“Compensation awards in the employment jurisdiction have been stagnant for quite some time,” says Chapman Tripp senior associate, Marie Wisker
“Historically, averages have been between $4,000 and $7,000 for unjustified dismissal claims but what we have been seeing over the past couple of years is an increasing trend to higher compensation awards,” she revealed.
According to Auckland-based Wisker, there are a couple of key reasons behind the change.
“One is an express acknowledgement by the Employment Court of a need to recalibrate these awards precisely because they have been so stagnant for so long,” she told HRM.
“There have also been some recent high-profile decisions coming out from the Human Rights Review Tribunal where there have been substantial awards made for conduct that, [had it been] in the employment jurisdiction, you wouldn’t see those levels of awards at all.”
Wisker pointed to two cases in particular – one which ended in an award of $98,000 and another of $45,000 – far in excess of the $4,000 to $7,000 that’s typically seen in the employment jurisdiction.
“In my view, I think we’re moving to a world of new averages of perhaps between $6,000 to $10,000 for procedural defects – that’s where a dismissal is upheld but where the court considers that the employer had not complied with all of its legal obligations – then perhaps between $15,000 and $20,000 for unjustified dismissal claims,” she said.
While Wisker indicated compensation levels were on the rise, she said employers shouldn’t be too worried as courts were keen to keep awards relatively low.
“I think HR professionals can take some comfort out of the fact that the courts have expressly said that rewards will remain modest particularly so if an employee is demanding some extravagant level out of the employment jurisdiction,” she told HRM.
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A leading industry lawyer has identified a notable trend in the compensation space, suggesting New Zealand could be about to move into a world of new averages.