Compensation Awards on the Rise



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Monday 13 November 2017

Are Compensation Awards for Personal Grievances on the Rise?

The Facts

The case of Waikato District Health Board v Archibald[1] involved a 67 year old nurse who had worked for the Waikato District Health Board (WDHB) for the majority of her career.  As a result of a restructure process carried out by WDHB, Mrs Archibald’s employment was terminated.   She had declined to take up a position which would have involved her travelling for two hours and 45 minutes per working day for a period of up to 9 months, and in doing so, the WDHB declined to pay her a severance payment.

The Court’s Findings

The Employment Court (and Authority) were critical of the way the WDHB had carried out the restructuring process.   The WDHB did not provide sufficient details of the proposal to Mrs Archibald in a timely way, which would have allowed her to properly engage in the consultation process.

The Court found that the WDHB pre-emptively made the decision that redeployment was the appropriate option.  The WDHB was not correct in its approach of stating that if Mrs Archibald rejected the offer she would not be entitled to redundancy compensation as per the terms of her collective employment agreement.

Redeployment – Less Favourable Terms

The Court considered the issue of whether the redeployment offer presented less favourable terms, and as such whether Mrs Archibald was entitled to reject it.  The Court found that the assessment of this was fact-specific to the individual.   It did not matter that others had accepted the redeployment option and the associated travel.  In Mrs Archibald’s case, she raised safety concerns regarding the new position.  It was not appropriate for the WDHB to suggest that Mrs Archibald should accept the role and then if she had health and safety issues arising she should raise them – the “suck it and see” approach did not find favour with the Court.

Compensation – Introduction of bands for level of harm suffered

The Court found that Mrs Archibald was indeed entitled to a severance payment (redundancy compensation) and she was also entitled to compensation for the manner in which she had been treated by the WDHB.  She had experienced a deep sense of hurt that she had not been listened to and that her concerns had been unceremoniously brushed to one side.

In determining the level of the award of compensation, the Court refers to a system of using bands to identify different levels of compensation. In doing so, Chief Judge Inglis refers to a conference paper co-written by herself at the 2016 New Zealand Law Society Employment Law Conference. The paper identifies the three bands as follows:

  • Low Level loss/damage Band 1: nil to $10,000
  • Mid Level loss/damage Band 2: $10,000 to $50,000
  • High Level loss/damage Band 3: $50,000 and over

The bands are mentioned in more general terms within the WDHB v Archibald judgment. The judgment does not identify specific dollar figures for the bands. The Chief Judge refers to the bands as follows:

  • Band 1 involving low level loss/damage;
  • Band 2 involving mid-range loss/ damage; and
  • Band 3 involving high level loss/damage”

 

Mrs Archibald’s fact scenario – level of hurt suffered

The Court identified that the injury suffered by Mrs Archibald as a consequence of the actions of WDHB would fall in the middle of band 2.  The Court came to similar conclusions about the merits of Mrs Archibald’s case as the Employment Relations Authority (which had awarded $10,000 compensation), but increased the remedies awarded to her.  The compensation award was doubled to $20,000.

Comments

In this case the Court used the commentary of previous Employment Court judgments as a guideline for determining compensation and introduced the concept of “bands” to be a helpful tool to determine compensation.  The precise figures attached to those bands is not set out in the judgment and are likely to be adjusted over time.   It appears from recent cases that the average compensation awards are on the rise, and this should be taken into account when assessing risk around personal grievances.

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[1] Waikato District Health Board v Archibald [2017] NZEmpC 132.

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