Compensation costs – an update

General / 19 February 2020
Compensation costs – an update

Employment New Zealand has released its latest six-monthly tables providing a snapshot of the compensation and cost awards made in the six months from July 2019 to December 2019. These tables provide us with a useful snapshot of the cases coming before the Authority and the Employment Court and can indicate the trends developing across time as well as informing settlement negotiations.

Compensation awards are made where the Employment Relations Authority (Authority) or Employment Court decide that there has been humiliation, loss of dignity or injury caused to the feelings of an employee. Costs awards provide us with an indication of the amounts awarded by the Authority, as a contribution towards the successful party’s costs.

Compensation in the Authority falls within three bands. Band 1 claims (low level damage or injury) are compensated by awards up to $10,000. Band 2 (mid-level damage or injury) claims receive awards between $10,000 and $40,000. Band 3 (high level damage or injury) claims receive compensation in excess of $40,000.

Over the July to December 2019 period, compensation was awarded for 71 claims, and 23 claims (32%) received awards up to $9,999. 41 claims (58%) were awarded between $10,000 and $24,999. The final seven claims received compensation awards of greater than $25,000.

Message for employers

As the table shows, getting it wrong can prove costly. It is crucial that employers understand their good faith obligations and follow the correct processes when managing the employment relationship with their staff. Our team can help guide you through any disciplinary or performance management processes to help you to get it right, minimising the time and expense of successful personal grievance claims.

Disclaimer: We remind you that while this article provides commentary on employment law and health and safety topics, it should not be used as a substitute for legal or professional advice for specific situations. Please seek legal advice from your lawyer for any questions specific to your workplace.

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