Personal grievance claims costly for employers despite decrease

Officially, the number of personal grievance claims have decreased over the last few years.  But before we give ourselves a nation-wide high five for having more robust employment practices, I should point out that a number of parties suggest the decrease is most likely attributed to the rising cost associated with defending a claim and companies opting to settle grievances early to avoid high legal fees. 

Despite the reducing number of claims - when a claim does end up in court, the costs to employers are on the increase.

Information from the Employers and Manufacturers Association shows the average cost to employers if they lose a case that goes to the Employment Relations Authority is $46,032. If they “win” the average cost to employ­ers is $16,042.   Employers’ average legal costs are $21,954 for individual cases. 

There is also a cost to the business that is difficult to measure financially.  Loss of productivity and the negative impact on the team take the focus off the day to day operations of the business.  Not ideal if you’re a business owner.

 

Key Messages when facing a Personal Grievance

1. Consult an Employment Lawyer

If you receive a PG, consult a lawyer and preferably one with employment experience. There are employment specialists who only work for employers.

2. Check your Employment Practices & Contracts

It is important to have robust employment practices and contracts to avoid or mitigate the chance of employment issues. I am still surprised to hear of business that do not have employment contracts in place or haven't updated them for some time.

In a recent discussion one of my clients phoned me about a contractor they had used for a 2 week period (and had initial discussions about the possibility of employment in the future). My client had been served with a PG after the ‘possibility of employment in the future’ didn’t come about.

3. Remember the 90 Trail Period is not a Silver Bullet

The 90 day trial period is also not a silver bullet to save you if a new staff member doesn't work out. There are still steps you must follow during the 90 days, so make sure you are up to date with what is required.

4. Read Up on Bullying

I'm seeing an increase in the number of PGs relating to bullying. Bullying is a very serious matter in the work place and you may be surprised about what can constitute bullying. WorkSafe have put out a guide on this which can be viewed at http://www.business.govt.nz/worksafe/information-guidance/all-guidance-items/bullying-guidelines

 

Consider your Options

There are insurance products available to cover you. Directors and Officers policies can include cover for Employments Disputes or there are stand alone policies are available.

Most come with a minimum excess of around $5,000.

My suggestion to any business owner would be:

  • Consult a specialist to review your employment contracts and practices
  • If you have any issues or concerns about a staff member, seek advice on how to deal with this before taking action
  • Have some form of insurance cover in place as a backstop.

Kim Matthews

About the Author

Name: Kim Matthews        

I’m the Leader Business Development & Sales for Rothbury’s Hawke’s Bay branch. I commenced my insurance career in 1980, have an insight in to how underwriters and assessors work and I’m a business owner myself - all great…
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I’m the Leader Business Development & Sales for Rothbury’s Hawke’s Bay branch. I commenced my insurance career in 1980, have an insight in to how underwriters and assessors work and I’m a business owner myself - all great skills and experience that make me the broker I am.

I love dealing with people and I’m passionate about insurance! 

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Disclaimer: The articles published on this blog are designed to provide general information and do not take into account any individual’s particular circumstances. We recommend that you obtain professional advice on your requirements before making any decision about a financial product.

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