Posted on: Sep 08, 2016

A perception has developed among litigants and practitioners that pursuing a claim under the Human Rights Act has the potential to be more lucrative than under the Employment Relations Act (when the nature of the claim is such that it could be pursued either way). The question is, does this perception have any merit?

It all started with the infamous ‘cake’ case (Hammond v Credit Union Baywide) that came out of the Human Rights Review Tribunal (HRRT) in March 2015.[1] This was a privacy-related case which received extensive publicity due to the significant sums that were awarded for damages and compensation ($98,000), amounting to over $168,000.  Click here to read more details about this particular case.

What sort of claims can be pursued either way?

Employment-related claims for discrimination and harassment can be pursued through either the Human Rights Act 1993 (HRA) or the Employment Relations Act 2000 (ERA).  The legislation that applies to these two parallel jurisdictions is similar, but there are some important differences.

It should be noted that the ERA only applies to employees, which means “any person of any age employed by an employer to do any work for hire or reward under a contract of service”, and includes homeworkers and persons intending to work, but excludes volunteers and certain people engaged in film production work.[2]  Despite how it sounds on the face of it, “persons intending to work” excludes job applicants who have not yet been offered employment.  Rather, the ERA requires more certainty of the existence of an actual employment relationship before a personal grievance can be pursued, and specifies that a person intending to work “must have been offered, and accepted, work as an employee”.[3]

As such, job applicants will only be able to take a claim under the HRA.  This is one of the key differences between the two Acts, if the complainant is not an employee, then the HRA is their only option for redress.  Further, under the HRA, complaints may be raised against persons other than the employer, such as fellow-workers, persons visiting the workplace, and contractors.

Given that both the HRA and the ERA provide jurisdiction for employees to bring claims against their employers for discrimination or harassment, at some point the aggrieved person will need to elect which pathway to pursue their claim.

This can be a difficult decision, and many factors need to be considered.  One of the key deciding factors will likely be the remedies that are available under each jurisdiction.  Litigants should definitely seek professional advice before making this decision!

Both the HRA and ERA provide the remedy of compensation for humiliation, loss of dignity, and injury to feelings.  This is where the controversy comes in, and prompts the question whether awards of this nature under each jurisdiction are similar, or not (as the perception seems to be).

Reviewing awards under each jurisdiction

When we looked into a selection of compensation awards made for employment-related discrimination and harassment claims under each jurisdiction (which are the cases where the applicant had a choice of procedures), we found that there was no obvious pattern or trend. But for a few extraordinary cases,[4] the quantum of compensation awarded from both jurisdictions appears to have remained fairly consistent and vastly comparable (ranging between $3,000 to $25,000) over the past two decades.  Our analysis therefore failed to provide any statistical evidence to support the current perception that the awards made under the HRA are higher than those made under the ERA.

It should be noted that the Hammond case that received an award of $98,000 for compensation was a privacy case, and therefore not included in the graph below.  Only the Human Rights Review Tribunal has jurisdiction to hear privacy complaints, so this matter could not have been litigated under the Employment Relations Act.

graphConsistency is required

Given the above graph, it will probably not come as a surprise that it has been widely recognised by the judicial institutions that there is a need for consistency in the awards from these two jurisdictions.[5]

It is interesting then, that despite this need for consistency (which appears to have been achieved) between the human rights and employment institutions, a perception of discrepancy has still developed.  As such, we next explore whether the impact of any statutory or judicially imposed ‘caps’ may be relevant factors.

Statutory and judicially-imposed ‘caps’ on compensation

Under the HRA the the statutory ceiling on awards is presently capped at $200,000.[6]  This differs to the ERA where no statutory limit is defined, and therefore “the compensation in the Employment Relations Authority and the Employment Court is, at least in principle, at large”.[7]

Whilst this opens the argument that a complainant could receive far larger awards under the ERA, in reality, the effect is that the awards made in the employment jurisdiction have in fact been kept very moderate over the years.  This is likely as a result of the judicially imposed guidelines that are applied when apportioning an award to compensate for non-economic loss under this jurisdiction.

Of particular importance is the case of NCR (NZ) Corp Ltd v Blowes, where the Court of Appeal appeared to set a judicially imposed cap or ceiling on the level of compensatory awards at $27,000.[8]  However, in the absence of specific legislative direction, the Courts cannot actually impose a ceiling or cap that had presumably been implied by the Blowes decision.  This principle was referred to in Simpsons Farms v Aberhart, where the Court of Appeal clarified that there was in fact no limitation set by the Blowes decision, rather just the intention to “signal that most awards will fall within a range up to about $27,000 but that exceptional cases may attract higher awards”.[9] In doing so, the Court confirmed that while awards will usually fall within the prescribed range, there was certainly no ceiling or cap imposed as a result of the Blowes decision.

