Law firm notes rising compensation awards for injury to feelings
If you heard a sudden loud noise last week, it wasn’t a jet plane flying overhead - it was the gasp of employment lawyers across New Zealand when the Employment Relations Authority published its determination of Parker v. Magnum Hire Limited and Anor, [2024] NZERA 85, which awarded total compensation for hurt and humiliation of a whopping $105,000.
Is this case an outlier or will we start seeing more remedies like this under s. 123(1)(c)(i) of the Employment Relations Act 2000 (Act) in the Employment Relations Authority (Authority)? In this article we walk through the Authority’s determination and the recent case law which indicates an uplift in remedies.
In the Authority, Parker brought personal grievances for unjustified actions causing disadvantage in respect of Magnum Hire’s director Liam Field’s bullying and psychologically abusive treatment of him, and an unjustified suspension from work. Parker also alleged that he was ultimately constructively dismissed from his employment.
Parker also brought claims relating to unpaid monies and breaches of the employment standards specified in the Act. However, for the purposes of this article we have focused on the personal grievance claims.
Claims of bullying, psychological abuse
Parker alleged that from 2012, Field subjected him to bullying and psychological abuse, including:
- Excessive and unprovoked personal criticism and verbal abuse, including multiple instances of blindsiding Parker in his office, closing the door, and lambasting him with baseless accusations.
- Threatening his job security both overtly and impliedly.
- Publicly humiliating and denigrating him as incompetent.
- Deliberately continuing or escalating abusive behaviour when Parker showed signs of vulnerability or asked him to stop.
From 2019 onwards, Parker says Field’s abusive and bullying behaviour towards him escalated, including incidents outside of work.
The consequences of such behaviour were sustained and significant. In February 2021, Parker went to hospital because he thought he was having a heart attack, which turned out to be a panic attack following an incident with Field. Parker developed depression, anxiety, and post-traumatic stress symptoms akin to PTSD. This included having flashbacks to Field’s abusive behaviour.
Citing FGH v. RST, [2018] NZEmpC 60, the Authority found that bullying behaviour towards an employee does not give rise to a personal grievance on its own, but can be the basis for an unjustified action causing a disadvantage grievance based on a failure by the employer to provide a safe workplace.
Using the definition adopted by WorkSafe New Zealand, the Authority found that bullying did occur on the basis that Field’s actions were repeated, unreasonable, directed at Parker, and these actions could and did lead to both physical and psychological harm. The Authority determined that Field’s lack of intention to cause harm was irrelevant.
The Authority concluded that Parker was bullied at work; the bullying was or ought to have been reasonably foreseeable in the circumstances; and Mangum Hire did not do anything to protect Parker from this harm which was foreseeable. This ultimately meant that Magnum Hire failed to provide Parker with a safe workplace, which amounted to a successful unjustified disadvantage claim.
Suspension claim
Shortly before his resignation in December 2021, Parker was recovering from a significant abdominal surgery, and received medical advice that he needed to work from home. Field told him that was not possible, that another employee would handle his duties, and that work phone calls would also be diverted. Parker claimed this amounted to an unlawful suspension.
The Authority agreed that Magnum Hire’s actions preventing Parker from working from home while he was willing and able to do so amounted to a suspension.
Magnum Hire’s failure to follow any process before making a decision – including no consultation or consideration of alternatives, as well as very limited grounds to suspend under the employment agreement – meant that suspension was not an action a fair and reasonable employer could have taken in all the relevant circumstances at the time.
Constructive dismissal claim
After his suspension, Parker engaged a lawyer who raised several claims on his behalf, including an unjustified disadvantage over a failure by the employer to provide a safe workplace as a result of the workplace bullying, and the unlawful suspension.
The parties attended mediation but were unsuccessful in resolving the matter. Parker’s lawyer also objected to Magnum Hire having their counsel’s firm investigate the alleged bullying by their own client. It expressed a lack of confidence that Magnum Hire was acting in good faith in the way they were addressing matters. Shortly after, Parker resigned effective immediately and raised a personal grievance for constructive dismissal.
The Authority was satisfied that Magnum Hire’s actions constituted breaches of duty sufficient to cause Parker to resign – and that it was reasonably foreseeable that Parker would resign. In determining he was constructively dismissed, the Authority acknowledged that Parker had tried other avenues before resigning.
$50,000 for constructive dismissal grievance
As foreshadowed earlier, Parker’s remedies were considerable. The Authority awarded the following compensation amounts under s. 123(1)(c)(i) of the Act:
- $50,000 for the bullying disadvantage grievance
- $5,000 for the suspension grievance
- $50,000 for the constructive dismissal grievance.
The Authority also awarded lost wages and penalties, and that the parties were to confer regarding bonus entitlements, holiday pay and interest. Costs were reserved.
As an interesting aside, the Authority referred to the breach of contract claims that had also been brought and held that “general damages for stress compensation relating to the bullying would have been the same as has been awarded under s. 123(1)(c) in relation to the established disadvantage grievance.”
The Authority also made recommendations under s. 123(1)(c) of the Act (a rarely used remedy) that Magnum Hire:
- Implement a clear Bullying and Harassment Policy and Code of Conduct, which Field agrees to be bound by
- Establish a clear avenue for complaints and reporting of bullying and harassment, as well as a requirement to establish a process for investigation of such complaints, including by a genuinely independent person, if such bullying complaints are against Field as the director.
A new era for compensation awards?
The Employment Court has recently revised the framework that guides compensation awards for injury to feelings in the recent decision GF v. Comptroller of the New Zealand Customs Service [2023] NZEmpC 101 (GF).
In the GF case, the Chief Judge acknowledged that it had been some time since the quantum of the bands were reviewed. As a result, the Chief Judge updated the bands to be:
- Band 1: (low-level loss or damage): up to $12,000 (previously up to $10,000)
- Band 2: (mid-range loss or damage): $12,000 – $50,000 (previously $10,000 – $40,000)
- Band 3: (high-level loss or damage): over $50,000 (previously over $40,000).
It seems like the Authority is listening to the Chief Judge. While the determination does not directly refer to (or cite) GF, the awards of $50,000 under the bullying and constructive dismissal claim would put each claim on the threshold of Band 2 and Band 3. Similarly, we are aware of 17 reported cases citing the updated bands in the last eight months since GF.
It seems difficult to disagree with the Authority’s findings that Parker suffered significant harm in relation to the actions of his employer. The compensation awarded is indicative of the life-altering impacts that the bullying and constructive dismissal had on Parker. It is also reflective of society’s understanding of the psychosocial harm that bullying (and other workplace hazards) can have on employees.
We anticipate that the Authority and Court will continue to award compensation in line with the new compensation bands. We expect that this will have trickle-down effects on the amounts sought in mediations and without prejudice settlement discussions. It may also become more commonplace for parties to separate out compensation awards under each claim, as the Authority has in Magnum Hire.
Field has indicated to NZME that he intends to appeal the Authority determination. If so, we look forward to seeing whether the Court upholds the remedies awarded.
It is also a little alarming to consider that the very significant compensation awards for the very significant psychological impacts in Magnum Hire puts the two main claims between the middle and high bands (Bands 2 and 3) in the GF case. How much worse would the impact need to be in order to fall within the highest band?
Alison Maelzer is a partner practicing employment law at Hesketh Henry in Auckland. Matthew Morrissey is a solicitor in the Employment Law Team at Hesketh Henry in Auckland. The information contained in this article is current at the date of publishing and is of a general nature. It should be used as a guide only and not as a substitute for obtaining legal advice.
