This blog sets out the principles that the Authority or Court will apply when deciding whether an employee should have lost income reimbursed, and how much should be paid.
In an employee has lost income because of an unjustified dismissal or other wrongdoing, the employer can be ordered to reimburse the employee.
The lost wages must have been caused by the wrongdoing, not an unrelated issue.
Normally, the minimum amount an employee is reimbursed is their actual losses, or three months income, whichever is lower. However, the Authority or Court will also consider the nature of the wrongdoing, undue damage to the employer, effect on other employees, and the future employment or impact on the employee. Some of these factors might be particularly relevant to a small employer.
A very important issue is that the employee has a duty to mitigate their losses. This means that an employee cannot do nothing (unless there is a good reason) while their claim is being resolved, they have to try and reduce their losses, normally by looking for another job.
An employee doesn’t have to get any other job, they need to try and find one of a kind that the person would reasonably be expected to accept having regard to their experience and personal history. A brain surgeon wouldn’t be expected to take a job as a bus driver, and that is no slight to bus drivers who would also not be expected to be a surgeon!
An employee should take all reasonable steps to look for other work and keep a record of their efforts. This means keeping notes about how they are searching for jobs, what search terms they are using, and why they are not using broader search terms. An example note could be “On 2 February search the seek website for all hospitality jobs in or around Otago, found 10 vacancies, 3 were not suitable because they required a duty manager’s certificate, 2 were not suitable because the hours were not compatible with my child care responsibilities, sent applications for the remaining 5 vacancies”. The employee should keep records of the applications made for jobs, and the outcome of those applications, which would normally be emails.
This means that when the employee comes to a hearing in the Authority or Court, they can show clear evidence of exactly what they have done to try and find another job.
If there is a reason why a client cannot look for other work, this should be clearly recorded and where possible supported by evidence. For example, if a person is so stressed and unwell because they lost their job, a medical certificate saying they are unfit to look for other employment would be helpful.
In summary the key points are:
- An employee is normally entitled to reimbursement of lost income, if that loss is caused by wrongdoing by their employer.
- This is normally capped at three months, but can be increased if the employee has made all reasonable attempts to mitigate their losses, normally by looking for other work.
- Reimbursement of lost income can be decreased if reasonable efforts have not been made to mitigate losses.
- Notes and supporting information should be kept by employees, so that they can be provided at a hearing to show what efforts they have made to mitigate their losses.
If you think that you could be having employment problems with something that has happened outside the workplace, it is important that you get advice early. This will give you the best chance of resolving issues quickly. Contact Frontline Law for a free initial consultation.
*The information in this blog post is general in nature, is not legal advice, and should not be relied on without speaking to a lawyer about your specific situation.