Restructuring at MBIE

The new Coalition Government has initiated actions to seek to reduce the county’s debt and specifically, the costs of operating the Public Service. In light of this, Government Departments have been provided with the mandate to reduce their operational costs by 6 – 7. How will these changes impact on the delivery of services within the employment law sector?

Recently the Ministry of Business Innovation and Employment (MBIE) released an update to those practicing in the employment law sector to advise that they had experienced a 23% increase in the number of requests for mediation support, and a 24% increase in demand for Mediators to endorse privately negotiated settlement agreements.

As a result, it has been advised that wait times to secure a MBIE facilitated mediation have been pushed out to between 4 – 7 weeks, from the previous 2 – 3 weeks wait experienced in recent years, with the actual mediation to then occur sometime after that.

Coupled with these increased timeframes, statistics for the use of mediation services verses the endorsement of privately negotiated settlement agreements have also recently been released with these identifying some interesting trends:

These statistics confirm a growing trend of more employment disputes being resolved privately, outside of an MBIE facilitated mediation event, with 2.5 private settlements occurring for every MBIE mediation event. Reminder that these statistics do not record the number of MBIE mediations that result in settlements, only the mediations that occur. From our own experience, a number of MBIE mediations do not result in a settlement being agreed upon, with this often requiring the parties to keep negotiating over the following weeks in order to reach settlement.

Based on the statistics above, these indicate that an employer has about a 65% increased chance of resolving a personal grievance outside of an MBIE facilitated mediation event.

What does this mean?

• With the delays in now securing a MBIE mediation date, there is a greater chance that the dispute may be able to be resolved on a full and final basis well in advance of a MBIE date being offered, and the mediation event occurring.
• Employee representatives are more open to reaching a privately negotiated settlement to avoid the delays associated with waiting for a MBIE mediation date.
• Where MBIE mediations are unsuccessful, continuing private mediations can still get a positive outcome.
• Privately facilitated mediations can occur a lot quicker than an MBIE facilitated mediation and can achieve the same, if not better, outcomes.

The value of an endorsed agreement?

Any settlement agreed outside of a MBIE facilitated mediation event, in order for it to be deemed full, final and binding, preventing the employee from continuing any claims against the company, must be drafted pursuant to section 149 of the ERA 2000 and must then be endorsed by a MBIE mediator. Although an employer may reach a settlement agreement with an employee, if this is not endorsed by a Mediator from MBIE there is no guarantee that this would be seen to be full and final with respect to all matters associated with the employee’s employment, and the ending of that employment relationship. The risk therefore is too high to leave this important final step incomplete.   

While this might all sound simple, the most difficult step is how the employer seeks to engage in a discussion (particularly with an existing employee) with the purpose of seeking an amicable, full, final and binding settlement agreement to exit the employee from the company without risk of future employment liability.

Given the statistics confirm that you have at least a 65% better chance of securing the desired settlement agreement outside of an MBIE facilitated mediation, if you have a situation where a settlement is required – engaging external professional assistance to achieve the desired result may be the better option. 

To assist you, we offer the following services:

• Private Mediation Services facilitated by a Mediator who is a member of the Arbitration and Mediators Institute of New Zealand.
• Independent negotiation services to secure a binding s149 settlement agreement.
• Drafting of s149 settlement agreements aligned to terms the parties may independently agree.
• Filing of s149 settlement agreements with MBIE to ensure that these are correctly endorsed.

Please feel free to contact us if you have a dispute that needs to be resolved in a timely manner.