Businesses say cost of fighting employment disuptes too high – NZIER report – Stuff


Fighting disgruntled workers through the courts is too expensive for businesses, the Employers and Manufacturers Association says.
A New Zealand Institute of Economic Research report, commissioned by the association (EMA), shows businesses are avoiding having employment disputes, particularly personal grievance cases, going to mediation or the Employment Relations Authority (ERA).
The costs involved have also increased significantly in recent years, the report says.
EMA lawyer Matt Dearing said the average cost for an employer to successfully defend a personal grievance in the ERA was more than $19,000.
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If the business lost the case, the cost could increase to nearly $56,000 including legal fees, hurt and humiliation awards and lost wages.
Six firms from construction, transportation, retail and manufacturing sectors were interviewed for the report.
Dearing said it was understandable that employers just wanted to get a claim out of the way.
"The Employment Relations Authority has made it clear that it is an employer’s obligation to ensure they follow their own policies and the required legal processes, and where this does not occur an employee will always have a valid claim," he said.
Employers interviewed for the research also said the increase in the number of workers with using lawyers, particularly with more lawyers operating on a "no win, no fee" system, Dearing said. 
However, employment lawyer Peter Cullen said the court system encouraged people to settle disputes directly rather than engaging expensive lawyers.
"Direct negotiations are the cheapest, quickest options," Cullen said.
"The second stage is mediation, which is provided by the courts free of charge. You don’t need a lawyer."
Under the third stage is the authority carries out its own investigation and this is meant to keep costs down, he said.
Cullen said the "no win, no fee" approach by some advocates and lawyers was more common in Auckland than elsewhere in the country. 
Nathan Santesso, director of The Worker’s Advocate said the process had got out of hand for some small businesses.
"Sometimes I do get contacted by small businesses and I feel bad, because for small businesses, costs are very high for them," he said. 
"There’s also not a lot of sympathy for them. There’s people like me to help out exploited migrants and people on low salaries, also unions they can join. But for employers, small mum and pop type things, to get assistance it does seem pretty expensive."
There were some business focused groups to help, such as Employsure, that could offer a safety net, Santesso said. 
"But the ERA has lost its way a little bit. Its turned from something that should resemble more of a disputes tribunal and slowly but surely moved to a place of formality with lawyers. I don’t think that’s ok."
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