A commonly used remedy available to an employee who has successfully established a personal grievance in the Employment Relations Authority or the Employment Court (Employment Institutions) is compensation for humiliation, loss of dignity, and injury to feelings. This is sometimes referred to as compensation for “hurt and humiliation”.
The Employment Court has recently revised the framework that guides compensation awards for injury to feelings in the decision of GF v Comptroller of the New Zealand Customs Service [2023] NZEmpC 101 (GF). In this case, the Court considered whether Customs’ dismissal of a port worker who failed to get vaccinated during the COVID-19 pandemic was justified. Before delving into the substance of the updates in GF, we will consider the origins of the banding framework.
In the 2017 case of Archibald v Waikato DHB [2017] NZEmpC 132 (Archibald), Chief Judge Inglis introduced the concept of “bands” which were established as a framework to help guide the awards of compensation for “humiliation, loss of dignity, and injury to feelings”.[1]
Quantifying compensatory awards is highly fact-specific and based on the individual’s specific circumstances and the harm that they have suffered. The aim of these bands is to achieve greater certainty and consistency in the employment jurisdiction for employees and employers.
The bands introduced in Archibald for the level of loss or damage awarded in respect of injury to feelings were:
For any award of compensation, the Employment Institutions will expect to see evidence of the impact on the employee. This is usually by way of verbal evidence (e.g. the employee or friends/family explaining the way in which the employee has suffered an injury to feelings) but may also be supported by medical evidence (e.g. information regarding doctors’ visits, details of counselling sought, or reports from psychologists/psychiatrists). Where the employee is alleging very significant damage or injury, the Employment Institutions would usually expect to see some form of corroborating evidence – typically medical evidence to substantiate the employee’s claim.
Despite the introduction of these bands in 2017, the Authority and its members appear to have shown a reluctance to adopt or refer to the three bands in their determinations when ascertaining the correct level of compensation.
For example, from January 2020 to December 2021, there were 260 determinations where compensation for injury to feelings had been awarded. From those determinations, only 40 referenced either Archibald or Richora (another leading case from 2018 where the Employment Court provided further direction on the banding approach), and of those only 21 referred to the banding principles. While this may be due to the fact that parties’ submissions failed to refer to these cases, it is also likely that in various instances Authority members have chosen not to implement the bands.
So, what has changed?
In the GF case, the Chief Judge acknowledged that it had been some time since the quantum of the bands in Archibald were reviewed and the bands were outdated. As a result, the Chief Judge updated the bands to ensure that they accounted for inflation.
The Reserve Bank’s inflation calculator was applied to the bands in Archibald and the revised bands are as follows:
Where to next?
Following GF, it appears that the Employment Institutions have applied the new banding approach to the calculation of quantum when deciding compensation for injury to feeling. This new approach has been evidenced in at least 17 reported cases in the last 8 months.
We foresee this trend continuing not only in future cases in the Employment Institutions but also in the compensatory awards sought and provided to employees in confidential records of settlement (signed by a mediator in accordance with s 149 of the Employment Relations Act 2000) for employment related matters.
As indicated by the Chief Judge in GF, it is also likely that the bands could increase again in future cases.
Authors: Alison Maelzer and Kirby Kleingeld
[1] Employment Relations Act 2000, s 123(1)(c)(i).
[2] Richora Group Ltd v Cheng [2018] NZEmpC 113.