December 2017 – increased s.123(1)(c)(i) compensation?

When the Authority or Court upholds an employee’s personal grievance, remedies will usually include compensation for “hurt, humiliation and injury to feelings” under s.123(1)(c)(i) of the ER Act.

How though, do you assess compensation when one person’s hurt, humiliation or injury to feelings is not going to be the same as another’s?  Also, how do you do this when this compensation is made up of three discrete concepts, rather than one?

In these respects, and in our view, the Employment Court’s recent judgment in Waikato District Health Board v Archibald [2017] NZEmpC 132 signals:

  1. First, a shift towards higher compensation awards; and
  2. Secondly, the use of a “banding” approach, to assist in assessing compensation.

Archibald concerned a redundancy which, while genuine, was carried out in a procedurally unfair way, and so was unjustified.  In awarding compensation of $20,000, which was “a moderate amount of monetary compensation”, the Court held:

“[62] Assessing compensation is an inexact science.  This can cause difficulties in terms of ensuring a degree of consistency across like cases, while reflecting the individual circumstances of the particular case before the Court.  In arriving at an appropriate figure I have considered the extent of the injury suffered by Mrs Archibald and where it sits in the spectrum of cases routinely coming before the Court.  In this regard, I have found it helpful in this particular case to consider the challenging task of assessing compensation in terms of a broad analytical framework of three bands:

  • band 1 involving low level loss/damage;
  • band 2 involving mid-range loss/damage; and
  • band 3 involving high level loss/damage.

[63] I assess the injury suffered by Mrs Archibald as a consequence of WDHB’s unjustified actions as falling around the middle of band 2.”

It is also worth noting that in an earlier judgment, Stormont v Peddle Thorp Aitken Limited [2017] NZEmpC 71, the Court considered, but did not adopt, the bands applied by the Human Rights Review Tribunal (HRRT):

  • band 1 – nil to $10,000;
  • band 2 – $10,000 to $50,000;
  • band 3 – $50,000 and over.

In this regard, in finding in Archibald that 20k was “around the middle of band 2”, it can be seen that the Court’s use of bands, in that case at least, appears to signal an overall increase in compensation – because $20k was “moderate”.  However, this does not seem to be the adoption of the HRRT’s figures – because 30k, not the 20k awarded, would appear to be “around the middle” of band 2 in the HRRT.

While, as the Court notes, assessing compensation cannot be an exact science, we suggest that a banding approach is likely to be applied more and more in future.  We also suggest that this appears to be the long-anticipated upwards recalibration of compensation generally.

Over time, we also anticipate that the Court’s (and so the Authority’s) adoption of a banding approach will bring increased predictability to compensation awards.  This is also likely to have a flow on, upwards effect on how employment settlements are negotiated – albeit the Court has also noted that what has been possible in terms of negotiated settlements has generally been greater than what has been awarded.

Watch this space.

First 100 days…

In our last newsletter we outlined what the new government was considering, in terms of changes to employment law.  By way of an update, Parliament is set to increase paid parental leave from 18 to 22 weeks from 1 July 2018, with a further increase to 26 weeks from 1 July 2020.  It also appears, under a yet to be introduced Bill, that parents will be able to take parental leave at the same time.  The government has also announced that it will halt the previous government’s Employment (Pay Equity and Equal Pay) Bill, given concern that this would limit the kind of claim that could be taken.

If you would like to discuss anything referred to above, one of our team would be happy to do so.  Either call us on 04 801 5427, or contact us via email:

Paul McBride (Partner) – paul@mdjlaw.co.nz
Geoff Davenport (Partner) – geoff@mdjlaw.co.nz
Tanya Kennedy (Senior Associate) – tanya@mdjlaw.co.nz
Guido Ballara (Senior Associate) – guido@mdjlaw.co.nz
Frances Lear (Senior Associate) – frances@mdjlaw.co.nz

Disclaimer – this newsletter is necessarily brief and general in nature.  You should seek professional legal advice before taking any action in relation to any matter dealt with in this newsletter.

© McBride Davenport James.

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