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Good employment relationships are central to a business’s success. However, sometimes these relationships break down. When this happens, the parties may be able to resolve the problem between themselves or at mediation. Where a matter cannot be resolved informally, or urgent relief is required, either party may refer the matter to the Employment Relations Authority (Authority).

Where a matter is resolved at mediation, the parties often agree around contribution to legal costs.

Costs in the Authority are an important factor to consider, and we set out below the rules for recovery of costs by a successful party in the Authority.

What are costs awards?
When a claim is heard in the Authority, the Authority may order the unsuccessful party to pay costs to the successful party. The successful party can generally expect some contribution from the unsuccessful party, but the contribution is typically not representative of a party’s true costs.

Parties are encouraged to agree on costs between themselves. However, if they cannot agree, the Authority has the power to order the unsuccessful party to pay the other party costs and expenses that the Authority considers reasonable.

How much can you get awarded in costs?
The Authority has a ”daily tariff” system as the starting point for assessing costs. Currently, the daily tariff of costs is $4,500 for the first day spent in the Authority, and $3,500 for subsequent days.

Costs may be adjusted upwards or downwards based on various factors. For example, costs may be reduced if the successful party’s behaviour unnecessarily increased costs, the successful party did not succeed on all the claims they made, or if the unsuccessful party can show that paying the costs would cause them considerable hardship. Costs may be increased if the unsuccessful party made arguments that had no prospect of success, or the unsuccessful party previously turned down an effective settlement offer. Making reasonable, without prejudice offers of settlement, can assist and be referred to when seeking a costs uplift.

However, parties should be aware that the costs of having your case heard will generally be greater than the amount that may be awarded in costs, and therefore even successful parties will likely find themselves out of pocket after having their case heard.

Recent changes to costs
The Authority recently released a practice note with changes regarding costs. From 2 May 2022, the following categories of a matter are not subject to a daily tariff and the parties are to bear their costs:

  • referrals for bargaining facilitation;
  • disputes about the application, interpretation or operation of a collective agreement;
  • pay equity processes;
  • screen industry processes;
  • fair pay agreement processes;
  • collective bargaining disputes;
  • disputes about access to workplaces; and
  • fixing of the terms of a collective agreement.

For example, for parties involved in collective bargaining, there is now a presumption that costs awards will not be made for disputes that may arise during this process.

For other matters, such as personal grievances and breaches of employment agreements, the Authority states that the parties should evaluate what they do in those proceedings on the understanding, if unsuccessful, they will usually have to contribute to the costs of the successful party, as well as meeting their own costs.

If a party does pursue a claim in the Authority, it should be aware that it is unlikely to recover its full costs, if successful.

If you need advice on employment matters, including resolving an employment dispute, feel free to get in touch with our employment team.