Did you know that you can win your personal grievance claim but still lose?

This happens when you convince the Employment Relations Authority that you were unfairly dismissed, but for one reason or another, you come out worse off financially than when you began.

Imagine spending $230k in legal fees to hire a lawyer to win your case, but only getting $51k in compensation and not recover all of your costs. That’s happened before.

You might wonder how that is possible.

FINISHING WHAT YOU STARTED…

Usually, if you start a legal proceeding, you are committing yourself to seeing it out to the bitter end.

Even if you win your claim in the Employment Relations Authority, the other side can challenge the outcome to the Employment Court – which often means you start the whole hearing afresh, as if you had never been in the Authority.

And in limited circumstances, one side can appeal an Employment Court decision to the Court of Appeal. By which time, costs will have mounted significantly and consumed a couple of years of your time.

That’s a worst-case scenario. Most cases don’t get to the Employment Court, let alone the Court of Appeal. But many claimants have started legal proceedings thinking they would be quickly resolved, only to find themselves still receiving regular legal bills two years down the track.

You could of course choose to settle the matter, but it takes two to tango, and if the other side is not interested in settling, then that is not an option. And the prospects of settling a claim get harder as both sides incur greater costs.

That’s one way in which your costs can eventually exceed the value of your claim. And even if you win, rarely will you recover all of those legal costs from the other side.

WHEN YOU CONTRIBUTE TO THE SITUATION

Now, if the value of your claim is significant, you may not be as concerned about what it will cost to win your personal grievance.

Yet, you should also bear in mind that the Authority (and the Court) have complete discretion to decide what to award you if they find you were unfairly treated.

In rare cases, the Authority can decide that even though you have been unfairly treated, it would not be right to award you any remedies. (Pyrrhic victory, anyone?)

Even if they decide that the other side should pay you something, the Authority must always consider whether you contributed to the situation.

If they think that you did, then they can reduce your remedies by up to 50% (a reduction of more than this is unlikely, given recent comments by the Employment Court).

EXAMPLE

Let’s say you lodge a claim for unjustified dismissal in the Employment Relations Authority.

The Authority hears your case over the course of a one-day investigation meeting and agrees that you were unfairly dismissed. It further decides that your former employer should pay you something to put things right.

Let’s say that they decide you should get $10,000 in compensation for the hurt and humiliation you suffered as a result of the way you were treated.

But let’s also say that the Authority thinks you contributed to the dismissal – maybe you really did steal something but the employer’s investigation was shoddy, or you made the disciplinary process unnecessarily difficult. So the Authority directs that your award of $10,000 should be reduced by 50% to $5,000.

Because you won your case, you would typically get back costs of $4,500 for the initial day in the Authority. (The Authority doesn’t care too much about how big your legal bill was. They tend to give awards of costs at this flat rate.)

So overall, your former employer would have to pay you $9,500 (being $5,000 compensation plus $4,500 you recoup for your costs).

“Great!” you think.

But let’s say you spent $10,000 in legal fees going through the process of mediation and then a full investigation in the Employment Relations Authority.

In this case you have won the battle, but lost the financial war – because the net outcome would be a loss to you of $500 ($10,000 legal costs minus the $9,500 awards you received from your former employer).

CONCLUSION

Taking a personal grievance to court calls for careful assessment of your likely outcomes.

A lawyer can help you with making this assessment, as it involves understanding what the Authority typically decides and how much they usually award for winning cases like yours.

It is also wise to consider the risk that the claim may take longer to be resolved than you would like – extending to challenges in the Employment Court and the Court of Appeal, in the worst-case scenario.

These economics are why employment law cases often settle in mediation – 80% are settled without being heard by the Authority.

There will of course be cases where the economics make sense – where the awards will be greater (usually if you have lost wages as a result of the dismissal, this will increase your awards a lot), there is a low risk of contribution reducing your remedies, and you have a good grasp on your legal costs.

Some claims are genuine wins – just make sure yours is too.