International employers with New Zealand based employees are now more likely to be able to enforce their choice of foreign law in employment agreements should an issue arise.
The Court of Appeal recently overturned an Employment Court judgment, which had applied New Zealand employment legislation despite the employment agreement specifying that Hong Kong law was to apply (New Zealand Basing Limited v Brown  NZCA 525).
The case involved New Zealand based pilots employed by a Hong Kong owned airline. Their employment agreements provided that Hong Kong law was to apply to the pilots’ conditions of service (in this case, the issue was the pilots’ retirement age of 55). A key issue was whether the laws of Hong Kong or New Zealand applied. The compulsory retirement age was lawful under Hong Kong law, but in New Zealand the compulsory retirement age would not be lawful. Also considered in this case, were some specific factors around the choice of these conditions being offered to the pilots when the employment agreements were negotiated at the outset.
The Employment Court found that New Zealand employment law should apply as the pilots were based in New Zealand. The Court of Appeal overturned that decision and found that the correct approach was to consider the express specification of Hong Kong law as the relevant law and then to assess whether conflict of law exceptions applied.
Despite the above judgment, employers still need to ensure that the choice of law provision specifies a law that is connected to the employment relationship or provides some benefits to the employee to offset any loss of protection that the employee would otherwise receive under New Zealand employment legislation.