Higher compensatory awards for personal grievances

Monday, March 26, 2018

Recent cases in the Employment Court and Employment Relations Authority have seen employees receiving increased awards for hurt and humiliation compensation.

Until recently, the quantum of awards had not changed significantly over the past 20 years. For the 2013-2016 period compensatory awards for unjustified dismissals averaged around $6,000-$7,000, rendering the pursuit of personal grievances in the Authority and Court a financially unsatisfactory option for most employees.  

There have been a rising number of Employment Court decisions where significant compensation has been awarded. In one case a $20,000 award for an unjustified disadvantage was described as “moderate”, and in another a $30,000 award for unjustified dismissal was considered “relatively modest” in the circumstances.

In Waikato District Health Board v Archibald [2017] NZEmpC 132 the Employment Court introduced banding as “a broad analytical framework” for compensation awards. Three bands were referenced: band one for low level loss or damage; band two for mid-range loss/damage; and band three for high level loss/damage.

Archibald follows a similar decision in Stormont v Peddle Thorp Aitken Limited [2017] NZEmpC 71. In Stormont, the Court noted that awards for hurt and humiliation compensation fell short of comparable awards under the Human Rights Review Tribunal, referring in particular to the case of Hammond v Credit Union Baywide, [2015] NZHRRT 6 where compensation of $98,000 was awarded to an individual for non-pecuniary loss arising out of an employment relationship under a similar section in the Human Rights Act 1993.  

Ultimately, the award in Archibald was $20,000, which was stated to fall around the middle of band two.

Despite the bandings in Archibald being framed as helpful in that particular case, they have been adopted by the Authority in at least eight cases to date. The average compensation in these cases was just over $15,000 (excluding reductions in remedies and restrictions on quantum from pleadings).

Employers need to be aware of the increase in compensatory awards. We expect to see more personal grievances being raised, demands for higher amounts in settlement negotiations, and more cases proceeding to the Authority.

Please contact a member of our specialist employment team if you would like further information on the issues discussed above.

 

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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