Guidance on compensation awards for hurt, humiliation and loss of dignity under the Employment Relations Act 2000

Quantifying compensation for an employee’s 123(1)(c)(i) hurt, humiliation and loss of dignity in the Employment Relations Authority (Authority) can be a confusing task. Unlike the Human Rights Review Tribunal, which has a considerably clearer banding structure, compensation in the Authority can be somewhat of a guessing game.A section 123(1)(c)(i) compensation payment for hurt, humiliation and loss of dignity is currently understood as being assessed in terms of three bands:

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

The difficulty, however, arises when determining which band each case falls under and what that means for what employees may expect to receive by way of financial compensation.

Cases law does provide some guidance on the matter.

In the seminal 2017 decision of Waikato District Health Board v Archibald (in which the Chief Judge put into practice her previous guidance as expressed in a paper co-written for the 2016 New Zealand Law Society Employment Law Conference) which introduced the banding approach discussed above, the Employment Court considered Ms Archibald’s loss of employment as a result of a flawed restructuring process to fall within “the middle of band two”. Ms Archibald was left “upset and anxious” following the restructuring which led to her dismissal. The proposed changes from the restructure were particularly stressful for Ms Archibald as she has been working as a nurse in the public health sector for 57 years, she was nearing the end of her working career, and the proposed changes to her role would involve a significant amount of travel which she physically could not do. Ms Archibald was of the view that the commute would “destroy” her. The District Health Board was ordered to pay Ms Archibald $20,000 in compensation.

Following on from the Archibald decision, Southern Cross Campus Board of Trustees was ordered by the Employment Court to pay an ex employee $25,000 to compensate for her hurt, humiliation and loss of dignity when she was dismissed following a flawed termination process. The amount was considered by the Court to fall within the “medium range” of compensation awards. The emotional damage to the employee included being unable to face others, and she explained how she had been dismissed and contemplated suicide. The Court did comment that some of her stress was self induced because she had self represented throughout the court process, which led to delayed and complex litigation and perhaps reduced the amount of compensation she was awarded.

By contrast, in the Authority’s decision of Lavin v Flawless House Washing Ltd the employer was ordered to pay Ms Lavin $3,000 in compensation for her hurt, humiliation and loss of dignity from an unjustified dismissal (this was reduced from $4,000 due to the employee’s contributory conduct). The award was considered to be “at the lower end of band one”, particularly because the employment was of short duration and the employee did not require any assistance for her distress.

Also, in Waugh v Commissioner of Police, a decision which predates Archibald and its banding approach, Waugh was awarded $50,000 for his hurt, humiliation and loss of dignity (which equates to around $80,000 in 2017). This award was considered in Archibald to be a “high water mark” for similar cases.

To put those cases in context, the Chief Judge had indicated in the paper for the NZLS Employment Law Conference that the bands would attract the following compensation awards:

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

While those are incredibly broad bands, the case law only provides general guidance for quantifying damages in the interests of consistency and foreseeability. Ultimately, each case will be decided on its merits and the specific damage the individual employee has suffered.

Workplace Law team

If you have any queries in respect of the above, or any other Workplace Law issues, please contact a member of Lane Neave’s Workplace Law team:

Employment: Andrew Shaw, Fiona McMillan, Gwen DrewittMaria Green,  Hannah Martin, Joseph HarropHolly StruckmanAlex Beal, Giuliana Petronelli, Abby Shieh
Immigration: Mark Williams, Rachael Mason, Daniel Kruger, Nicky Robertson, Julia StrickettKen Huang, Mary Zhou, Shi Sheng Cai (Shoosh)Sarah Kirkwood, Janeske SchutteLingbo Yu
ACC: Andrew Shaw
Health and Safety: Andrew ShawFiona McMillan

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