New Zealand Employment Law Update: TREND OF INCREASING AWARDS CONTINUES

Two recent decisions of the Employment Relations Authority and Employment Court show a renewed willingness to provide increasing remedies under section 123 of the Employment Relations Act 2000.

The first is a decision of the Employment Relations Authority, Andrews v Chief Executive of the Inland Revenue Department. Ms Andrews is a customer services officer for the Inland Revenue Department. She viewed information and tax information for a client’s partner (a “prominent New Zealander”) and made some comments about it to other employees. The Department decided to issue her with a written warning in relation to these actions. The Authority found that Inland Revenue had not followed a fair process in issuing the warning, including that it did not sufficiently investigate whether Ms Andrews’ review of the client’s partner’s tax information was inconsistent with her normal work habits and practices.

The Authority ordered a retraction of the warning. It also found that Ms Andrews consequently suffered an emotional, mental and physical toll, including extreme bouts of depression, paranoia, insecurity and a sense of distrust and betrayal. It applied the now common bands when assessing compensation, and found the harm to fall within the mid-range band, warranting a remedy of $20,000 compensation for hurt and humiliation. Taking past practice into account, this was an unusually high award for a grievance not involving a dismissal and/or repeated poor behaviour on the part of an employer. It may demonstrate an increased willingness for the Authority to apply the bands and award higher compensation in arguably less serious situations.

The Employment Court has also since made some interesting comments about the Authority’s powers to award higher remedies than originally sought by an employee in Ashby v Niwa Vessel Management Ltd.

Ms Ashby was employed with Niwa on one of their major research vessels for 20 years. She was dismissed for incompatibility after many years of issues between her and NIWA, including complaints of bullying and sexual harassment. The Authority found the dismissal to be unjustified and awarded Ms Ashby $20,000 compensation for humiliation, loss of dignity and injury to feelings (the amount she had sought in the proceedings), as well as three months’ lost wages (although she had sought 12).

Ms Ashby challenged the determination in the Employment Court, seeking an uplift in her remedies. NIWA defended the challenge, claiming that the Authority’s compensation award was for the amount Ms Ashby sought, and that it was limited by that request.

The Court held that the Authority was not bound by the amount sought by a claimant when awarding remedies. The Court considered that the Authority differed from the Court, as an investigative body that is empowered to resolve employment relationship problems according to the substantial merits of the case without regard to technicalities. It has full agency over its own procedure provided it complies with natural justice and acts in accordance with equity and good conscience. There is no statutory requirement for applicants to specify the compensation sought and it is common for applicants to simply say they seek compensation without stating a quantum. Thus, it was open to the Authority to award more than the amount initially claimed.

The Court considered that the dismissal had a significant impact on Ms Ashby. She suffered severe distress and her long-term relationship broke down. In addition, whilst the sexual harassment and alleged bullying were not capable of compensation in the Employment Court proceedings, they rendered her vulnerable at the time of the dismissal, and thus impacted the extent of the distress caused. There were extraneous personal stressors affecting Ms Ashby’s mental state but they did not reduce the distress caused by the dismissal process followed by NIWA. The Court considered that the appropriate award for Ms Ashby’s distress sat towards the top of the middle band, at $35,000.

In determining lost wages, the Court also granted an uplift in the award of lost wages to 12 months.

Comment

The Court’s assessment confirms that the Authority can award more than that sought in the claimants proceedings. This is a significant shift, as the Authority had previously been acting as though bound by earlier case law and the common law principle that you cannot receive more than you seek. This often operated as a disadvantage to employees, particularly self-represented employees, who did not know how much they were entitled to claim. It was not uncommon for the Authority to comment that it would have awarded more compensation for an employee if more had been sought. In those cases, the Authority is now empowered to provide awards as it sees fit, irrespective of the employee’s claim.

This development by the Employment Court, and the Authority’s determination in Andrews v Chief Executive of the Inland Revenue Department also suggest a trend towards increasing awards in line with the banding approach (which are still only applied inconsistently in the Authority), which shall not be confined to the sum claimed by an employee in the Authority. This represents somewhat of a warning for employers, who should be mindful of the increasing remedial awards and take this into account when responding to personal grievances.

By Quigg Partners, New Zealand, a Transatlantic Law International Affiliated Firm.

For further information or for any assistance please contact newzealandlabor@transatlanticlaw.com

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