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Can employees claim unjustified disadvantage arising out of their employer’s decision not to pay them?

By Kathryn McKinney - 18 Mar 2024

No, held the Employment Court in the case of Breen and Prime Resources Company Limited, [1] because the company's actions were based solely on a genuine interpretation of a clause in the employment agreement.

Mr Breen was initially not paid for two months' wages in August and September 2021, and told to work from home, following the COVID outbreak. He was subsequently paid in full for those months after attending mediation, but remained dissatisfied and pursued a personal grievance claiming he had been unjustifiably disadvantaged by the late payment of his wages.

The Employment Relations Authority determined that the company had unjustifiably disadvantaged Mr Breen by the late payment of wages. Mr Breen was paid $2,000 by way of compensation for hurt and humiliation, loss of dignity and injury to feelings for the unjustified disadvantage suffered.

There followed appeals by both parties in the Employment Court. Mr Breen challenged the amount he was awarded for unjustified disadvantage, and the company claimed (amongst other things) that there was no jurisdictional basis for Mr Breen's personal grievance because it derived solely from a dispute about the interpretation and application of an employment agreement.


To establish a claim for unjustified disadvantage, an employee must raise a personal grievance. Section 103(1) of the Employment Relations Act 2000 prescribes the grounds for a personal grievance and section 103(3) specifically excludes an action by the employer deriving solely from the interpretation, application, or operation (or disputed interpretation, application or operation) of any provision of an employment agreement. Any such matter can be raised as a dispute, but does not give rise to claims for unjustified disadvantage and therefore compensation for hurt and humiliation, loss of dignity or injury to feelings.

The Employment Court held:

[25] The actions complained of (reduction in pay and late payment) were allegedly contrary to the provisions of the employment agreement and were unjustified. However, the company's actions were based on a genuine interpretation of cl 4 of the employment agreement. The company's interpretation may well have been wrong (a point I do not need to decide), but the claim was an action deriving solely from a disputed interpretation of an employment agreement. Therefore, the dispute procedure applied, and no grievance based on disadvantage arose.

As the Employment Court ruled in favour of the company, the Employment Relations Authority's decision in Mr Breen's favour was set aside and no compensation was payable.

The jurisdiction point was raised by the company quite late in the piece in this case and Chief Judge Inglis acknowledged that Mr Breen might well feel frustrated by the outcome, saying that: "If there had been no jurisdictional bar to the claim proceeding, I would likely have dismissed the company's challenge against the Authority's finding of unjustified disadvantage and upheld Mr Breen's challenge to the Authority's determination as to relief."

One to remember for those raising personal grievances and/or disputes, or those defending such claims.

[1] [2023] NZEmpC 199.


Kathryn McKinney

Saleha Hamid-Drew


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