With the upcoming holiday season, the recent decision of the Employment Relations Authority Couling & 342 others and Carter Holt Harvey Limited (29 October 2001, AA 169/01) is a timely reminder for employers of the correct procedure for arranging annual leave.

Carter Holt Harvey Limited (CHH) was accused of breaching the Holidays Act 1981, the relevant employment agreement and its good faith obligations under the Employment Relations Act 2000 when it required its employees to take leave at a specified time, namely during a "market shut" of Kinleith Mill.

Under s 12(2) of the Holidays Act 1981, an employer is permitted to fix the time at which annual leave may be taken by an employee, but only after consultation with the employee concerned. This allows an employee's opportunities for rest and recreation to be considered alongside work requirements.

Consultation need not be with employees directly - a union may be consulted if it has authority to represent the employees.

In this case, CHH's communications were not enough to amount to consultation because the union was presented with a decision which had already made. The union was merely offered an opportunity to try to persuade the decision makers to change their minds. The employer is allowed to have a working plan in mind at the time it consults, but CHH had from the outset intended to implement the plan.

There is a further requirement under s 19(1) of the Holidays Act 1981 upon the employer to give not less than 7 days' notice of the date on which the worker is to begin any annual holiday.

When CHH initially gave the union notice of their plan to have the employees take their annual leave, the dates put forward were expressed as falling somewhere within the period 26 to 31 January 2001. The employees were not told of the exact dates they were to take as annual leave until 22 January 2001. For many employees, this was less than seven days before the required leave dates. This was a clear breach of s 19(1) of the Holidays Act.

However, if an employment agreement provides a mechanism for arranging annual leave, that arrangement will prevail, over the statutory provisions. An agreement can and should provide for an approach to when annual leave may be taken. This may be different to the provisions of the Holidays Act.

The agreements provided that the employer's decision should as far as practicable meet the wishes of the employee concerned.

The Authority declared CHH to have breached the employment agreement and the Holidays Act. However it did not find the company had acted in breach of any duty of good faith when it proceeded on the basis that it could rely on a statutory right under the Holidays Act, to require employees to take leave for a fixed period. The fact that CHH had to consult its employees in good faith was governed by the specific provisions of the Holidays Act rather than the Employment Relations Act 2000.

No substantive orders were made against CHH. The parties were directed to mediation.

This article is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances and no liability will be accepted for any losses incurred by those relying solely on this article.

Copyright Phillips Fox, 2001

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