Each year the Employers and Manufacturers Association (EMA) analyse all Determinations of the Employment Relations Authority to track the actual costs for both Employers and Employees in taking or defending a personal grievance claim.
The analysis results for the 2019 calendar year have recently been released. These results confirm that there is a growing trend for remedies increasing for Employees.
When issuing a Determination in favour of the Applicant, this generally being the Employee, the Authority are required to consider awarding remedies within three (3) specific areas: Hurt and Humiliation; Loss of Wages; and Contribution towards representation costs.
Hurt and Humiliation
In 2018 a successful Employee received on average $10,360 compensation. However, in 2019 the average increased to $12.227, a 18% increase from 2018. Nationally awards were greatest in the Christchurch ERA jurisdiction (average $14,563) and lowest in Auckland jurisdiction (average $10,873), with the Wellington jurisdiction slightly higher (average $11,657).
Hurt and Humiliation awards were generally higher where the case involved redundancy with the National Average being $14,500, with performance cases being similar at $14,467. The lowest awards were being made are for constructive dismissal related claims where the National Average was $11,036 with cases involving disadvantage resulting in a slighter higher payment ($11,354).
Lost of Wages
Loss of wages claims paid to successful employees averaged $17,035 nationally, this being approximately three (3) months equivalent wages less any earnings achieved by the employee within alternative employment during this time.
Awards for the Employer to pay a contribution to the legal representation costs of the Employee averaged $4,025 Nationally.
From the available data, the critical information for Employers to recognise relates to the total costs involved in either losing a case, or successfully defending the Employer’s position.
The 2019 EMA data confirms the following:
Cost for the EMPLOYER TO LOSE
After taking into consideration:
- the average hurt and humiliation payment ($12,227),
- the average lost wages payment ($17,035),
- the contribution to be made to the Employee’s costs of representation ($4,025), and
- the average costs to be incurred by the Employer in obtaining representation ($7,920),
The total cost for an Employer to be unsuccessful in defending themselves against the personal grievance claim is now $41,207.
Cost to the EMPLOYEE TO LOSE
The average representation costs to the Employee are now at $10,599. When combined with the average cost contribution to the Employer a ‘losing’ employee would be required to pay approximately $14,866.
The 2019 statistics show the Employee success rate in winning cases was 69% nationally (66% in Auckland, 73% in Christchurch, and 68% in Wellington).
Misconduct claims were the hardest cases for Employees to win (50%) and performance related claims the easiest (70%).
These figures confirm that increasingly costs associated with cases that proceed through the full ERA process and reinforce that, where significant liability may exist to the employer – early resolution through mediation of a s149 Settlement Agreement may be the more pragmatic approach.
Please feel free to contact us for assistance with any personal grievance claim.