Affco New Zealand Limited v New Zealand Meat Workers and Related Trades Union Inc and Others

This dispute came out of a very common business model in New Zealand: seasonal work where the same people come back each year. AFFCO operated meat slaughtering and processing plants in the North Island. Because slaughtering was seasonal, many workers were not needed all year. At the end of a season they were laid off, and when the next season began many of them returned.

That pattern matters because it can look simple on paper but be more complicated in practice. A business may think employment ended at the close of the season, so the next season is just a fresh hiring round. Workers and unions may see it differently where the same people are repeatedly brought back under a structured system, especially if agreements deal with seniority, lay-offs and re-engagement.

Here, the union’s collective agreement with AFFCO had ceased to apply from the end of December 2014. For the balance of the 2014/2015 season, workers were employed on individual employment agreements containing the same terms as the expired collective. When the 2015/2016 season approached, AFFCO wrote to workers from the previous season and invited them to an introduction presentation for a new individual employment agreement.

At Rangiuru, AFFCO said the plant would reopen on 22 June 2015. Workers were told the proposed agreement contained changes from the previous season’s terms. The handout said a signed employment agreement was required before work commenced and that previous agreements did not continue automatically past the lay-off season end. Workers were told they could get independent advice and meet individually with a company representative.

The union and workers said this was more than a normal pre-season sign-up process. Their case was that AFFCO was using access to work at the start of the season to compel returning workers to accept substantially less favourable terms. They brought proceedings in the Employment Court and argued that AFFCO had unlawfully locked them out.

An interim injunction was refused, and most union members signed the new agreements without prejudice so they could return to work. But the legal issue did not go away. The lockout claim continued through the Employment Court and Court of Appeal before reaching the Supreme Court.

The Supreme Court had to answer a narrow but important question: were these returning seasonal workers “employees” for the purposes of the lockout provision in section 82(1)(b) of the Employment Relations Act 2000 when AFFCO required them to enter new individual employment agreements before beginning work for the new season?

That question mattered because the lockout definition is built around acts done by an employer with a view to compelling employees to accept terms of employment or comply with demands. If the workers were outside that concept, the lockout claim would fail. If they were inside it, AFFCO accepted there was an unlawful lockout.

The Court worked through two linked issues. First, did the workers fit the Act’s general definition of employee in section 6 at that point in time? That raised the question whether their employment relationship continued across the off-season, or whether each season involved a separate period of employment with a break in between. There was also an alternative argument about whether they were “persons intending to work”.

Second, if the workers did not fit the section 6 definition, did the word “employees” in section 82 still have a broader meaning because the context required it? The Act’s definition section itself says the defined meaning applies unless the context otherwise requires, so the Court had to decide whether section 82 was one of those situations.

This was not just a technical interpretation exercise. The answer affects how employers can deal with returning workers where there are surviving obligations between seasons. If the law treated every off-season as wiping the slate clean, an employer could have much more room to insist on new terms before work resumed. If not, the employer’s leverage is more limited.

The Court also considered the wider purpose of the Employment Relations Act, including good faith, the recognised inequality of power in employment relationships and the promotion of collective bargaining. Those themes helped explain why the lockout provision should not be read too narrowly in a case involving a recurring workforce and continuing obligations.

The Supreme Court dismissed AFFCO’s appeal. It agreed with the overall result reached below that AFFCO had unlawfully locked out the workers, but it got there by a different route from the Employment Court.

The Court did not accept that the workers were employees under the narrow section 6 definition at the relevant time. In other words, it did not treat them as continuously employed across the off-season just because they had worked in the previous season and were likely to return in the next one. That part of the union’s argument did not succeed in the Supreme Court.

But that was not the end of the case. The Court held that the word “employees” in section 82(1)(b) had a broader contextual meaning than the section 6 definition. The workers were not strangers seeking brand new jobs. They had previously worked for AFFCO, and AFFCO still owed them contractual obligations that survived termination, including obligations around re-engagement in accordance with seniority.

The Court also treated the language of section 82 itself as important. One part of the lockout definition refers to refusing or failing to engage employees for work for which the employer usually employs employees. That wording already shows the section can extend beyond people who are current employees in the strict sense.

The Court also noted that the phrase compelling employees to “accept terms of employment” is naturally capable of covering people seeking to resume work, not only people already actively working under current terms.

On that basis, the Court concluded the relationship between AFFCO and the returning workers was sufficiently close to bring them within section 82(1)(b). Because AFFCO required them to enter new individual employment agreements before beginning work for the new season, and because the case proceeded on the basis that this would amount to an unlawful lockout if they were employees for section 82 purposes, the appeal failed.

