Discipline and Grievances - What's the Cost?
Regardless of your businesses size and access to resources, dealing with workplace grievances or disciplinary processes will be challenging, time-consuming, and often costly. NZ case law makes it abundantly clear that ‘procedurally fair processes’ are extremely important in dealing with workplace issues; yet many employers are still failing to get it right. Although a common sense approach is often advocated, there is often a wide interpretation on what constitutes ‘common sense!
The importance of having documented, sound and robust company policies and procedures in place that are procedurally fair yet flexible enough to be able to be applied consistently in a variety of situations is key. Give careful consideration to who will be responsible for dealing with any issues and ensure that they are equipped to do so. They should understand the legal obligations, be familiar with the organisation's policies and procedures, capable of conducting a comprehensive investigation whilst following a set process and keeping meticulous notes. Any grievance must be taken seriously, dealt with in a consistent but fair manner, remain confidential and be handled expeditiously.
Handling issues within the workplace takes time and energy away from daily business operations. For discipline, the process is even more arduous. Allegations of misconduct need to be thoroughly investigated, documented and supported by evidence. To be procedurally fair any claims need to be clearly communicated to the employee concerned and any supporting evidence should be provided to the individual before a disciplinary meeting is held. The individual must be given time to prepare for any discussion, have access to support, and be given the opportunity to be heard prior to a final decision being made.
Failure to follow your own company’s policies and procedures, and/or a fair process, perceived unfair treatment and non-compliance with NZ employment law are just a few of the reasons that may bring about a personal grievance. People’s perceptions are their own and people can often feel aggrieved whether there is a real or perceived grievance. The EMA reports that most grievances occur within the first twelve months of employment and are most likely to be successful when raised in the initial six months of employment.
In terms of what a personal grievance will actually cost you, naturally like everything else these costs are on the rise. With figures noted from the last EMA briefing, in 2015 the average payment of an award for ‘hurt and humiliation’ was $6,344; up over $1000 on the previous year. There is no real win when it comes to having to defend a personal grievance accusation and this is evidenced by it costing employers an average of $46,032 should they lose (compared with an average cost of $39,134 in 2014) vs an average cost of $16,042 to win – again up from $10,881 in 2014. Win or lose it’s going to cost you.
The number of personal grievance claims has actually decreased by 27% - however, this could be attributed to the rising cost associated with defending one’s position along with the fact that companies are opting to settle grievances early avoiding the high legal fees associated with defending a case before the Employment Relations Authority. Employee success rates have remained solid with an average of 70% of employees continuing to win their cases.
Any way you look at it, it’s a lose/lose situation for an employer. Whilst the monetary side of a personal grievance will hurt employers in the pocket whether you win or lose, there is also cost to your business which is difficult to measure in monetary terms. On a more individual basis consideration needs to made around the cost of lost productivity due to time spent dealing with and preparing for the hearing, the negative impact on other team members morale, how the publicity may affect the business, and the cost of replacing that person if need be.
Managing the people side of your business is not always easy – your people should be your biggest asset but as evidenced here, can be your biggest liability when issues arise and things don’t go to plan. Another incentive for business owners and managers to ensure they are well equipped, informed and encouraged to seek professional advice on employment processes when needed.
Source: EMA Winter Briefing 2016
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