Employment litigation predictions

2018 Litigation Forecast

Remedies and compensation for hurt and humiliation

As we anticipated in our 2017 Forecast, we are now seeing the Employment Relations Authority and the Employment Court increase compensatory awards for “hurt and humiliation”. These increases have been long signalled by the courts, with comments that hurt and humiliation awards in the Authority and the Employment Court have fallen “woefully” behind.

While the courts will continue to recognise the need for moderation in employment cases, compensation should be reasonable to reflect harm caused to employees. There has also been consideration of compensation “bands” (similar to the Vento bands used in the UK), with the Chief Judge of the Employment Court referring to banding in a recent decision to assist with a compensation assessment. While there is no judicial guidance on the approach to compensation bands, it will be an area to watch for 2018.

Privacy and the GDPR

We have seen no further progress on the long awaited Privacy Act reforms. While the broad drafting of existing privacy legislation has meant it is able to accommodate technological and privacy advances, reform is well overdue. We wait to see where this sits on the new Government’s agenda. In that regard, refer to this forecast’s article on cyber security. That said, there is change that businesses need to be aware of outside of New Zealand.

The European General Data Protection Regulation comes into force in May. It has express extra-territorial effect, which means that New Zealand businesses will need to understand the GDPR’s reach and whether it has implications for how they collect or process its data.

Mental health and wellbeing

The Health and Safety at Work Act is nearly three years old, and the focus to date has been on individuals’ physical safety and health. The conversation is now extending to mental health. Mental health is a crucial part of employees’ wellbeing and, in addition to progress we have seen in safety, we can expect to see more initiatives being led by WorkSafe and big business to support wellbeing in the workplace.

We have seen this in the introduction of WorkSafe’s Good Practice Guidelines on workplace bullying and the use of these by the Employment Relations Authority. The effect of this has been an increase in the investigation and management of workplace bullying concerns as employers hone in on acceptable conduct and standards in the workplace.

Harassment in the workplace – particularly sexual harassment – is an issue that will be closely monitored. The unprecedented momentum and media interest surrounding the #MeToo movement has made the elimination of sexual harassment a key issue of public concern.

Given the new Government’s passion in this space, we expect this conversation to continue and gain momentum.

Future of work (2.0)

The future of the workforce continues to be a focus for businesses globally. With the changing demands of business and individuals, businesses are considering whether current models are fit for purpose in the age of the 4th industrial revolution and the “gig-economy”.

Global attention continues to be on the employee/contractor tension in the UK after Uber lost its appeal in the Employment Appeal Tribunal.

This includes whether the right balance is being struck between providing protection and minimum entitlements for our most vulnerable, and the flexibility and freedom that is being demanded by individuals. This has generated conversation on whether current employment laws are fit for purpose and is reflected by the new Government’s comments around enhanced rights for contractors where they depend on a particular principal for their income.

Global attention continues to be on the employee/contractor tension in the UK after Uber lost its appeal in the Employment Appeal Tribunal. With an appeal to be heard in the Court of Appeal, we are watching this space and its influence on New Zealand businesses.

Ongoing focus on equal pay and pay equity

Scrutiny regarding “equal pay” and “pay equity’ over recent years is set to continue through 2018. During 2017 we saw the settlement of equal pay claims relating to care and support workers, the commencement or continuation of similar litigation by workers in other sectors, and the previous Government’s introduction of the Employment (Pay Equity and Equal Pay) Bill.

The Labour-led Government has halted the progress of that Bill, and signalled it will introduce new legislation to address equal pay and pay equity, which will be in line with the recommendations of the Joint Working Group on Pay Equity Principles.

A key difference between the now defunct Bill and the new legislation is likely to relate to identifying an appropriate comparator group when considering pay equity claims for work predominantly performed by women that may have been historically undervalued. Quite how this will be put into practice, and what guidance or assistance will be given to parties bargaining to resolve pay equity issues, remains to be seen. In the first instance, the Government’s focus may well be on trying to resolve existing claims in sectors that are publicly funded; pre-election Labour promised to make pay equity for mental health workers a priority.

In the longer term, the introduction of new legislation is likely to have an impact both directly (including equal pay/pay equity claims in a wider range of sectors) and indirectly (such as bargaining for increased pay for unaffected roles, as a flow-on effect of pay equity remuneration increases).

Possible implications from policy changes under the new Government

During the election, Labour campaigned on making a raft of changes to workplace relations laws. Working off the assumption that policies in Labour’s manifesto not ruled out by either the Coalition or the Confidence and Supply Agreements with NZ First and the Green parties are still in play, as well as additional commitments made in both of those agreements, there is potential for a lot of changes over the next three years. These changes will have an impact on how employers and employees engage in the context of employment litigation. We see three broad themes underpinning the proposed changes to workplace relations laws: employee entitlements and rights, the role of the unions, and the nature of contractors.

In the context of litigation, the changes to employee entitlements and rights are likely to make the greatest impact, including:

  • amending the rules around 90 Day Trial Periods to allow employees to contest their dismissal
  • restoring reinstatement as a primary remedy for unjustified dismissal
  • increasing the number of Labour Inspectors.

While increasing the number of Labour Inspectors may see an increase in employers being prosecuted for labour law breaches, the proposed changes to 90 Day Trial Periods and restoring reinstatement as a primary remedy may encourage employers to try to settle employment disputes to avoid the uncertainty of outcome that litigation can bring.

We also expect increased collective bargaining and intervention by the courts as changes are made to the role of the unions. These include restoring the duty to reach agreement in collective bargaining and introducing a new type of multi-employer, multi-union collective agreement called a ‘Fair Pay Agreement’, which could apply to employees across entire industries. Similarly, the proposal to provide statutory rights, similar to those currently provided to employees, for ‘dependent contractors’ will impact on the nature of contractors and could lead to greater litigation with parties wanting to seek the correct status of a contractor (or employee).

Who can help

Related Articles