Ambiguous legislation and government advice

Question

When legislation wording is ambiguous enough to potentially conflict with government advice interpreting that legislation elsewhere, how do the courts resolve the ambiguity?

For example, in New Zealand, holiday pay is dealt with under the Holidays Act 2003, and as an example, the legislation has this clause in it:

An employer must pay the employee 8% of the employee’s gross earnings since the commencement of employment, less any amount—

(a) paid to the employee for annual holidays taken in advance; or

(b) paid in accordance with section 28.

Section 23(2): amended, on 1 April 2007, by section 42.

However, the New Zealand governments employment website offers the following interpretation of that legislation:

These employees get an annual holiday payment of 8% of their gross earnings. Gross earnings:

• is calculated from the start of employment, and
• include any other payments made in the employee’s final pay.

If the employee has taken annual holidays in advance or has been paid for annual holidays on a pay-as-you-go basis, the amount paid is deducted from gross earnings.

This means there are two ways to formulate this calculation:

1. (gross pay - advance leave) * 0.08
2. (gross pay * 0.08) - advance leave

These two approaches differ wildly in the outcome - the first is in the employee's favour, the second in the employer's favour. On gross earnings of $100k, the difference can be several thousand dollars.

When the advice given is a government website specifically intended to give advice in this area, how are differences in interpretation generally handled?

The second website does contain a disclaimer about not being legal advice, but that seems pretty weak when the entire website is intended to guide employers and employees in their requirements and obligations.

The examples are from NZ, so an NZ specific answer would be nice, but I'd also like to hear what other countries and jurisdictions do as well.

Answer 1

In interpreting a statute, New Zealand courts must conform to the Legislation Act 2019, which says that

The meaning of legislation must be ascertained from its text and in the light of its purpose and its context.

This carries forward a provision from the Interpretation Act 1924 at 5(j) that interpretation must "best ensure the attainment of the object of the Act [...] according to its true intent, meaning and spirit." In discovering what this purpose is, the entire text of the Act is available, including in this case the Holidays Act s. 15(c),

The purpose of this subpart is to [...] require employers to pay employees at the end of their employment for annual holidays not taken or paid out

When they do this, the courts must be cautious not to make up their own laws; in the Northern Milk case, this was summarized as

The Courts must try to make the Act work while taking care not themselves to usurp the policy-making function, which rightly belongs to Parliament. The Courts can in a sense fill gaps in an Act but only in order to make the Act work as Parliament must have intended.

(This case, Northland Milk Vendors Association Inc v Northern Milk Ltd [1988] 1 NZLR 537 (CA), is a major authority for how far the courts can go. There, they were dealing with a gap in time between one statutory regime ending and the next one beginning, where Parliament had neglected to say what would happen in between. The Court of Appeal had to decide on the purpose of the Milk Act 1988 by looking at such textual matters as its long title, which said that it was meant "to provide for the continuing home delivery of milk", and so the status quo had to be maintained in the interim.)

But this exercise is focused on the statute itself. It excludes, for example, even such tempting targets as an amendment to that statute which was made subsequent to the case at hand, and which might clarify what was intended. (See Commissioner of Inland Revenue v. Databank Systems Ltd Co (New Zealand) [1990] UKPC 37.) In some cases, reference might be made to the Parliamentary circumstances when the statute was passed. New Zealand, compared to other similar jurisdictions, is reluctant to bring in other kinds of non-statutory material to explain a statute. They also do not generally defer to government agency interpretations unless the matter is very technical, or the primary statute tells them they must.

For the Holidays Act, recent cases concerning some different ambiguities have been resolved without having to look beyond the text itself, and its broad purpose. (For example, Postal Workers Union v NZ Post [2012] NZCA 481, on whether unrostered overtime is part of "relevant daily pay", or Tourism Holdings Ltd v Labour Inspector [2021] NZSC 157, on holiday pay for somebody with a very irregular work pattern.) I would expect that in your example, government websites would not be used by the courts to determine what the law means. They would do their best to "make the Act work", starting from its actual text, and informed by its own statement of purpose. But they would not use a guidance note from a government website as evidence for what Parliament intended.

