Max Whitehead: Costs put employment justice out of reach of ordinary folk

Paying for professional assistance is likely to cost you more than winning the legal case. Photo / Getty

By Max Whitehead

An honest lawyer tells an employee she is likely to win $10,000, but her legal fees will be $12,000. Another lawyer tells the small business employer that it will cost $50,000 to defend them. Nobody in their right mind would use lawyers or representatives if they could avoid them, so why do they use them?

The legal complications and judiciary make it a mug's game if you try and take or defend a claim without a representative. Not a great start if you're an employee with limited means. Add to this that when considering raising a grievance or going to mediation services, the advisers on the end of the line at the Ministry of Business, Innovation and Employment virtually tell every caller to engage professional assistance.

The same advice comes from the ministry's mediators and the Employment Relations Authority members (who hear and decide case outcomes).

Sadly, if you do get professional assistance, you will likely end up paying that professional more than you win. Now, that is if you win. If you don't, you not only have to pay your professional fees, you will also have to pay a hefty contribution of the other party's lawyer or advocate fees.

It does not get better if you end up at the Employment Relations Authority further down the track. In fact, it gets worse. In short, it is too legally complicated, time consuming and costly for either party, particular employees. You cannot reasonably tell someone who is desperate and jobless to spend money they don't have in order to make life easier for the authority to do its job.

The Employers and Manufacturers Association reports the average cost for an employer to take a matter to the Employment Authority in 2016 and be unsuccessful was $50,501. Even if they are successful, the average cost was still $11,781. Ultimately, the risk of going to the Authority for an employer is so massive that they are incentivised to settle a matter, even if they are in the right.

If you do get professional assistance, you will likely end up paying that professional more than you win.

Max Whitehead

On the other hand, the costs for an employee for a successful or unsuccessful outcome from the authority only differs by about $500. This shows the awards the authority dishes out are too low to justify employees taking a matter to the authority.

There are however advocates who do not have a legal practising certificate and are able to assist the parties at a much lower cost than lawyers. What's more if you win your case the authority can order the other party to pay a healthy contribution to your legal costs.

Unfortunately, the Employment Relations Authority favours lawyers over advocates, presumably because the lawyers present their cases in a way that make the authority's life easier.

Recently the authority announced that unregulated employment law advocates will be awarded lower costs than lawyers. The effect of this is the employees or employers who engage these cheaper, unregulated advocates and win their case are now penalised for not using a lawyer.

This stance will move the affordability of justice further away from those who need it most. Taking all the above into consideration, it shows that sight has been lost of the primary purpose of these employment institutions, enabling ordinary people to have access to justice.

• Max Whitehead has a human resources and employment consultancy.