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Much to the astonishment of many employment lawyers in New Zealand, the Employment Relations Authority (ERA) recently issued a noteworthy determination, in which a significant amount of compensation was awarded in favour of an employee who had endured severe bullying in the workplace. In the case of Parker v Magnum Hire Ltd [2024] NZERA 85, Mr Parker was awarded $105,000 as compensation for hurt and humiliation, along with lost wages. This case has the potential to establish a precedent, paving the way for comparable compensation awards to be made in cases involving moderate to severe breaches of employment law by employers.
Mr Parker was employed as a Manager by Magnum Hire Limited (Magnum) for nearly 12 years. He raised several grievances against the company and Magnum's director (Liam Field) for unjustified disadvantage, unjustified suspension and constructive dismissal. Mr Parker claimed that Mr Field bullied and psychologically abused him.
The ERA noted that while bullying itself does not give rise to a personal grievance, it serves as grounds for lodging a claim for unjustified disadvantage due to the failure to ensure a safe work environment. The ERA concluded that Mr Parker was subject to extensive unreasonable personal attacks as well as task-related attacks from Mr Field, which Magnum was clearly aware of. As there is no definition of bullying in the Employment Relations Act 2000, WorkSafe New Zealand provides a guide on what is considered bullying, which was adopted by the ERA. It is considered bullying if the behaviour:
(a) Is repeated and unreasonable;
(b) Is directed at a worker (or group of workers); and
(c) Can lead to physical or psychological harm.
The ERA concluded that Mr Field's behaviour constituted bullying. It also found that Mr Parker had an unjustified disadvantage claim, given that the risk of harm was foreseeable, and Magnum failed to protect Mr Parker from that harm and failed to provide a safe working environment for him.
Mr Parker was awarded compensation of $50,000 for his bullying claim, $50,000 for his constructive dismissal claim and $5,000 for his unlawful suspension. In addition, Mr Parker was awarded $32,463.69 in lost income and a $1,000 penalty for Magnum's failure to provide compliant wage and time records and holiday and leave records. Mr Parker's psychologist fees were also to be recovered as special damages.
The ERA requested that Magnum implement a Bullying and Harassment Policy and Code of Conduct with a clear avenue for employees to make complaints and report bullying.
Last year, the Chief Judge of the Employment Court updated the quantum of the bands for compensation awards. The updated bands are now as follows:
Band 1: (low-level loss or damage): up to $12,000 (previously up to $10,000);
Band 2: (mid-range loss or damage): $12,000 – $50,000 (previously $10,000 – $40,000); and
Band 3: (high-level loss or damage): over $50,000 (previously over $40,000).
This landmark ruling by the ERA underscores the legal ramifications of workplace bullying and further highlights the need for employers to take proactive measures against such workplace misconduct. The decision sets a precedent for employers, emphasising the imperative to address workplace bullying to ensure a safe and respectful work environment. It is also evident that the ERA followed the updated quantum for awarding compensation.
As a side note, this is a reminder for employers that the adult minimum wage is increasing on 1 April 2024 from $22.70 to $23.15. If you have employees on minimum wage, you need to let them know in a letter or email advising them of their new wage, this serves as a variation of their employment agreement. This is a good opportunity to review your employment agreements and policies.
© McVeagh Fleming 2024
This article is published for general information purposes only. Legal content in this article is necessarily of a general nature and should not be relied upon as legal advice. If you require specific legal advice in respect of any legal issue, you should always engage a lawyer to provide that advice.
