Are awards of compensation in employment cases increasing?
There’s been a little activity on LinkedIn lately as a result of the release by the Employment Relations Authority of their Annual Report 2022.
What I have seen has largely been about the rate of delivery of determinations by the Authority. I have had everything from quick to slow, and the report shows that about 90% meet the target of being delivered within 3 months, and so this didn’t really capture my attention. What did, is their table of compensation awards from 2020 to 2022.
This information always interests me, because when involved in employment disputes, clients inevitably wish to know either what they might likely be awarded, or what they might be required to pay. It also has a strong influence on settlements and exit packages - something I am involved in regularly.
A chart from the report (taken from page 18) shows this:
There has been an increase in the number of determinations in 2022 (from 539 in 2020, to 581 in 2021, to 689 in 2022) and so comparisons between years have to be handled with care. What interests me is the spread - are the awards higher overall?
Up until about 10 or so years ago, I would quote to my clients that “70% of awards are $7,000 or less”, which I had calculated from a previous chart similar to this one. I had updated that to “80% are $8,000 or less” at some point. But some years ago I stopped quoting this, based on the belief that awards were increasing.
So was I right? I am no statistician, but based on my rough calculations (taking into account that the chart is not able to be exactly read) (and also is only in $5,000 segments), yes, things have changed.
My calculations reveal that the largest group of awards, 25% in total, are in the $5,000 - $9,999 range. Another 22% are from $10,000 - $14,999. That makes 47% of awards between $5,000 and $14,999.
Looked at another way, 60% are under $15,000. And to reach that 80% figure that I used to quote, the awards are up to $19,999.
Even with my mathematical limitations, it seems clear. This have changed compared even to 2020 and certainly from my figures ten years ago.
What is very interesting is that only 5% are $25,000 or more, a lower percentage than the last couple of years. Claims this high are often made by parties in dispute with their employer. But they are usually not realistic. Although the middle has changed, these high sums remain to be only awarded in the worst cases.
But still, it proves that I need something new to tell clients, so they understand their context. “About half are between $5k and $15k” - how does that sound?