Open-Minded Discussion on Employment Law


SHOW ME THE MONEY (with apologies to Tom Cruise, aka Jerry Maguire)

Some applicants, having successfully pursued an action in the Employment Relations Authority or the Employment Court may well have uttered the memorable words from Jerry Maguire when the cold, hard reality of the final outcome is revealed after costs, time and trauma are accounted for. Indeed, in some cases there is little or no money to "show" the successful grievant. Why so, you ask? Surely, if a grievant obtains a legal determination in their favour from the adjudicator, then the outcome should be reflected in an appropriate monetary remedy which places that party in the position they would have been in if their employment agreement had not been breached. But of course, while contract law principles largely apply to a breach of an employment contract, there is rarely a situation where a successful grievant will be returned to the status quo, particularly when the costs of obtaining a legal remedy are factored in. A recent Employment Court judgment, Adams v Brown [2016] NZEmpC 13, highlights again the risks of litigation and the associated costs of having a "day in Court", so to speak.

Ms Brown (employee) and Mr & Mrs Adams (employers) began their legal battles in the Employment Relations Authority ([2014] NZERA Christchurch 87), where Ms Brown was successful with her claims of unjustified disadvantage and dismissal. The Authority awarded her $10,046 lost wages and compensation of $10,000 for hurt and humiliation: a total of $20,046 (plus some interest on the lost wages). Ms Brown was subsequently awarded $7,000 as a contribution to her costs: a final total of $27,046. But wait, there's more (or less really), because Ms Brown's costs amounted to $29,228 (including GST). Simple maths: Ms Brown was $2,000 worse off; notwithstanding that the Adams had to pay $27,000, plus their own legal costs.
It would be reasonable to assume that at this point, Ms Brown would have been having a "Jerry Maguire" moment as nobody was showing her any money. On the contrary, her bank balance was reduced by around $2,000.

Just as Ms Brown was probably putting her monetary losses down to experience, she is involved with more litigation, in the Employment Court. Mr & Mrs Adams challenged the determination of the Authority on the grounds that the Authority was wrong with its findings as to liability and remedies. Ms Brown cross-challenged, arguing that she was entitled to more "significant" remedies from the Authority.
The outcome was that the Court held that the decision by the Adams to suspend Ms Brown from her employment and then dismiss her, was unjustified. Orders were made of $8,887 for lost wages and $7000 for compensation: a total of $4,159 less than the Authority ordered. Simple maths: Ms Brown is now more than $6,000 out-of-pocket and her legal costs in the Court are yet to be considered.

Ms Browns legal costs for the Court proceedings were $55,761 (including GST). The principle followed by New Zealand courts is that GST is a neutral factor when it comes to the consideration of awarding costs to a successful party. That is fair enough where a party is GST registered but seems an anomaly for someone in Ms Brown's position, given that GST adds a further 15% to the bill. After taking a number of factors into account, the Court awarded Ms Brown costs of $36,386, being $19,375 less than her court costs.
Simple maths: Ms Brown's losses now total $25,387 albeit she was a successful party in the Authority and the Court. Show me the money indeed!