Advice for Employers Facing a Personal Grievance Claim

Although most of our clients are employees; we do also act for employers. Our approach in acting for employers advised of a personal grievance claim is as follows:

• We need to ask questions: What actually happened? Is there some truth to the employee’s claim? What do we know about the employee’s motives and personal characteristics? We need to analyse the chances of success and likely outcome. This information must be the first step so that we can advise the employer whether it is better to try and settle, and how best to settle the claim (if settlement is advised).
• What amount of money is being claimed? Given that the usual maximum successful claim is 3 months loss of wages plus a tax free award (possibly between $5,000-$10,000) plus a contribution towards legal fees (not full legal fees); any amount claimed which is much larger than this must be treated with suspicion. We also need to be mindful of the rare situations where larger awards are justified.
• An unrealistically large claim might mean that the employee has someone incompetent acting for them, that they are having “a go” – hoping that the employer caves in and agrees to pay a ridiculous amount, or that they are on some kind of crusade.
• We need to consider whether the employer will be better off trying to settle the case by ignoring the claim, by seeking a direct negotiation, or by getting the case into mediation. In doing so we weigh up the legal costs and inconvenience to you of each stage of defending the case, versus, the likely settlement and any message that a settlement might send to other employees.
• If the employee sticks to an unrealistically large claim, or their case is a bad one, the employer may be better off refusing to settle and letting the case go to mediation at an early stage. The benefit is that the mediator is likely to be able to support the employer’s position and put pressure on the employee to be sensible.
• Consider what it is that the employee is actually seeking and how settlement offer items can be substituted for each other. For example, a tax free offer for hurt and humiliation will mean that the employee is better off as they receive more in their hand; the employee might therefore agree to take less for lost wages in exchange. Are the employee’s feelings hurt? If so, an apology might go a long way in obtaining settlement. How valuable is the employee’s future career? Promising to provide a positive reference (where this is appropriate), might also reduce the amount of cash required to be paid to the employee.
• If the employee is having “a go” with a hopeless claim we need to discuss how you feel about paying a small amount to make the claim go away versus the moral principle of paying for something you shouldn’t have to.
• Settlements must protect you from further claim by the same employee. Confidentiality and a possible variation of the employment agreement are also issues to be considered in the settlement. There are important procedural steps that need to be followed to ensure that the settlement agreement is a strong one.

If you have any questions please contact us in confidence to discuss.