Employers are constantly looking for a business edge in an increasingly global and competitive market. Some human resources models often claim that happiness and motivation levels of employees are the key to improved work efficiency and obtaining that extra dollar out of every sale. Creating a happier work environment may range from supplying tea, coffee, and chocolate biscuits in the kitchen to playing music for employees while they work.

In Australia in the late 1990's though, the Australasian Performing Rights Association ("APRA") (the licensing body which represents over a million composers and collects licence fees on their behalf), encroached upon the ability of employers to play music in the work place, by demanding payment of a licence fee by any employer playing music for employees enjoyment in the workplace. This was the case even though members of the public were not present and the business obtained no benefit from playing the music other than (they hoped) creating a happier work environment.

This left numerous employers in Australia wondering what a licence fee was and why they had to pay for the seemingly simple "right" to play music to employees while they worked.

Given the laws of copyright in New Zealand and Australia are similar, should New Zealand employers share this concern?

Licences and the New Zealand Copyright Act

Under section 29 of the New Zealand Copyright Act 1994 ("Copyright Act"), copyright is infringed by any person who, other than pursuant to a copyright licence, does a restricted act. Section 32(1) of the Copyright Act deems the performance in public of a musical work to be a restricted act. It is therefore an infringement of copyright to perform a musical work in public without a copyright licence (and damages, injunctions, or accounts of profit may be available to the copyright owner against the infringing party).

A distinction is made between performances that are in public and those, on the other hand, which are "domestic" or "private" in character. In short, anything that is not private will be regarded as in public. Performance of a musical, literary, or dramatic work in places of public gathering obviously falls within the term "public" - but does this extend to the workforce and the playing of music to employees while they work?

In the Australian case Australasian Performing Right Association Ltd v Commonwealth Bank of Australia, playing an instructional video which incorporated music at a bank to 11 employees before doors opened to customers was considered a public performance by the court. In that case, the judge held that if a performance occurs as an adjunct to a commercial activity, the performance is likely to be regarded as a public one. This was the case even though the numbers present were small and the "audience" paid no fee.

The position in Australia

Given this interpretation of performances "in public", APRA Australia embarked upon a licensing drive in 1996-1997 demanding royalty payments from businesses, small and large, for public performance of musical works in the work place. This led to numerous complaints by businesses to Members of Parliament and the Australian Government concerning APRA Australia's actions.

Businesses questioned why a licence fee should have to be paid for the public performance of a musical work on their premises, when a radio broadcaster had already paid a licence to broadcast the music. The answer to this lies in both the New Zealand and Australian Copyright Acts, where a broadcast right and the public performance right are two distinct and separate economic rights for each of which a licence is required.

In response to these complaints, an Australian parliamentary inquiry (by the House of Representatives Standing Committee on Legal and Constitutional Affairs), was conducted to investigate this licensing drive by APRA Australia.

This report was released on 1 June 1998 and recommended (among other things), that APRA Australia implement a complimentary licence scheme for small businesses of less than 20 employees that play music through the radio or television in circumstances where there is no intention that the music be heard by customers of the business or by the general public. The Australian government released its response to this report in February of this year and supported these recommendations. APRA Australia implemented the complimentary licence scheme outlined above from 1 June 1998.

So can New Zealand businesses enjoy a similar complimentary licence for playing music in the workplace?

The short answer, is no. But that's not the whole answer.

APRA New Zealand is independent of APRA Australia, and is not bound by the Australian parliamentary recommendations or APRA Australia's rules or licensing schemes. As outlined above, the current situation in New Zealand is that performing music in public, including in the workplace, without a licence, is an infringement of copyright under the Copyright Act 1994.

However, APRA New Zealand has not officially, to date, launched a campaign to demand payment of licence fees from employers similar to that undertaken by APRA Australia in 1996-1997.

APRA New Zealand has also indicated that it prefers to deal with each case of music in the workplace separately and in a sensible and practical manner.

It remains to be seen, though, whether APRA New Zealand may one day follow its Australian counterpart by demanding licence fees from employers for music played in the workplace. APRA New Zealand has stated that if employers do in fact derive a commercial benefit from playing music, then the music writer is owed some compensation for the use of his/her music.

Does an employer derive a commercial benefit, even indirectly, from creating a happier work environment by playing music for employees? If APRA New Zealand ever considers that the answer to this question is yes, then lessons should be learnt from the Australian experience. A public education and discussion campaign should be the first step before licence fees are demanded from employers.

Important Facts
Licence fees may be payable for music in the work place, because the work place is taken to be "public"

New Zealand does not have Australia's free licence for small businesses, but APRA hasn't demanded payment in New Zealand yet.

This is a general summary only and should not be taken as a substitute for specific advice.

x-tech group Simpson Grierson
Web site: x-tech group Simpson Grierson


Contacts

Michael Sage, Partner, michael.sage@simpsongrierson.com
Earl Gray, Partner, earl.gray@simpsongrierson.com
Lianne Young, Senior Associate, lianne.young@simpsongrierson.com
Alan Potter, Senior Associate, alan.potter@simpsongrierson.com
Jan Kelly, Partner, ,jan.kelly@simpsongrierson.com
Cherie Lawrence, Solicitor, cherie.lawrence@simpsongrierson.com

July 2001