This understanding was again confirmed in Commissioner of Police v Hawkins, where leave to appeal was granted and one of the questions was whether the Employment Court’s award for compensation was excessive ($35,000), given the decision of the Court of Appeal in Blowes.[10] The Court confirmed “the Chief Judge has correctly stated the proper approach to Blowes” and concluded that it was was within the jurisdiction of Judge Shaw to make the award she did.[11]

Recently, in Grace Team Accounting Ltd v Brake, this issue was raised again.  One of the questions in which leave to appeal was granted was: “Did the Employment Court apply the correct principles when exercising its discretion to award remedies to the respondent?”[12]  This was a case where the Employment Court had awarded $65,000 as compensation for lost remuneration (roughly equating to one year’s salary),[13] and $20,000 in compensation for humiliation, loss of dignity, and injury to feelings.[14]  The Appellant argued that this award was excessive,[15] and tried to rely on the Court of Appeal’s decision in Blowes.[16]

The Court then again, reiterated the approach taken in Blowes:

[113] We consider that the approach taken in Blowes has to be read in light of the later decision of this Court in Commissioner of Police v Hawkins. In Commissioner of Police v Hawkins, this Court endorsed comments made by Chief Judge Colgan in Simpsons Farms to the effect that Blowes did not establish a range within which awards must fall or set a ceiling. (Footnotes omitted)

The Court therefore found that there was “no error of principle in the manner in which Judge Travis approached this issue”,[17] and concluded that the second question should therefore be answered “yes”.[18]

So in reality, the ERA has in fact no statutory cap or judicially imposed limitations to the level of compensation that can be awarded, further supporting that there is no basis for the perception that has been formed. Furthermore, there has been recent signals from the employment institutions that compensation awards are on the rise.

Recent changes in the employment institutions

What we have seen recently in Hall v Dionex Pty Ltd and Rodkiss v Carter Holt Harvey, is an attempt by the Employment Court to lift the level of compensation awards.  Referring to recent human rights cases including Hammond where $98,000 compensation was awarded, the Employment Court recognised that “the awards in question do appear to be substantially in excess of awards made in both the Authority and in this Court for arguably similar wrongs committed on employees”[19], and expressed some sympathy with the view that the awards made under the employment jurisdiction have fallen “woefully behind”.[20] In these recent cases, the Employment Court awarded compensation of $18,000 (reduced by 50% for contribution) and $20,000 respectively, signaling an upward shift for compensation awards in the employment jurisdiction.  We expect to see that the Employment Relations Authority will also follow this trend going forward.

Conclusions

In examining a sample of compensation awards made under the human rights and employment jurisdictions, identifying the need for consistency between the two jurisdictions and reviewing any statutory and judicially imposed ‘caps’, we’ve come to the conclusion that there is no merit to the perception that compensation awards will be higher if a claim is pursued under the HRA.

If a discriminated or harassed litigant is faced with a decision regarding their choice of procedures, we recommend they seek professional advice and weigh up all the factors that differ between the two jurisdictions.  While compensation for non-economic loss will be one factor to consider, the decision should not be based purely on the mistaken belief that the human rights jurisdiction will be more lucrative.

[1] Hammond v Credit Union Baywide [2015] NZHRRT 6.
[2] Section 6(1).
[3] Section 5.
[4] See Singh v Singh & Scorpion Liquor (2006) Ltd [2015] NZHRT 8 ($45,000 awarded by the HRRT) and D v N Ltd ERA Auckland AA290/03, 25 September 2003 ($60,000 awarded by the Employment Relations Authority)
[5] See for example, Laursen v Proceedings Commissioner (1998) 5 HRNZ 18 (HC) at 28-29 and Attorney-General v N [2002] 1 NZLR 651 (CA) at [21].
[6] Section 92Q.
[7] John Hughes “Editorial: Challenging discrimination” [2006] ELB 125.
[8] NCR (NZ) Corp Ltd v Blowes [2005] ERNZ 932 (CA) at [42].
[9] Simpsons Farms v Aberhart [2006] ERNZ 825 at [75] – [79] per Colgan CJ.
[10] Commissioner of Police v Hawkins [2009] NZCA 209 at [63].
[11] At [77].
[12] Grace Team Accounting Ltd v Brake [2014] NZCA 541 at A(ii).
[13] At [102].
[14] At [109].
[15] At [110].
[16] At [111].
[17] At [115].
[18] At [116].
[19] Rodkiss v Carter Holt Harvey [2015] NZEmpC 34 at [133].
[20] Hall v Dionex Pty Ltd [2015] NZEmpC 29 at [87].



Disclaimer

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.