Why employment law needs a shake-up - Max Whitehead

The coalition Government has promised to simplify employment law, which is a step in the right direction. Photo / 123rf

Opinion

OPINION

The issue of overly complicated litigation law is a worldwide phenomenon, and New Zealand is no exception. For the past decade, various governments have promised to simplify employment law but have only made it more complex. Some good examples are the Holidays Act and the Employment Relations Act.

Our new coalition Government, formed by the National Party, New Zealand First and Act, has promised to simplify the employment personal grievance process.

However, there are concerns making the process easier would only increase the personal grievance industry and increase the exploitation of vulnerable employees and small employers by cowboy lawyers and advocates.

The current personal grievance process is out of the financial reach of the ordinary person. In 2020, the Employer and Manufacturers Association (EMA) stated that personal grievances cost employers an average of $57,196 if they lose and individual employees $14,866.

The process which requires the parties to attend mediation before proceeding to the judiciary is flawed.

The free mediation service provided by the Government has mediators who are not empowered to make any decisions and their performance is measured on how many resolutions they can achieve, rather than what is deemed justice under the circumstances.

The average mediation takes at least three hours and, due to the complexities of employment law, most players realise they would be foolish not to pay for professional representation such as lawyers or advocates.

After three hours, both parties are reluctant to progress due to costs being served instead of justice. Usually one party will cave in and agree to settle the matter for economic reasons. It’s rarely about justice. It generally comes down to who has the deepest pockets.

Matters that are not resolved at mediation are progressed to the Employment Relations Authority (ERA) which has unfortunately evolved into a mini-High Court via overcomplicating matters unnecessarily.

For example, a simple pay arrears case for an employee who had an employment agreement signed by the organisation’s chief operating officer turned into a two-day hearing.

First, to determine if the person was an employee, then another two-day hearing to decide if the employee should be paid wages as per the employment agreement. Three years have passed since the employee asked the ERA to intervene and a decision still has not been made to date, despite the last hearing being over three months ago.

The solution

The solution is to dispose of the Employment Mediation Service (EMS) and ERA, and replace them using the existing Disputes Tribunal based out of the District Court for resolving employment matters.

In that forum, parties represent themselves without representatives and a referee makes a final decision based on the law after hearing the arguments. This would ensure swift and fair resolutions for all personal grievances.

If the matter was appealed, it would go directly to the Employment Court. This would eliminate both the employee and employers the costs for legal assistance to attend the EMS and the ERA. Both these institutions have become a burden to justice and a unnecessary expense for those seeking justice.

The coalition Government has promised to simplify employment law, which is a step in the right direction.

However, it needs to ensure the Disputes Tribunal does not become overly litigious or complicated so parties are not again exploited by money-hungry lawyers or advocates. This is the way ordinary people access a swift and fair resolution to employment issues at minimal fuss and cost.

The elimination of the EMS and ERA, unnecessary and poorly functioning Government institutions, will save taxpayers hundreds of millions of dollars.

Max Whitehead is the managing director of Whitehead Group Employment Solutions.