Changes to the personal grievance system and employment law: implications and applications Jennifer Mills, Partner Minter Ellison Rudd Watts NZ Employment Relations Society 9 June 2010

Agenda Is it broken and does it need to be fixed?  key issues in review Costs  phyrric victory  impact on how process is perceived S103A  could we? would we? should we?

Is it broken and does it need to be fixed? (1) Government announced a review of personal grievances under Part 9 of the Employment Relations Act Submissions closed on 31 March 2010, report not released yet Topics for submission included:  the cost of problem resolution  varying quality (and effect) of employment advocates  balancing of fairness in the personal grievance system

Is it broken and does it need to be fixed? (2)  ensuring access to justice  negative impact of the responsiveness and timeliness of services  employment relationship problems appear to impact disproportionately on small and medium sized enterprises  eligibility for raising a personal grievance; and  effectiveness of remedies Issues and impact depend on whether you/your clients are employers or employees

Costs (1) Principle is that costs will follow the event Costs are often reserved and applications for costs follow No scale costs (as in High Court) Parties encouraged to agree in first instance Commonly 28 days to file application for costs, unhelpful as same timeframe for appeal to Employment Court Principle is contribution of 2/3 to ‘reasonable’ costs Most often, a notional daily rate is applied. Varies from $1,500 - $3,500 per day Takes no account of preparation time

Costs (2) Reality is current level of costs awards frequently means clients will win on paper, but lose commercially Often more expensive to defend proceedings than to settle Creates financial pressure to settle Can be worth spending more to defend unmeritorious proceedings, as it sends a message that the business will not settle (pay out) unmeritorious claims This issue has a significant impact on the way many employers perceive the process

S103A Employment Relations Act 2000 (1) Sets out the test for a substantively justified dismissal Two aspects: procedural fairness and substantively justified decision to dismiss Complete absence of fair process may mean decision could not be substantively justified Test is: “What would a fair and reasonable employer have done in all the circumstances at the time the decision to dismiss was made?” Objective test (would not should)

S103A Employment Relations Act 2000 (2) ERA/Court will ‘stand in the shoes’ of the employer Test is applied in all dismissal circumstances, including redundancy (if challenged) ERA/Court have indicated won’t enquire as closely into substantive justification in redundancy situation – managerial prerogative. Instead the focus is on correct and fair process Compared with serious misconduct dismissals; cases confirm fair process is important but actions/conduct (substantive justification) is key

S103A Employment Relations Act 2000 (3) ERA/Court can reduce remedies to take into account contributory conduct Litigation risk Can appeal ‘de novo’ to Employment Court, but issue of cost

Questions

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