Increased compensation awards in employment disputes are on their way

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Are compensatory awards in employment disputes settings keeping up with inflation? A recent Employment Court case has foreshadowed an increase in the quantum of compensatory awards for humiliation, loss of dignity and injury to feelings under section 123(1)(c)(i) of the Employment Relations Act 2000.

In GF v Customs [2023] NZEmpC 101, the Employment Court found that the dismissal of an unvaccinated port worker was unjustified, on appeal from the Authority.

An increase to compensation bands?

Of immediate relevance to those in the employment relations space will be the Chief Judge’s comments indicating that the ‘bands’ for compensatory awards could be increased in future cases. Citing the need for compensation to keep pace with inflation, and the fact that the current bands were set over 5 years ago (in the 2018 Archibald case), the Chief Judge applied the Reserve Bank’s inflation calculator to the compensation bands and suggested the new settings should be:

  • Band 1 – (low level loss/damages): $0 – $12,000
  • Band 2 – (mid-range loss/damages): $12,000 – $50,000
  • Band 3 – (high level loss/damages): Over $50,000

It is likely that future Employment Court cases will follow the Chief Judge’s cue and formally apply these increases to the compensation bands. A corresponding upward trend may also be seen in the level of compensatory awards being paid following settlement negotiations or mediation (usually recorded in a Record of Settlement pursuant to section 149).

For more information, or for specialist advice on any employment issues, please contact a member of our Employment Law team.

Disclaimer: the content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.

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