New Zealand: Personal Grievances – Reducing the Costs to Employers

The New Zealand Department of Labour has launched a public consultation¹ prior to a review of Part 9 of the Employment Relations Act 2000, which deals with Personal Grievances. It's a root and branch reappraisal of that part of the Act with the intention of examining, amongst other things, whether the system strikes a fair balance between employers and employees, imposes unnecessary costs or obligations on employers and employees, and is efficient and effective.

Under the current regime, employees can raise personal grievances about a range of issues, including that they have been unjustifiably dismissed, that they have been discriminated against or sexually or racially harassed in their employment and that their employment has been affected to their disadvantage by an unjustifiable action by the employer.

There are no readily available statistics as to how many personal grievances are raised each year by employees in New Zealand as most will be resolved without the need to go to litigation, but with around 450,000 businesses the numbers are likely to be in the thousands.

Any employee may raise any personal grievance except for those who work for an employer with 19 or fewer employees and who are subject to a trial period which may last for no more than 90 days. If they are dismissed during that 90 day period they may not raise a personal grievance about the dismissal but may do so on any other permissible ground.

Reading between the lines of the consultation document the government is seeking ways of reducing costs on employers and reducing personal grievances altogether.

There are a number of steps the government could take to reduce costs to employers, and in this article we examine a few. All but one restricts the rights of employees.

Restricting access to the PG system

A very straightforward approach would be to restrict the rights of all employees to bring personal grievances for dismissal, regardless of the size of the employer. In the UK all employees have to wait a year before they accrue the right to sue for a non discriminatory unfair dismissal. If this were seen as a bridge too far in New Zealand, extending the 90 day cordon sanitaire to all employees would simplify matters and eliminate the tendency for employers to hold off recruiting someone where their staff numbers would then hit the 20 mark, thereby taking them outside the scope of the exception.

We do not advocate removing the right for new employees to raise other personal grievances, as that would impinge on fundamental human rights which should be respected for all workers.

Reducing the scope of the PG system

At the moment any perceived disadvantage can give rise to a personal grievance. So, if a manager gives an employee a written warning for failing to perform her tasks, she can argue the warning was not justified and raise a personal grievance, even where the employee has not been dismissed and has suffered no loss. Unless the employer and employee can reach an agreement outside of the court system, there has to be an examination of all the circumstances of the situation giving rise to the warning. This is bound to have a detrimental effect on the employer's willingness to issue a warning in the first place.

We suggest that the disadvantage in employment right be removed, save where the action complained of has caused a loss of salary or other benefits or where the disadvantage was caused by reasons of discrimination.

Reducing the time to complain

Employees have 90 days from the action complained of to raise a personal grievance with their employer. We think this time limit is reasonable and prejudices neither the employee, nor the employer. However, the employee then has 3 years within which to file their complaint with the Employment Relations Authority. This puts a real burden on employers, who have the uncertainty of a possible legal action hanging over them for an unreasonable time. Given that most complaints take around 230 days between filing the application and a determination, employers may have to wait nearly four years before the matter is determined (unless the employee then appeals to the Employment Court!). The clear disadvantage of this lengthy wait is that memories fade and there is no closure for a considerable time. We say that 6 months from the action complained of is more than enough time within which to file the application, whether or not mediation has been explored.

Discouraging an overly legalistic approach

Many issues which arise within the employee/employer relationship can be resolved between the parties without the need for lawyers or other professional representatives. However, the participation of such people in a workplace dispute often encourages an overly legalistic approach which complicates matters. We would advocate the right of employers to refuse an employee being accompanied by a professional support person in an internal meeting, save where the employer is itself represented in that way. Employees could still have representation in the form of a work colleague, a trade union official or a friend or family member.

Prevention is better than cure

All these suggested measures do no more than tinker with the problem. The real issue is why personal grievances arise in the first place. We believe that the majority of workplace conflict situations occur because managers and employees do not communicate effectively. The Department of Labour has much to offer in resolving this. A comprehensive bundle of on-line resources offering guidance in various media on how to hire, performance manage and incentivise staff, coupled with an advertising campaign highlighting the materials, could kick start a significant up-skilling which would have obvious benefits beyond the avoidance of personal grievances.

1. available on http://www.dol.govt.nz/consultation/personal-grievance

© Goodman Tavendale Reid

Goodman Tavendale Reid is commercial law firm in Christchurch, New Zealand, specialising in Corporate and Commercial, Primary Industry, Litigation, Resource Management and Employment Law.

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