Request for details of severance payment and salary relating to second tier manager
Request for details of payments made to former employee of Airways Corporation—information refused under s 9(2)(a) and s 9(2)(b)(ii)—release of salary information in a $20,000 band struck the right balance between the established privacy interest and the public interest in disclosure
This request by a journalist was for details of any severance payment made to a second tier manager whose employment was terminated by Airways Corporation of New Zealand Ltd together with details of the manager’s salary.
The Corporation argued that release of the former employee’s remuneration details would prejudice it competitively within the private sector in relation to its ability to recruit and retain senior staff, given that the Corporation’s private sector competitors were not required to disclose such information. In respect of disclosure of severance payment details, the Corporation maintained that such disclosure, regardless of the amount involved sends a signal to the employment market that the Corporation cannot guarantee payment details of this nature will be kept confidential, and this would prejudice the Corporation’s commercial position vis-a-vis its competitors in the commercial sector. It therefore believed that the information should be withheld in terms of section 9(2)(b)(ii) of the OIA.
In considering these arguments, regard was had to the fact that SOEs and other Crown companies are subject to the OIA and are therefore subject to legal requirements which are different from those applying to private sector companies. Anyone employed by or seeking employment in one of those organisations, particularly at a senior management level should be aware of that and of the special environment in which such companies operate. As noted by Jeffries J at page 191 in Wyatt Company (NZ) Ltd v Queenstown Lakes District Council  2 NZLR, 180:
There cannot be allowed to develop in this country a kind of commercial Alsatia beyond the reach of a statute. Confidentiality is not an absolute concept admitting of no exceptions … It is an implied term of any contract between individuals that the promises of their contract will be subject to statutory obligations. At all times the applicant would or should have been aware of the provisions of the Act and in particular s.7, which effectively excludes contracts on confidentiality preventing release of information.
In the circumstances, it was concluded that section 9(2)(b)(ii) did not apply to the information.
In respect of the privacy interests of the former manager, after consulting with his legal adviser and with the Privacy Commissioner, the view was formed that, subject to any countervailing public interest considerations, it was necessary to withhold the specific information requested in order to protect the former employee’s privacy in terms of section 9(2)(a). Consideration then had to be given in terms of section 9(1) to whether that need was outweighed by any other public interest considerations favouring disclosure.
As a publicly owned organisation, the Corporation is accountable to the public of New Zealand. This is what distinguishes it from privately owned organisations and the reason why it is subject to the accountability regime of the OIA. This distinction was seen by Parliament when it made SOEs subject to the OIA when they were established and confirmed following the Select Committee review in 1989/90 of the continued application of the Act to SOEs.
In this case, the employee concerned held a very senior position in the Corporation. There is a public interest in knowing how much it costs to get a suitably qualified person to carry out particular senior management functions. There is also a public interest in terms of accountability for expenditure of public money in information about any severance payment made to a senior manager whose employment is terminated.
In striking the balance between the established privacy interest of the individual concerned and the public interest factors which had been identified in this case, it was concluded that the annual salary paid to the employee at the time of the termination of his employment should be released in a $20,000 band. This would meet the public interest in disclosure while at the same time preserving an appropriate degree of privacy. It was also concluded that the fact that no severance payment was made should be disclosed. The information was released accordingly.
This case note is published under the authority of the Ombudsmen Rules 1989. It sets out an Ombudsman’s view on the facts of a particular case. It should not be taken as establishing any legal precedent that would bind an Ombudsman in future.