Answer 2

One approach to resolving ambiguities is to rely on formal interpretive principles such as "the last antecedent rule" (which would not be applicable: that rule governs preceding modifiers, not following ones). However, formalist approaches to interpretation are not generally favored, and instead there is a tendency to look for the underlying intent of the law-makers. So that means asking, why does this law exist in the first place – what was the legislature attempting to do, and if you know that, does that tell you how you should interpret the clause?

Under the first interpretation (deduct then compute 8%), you are essentially taking back the holiday payment that was given in anticipation of the employee staying on the job until they are entitled to that holiday, that is, it is as if you hadn't taken that holiday in advance. Then you get 8% of what you worked for. Under the second interpretation, the employee is effectively penalized for having taken a holiday in advance -- but doing so is allowed by law.

One could decide that the second interpretation "must be right" (or simply decide on principle to put it to the test), and the government would take action against you. You then would give your argument in court as to why your interpretation should be the correct one. It then depends on the prevailing jurisprudential philosophy. I think, in light of the purpose of the act, that the first interpretation is more in line with probably legislative intent, though committee reports and other secondary evidence regarding the enactment of the law could push the interpretation the other way.

The clause could have been written in a way that clearly says "deduct as necessary, then take 8% of that figure". Punctuation is often taken to impose logical bracketing on clauses, so "compute 8% of gross; and then subtract" is encouraged by the comma. So it is not inconceivable that the courts rule in favor of the second interpretation, especially if the courts favor formal interpretation of language over attempts to discern legislative intent.

Answer 3

You must follow the legislation

Even if the government gives general advice that appears to contract the legislation.

However, if the government gives you specific advice then they cannot prosecute you for following it even if the advice is wrong. However, third parties (like your employee) can still sue.

Answer 4

The constitutionally correct answer is that government guidance issued after the legislature has passed the legislation is to be ignored. Using it would contradict the doctrine of the separation of powers because it would effectively allow the executive to change the law when only the legislature can change the law.

If, however, the guidance was issued before the legislation was passed and especially if it was actually referred to in debates in the legislature on the proposed legislation then it might be different - it might be something which could be taken into account in interpreting the legislation. The rules about this vary in different Westminster-style systems.

Answer 5

The statements in the legislation can legitimately and fairly be read to mean either:

• (gross pay - advance leave) * 0.08 or

• (gross pay * 0.08) - advance leave

This is because the format of the original statute is drafted in a manner that does not make clear what the clause "less any amount" modifies, "8% of gross earnings" or "gross earnings."

Given the fact that the agency charged with administering the statute has come to the conclusion that the first reading applies in an unambiguous statement, ordinarily, a court would defer to the agency if the interpretation of an ambiguous statute is a plausible and reasonable way that it could be interpreted, even if it could plausibly be interpreted in another manner as well.

This is all the more the case in a Westminster system, in which the statutory language was almost surely drafted by officials in the same department that drafted the guidance, at a roughly contemporaneous time.

In general, regulations and interpretations drafted contemporaneously with the adoption of a new statute are usually treated as a more authoritative statement of the original statutory intent than regulations and interpretations made much later that deviate from previous understandings of a statute.

Also, the fact that a third-party, the government, is making that interpretation ex ante, rather than an employer or an employee who has an economic interest in the outcome trying to justify one position or another after a dispute has arisen, is almost relevant.

If there were no reasonable way that the government interpretation could be gleaned from the statute, that would be another matter, and the regulation or interpretation could be held to be invalid, e.g. in a declaratory judgment action or an actual dispute between an employer and an employee. But that is not the case in this particular instance.

In U.S. law, deference to an agency interpretation when a statute has more than one plausible interpretation is called Chevron deference, after the leading U.S. Supreme Court articulating this doctrine, Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). But, the basic concept is applied widely in both common law and civil law legal systems under a variety of less U.S. specific names.

On the other hand, if there were other strong evidence of the intent of the legislature, such as floor speeches in the legislature, or a white paper circulated before the enactment of the statute that was not deviated from in the actual legislation, that could also be brought to bear, either to solidify the argument in favor of the agency interpretation, or to muddy the waters and make the decision harder for the court (although the less clear the answer seems, the more likely the court is to defer to a government interpretation that many employers have no doubt relied upon in good faith in trying to comply with the law).