Posted on: Apr 07, 2015
A recent case has given ammunition to those seeking more realistic compensatory awards in the employment institutions.
Until now, compensatory awards for hurt and humiliation for employees bringing successful personal grievances have commonly been between $5,000 and $7,000. Costs awards are normally far lower than the actual costs incurred, so the likelihood is that the employee will be out of pocket.
Agreeing that the levels of compensation had fallen woefully behind in both the Employment Court and the Employment Relations Authority, the Court awarded reimbursement of six months’ lost wages and compensation of $18,000 (reduced for contributory conduct) in the case before it. Judge Inglis referred to a 2005 decision of the Court of Appeal in which it had attempted to set an “upper limit” of $27,000 on compensatory wards on the basis that that sum equated (when adjusted for inflation) with one of $20,000 made by it in a case 13 years earlier. Judge Inglis noted that if a similar inflationary approach applied today the upper limit for compensation would be $33,000. In reality, awards ranged between $3,000 and $20,000, with an average of $9,687. She said that there was a danger of using consistency to keep awards at an artificially low level and said the starting point in assessing remedies must be the particular circumstances of the case.
In exercising her discretion to award six months’ lost remuneration — the employee had made numerous unsuccessful applications for jobs — the Judge applied the counter-factual analysis required by the Sam’s Fukuyama Food Services case and made allowance for all contingencies that might, but for the unjustifiable dismissal, have resulted in termination of the employment. She was satisfied the employee’s employment would not have continued for long.
The employee was also awarded the amount of commission he would have earned in the six-month period because it was a benefit he had lost in being dismissed.
The Court declined a claim by the employee for damages for injury to reputation and for legal expenses related to the disciplinary investigation and meeting. Damage to reputation was found unproven. In relation to the expenses, the Judge said that there was a clear causal connection between the failings of the disciplinary investigation and the dismissal and said the claim of breach of contract effectively mirrored the matters raised in the personal grievance and it would be artificial to separate out these matters. She did accept that there might be limited circumstances in which an employee could claim the legal expenses associated with an employment investigation.
The employer’s failings with regard to the disciplinary process were key to the employee’s success. The employee was employed by Dionex Pty Ltd (Dionex). It was acquired and integrated into Thermo Fisher New Zealand Ltd (Thermo Fisher) but it continued to exist as a separate legal entity post-acquisition. Thermo Fisher formed the view that the employee had engaged in inappropriate conduct in relation to company expenditure and behaviour while on business trips to Thailand. It appointed one of its own employees, C, to undertake the disciplinary process and ultimately to dismiss the employee. During that process, the employee’s solicitor questioned whether C had the requisite authority to undertake the process and make disciplinary decisions. C said that she did have the necessary delegated authority in writing but she did not provide a copy. The Court said that the Employment Relations Act 2000 did not include any provision suggesting that employers could divest themselves of their statutory obligations or unilaterally confer them externally and it was difficult to see how a non-employer could form the view that the necessary trust and confidence in an employee had been damaged to an extent justifying dismissal. Even if it could, here there had been no effective delegation of authority in this case.
Judge Inglis’ approach to compensation in this judgment — Hall v Dionex Pty Ltd  NZEmpC 29 — was followed shortly afterwards by Judge Ford in Rodkiss v Carter Holt Harvey Ltd  NZEmpC 34 where the employee was awarded $20,000 compensation for distress.
This article, and any information contained on our website is necessarily brief and general in nature, and should not be substituted for professional advice. You should always seek professional advice before taking any action in relation to the matters addressed.