Technicalities trip up employers in grievance cases

Employers lost three-quarters of personal grievance claims brought against them when they restructured last year because their processes were inadequate, a new survey says.

The cost of losing a case averages nearly $35,000 compared with about $10,000 to successfully defend one.

The Employers & Manufacturers Association (Northern) has analysed decisions made in 2010 by the Employment Relations Authority. It shows the number of grievances overall continues to rise but at a more moderate rate compared with previous years.

The EMA assessed 591 claims in 2010 compared with 579 for the previous year.

“Businesses are being discouraged from seeking to improve themselves because of the complicated procedural requirements of our employment law,” employment services manager David Lowe says.

“Overall employers lost 69% of all restructuring related personal grievances, 74% because of inadequate process. A recent example was Massey University losing for not giving an employee’s interview and assessment notes to another employee who was also involved in the change.”

Mr Lowe says making it hard for firms to change is of no benefit to anyone in the long-term.

“Some businesses delay making any changes until they are faced with a crisis and forced to take sudden action rather than adopt an incremental approach," he says.

“This year the cost to an employer to defend themselves successfully was $9880. The total bill for an employer who slipped up was an average of $34,411.

“For employees who win their cases, the average pay out is $11,023 after legal fees. Employees who lose are left with an average bill of $13,508.”

Mr Lowe says “no win no fee” advocates are exacerbating the situation by extracting payments from employers who have done nothing wrong.

“This practice of ‘ambulance chasing’ should be banned,” he adds.

Mr Lowe says disadvantage claims, which are usually used as a back-up to an otherwise doubtful dismissal claim, continue to make up 42% of all personal grievances. Employers lose 64% of these claims.