A recently released report reveals that 47% of parties who resolve employment disputes think the outcome is unfair. This is despite most employment disputes being resolved by mutual agreement between the employer and employee.
The Access to Justice: 2023 Legal Needs Survey obtained responses from around 5000 participants across several different legal areas. One stand out from the report is that there is a significantly higher level of dissatisfaction with resolution outcomes in employment, than in other areas of law where on average, around one third of respondents felt the result was unfair.
The question needs to be asked, therefore, why are employee (predominantly) grievants entering into settlements that they perceive to be unjust? There are a number of obvious, and some less obvious, answers to this.
Firstly, there is often a power imbalance in employment relationships. Employers generally have access to greater resources, legal knowledge, and influence than individual employees. This imbalance can lead to a perception (real or otherwise) of unfairness and that the employee has been backed into a position where they have no option but to agree to what they are offered.
It is relevant in this regard that around 80% of employment disputes settle out of court. The absence of an independent adjudicator and the inherent power imbalance can lead to a lingering sense of injustice.
Closely aligned to this is the cost of pursuing a claim in the employment institutions. Whilst the Employment Relations Act was intended to establish low level, easily accessible, and non-legalistic, means of resolving employment relationship problems, the opposite has proved true. One need only look to the proliferation of employment lawyers, advocates and human resources advisers, to see that this has become a niche and highly specialised area. An industry even!
In this context, the notion that an employee can represent themselves in mediation or litigation seems unrealistic or at least hugely intimidating and unattractive. This is despite the mediation service and employment relations authority being very open to self-represented litigants and generally providing helpful guidance and support.
The other financial factor is the risk of having to contribute to the other parties costs if unsuccessful in a claim. The authority typically applies a daily costs “tariff’ of $4500 for the first day of hearing plus $3500 for each subsequent day. In other words, an employee who loses a claim in a hearing which takes two days will likely have to contribute to the employer’s costs to the tune of $8000. On top of potentially being out of employment, and having to pay their own representative, this could be viewed as prohibitive.
To put this further into perspective, the Employment Relations Act provides for payment of three months lost wages as a starting point for unjustified dismissal. Whilst it has the discretion to award more, in most cases this is around where it lands, together with an award of compensation for humiliation and distress which is also usually quite modest (between $5000 – $20000). For a lower paid employee, the risk – benefit may simply not be worth it.
Further to the financial impediments, there is a strong fear amongst many employee litigants that they will be blacklisted if they sue their employer. This is not simply a perception – there is evidence of prospective employers and recruitment companies searching employment databases (which are publicly available), to screen applicants who may be regarded as troublemakers.
This has been recognised judicially as an impediment to access to justice, which in turn has led to some “loosening” of the threshold for granting name suppression to employee litigants. However the bar is still a relatively high one and a grievant could not go into litigation assuming that this would be granted – it remains far more the exception than the rule.
Finally, employment disputes tend to be more emotionally charged than other types of litigation. People invest heavily in their career and employment, and this often influences their self-esteem, sense of identity and confidence. When employment relationships fall apart this can have a significant impact on an employee’s wellbeing.
It can be difficult to maintain objectivity in this situation and many people believe that they have been unfairly treated and/or targeted when “let go”. It does not matter whether this perception is right or wrong, the point remains that the grievant genuinely feels this way and is therefore more vulnerable to being left aggrieved by the outcome of any resolution process.
There are a number of factors that influence how the parties to an employment dispute feel about the outcome. This column highlights the potential for employee grievants to be “squeezed” or pressured into accepting unfair outcomes, however employer parties should take care not to exploit this. Whilst getting away with paying as little as possible to resolve a grievance may seem attractive at the time, maintaining a good employment brand is critical in a tight labour market.
Just as employers can google search prospective employees, this equally applies in reverse. So, if an employer has mis managed a situation, the best approach is likely to be to engage in respectful negotiations and seek to agree an outcome that both parties can walk away from feeling heard and not taken advantage of.
Originally published in The Post
