from a small thing. It seems like it’s neverending, even today that I’m here talking. It’s very frustrating.”

 

Smorgasboard of views

Very few applicants get to keep their name secret as the threshold for non-publication orders is high. Even rarer are the instances where employees ask the court for name suppression, although the Employment Relations Act 2000 confers on the authority and the court the express power to make non-publication orders.

The significance of MW’s case was evident by the presence of 11 intervening parties, the consideration of what role tikanga Māori might play in helping the Employment Court approach non-publication orders, and the appointment of Rodney Harrison KC as counsel assisting Chief Judge Christina Inglis and Judges Bruce Corkill, Joanna Holden and Merepaia King.

“This case is about name suppression, of employees in particular,” said Harrison, whose primary role was in trying to distill the “virtual smorgasboard of differing, indeed competing, perspectives” presented by the interveners. Chief among the issues is whether the Employment Court must follow a test set down by the Supreme Court in Erceg v Erceg: a name suppression applicant must show specific adverse consequences that are sufficient to justify departing from the fundamental and constitutionally important principle of open justice.

 

To follow or depart?

Those against change included the New Zealand Law Society and the New Zealand Bar Association, the Employers and Manufacturers Association (EMA), Business New Zealand, Human Resources Institute of New Zealand, Employment Law Institute of New Zealand, and news media outlets Stuff, NZME and Radio New Zealand.

Those favouring change included the plaintiff, New Zealand Council of Trade Unions, The Law Association (previously the Auckland District Law Society), the Privacy Commissioner and Te Hunga Rōia Māori o Aotearoa.

If the court concludes it’s not bound by Erceg and instead will formulate a new guideline approach which better reflects the object of the Act to build “productive employment relationships through the promotion of good faith”, several more issues will arise, Harrison said.

Will the new approach apply across the board or only to employees? Will the new test apply in both the Employment Court and the Employment Relations Authority, which has a “special and arguably discrete” position? Should interim suppression applications be treated differently to applications for permanent non-publication?

More broadly, are there some kinds of cases, such as sexual harassment or breaches of mediated, confidential settlement agreements, where nonpublication orders should be the default position? Does open justice remain the starting point or must it be considered on a par with privacy concerns, tikanga Māori, freedom of expression and other equally important factors? How might tikanga Māori and tikanga values shape the court’s new guideline test? And what weight must the court give to the fact that personal information, published online, exists forever?

 

Screening issue

Decisions of the authority and the court are published online and are freely available to the public in searchable databases. One consequence of this is that employers and recruiters may, in screening applicants for employment, search a prospective employee’s name to see if they have been involved in litigation.

The court is conscious of the ramifications. In a nonpublication order judgment in The Chief of New Zealand Defence Force v Darnley, Chief Judge Inglis noted “the spectre of publication” was increasingly putting many employees off pursuing their claims, which in turn was raising crucial access-to-justice issues. An employee’s ability to pursue legal entitlements under the Act, “without the fear that doing so may damage future employment prospects”, was a relevant factor in balancing open justice with other interests. Many of the interveners addressed how the “screening issue” was having a chilling effect on access to justice.

The court heard that 70% of the nearly 300 members that responded to an EMA survey considered it either highly relevant or essential for employers to know that prospective employees had been involved in employment proceedings, regardless of the outcome. Of the nearly 300 respondents, 70% “sometimes” used online database name-search results to identify those with previous involvement in litigation, while 30% used them “often” or “always”.

Harrison noted the frequency question, as it was written, left open the possibility that third party recruiters were also screening applicants on an employer’s behalf. While he wasn’t criticising employers who wanted to know this information, “the practices appear to be widespread and likely to continue so that if there is a concern, it’s a concern based on reality”.

 

Evidential basis

Asked by Judge Holden how the court should view this evidence, EMA general counsel Paul O’Neil said while the results showed “some interest” among the organisation’s employer members, almost 70% were failing to follow through in either never or sometimes checking online sources.

There was no way of telling whether searching online databases was determinative of hiring decisions, O’Neil said, and urged the court to be wary of simply assuming a chilling effect existed because of the large amounts of information available online. Representing the media outlets, Lee Salmon Long’s Daniel Nilsson understood the chief judge’s concerns in Darnley in two ways: a concern about the impact that screening might have on employees’ future job prospects and the related concern about the chilling effect it might have on people accessing the authority.

While both concerns were valid, “we need an evidential foundation for it before we start using it as a reason to interfere with fundamental rights. That’s not to say we shouldn’t find out, but it’s to say I don’t believe we have that evidence now”, Nilsson said. “And if it exists, it’s not before this court right now.”

Kathryn Dalziel, representing the Privacy Commissioner, said both concerns were the reason everyone was in court. “The relevant features of the Employment Relations Act – power imbalance, good faith, productive employment obligations, equity and good conscience – all work together to assist this court with the importance of balancing out the interests, otherwise harm can be done.”

At the end of the hearing, Chief Judge Inglis paid tribute to Judge Corkill as MW’s case, over which he had presided, was most likely his last substantive hearing before retiring in February 2024. “He has been a wonderful judge, has made a fabulous contribution to the court and to employment law. So Judge Corkill, thank you so much,” the chief judge said. The court applauded Judge Corkill, and reserved its decision. ■

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