EMA Applauds Reforms To Address Personal Grievance Imbalance

The Employers and Manufacturers Association (EMA) is backing the government’s initiative to overhaul the personal grievance system, which it says has been tilted in favour of employees.

EMA Head of Advocacy Alan McDonald says the imbalance in the system is a problem that has persisted for far too long.

"When the cost to employers of defending a personal grievance claim is often nearly the same as losing the case, you know you have a problem," says McDonald.

"When employers are faced with a choice between paying out and risking higher costs to defend a case, many simply pay up - even when they know they are in the right. This undermines fairness and accountability."

A major contributor to the rising number of personal grievance claims has been no-win, no-fee arrangements from legal advocates.

"These arrangements have led to an increase in personal grievance cases, as employees are encouraged to pursue claim s with little risk to themselves," says McDonald.

"Unfortunately, this trend has led to a significant strain on employers, who often feel forced to settle rather than fight."

In 2023, the Employment Relations Authority saw a notable increase in the number of awards of $25,000 or more for compensation for hurt and humiliation. In addition, the Employment Court has updated and increased the bands that guide compensation awards.

The EMA supports the proposed changes aimed at ensuring greater accountability for employees, particularly in cases of serious misconduct.

"It's important that the system no longer rewards employees for poor behaviour or performance. Employers should not be left footing the bill when an employee has clearly acted improperly," says McDonald.

"Minor procedural flaws in contracts or paperwork, in comparison with major breaches that may have been committed by the employee, shouldn’t result in a favourable decision for the employee."

The reforms are seen as a step towards achieving a better balance between protecting workers’ rights and ensuring that employers are not unfairly penalised for defending their businesses.

"These changes will not only reduce the financial burden on employers but will also help restore confidence in the fairness of the system," says McDonald.

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