Consider Settlement Offers Carefully

Terry Watson was dismissed by his employer because of misconduct towards other employees. Mr. Watson took a personal grievance claim against his former employer, Oceana Gold, and they made him a settlement offer that included:

• Withdrawal of the letter of dismissal and an agreement to record the termination as a resignation;
• The issuing of a certificate of service;
• Facilitation by the employer of Mr. Watson’s First Line Management Certificate, at the company’s expense;
• Tax free - the sum of $13,000 compensation pursuant to s. 123(1)(c)(i);
• $5,000 plus GST towards Mr. Watson’s legal costs.

Mr. Watson rejected the offer and went to the Employment Relations Authority. He won $7,226, but was ordered to pay the employer’s costs of $8,601. As a result of having rejected the settlement offer worth $28,000, Watson ended up having to pay the employer $1375. Why? Because he rejected the reasonable offer made by the employer.

This case illustrates two points. Firstly, that it usually better for you as an employee to settle your case as early in the process as possible - at the exit negotiation or mediation stage. Early settlement usually leads to the best financial outcome for the employee (and the employer!), it allows for confidentiality and references, it is quick, and it keeps legal costs as low as possible. Naturally, not every case is able to be settled and some do have to be taken to the ERA, however, employees need to be careful that if they do choose to take their case to the ERA that this is in their best interests. The second point is this: we don’t know what legal advice Watson was given and we make no comment or criticism of his representative, but a quick internet search shows that there are many employment lawyers who seem to view the Employment Relations Authority, or worse, the Employment Court, as the first and only port of call. The only thing that can be guaranteed from that kind of tactic is large legal fees. When choosing someone to act for you, choose carefully. 

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10859785