The Cost of a Personal Grievance

 

Each year the Employers and Manufacturers Association (EMA) analyse all Determinations of the Employment Relations Authority to track the actual costs for both Employers and Employees in taking or defending a personal grievance claim.

The analysis results for the 2017 calendar year has recently been released. These results confirm that there is a growing trend for remedies increasing for Employees.

When issuing a Determination in favour of the Applicant, this generally being the Employee, the Authority are required to consider awarding remedies within three (3) specific areas: Hurt and Humiliation; Loss of Wages; and Contribution towards representation costs.

Hurt and Humiliation

In 2013 a successful Employee received on average $5,042.00 compensation. However, in 2017 the average increased to $8,711.00 – a 24% increase from the 2016 average award of $7,007.00. Nationally awards were greatest in the Christchurch ERA jurisdiction (average $9,707.00) and lowest in Wellington jurisdiction (average $5,949.00).

Hurt and Humiliation awards were generally higher where the case involved constructive dismissal with the National Average being $9,839.00 with the lowest awards being made for disadvantage related claims where the National Average was $6,398.00.

Lost of Wages

Loss of wages claims averaged $15,954.00 nationally.

Costs Contribution

Awards for cost contribution from an Employer to an Employee averaged $4,616.00 Nationally.

In interpreting this data the critical information for Employers relates to the total costs involved in either losing a case, or successfully defending the Employer’s position. The 2017 EMA data confirms the following:

Cost for the Employer to Lose

After taking into consideration the average hurt and humiliation payment ($8,711.00), the average lost wages payment ($15,954.00), the contribution to be made to the Employee’s costs of representation ($4,616.00), and the average costs to be incurred by the Employer in obtaining representation ($31,344.00), the total cost for an Employer to be unsuccessful in defending themselves against the personal grievance claim has now risen to a staggering $60,665.00.

Cost to the Employee to Lose

The average representation costs to the Employee are now at $11,415.00. When combined with the average costs contribution figure a ‘losing’ employee would be required to pay, the total costs to the unsuccessful Employee have now risen to $18,560.00.

Success Rates

The 2017 statistics show the Employee success rate in winning cases was 70% nationally (79% in Auckland, 73% in Christchurch, and 46% in Wellington).

Constructive Dismissal claims remain the hardest cases for Employees to win (45%) and performance related claims the easiest (83%).

Representation Rates

The data confirms that 17% of Employers were successful in winning their cases, however data for cases where the EMA provided representation demonstrated that 41% of cases were determined in favour of the Employer.

If you need assistance in seeking representation in relation to a personal grievance claim please feel free to contact us.

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