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Workers could be in line for larger payouts following a recent landmark ruling by the Human Rights Review Tribunal.

Employers should take note that the ruling could lead to one of the most significant developments in employment law since the Court of Appeal’s 1993 decision in Ogilvy & Mather (NZ) Ltd v Turner in which damages for distress were claimed.

A bigger slice of the cake 

Recently the Human Rights Review Tribunal ruled in Hammond v Credit Union Baywide (NZCU), which has become commonly known as ‘the cake case’, that NZCU breached principle 11 of the Privacy Act 1993 by disclosing private information of a former employee, Ms Hammond. 

Ms Hammond baked a somewhat controversial cake which was iced with words “F*** you NZCU” and “C**t”, and posted a photo of it on Facebook. NZCU discovered the existence of the photo, obtained a copy, and subsequently proceeded to distribute the photo to recruitment agencies to deter them from recruiting Ms Hammond. Confidential details of the circumstances surrounding Ms Hammond’s resignation were disclosed, and NZCU went as far as pressuring Ms Hammond’s new employer to terminate her employment by suspending business with the company until she resigned. NZCU’s actions had a significant impact on Ms Hammond – she was unemployed for 10 months afterwards, and she suffered anxiety, stress, humiliation and financial difficulties.

The Tribunal awarded Ms Hammond a record-breaking sum of $98,000 for distress (hurt and humiliation), among other compensation for lost income, legal expenses, and damages for loss of benefit. The total damages awarded were $168,000.

Ruling against racism

A week after the ‘cake’ case, the Human Rights Review Tribunal issued another decision, Singh v Singh & Scorpion Liquor, and awarded the claimant, Mr Singh, $45,000 as damages for distress in addition to lost wages, costs and other remedies relating to a restraining order against further harassment. Mr Singh was racially harassed by his manager, both physically and verbally. In an attempt to stop the abuse, Mr Singh trimmed his hair and beard, which was against his Sikh faith, and led to his father disowning him. He also suffered from depression and anxiety. The Tribunal found that the cumulative effect of the manager’s actions was to rob Mr Singh of his dignity and attack his identity as an Indian, particularly of the Sikh faith.

Employment Court takes a second look

The Employment Court has also recently reviewed the traditional compensatory amounts of between $5,000 and $7,000 for distress damages in the employment jurisdiction. In the recent decision of Hall v Dionex, the Court noted that despite inflation, the average amount of compensatory awards has remained stagnant in the past two decades. The Judge discussed the possibility of setting an upper limit for compensatory awards, as the Court of Appeal tried to do in NCR (NZ) Corp Ltd v Blowes. Adjusted for inflation, the upper limit today would be $33,000. 

The Court balanced the need for moderation in the employment jurisdiction with the issues brought to light by the facts of the case. The Court concluded that in consideration of the hurt and humiliation suffered by the dismissed employee, a compensatory figure of $18,000 was appropriate. However, the remedy was cut by half due to the contributory conduct. 

Court increases payouts 

In another recent decision, Rodkiss v Carter Holt Harvey Ltd, the Court followed the approach in Hall v Dionex to fix a fair and reasonable amount for compensation in balance with necessary moderation. In this case the employee suffered anxiety and stress due to the unjustified actions of the employer, and suffered damage to his professional reputation in both his former and his new employment. The Court awarded a global figure of $20,000 for humiliation, loss of dignity and injury to feelings.

What this means for you  

For some time there has been a concern that Courts and Tribunals generally under-compensate claimants, and the exercise upon which the Courts have to embark is one which is inherently difficult and unscientific. Judges have largely used past cases and previous experience as the tools for assessment of distress damages. It is however clear from recent cases that the Court is willing to look at applying alternative methods to assessing and fixing claims for distress. The main findings of these recent cases represent a significant move away from what has been deemed “artificially low” awards of compensation and damages. 

For employers, this means increased awards can be expected where employees have a valid claim for a grievance and have suffered distress as a result. 

If you have any questions about this Newsflash, please contact Anthony Drake or Michael O’Brien in Auckland, and Greg Cain in Wellington.



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