No employer enjoys having to take disciplinary action against an employee. Even more sapping is having to deal with a personal grievance from an employee or ex-employee.
Thankfully, working closely with your employees, supporting them and being attentive to their aspirations and needs will build a strong, positive relationship that begets fewer problems.
This is where getting expert HR guidance can make creating and maintaining a healthy relationship with team members so much smoother. It’s about establishing robust, responsive systems and processes to support the employment relationship in its entirety, from hiring staff to helping them flourish.
Then if you do have any issues (let’s be honest, we’re dealing with people, and we aren’t always as straightforward and guileless as we like to think), you shouldn’t be blindsided.
It’s a matter of taking control and solving problems early, rather than bouncing from one situation to the next and having them control you, which can be a major drain on your resources.
Getting the right help
With over 700 businesses and 15,500 employees on our books, MyHR supports a lot of employment relationships.
Our expert guidance, software, and resources support employers so they aren’t likely to put themselves at risk.
Things don’t always go as planned, however, and we know that despite the best of intentions, employment relations can turn sour. This is when detailed knowledge of the legal landscape and adhering to fair and reasonable process is crucial. Mistakes can be extremely costly.
In the past year, we’ve overseen more than 1,100 disciplinary procedures and dozens of personal grievances. We’re never had a successful personal grievance case against an employment process that we have recommended to a client.
So we wanted to share some tips about personal grievances: how to do your best to avoid them and how to handle one if you are faced with it.
What is a personal grievance?
In a nutshell, personal grievances are the legal mechanism for an employee or ex-employee to challenge a dismissal or other unfair or disadvantageous treatment by their employer (find out more about the grounds for a personal grievance on the Employment NZ website).
Employees have 90 days from when the incident occurred (or came to their attention) to raise a personal grievance. They can raise the grievance verbally or in a letter or email, but it must be clear what the complaint is and the reason(s) why the person believes they have a grievance.
Employers have 14 days to respond to the claim.
The claim can be settled at any time, if both parties agree. The employee can also lodge a claim with the Employment Relations Authority (ERA) at any stage.
Heads up: On 27 June 2020, the Employment Relations (Triangular Employment) Amendment Act comes into force. The Act gives employees in a triangular employment relationship, e.g. working via a recruitment agency or under a labour-hire model, the right to bring a personal grievance against their employer and the third party they actually do the work for.
Personal grievances can get expensive
Earlier this year, the Employers and Manufacturers Association (EMA) released statistics that show the average cost to employers who lost a personal grievance with the ERA was nearly $56,000, including legal expenses, hurt and humiliation costs, and lost wages awards. Even if they won, the average cost was nearly $19,000.
These costs have been going up consistently each year.
These stats don’t include the time spent on responding to and investigating the claim, or the potential damage to workplace culture, productivity, and the business’ reputation (any case that makes it to the ERA is a matter of public record and can be found on a searchable online database).
It’s also worth remembering that once the employee has raised a grievance, they have 3 years to begin proceedings with the ERA and no one wants a sword dangling over their head for that long.
Obviously, it’s much better if you can resolve the issue without having to go through formal channels (this should be much more straightforward if the employment relationship has been mostly healthy and you’ve followed fair processes when dealing with them).
If an employee raises a personal grievance, take time to consider your options - you have a couple of weeks to respond, after all.
Try to get to the bottom of the issue. If you feel the employee hasn’t given enough information, seek clarification.
The onus is on them to clearly state what the issue was. If there’s not enough detail (or the grievance was raised outside the statutory time period), the claim could well be invalid before it gets any further.
The employee will usually include the outcome they want, whether it is money, reinstatement etc. Weigh it up from a business perspective. It may be better to settle the claim with a payment so you don’t waste unnecessary time, money, and energy on it. But you may decide to contest a claim, especially if you strongly believe you are right and want to stand up for your principles and values.
If you are in doubt, get MyHR to sense-check your plan.
Once you are ready to respond, write back to the employee accepting or denying their claims and outline your side of the story.
If you accept their claims, offering to reinstate the person is good solution, wherever practicable. Short of that (the employment relationship may be too strained), reimbursement for lost wages or compensation for hurt and humiliation are other options to consider.
If you deny their complaint, the person may send you another letter pressing their case or they may invite you to attend mediation.
The best-case scenario is that they drop the claim. At worst, they will lodge a ‘statement of problem’ with the ERA.
You can also choose to go to mediation if you don’t think the claim stacks up.
The Employment Relations Act 2000 emphasises mediation in dealing with personal grievances and mediators can be accessed free (through MBIE) or hired from private providers.
Mediation gives both parties an opportunity to present and discuss their side of the story and to get help resolving issues from an objective professional. You don't need a lawyer but either party can take a representative, if they wish.
Mediators can only make binding recommendations if both parties agree.
It’s generally acknowledged that 90% of personal grievances get sorted out through mediation or a confidential settlement before they need resolution by the ERA or Employment Court
From there… the ERA
If you don’t reach an agreement, the employee can choose to take it to the ERA. This is where things get expensive and time-consuming, and you may well need legal representation.
Unlike mediators, the ERA can impose binding outcomes and penalties but either party can challenge the Authority’s ruling. From there, the case will go to the Employment Court (the final appellate court is the Court of Appeal).
If a claim does head to the ERA, you should think about whether time or money (or your principles) is more important, as it may be best to reach a settlement.
If you want to defend a personal grievance, we strongly recommend you get professional advice before going to the ERA.
Word to the wise: Start the employment relationship off right
According to the EMA statistics, most incidents that spark personal grievances occur in the first 12 months of employment and an employee’s chances of a successful claim with the ERA are highest within the first six months (around 82% on average).
MyHR provides all the tools you need for effective, easy-to-run recruitment campaigns that attract the best talent. Once you’ve found the right person, we can help kick-start the employment relationship with precise, legally-robust documentation, the perfect onboarding plan, and intuitive, self-service software.