Is ERA justice delayed, justice denied for employers?
Senior Associate Gerard Elwell spoke to the National Business Review to analyse the Act Party's new policy that would see Employment Relations Authority (ERA) members given a boot to work faster.
Follow the link to watch Gerard's interview with Senior Journalist Dita De Boni and read the full interview below:
Act Party leader David Seymour may well have been listening to employers in formulating his proposed changes to the Employment Relations Authority, but has he been listening to employment lawyers?
That was the question NBR put to Young Hunter Lawyers senior associate Gerard Elwell this week, in asking him to assess Act’s new pre-election policy that amounts to kicking ERA members up the backside to get them to issue decisions faster or risk being sacked.
To summarise what Act is suggesting just briefly: first, a requirement that the ERA deliver its written determinations within a month of the ‘investigation meeting’ concluding; second, that remedies (financial penalties against the employer) be removed from an employee if that employee’s behaviour contributed to the unjustifiable dismissal or unjustifiable disadvantage; and third, a ban on the ERA being able to unilaterally reinstate an employee after a personal grievance or dismissal.
The party’s main beef is that employers are being penalised for acting ‘swiftly and decisively’ when dealing with the breakdown of an employment relationship, and disgruntled former employees with wide-ranging claims of ‘unjustified dismissal’ can hijack employment relation processes for months if not years in retribution.
Elwell says Act is right in signalling some problems with processes in the ERA, but he is not sure of the party’s prescriptions to remedy the issues – and suspects Seymour et al have taken on the concerns of business rather than those of employment lawyers.
“I’m a little bit surprised – it does seem to be a bit of a knee-jerk response, or perhaps a misdirected approach to resolving some of the issues that are there,” he says.
“I just can’t see their ideas working that effectively in practise.”
Justice delayed = denied?
Elwell first tackled the Act policy that would see all ERA decisions released within a month. Given some of his cases have taken up to two years to resolve, he agrees there are roadblocks and says the old adage ‘justice delayed is justice denied’ is germane.
“[ERA processes are] expensive, time-consuming, stressful, and leave [the parties] in a state of uncertainty … so I think that needs to be acknowledged at the start. It’s not an area that is without its issues.”
However – and however laudable it may be to have decisions given in a month – the part of the process that takes the longest is not between when a decision is made and when it is delivered, he says.
For example, when someone files an application to be heard, that goes into a pool and allocated to a member, and that alone can take three to six months. Then there is another six to 12-month delay before a hearing can be scheduled, on top of interlocutory (provisional) matters around evidence and other key date-setting matters.
“That three-month wait at the end is probably not the most significant part of it,” he says.
However, he adds, it’s fair to critique the lack of accountability around the roughly 10% of ERA decisions not given within the 90-day period.
Resourcing
A lack of resourcing is one of the main issues for hearings not being held in a timely manner, with a spike of applications made over Covid that backed up and are still being worked through.
For a time, there had not been a full complement of ERA either, exacerbating delays.
But there are some solutions to these – the increased use of technology (giving evidence remotely) and more members; Elwell says decisions could be given orally instead of in writing to speed things up.
He also says the ERA has become very ‘court-like’, which is natural given it was established under statute to administer legislation, and is populated by people who were formerly lawyers, “but there does seem to be a level of formalisation, which restricts access to justice,” he says.
“My solution to that would be to have a ‘lower level’, such as a disputes tribunal, where parties could go if mediation failed, where a ‘referee’, not necessarily expert in employment law, would help resolve matters without the delays and the costs involved.”
But Act is talking about more stringent KPIs for ERA members without the carrots mentioned above, using a stick to force members to either meet the expectation of quicker decisions or be fired (“after going through a fair performance management process”).
Elwell called this approach “unusual”, saying it seemed a bit extreme to have a go at members of judiciary, with the ERA a court of special jurisdiction.
“I’m not sure how that will play out – it may even result in more cases being in the ERA from members that have been disaffected by being terminated!”
Remedies
Act says that at the moment, employment law states remedies (penalties) paid by the employer can be reduced if the actions of the employee contributed towards the situation that gave rise to a personal grievance.
But, in practise, the party says, employees who might already know that they deserved to be fired would “still have a shot at making some money off their employer, by tripping them up on procedural matters … even the threat of raising a personal grievance can be enough to force some employers to simply offer the employee a payout before being dragged through formal processes.”
Act intends to remove employee eligibility for remedies if the employee’s behaviour contributed in any way to the issue.
“That sets an incredibly high bar … Employment is a relationship and, by the time it gets to the ERA, it has obviously broken down to a significant degree – and who in any relationship that’s broken down is entirely faultless,” Elwell responds.
The employment law expert says the leeway that already exists for employers to make minor mistakes is sufficient and recognises when an employee is partly to blame. What is being proposed “effectively allows an employer to potentially just spot a mistake or error that an employee’s made and say, ‘right, there’s no claim here’.
“I think the outcome of that policy and practice would be manifestly unjust.”
Reinstatement
Finally, Act would remove the ability for the ERA to reinstate an aggrieved employee who has been dismissed or taken a personal grievance to the workplace at which he or she had the issue.
The ERA does do this in rare cases, and Act uses a couple of these decisions to bolster its argument. One was a small construction firm that had an employee who was fired after not turning up to work for eight days, and when asked about it over the phone, yelled at the employer. He was subsequently awarded $5520 in compensation and wages.
Elwell says in the case, the employee believed he’d been fired during the conversation and the employer did not clarify this understanding, issues that could have been avoided by using the 90-day trial or invoking the ‘abandonment clause’ in his employment agreement.
Elwell adds that the employer said in an interview, the ERA process had been generally pretty fair and he’d expected to pay a small amount. Act, however, claimed the employer had used the case as a warning to other companies to not hire people too quickly, and quoted him saying: “I’m a small business, I’m a single dad with kids to care for. I’ve run this company for 10 years, but it’s not like a company which has millions of dollars sitting in the bank to pay out to people.”
(In fact, the employer had said all of the above things to a Herald reporter.)
Elwell points out that, in practice, the ERA will only grant the application for reinstatement if it is “reasonable and practicable” to do so – and there are many reasons why an employer could successfully argue that it is not reasonable and practicable (such as loss of trust and confidence, elapse of time, difficulty reintegrating them into a team, among others).
He says under the Act policy, “if an employer was the sole arbiter of reinstatement, it would almost never occur – unless the employer had a ‘Road to Damascus’ epiphany.”
