Te Pūkenga, New Zealand’s national vocational education provider, has been found by the Employment Court to have acted unlawfully in removing life and income protection insurance for staff at the Unitec branch of the Tertiary Education Union (TEU). The court’s decision, delivered by Judge Kathryn Beck on Nov. 7, determined that Te Pūkenga failed to consult with employees before discontinuing the group insurance policies in March 2023.
Unitec staff had been covered by group life and income protection insurance for several decades. The court found that Te Pūkenga notified insurers of the cancellation before any formal consultation with staff had begun. Judge Beck said: “Indicative notice of cancellation was given to the insurers, even though the consultation had not yet started. Te Pūkenga failed to comply with its consultation obligations prior to removing the insurance benefits.”
The case highlights the importance of robust consultation and transparent communication in managing group insurance benefits – principles that are reinforced by recent legislative changes. The Contracts of Insurance Act 2024 consolidates and modernises insurance law, including the introduction of proportionate remedies and a duty of fair presentation for non-consumer insurance contracts. The act also requires clear communication and disclosure from both insurers and policyholders, reflecting a broader trend toward transparency and good faith in insurance relationships.
The Employment Court concluded that Te Pūkenga entered the consultation process with a predetermined outcome, breaching section 4(1A) of the Employment Relations Act. Judge Beck’s judgment also stated: “Te Pūkenga’s consultation material was misleading in part and accordingly in breach of good faith obligations under s4(1)(b) of the Act.”
Under New Zealand employment law, employers are required to consult in good faith with employees when making changes to employment benefits. This means employers must be open to considering staff feedback and be willing to adjust decisions based on evidence. The court’s ruling reinforces that consultation cannot be treated as a procedural formality.
Unitec welcomed the decision. It said: “The ruling sends a powerful message that employers cannot treat consultation as a mere box-ticking exercise. Consultation must be conducted in good faith, with a genuine openness to evidence and to changing position where justified.”
It acknowledged its legal representative, Peter Cranney, for his work on the case. The branch noted that the removal of insurance left some members’ families without benefits after their passing, and suggested that a thorough consultation could have demonstrated the financial viability of retaining the scheme.
For insurance professionals, the case highlights the operational and legal risks of altering or discontinuing group insurance benefits without following robust consultation processes. The new Contracts of Insurance Act 2024 further underlines the importance of clear communication and fair presentation of risk when dealing with group policies.
The TEU reported that Te Pūkenga has spent more than $150,000 plus GST in legal costs related to the dispute. The union has called for Te Pūkenga to resolve the issue and engage in meaningful discussions about remedies and rebuilding trust.
Recent changes in New Zealand’s insurance regulatory environment, including the introduction of the Contracts of Insurance Act 2024, require insurers and employers to ensure that group insurance arrangements are managed in compliance with both statutory and good faith obligations. The act introduces a duty for policyholders to make a fair presentation of risk and for insurers to provide clear information about policy terms and consequences of non-compliance.
