What will the Employment Relations Authority award me?
We are often asked by employees, that want to take a matter to the Employment Relations Authority (ERA), what are they likely to be awarded if they win.
The formula is rather simple for most situations, but not for all. Please use this as a guide only. Particulars of your situation may be different.
So, let's assume that you are a typical employee and that you have an outright win in the ERA. Your award will most likely be:
Should your employer not have paid you for any time that you have worked (and you are credible in what you claim is the time you have worked and not been paid for), then this amount should be awarded to you. This includes any bonuses or commissions that you can prove are owing. To prove this, you need to be able to show the written agreement for the bonus or commission, plus evidence that you are entitled to it. Any amount awarded is subject to usual income tax.
Should your employer not have paid you out for your accrued holiday pay or leave entitlements then, as long as you are credible in what you claim, this should be awarded to you. Any amount awarded is subject to usual income tax.
Lost wages payments are awarded as the lesser of 13 weeks' pay or the actual time you were out of work between jobs. So if you are only out of work for five weeks then you can only get an award of five weeks. Should you be out of work for five months then you are still only likely to be awarded the 13 weeks of lost wages.
However, you have an obligation to mitigate your loss by trying to find alternative employment. In other words, if you spend the next 13 weeks at home watching The Simpsons and Judge Judy on Sky TV then you will not be awarded any lost wages. You need to be able to prove to the ERA that you have tried to find work by producing copies of emails of job applications, interviews etc. One or two job applications will not cut it either. Effectively, your full time occupation, once you have lost your job, is finding a new job. If you can't demonstrate this, then don't expect the ERA to award you any lost wages. Any lost wages awarded are subject to usual income tax.
Compensation for Hurt and Humiliation
This figure differs widely for many people depending on what the impact of an unjust termination has had on them. However, typically, this figure is around the $5,000 to $15,000 mark. This amount is not considered as income, and as such, no tax is payable on this payment. It has been noticed in the past few months to June 2021, that this amount is now steadily rising in the Employment Court and it appears they they are typically awarding up to $20,000. The Employment Relations Authority tends to take time to catch up to the values of the Employment Court. The average the Authority is awarding is in the vicinity of the $12,000 to $18,000.
Contribution to Costs
Even if your employer is completely slated by the ERA, the ERA will generally only award you a contribution to your costs and not all of your costs. Currently, the daily tariff they are awarding is an amount based on $4,500 for the first day of the Authority hearing and a further $3,500 for every subsequent day. So, if your matter in the ERA only takes a half-day, then the costs awarded will likely be $2,250. Alternatively, if your matter takes two days to hear, then the figure will likely be $8,000. There is, however, a complication which can radically change the amount of costs awarded. Should either the employee or employer make what is known as a "Calderbank Offer" to the other side, prior to this process commencing, and what is eventually awarded is less favourable than the "Calderbank Offer" for the other side, then the costs can be wildly different.
However, similar to how some people portray their financial position to the NBR so that they can get on the Rich List, there is another side to this equation, which is the cost in taking a matter through the ERA process. The wheels of justice turn slowly. They are not cheap to rotate and sometimes they don't rotate in your direction of choice.
Typically it can take 12-24 months to get through this process and receive a written decision from the ERA on your matter.
The actual costs vary depending on who you use and how complicated your matter is. We find that our typical costs, for an employee going though this process, are between $10,000 to $15,000 plus GST. In order for you to have a better idea of the likely costs for your situation, please contact us for a more detailed estimate.
The ERA must take into consideration the conduct of the employee in the events leading up to the termination. The ERA will ask itself the question, "Has the Employee contributed in any way towards this termination, by their actions?" If they decide that you have, then they will water down your awards by a percentage that they determine is fair and reasonable in relation to how they have assessed your contribution to the situation.
ERA rules in favour of your Employer
Remember that there are no guarantees when you go to court. Should this happen, then you will not be awarded any of the four items as described at the top of this page. However, it could be even worse. The ERA may (again depending on your situation) award costs in favour of your employer. Now, the item above (Contribution to Costs) applies, but in favour of your employer and not yourself. So, not only have you had to pay for your representation, you now need to pay for some of your employer's costs for representation as well.
For the four reasons above, we have an in-depth conversation with our clients before proceeding to the ERA. The cards need to be strongly stacked in your favour before we will proceed. Because of this policy of ours, we have a very high winning rate for cases that has been taken to the ERA on behalf of our employee clients. As of February 2021 it was sitting at just over a 78% success rate when representing the employee. Personally, I don't like losing. This is a stance that has benefited all of my Employee clients we have represented before the ERA. The actual costs to take a matter to the ERA will always be greater than the costs that they award. It case is different and you need to talk to us directly to get an accurate estimate of what the likely costs would be for your case.