Quantum: Are Compensation Awards under Section 123 High Enough?

There have been several recent Employment Court cases where the Court has raised concerns as to the extent to which compensatory awards have kept pace with the times, and adequately reflect the non-pecuniary loss or damage sustained by an employee.This concern was considered in the case of Stormont v Pedal Thorpe Aitken Limited where the Court recognised that these recent cases reflect a “discernible upswing” in the quantum of awards for compensation under s 123(1)(c)(i). That section allows the Court to award compensation to an employee for humiliation, loss of dignity, and injury to feelings.

The Court in Stormont also recognised that the top-end awards under s 123(1)(c)(i) fall well short of the monetary awards provided for in the Human Rights Review Tribunal for the same form of non-pecuniary loss or damage. A well-known example is the case of Hammond v Credit Union Baywide where the Human Rights Review Tribunal awarded an employee $98,000 to compensate her for the humiliation, loss of dignity and injury to feelings she had suffered. Hammond, often referred to as “The Cake Case”, arose out of the dissolution of an employment relationship and involved many aggravating factors which are not uncommon in personal grievance claims that go through the Authority and the Employment Court.

UK Guidance

The Presidents of the Employment Tribunals in England, Wales and Scotland have recently revised the three broad bands of compensation for injury to feelings that may be awarded. As of September 2017 the new bands set out in the Presidential Guidance are:

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The bands were increased approximately 40% from the previous bands, which had been in effect since 2009. The bands will now be reviewed annually and any new guidance will come into effect in April each year. Although there are three distinct bands, the guidance also notes that awards can exceed the top band in the most exceptional of cases.

Although it is uncommon, both in the UK and in New Zealand, to hear about awards at the top end of the scale, many cases involving the most serious type of humiliation, loss of dignity, and injury to feelings will be settled out of court on a confidential basis, as these cases pose the greatest reputational risk to employers.

The Court in New Zealand has not yet adopted a banding approach to compensatory awards. Ultimately, each case falls to be decided on its own facts, bearing in mind desirability of broad consistency with other cases.

 

 

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