By GEORGINA BOND
Many businesses are opting to pay up rather than resolve employment conflicts in the Employment Court, an Auckland Chamber of Commerce survey shows.
Of the 360 businesses who responded to the survey, 22 per cent had chosen to pay rather than go to court, despite evidence they had strong cases.
Legal costs and the slow court process were cited as the main reasons for not using the court, along with a lack of confidence in the system.
Chamber chief executive Michael Barnett said the results confirmed a perception of the business community that the cost of justice was too high, and the Employment Court system biased towards the employee.
Barnett was surprised at the number of businesses choosing to pay out.
"It suggests the system is wrong, and needs to be looked at," he said.
The results form part of the chamber's August Feedback for Government survey that aimed to identify issues of concern for businesses.
Most settlements described by the businesses averaged between $5000 and $6000, with a number reaching $25,000 and some as high as $60,000.
In all cases, respondents indicated that despite strong confidence in their reasons for dismissing an employee, it became clear the legal costs of a court hearing would be greater than the settlement - even if it were won.
One respondent, who paid a $10,000 settlement fee, said it was the cheaper option, "even though it was effectively blackmail by the employee's representative".
Another business said it cut its losses with a $30,000 settlement because it "didn't want the hassles of court".
Solicitors of one business advised a $5000 settlement, saying the Employment Court was prejudiced against employers.
A business that paid a $45,000 settlement said time, lawyers' fees and the law were stacked against the employer. Another chose to pay $6700 because "the law is totally against employers' rights".
Barnett said the purpose of the survey was to tell the Government of the issues concerning business. It dealt with four issues, including the Inland Revenue Department and compliance costs, the Resource Management Act, the lack of employment contracts among small to medium enterprises, and Employment Court costs.
Barnett said he thought a remedy to restore business respect for the judicial system and the court was required.
He suggested Employment Court hearings be reserved for big cases with a system of mediation for claims of less than $40,000.
Firms pay out to dodge courts
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