Counting the Cost - More from Mrs A

Last week I blogged about Mrs Archibald’s case against the Waikato District Health Board.  You will remember that Mrs Archibald was held to be redundant when the Health Board changed her job to include a significant travel component.  Another interesting feature of Mrs Archibald’s case was her personal grievance claim. 

Personal grievance is the phrase the Employment Relations Act uses to describe a complaint or action against an employer for breach of duties by the employer.  The Act requires any action the employer takes to be “justifiable”.  This means that the employer must act as a (hypothetical, objective) fair and reasonable could have acted in all the circumstances at the time. 

This test allows that there are number of decisions that a fair and reasonable employer “could” make – so there is not one right answer – but it requires consideration of both the decision (eg to change someone’s job), and the process by which the decision is made. 

The Employment Relations Act creates a number of remedies for a personal grievance.  An employee can seek reinstatement (their job back, or changed back to what it was), or compensation for lost wages and benefits.  The Act also allows for an award compensating an employee for “humiliation, loss of dignity and injury to feelings”.

In theory at least, you need to prove that you have been humiliated, injured or lost dignity in order to receive an award of this type.  In practice, the Court will often infer that such hurt flows as a natural consequence of an unjustifiable decision.  Because emotional harm is very difficult to measure in dollar terms, the level of award has always been a bit of a guessing game.  This can be contrasted to the approach to setting remedies in other courts (eg when awarding damages to victims in health and safety cases) 

Some years ago now, the figure of $15,000 came to be something of a de-facto maximum for emotional harm compensatory awards.  Although historically there were some awards up to $50,000, most awards in the Employment Relations Authority clustered around the $5,000 mark.  As time has passed, many people have suggested that this it out of step with awards in other jurisdictions (notably the awards given by the Human Rights Review Tribunal, and the recent level of awards for stress in Earthquake cases against insurers in the High Court).

To bring this back to Mrs Archibald’s case – an interesting feature of the Employment Court’s decision was its comments about the approach to compensatory awards.  The Court, for the first time, suggested a “banding” approach to damages, dividing cases into low/medium/high bands of loss/damage.  The Court assessed Mrs Archibald’s harm as falling in the mid band, and concluded that “having regard to the circumstances of this case, I consider than an award of $20,000 … is appropriate”.        

This gives two important take-home points.  Firstly, we might expect to see the Court take a more principled approach to compensatory awards, which might mean that employees will need to articulate the type of harm they have suffered, and perhaps compare it to harm in other cases.  Secondly, $15,000 can no longer be said to be a de-facto maximum.  If the Court is willing to award $20,000 for a mid-band case, we could expect awards under this head to push up to at least $40,000 in the most serious cases. 

This is an area likely to develop over the next few years.