News
Employment problems: it's the putting right that counts
First published in The Independent, 24 October 2007.
If you grew up in New Zealand in the 70s or 80s you will undoubtedly remember Alan Martin of LV Martin & Son.
Mr Martin's message was a simple one: when buying electrical appliances "it's the putting right that counts".
There were legendary stories about the lengths to which Mr Martin would go to ensure that any defective product bought from his store would be fixed promptly and effectively, including fielding calls in the middle of the night, and often returning them at a similar hour.
The law's approach to employment problems is not entirely different in concept.
The Employment Relations Act operates on a premise that workplace problems should be addressed promptly and informally (at least in the first instance) and places a high premium on putting things right. In fact, reinstatement into one's job is the primary remedy provided in the law.
But where employment problems cannot be resolved amicably, the parties are left to litigation. Where reinstatement is not practical, an employee is left to seek the monetary remedies provided by the legislation.
These remedies can include an award for lost wages where, for example, the employee has been unjustifiably dismissed and has lost income as a result of losing his or her job.
The other financial remedy available is provided in section 123 of the Employment Relations Act. It allows for the payment of compensation to the employee for "humiliation, loss of dignity and injury to feelings". Payments under this section are made to the employee on a tax-free basis.
But how does the Authority (and the court) go about assessing a fair award of compensation under this heading?
The answer is that it uses its discretion. And beyond that, the only boundaries are the ones that these tribunals create for themselves.
What price should a court put on someone's hurt feelings? How does one determine the way in which an employee's distress and humiliation should be put right?
The courts have offered some guidance in this area and while no absolute ceiling has been set, there are indications that an award in an extreme case would be unlikely to exceed $27,000. Statistics suggests that most awards are likely to be greatly less than this.
But in reaching an appropriate sum of compensation, it is rare for a tribunal to adopt any sort of scientific approach. It's more likely the Authority may ask specific questions about the way in which an employment problem affected an employee - including seeking some evidence about such things as the emotional hurt that was caused, and the effect that the resulting distress may have had upon the employee's health and personal relationships.
But in reality these pieces of information are used simply to justify an award which is otherwise determined at the general discretion of the Authority.
One view is that to perform the task in any other way could, in itself, lead to unfairness. For example, if an employee was required to satisfy a prescribed checklist in order to justify a particular level of award, the system might become both unworkable and (at worst) specious.
But does the present system adequately take account of all of the different things that should be considered in order to "put right" an employment problem? And might there be a better way of doing things?
A recent academic study in the United States offers some food for thought. An Assistant Professor of Law at the University of Arkansas, Professor Zachary Kramer, has offered some thoughts in the context of compensation for discrimination claims.
In essence, Kramer argues that, due to the close connection between workplace and home life, many (if not most) employees "export" emotions and feelings from the workplace to their home life. A bad day at work, for example, may make it more difficult for an employee to transition easily into the role of parent or spouse.
Where there is unfairness at work - and distress is caused accordingly - Professor Kramer argues that there may be an effect on the employee's family life. Broadly, he contends that this can occur in two different ways.
First, it can cause "disruption harm" which interrupts the employee's ability to interact normally with his or her family. Feeling distressed about work can cause the employee to be short-tempered or anxious at home and, for example, unfairly transfer the workplace distress to the employee's family.
Secondly, the employee may suffer "exclusion harm", in essence causing the employee to seek to drive a wedge between workplace and family life to the extent that he or she simply disengages at home on any subject related to work. Professor Kramer argues that such absolute disassociation is abnormal and can result in such things as excluding the employee's family from workplace social events (not to mention the lack of social support that might otherwise be gained from sensible discussions with one's spouse concerning the workplace).
It may, of course, be extremely difficult to complete any sort of objective analysis of the extent of any such harm, and even harder to determine the monetary level that could properly compensate it. Indeed, there may be those who would argue that no amount of money could put right harm of this type.
But there is surely a case for New Zealand's employment tribunals to consider harms of the type that Professor Kramer has identified when making awards of compensation.
