Deck stacked against employers in disputes
Employers feel the deck is stacked against them when it comes to staff disputes as the cost to business in terms of time and money has increased exponentially in recent years.
A recently released NZIER report, commissioned by the Employers and Manufacturers Association (EMA), shows employers are actively avoiding having these disputes - particularly personal grievance actions - settled by mediation or determined by the Employment Relations Authority. Employers believe the costs are too high.
EMA managing solicitor Matt Dearing says the average cost for an employer to successfully defend a personal grievance (PG) in the ERA is now over $19,000, and if they lose it is more than twice that at nearly $56,000 including legal costs, hurt and humiliation awards and lost wages.
"It’s understandable that employers just want to get a deal done and get the claim out of the way so they don’t waste more time, money and energy on the action. That’s a commercially pragmatic approach," he says.
"The Employment Relations Authority (ERA) has made it clear that it is an employer’s obligation to ensure they follow their own policies and the required legal processes, and where this does not occur an employee will always have a valid claim."
Employers questioned for the NZIER report also mentioned the increase in the number of employees with representation, particularly with more advocates operating on a ‘no win, no fee’ system.
EMA chief executive Brett O’Riley says this advocacy industry is unregulated at the moment, but must be to ensure the integrity of the employment relations process.
"Employees are being encouraged to take up claims to see whether they have grounds for a claim, not because they know they do, which is time-consuming for an employer and impacts negatively on productivity. This is supported by the number of EMA members seeking advice on these matters," he says.
Calls and emails to EMA’s AdviceLine, which is a free service for members, have now reached over 30,000 a year. Discipline and termination; employment terms, agreements and recruitment; and leave issues are the most common queries.
The service, which works in tandem with the EMA’s legal team and human resource consultants, reduces the risk for employers by ensuring they have the right policies and processes in place. Following that advice should prevent or significantly reduce the risk of litigation.
Data gathered by the EMA on ERA PG cases shows that in 2018 the average national award for hurt and humiliation increased 19 per cent to $10,360. Wellington contributed substantially to this increase, up by 49 per cent from 2017 figures. In Auckland it went up six per cent in 2018, compared to 38 per cent in 2017.
Mr Dearing says that with EMA’s advice and resources to support its members, employers can be more certain they are not likely to make mistakes around employment conditions for workers and mitigate risk.
"We work really hard for our members, have a comprehensive understanding of employment relations law and have been achieving excellent results for them over many years," he says.
Please click here to read the full report.