Increasing ERA payouts for workplace bullying

Published 11 July 2024 | 2 min read

Workplace bullying and harassment have long been a pervasive issue in New Zealand offices, but the scale of harm caused to employees is now becoming more widely recognised. Employees subjected to bullying suffer not only immediate stress and anxiety but also long-term mental health issues, decreased job satisfaction, and diminished productivity. These personal impacts are profound and far-reaching, affecting their overall well-being and performance at work.

Increasing financial burden on employers

Employers are now facing a stark reality: the financial cost of workplace bullying is escalating. The Employment Relations Authority (ERA) is increasingly recognising the severe harm caused by bullying and harassment, leading to substantial compensation awards for affected employees. This trend is a clear signal that managing workplace bullying is no longer optional but a crucial aspect of business operations.

A recent report by the Te Kāhui Tika Tangata Human Rights Commission and KPMG, titled Counting the Cost: Estimating the economic cost of workplace bullying and harassment on New Zealand employers, highlights the staggering financial impact. The report estimates that bullying and harassment cost New Zealand employers around $1.5 billion annually. This figure, considered conservative, underscores the significant economic burden borne by businesses.

Key Case: Parker v. Magnum Hire Limited

The case of Parker v. Magnum Hire Limited [2024] NZERA 85 exemplifies the consequences of failing to address workplace bullying effectively. Key points from the ERA decision include:

• NZ$50,000 for bullying: Parker's disadvantage grievance.
• NZ$5,000 for suspension: Compensation for the unjust suspension.
• NZ$50,000 for constructive dismissal: Acknowledgment of the severe impact on Parker's employment.

The ERA's decision in this case reflects a growing willingness to impose higher compensation awards, particularly in situations involving serious health and safety risks.

Future benefits addressing workplace bullying

Understanding and addressing workplace bullying proactively can yield numerous benefits for businesses. By fostering a safe and supportive work environment, employers can:

• Enhance employee well-being and job satisfaction.
• Boost productivity and performance.
• Reduce absenteeism and staff turnover.
• Foster a positive company culture and reputation.

Investing in measures to prevent and manage bullying not only mitigates legal and financial risks but also creates a healthier, more productive workplace.

How can you proactively solve this?

To achieve these positive outcomes, New Zealand employers should consider the following steps:

Implement clear policies

Establish comprehensive bullying and harassment policies, ensuring they are well-communicated to all employees.

Provide training

Conduct regular training sessions on recognising, preventing, and addressing bullying and harassment.

Designate Independent Contacts

Appoint independent personnel to handle complaints, ensuring impartiality and confidentiality.

Foster Open Communication

Create an environment where employees feel safe to report issues without fear of retaliation.

Regularly Review Practices

Continuously evaluate and update policies and practices to ensure they remain effective and relevant.

The rising cost of workplace bullying compensation is a wake-up call for New Zealand employers. The ERA's increasing consciousness of the harm caused by bullying and harassment highlights the urgent need for businesses to address this issue comprehensively.

By taking proactive steps to create a safe and supportive workplace, you can protect your employees, enhance productivity, and avoid significant financial liabilities. Embracing these changes is not only a legal and ethical responsibility but also a strategic investment in the future success of your organisation(s).