The allocation of legal costs in employment litigation is governed by the Employment Relations Act 2000 and the practices of the Employment Relations Authority (the Authority) and the Employment Court. The general principle is that costs usually follow the event, meaning the unsuccessful party is typically required to contribute to the legal costs of the successful party, in addition to bearing their own costs.
The Authority and the Court have broad discretion to award costs and expenses, including witness expenses, as they deem reasonable. Costs are intended to compensate the successful party for expenses reasonably occurred. Costs are not intended to punish the unsuccessful party. Factors such as the conduct of the parties, the complexity of the case, and the financial position of the unsuccessful party may influence the amount of costs awarded.
Negotiation
If you can successfully negotiate a settlement without it escalating to formal litigation, you can, and should, ask that the other party contribute to your legal fees. However it is not guaranteed that they will agree.
Mediation
In mediation, parties are generally expected to bear their own costs of representation. Costs incurred during mediation are typically not recoverable, even if the matter proceeds with the Authority or Court, and one party is successful. However, if you settle in mediation, you may negotiate coverage of legal fees or a contribution to legal fees as part of the settlement. Again, it is not guaranteed that they will agree.
The Employment Relations Authority
If you are the successful party in the Authority, you are entitled to claim costs. This applies whether you were the one pursuing the claim or defending it. An award for costs in the Authority covers both your professional representation fees and other reasonable expenses you incurred. The Authority Member has the power to determine who must pay costs and how much they must pay.
The Authority uses a notional daily tariff as a starting point for assessing costs, which is currently set at $4,500 for the first hearing day and $3,500 for subsequent days. This tariff may be adjusted upwards or downwards based on the circumstances of the case. For example, if a party’s conduct unnecessarily increased costs, this may lead to an increase in the costs awarded. Conversely, financial hardship or other mitigating factors may result in a reduction in costs.
What if I Self-Represent?
Self-represented litigants are generally not entitled to recover costs for their time and effort, although they may claim disbursements and, in some cases, certain expenses. Exceptions exist for representation by in-house counsel, union officials, or other authorised representatives, though the recoverable amount may be lower than for legal counsel.
The first step in getting support is to talk with a lawyer from Frontline Law about your situation and see what options we can offer you. Contact Frontline Law for a free initial consultation.
*The information in this blog post is general in nature and is not legal advice. If you need advice, you should contact us about your specific situation.
