Your rights: Cost of defending the decision to fire

By CHRIS PATTERSON


Q. Earlier in the year I fired an accounts manager for taking backhanders from a couple of key clients.

I took advice on the process to be followed and this resulted in the manager's dismissal.

The manager's actions, apart from being dishonest, has put my company in a difficult position which is likely to have an adverse effect on the business. We now have received a claim alleging that the dismissal was unjustified.

The former manager claimed for lost earnings, compensation for stress and legal costs.

We attended mediation. The mediator told us that we probably could successfully defend the claim.

However, the mediator recommended that we pay the account manager $2000 because it would cost us more in legal costs even if we successfully defended the matter.

The mediator also told us that the manager's advocate was working on a no-win, no-fee basis and therefore the manager had nothing to lose.

We feel we are being subjected to extortion. Surely there is something that we can do?

A. The first thing you should do is make sure you have completed a thorough risk analysis.

Your net cost of defence will depend on a number of factors. The largest factor is likely to be whether you can successfully defend the matter. Your only other costs will be the legal costs and lost management time if you can successfully defend the claim. You should keep in mind that if you are successful that you will only be entitled to a contribution towards your reasonable costs.

The Employment Relations Authority does not, as a general rule, order large contributions towards costs. The average daily rate for costs awards is between $1800 and $2500.

I suggest you consider the following. You could make an offer of settlement of, say, $500 on a without prejudice save as to costs basis. This means that if the offer is rejected and you do successfully defend the claim you will be entitled to raise the existence of the offer with the Authority.

The Authority should take into account the fact that a reasonable offer of settlement was made and rejected forcing you to incur costs that you should not have.

Litigation is not a sport and unsuccessful parties should take at least some responsibility for forcing the other party to incur costs. This is especially so when they have turned down reasonable and earlier offers of settlement.

You may wish to consider filing a counter claim. You may as well put your hand out if you are going to be dragged into an Authority investigation meeting. Based on what you have indicated, your company may be able to seek damages against the former manager for breaching his\her employment obligations. Even if you cannot establish any quantifiable loss you could seek a penalty up to $5000 for each provable breach of the manager's employment obligations.

A counter claim may also assist in the resolution of the employment relationship problem. Your former manager might realise that he\she might be better off simply moving on.

There is little you can do about the former manager's advocate working on a "no win, no fee" basis. The law is about to change shortly in an attempt to bring such contingency arrangements to an end.

However, I do not believe that the proposed law change will make any difference. The New South Wales solution was to make lawyers and advocates responsible for certifying that claim has merit and in the event that it is found to totally lack merit the lawyer and the advocate can be personally responsible in part or wholly for the defendant's legal costs.

Another change which would have a positive effect on the so-called grievance industry is for costs awards to be increased to reflect the real cost of defending claims.

Some lawyers and advocates appear to charge about $1800 just to open a file. The introduction of more reasonable and realistic daily rates would act as a positive disincentive to claimants who are simply bringing a nuisance claim in the hope of a quick payout.

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Q. I am waiting for a decision from the Employment Relations Authority concerning my personal grievance for unjustified dismissal.

I have other claims against my employer such as breach of employment contract and defamation etc which I have yet to lodge. Should I have to wait until the outcome of my personal grievance case is known and then file my claims? And what should I do with my other civil/legal claims?

A. Ideally, you should have filed all of your claims at the one time. The sooner you file your other claims, the sooner they will be dealt with by the Courts.

You have 12 months to bring your breach of employment agreement claim if you are seeking to recover a penalty against your former employer. However, you have six years to bring an ordinary breach of contract claim and any tortuous (civil wrong) claim such as a defamation claim.

The advantage of waiting on the outcome of the Authority's determination is that you will know where you stand in respect of the matters that were investigated by the Authority.

Employment Relations Service

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