The Court made an important limit explicit. This was not a ruling that every employer who cannot agree terms with a new hire has committed a lockout. The decision turned on the fact that these workers had previously worked for AFFCO and were still owed continuing contractual obligations connected with re-hiring.

A major feature of the case was the Court’s treatment of the agreements governing the seasonal workforce. The collective agreement contained signals pointing in both directions. Some clauses suggested discontinuous employment, including references to seasonal employees being employed for a season, to termination at the end of the season, and to lay-offs and re-employment.

Other clauses pointed to a longer-running relationship, including seniority arrangements, long-service style benefits and disciplinary warnings that could carry over beyond a single season.

The Court focused closely on the continuing obligations that survived termination. AFFCO accepted that it remained contractually obliged to offer re-employment in accordance with seniority. That mattered a great deal. Once that continuing obligation was accepted, the Court found it difficult to justify treating other continuing obligations as if they disappeared.

One clause the Court highlighted said re-engagement was dependent on employees completing the employer’s induction process and signed acceptance of terms of employment, being any terms applying in addition to those set out in the agreement and applicable site agreements. The Court treated that clause as important because it appeared to identify the terms that would apply on re-engagement and to limit AFFCO’s ability to insist on less advantageous terms as a condition of return.

The practical point is not that every expired agreement keeps operating forever. It is that your documents may contain obligations that continue after a season ends, even if active work and pay stop. If those obligations shape who must be offered work and on what basis they return, the legal relationship may still be close enough for lockout rules to apply.

For a business owner, this is the engine of the decision. The Court did not create a broad rule protecting all former workers. It looked at the actual contractual structure and found a continuing web of rights and obligations between the same employer and the same returning workforce.

This case matters most to businesses that rely on repeat labour cycles: seasonal processing, harvest work, annual shutdowns, tourism peaks, project-based re-engagement or any model where the same people are regularly brought back under a known process. It is especially relevant if your agreements refer to seniority, recall, re-engagement, induction before return, or rights that build up over consecutive seasons.

The decision does not say an employer can never propose new terms at the start of a season. It does say you should not assume returning workers are simply fresh applicants with no legal connection to you. If your contracts or collective arrangements create obligations that survive the end of a season, using the reopening date as leverage to secure less favourable terms may create lockout risk.

That matters in practical business planning. For example, if you want to change pay structures, attendance rules, site access rules or other conditions before the next season, the first question is not just whether the old agreement expired. The first question is whether any obligations still bind you in relation to re-engagement and the basis on which workers return.

The Court also linked its reasoning to the purpose of the Employment Relations Act, including good faith and collective bargaining. That means the case is particularly important where bargaining with a union is ongoing or has stalled. A move to individual agreements at the point of re-engagement may be challenged if it is seen as pressure on workers to accept terms they would not otherwise agree to.

For smaller employers, the safest reading is a cautious one. If your workforce returns season after season and your documents create a structured pathway back to work, treat that process as legally sensitive. Review the wording before making return to work conditional on signing a new agreement, especially where the new terms are materially worse than the previous ones.

If you run a seasonal or cyclical workforce, the safest approach is to map your return-to-work process before the next season starts. This case shows that the real question is not only whether the previous season ended, but whether any rights and obligations continued after that point.

Start with your documents. Read the employment agreement, any collective terms, site arrangements and any long-standing re-engagement process together. Look for wording about seasonal lay-off, termination, re-employment, seniority, induction, signed acceptance of terms, and benefits that depend on consecutive seasons or length of service. Those features may show that the relationship does not fully reset between seasons.

Then look at your proposed change. Are you simply confirming the same terms for returning workers, or are you asking them to accept materially different terms before they can start? The more the proposal looks like a condition for getting back into work, the more carefully it needs to be handled where continuing obligations exist.

Also consider timing and bargaining context. If collective bargaining is underway or has recently stalled, a push to move returning workers onto new individual terms may attract extra scrutiny. The Court’s reasoning sits within the Act’s broader focus on good faith and collective bargaining, so process matters as much as wording.

As a practical checklist for owners and managers:

• identify any clauses that survive the end of a season
• check whether re-engagement must follow seniority or another set process
• compare proposed new terms against the previous season’s terms
• avoid presenting reduced terms as the only path back to work without first checking your legal position
• make sure managers understand that returning workers may not be the same as outside applicants

This decision is a reminder that seasonal workforces still sit inside the Employment Relations Act framework. A pause in active work does not always mean a pause in legal obligations.