Compensation for Emotional Harm on the Rise?
26 March 2024A recent determination by the Employment Relations Authority suggests compensation to employees for hurt and humiliation may be on the rise.
Compensation Bands
One of the key remedies available to employees who are successful in raising a personal grievance, is compensation for humiliation, loss of dignity, and injury to feelings.
In the recent case of GF v Comptroller of the New Zealand Customs Service [2023] NZEmpC 101, these bands were updated to account for inflation, as follows:
- Band 1: (low-level loss or damage): up to $12,000.
- Band 2: (mid-range loss or damage): $12,000 – $50,000.
- Band 3: (high-level loss or damage): over $50,000.
It is important to note that although these bands provide guidance for measuring compensatory damages, it is a fact-specific exercise which will vary from case-to-case.
Parker v Magnum Hire Limited [2024] NZERA 85
In this case the Authority has raised the bar to the point of awarding the employee a massive compensation award totalling $105,000 (free of tax), well in excess of the lower end of Band 3. The prospect of an appeal to the Court would seem likely, but the point is the awards are on the rise.
Mr. Parker raised several personal grievances against his former employer, Magnum Hire Limited and its director, Liam Field.
Mr. Parker claimed that he was unjustifiably disadvantaged due to Mr. Fields’ failure to take reasonable care in maintaining a safe workplace. In addition, Mr. Parker claims that he was unjustifiably suspended and ultimately constructively dismissed.
According to Mr. Parker, Mr. Field subjected him to severe bullying and psychological abuse. This included excessive and unprovoked personal criticism, threats against Mr. Parker’s job security, and public humiliation.
The amount of compensation awarded in respect of each grievance was:
- Unjustified disadvantage in respect of bullying: $50,000
- Unjustified disadvantage in respect of suspension: $5,000
- Constructive dismissal: $50,000
This case raises the question of whether compensation for hurt and humiliation is on the rise, particularly in situations involving workplace bullying. In recent years, there has been a shift towards prioritsing workplace health and safety. Perhaps the Authority’s determination reflects such a shift, seeking to stress the importance of fostering a safe work environment which promotes the well-being of workers.
On the other hand, the Authority’s determination may be a mere illustration that there is no exact science in quantifying emotional harm. As stated above, the amount awarded will turn on the facts of each case. The case of Mr. Parker is one that demonstrates significant emotional distress. As a result of the psychological mistreatment he endured at Magnum, Mr. Parker was diagnosed with depression, anxiety, and symptoms akin to PTSD – demonstrating the long-term effects this has had on Mr. Parker’s day-to-day life.
Considering this, it could be said that the Authority’s awards in this case were due to the extraordinary circumstances of Mr. Parker’s case. Nevertheless, it will be interesting to see whether future cases follow suit.
To find out more about the Authority's determination, click here.
Key Takeaway:
It is important that employers ensure they provide a safe working environment for employees, which includes:
- Implementing bullying and harassment policies and a code of conduct with accessible reporting mechanisms.
- Making sure that all employees and management are made aware of such policies.
- Taking complaints of bullying seriously and promptly undertaking thorough investigations.
- Review and improving policies and practice continuously.
It will prove very costly to ignore the threat.
For more information contact: Tony Teesdale 021 920 323, Justine O’Connell 021 920 410, Michelle Battersby 021 993 735, or Esther Cohen-Goh 021 178 4111