The Cost of a Personal Grievance
By Rose McVeagh
In business, it’s normal to have an ever-present concern that at some stage you may need to deal with a personal grievance matter. It’s a fact that sometimes employment relationships don’t go smoothly and if an Employee feels aggrieved; this is a common way to raise their issues under current New Zealand employment law.
Latest statistics show that the cost for Employers to manage a personal grievance are very high. For the 2016 calendar year, the average costs to Employers who went to the Employment Relations Authority were:
To Win: An average total of $11,781 to defend the Employer’s position.
To Lose: An average total of $50,501 including legal costs, hurt and humiliation costs and lost wages awards.
The chance of a win (in 2016) were heavily weighted towards Employees with a 77% success rate in Wellington, 71% in Auckland and 69% in Christchurch.
Interestingly, most personal grievances occur in relation to the first 12 months of employment and an Employee’s chances of success are highest within the first six months (at 82-83% on average). Also, EMA membership improved an Employer’s chance of defending a claim, with members having a 5% higher success rate than non-members.
Of course, these official statistics don’t account for the hidden costs of management stress, the effect on workplace culture, the cost to rehire, the cost to productivity and all the time spent on grievance matters.
As an Employer there are some things you can do to mitigate the risk of a staff member (or past Employee) raising a personal grievance:
- Recruit effectively – often the person should never have been hired.
- Document everything – from the offer of employment and contract, through to feedback and meetings, the more you have recorded the better if things go bad.
- 90-day clause – note the 70-day point in your calendar for all new hires so that you have options. Make sure your 90-day clauses are up-to-date and managed effectively.
- Seek advice – if you’re not 100% sure, seek advice. It’s better to spend a few hundred asking advice than thousands because you got it wrong.
- Move fast – if you know there’s an issue and don’t address it, it will snowball. Get in early and the issue will normally be easily resolved, rather than grow to be a huge problem.
At Russell Drake Consulting we work with Employers in all industries on Human Resource and Employment Relations. Don’t hesitate to get in touch if you’d like some advice on any of the topics in this article, we’ll be happy to help.