Can I claim the wages I would have received if I wasn’t dismissed?
For most New Zealanders income is a fundamental part of supporting themselves and their families – if this is taken away unfairly, for example by being unjustifiably dismissed, the law provides a remedy.
In the recent decision of Campbell v Value Tyres Limited, Mr Campbell was unfairly put out of work for just over a year. So he sought the amount he would have earned had he not been dismissed.
After considering the matter the Employment Relations Authority decided to award 9 months lost earnings (minus some income he earned elsewhere after his dismissal) coming to a total of $118,500 (gross, plus interest). This was because he had in fact unfairly lost earnings, and he had taken active steps to mitigate his loss and provided evidence of this – i.e. him working elsewhere.
So why was he only awarded 9 months when Mr Campbell’s actual loss was just over a year’s salary?
There are several important considerations when determining an award for an employee’s lost earnings:
- Section 128 of the Employment Relations Act means the Authority must award the lesser sum of an employee’s actual loss, or 3 months’ lost earnings. Thus if an employee has suffered more than 3 months’ lost earnings, the Authority must award at least 3 months lost earnings.
- However, the Authority may award more than 3 months’ lost earnings if appropriate.
- The maximum which can be awarded is an employee’s actual loss – the amount they would have otherwise earned from the time their income stopped until a new job is found, minus any amount that was earned in between.
- When assessing a loss of earnings award between 3 months’ and an employee’s actual loss, the Authority will consider relevant factors including the probability the employee’s employment would have come to an end during this period anyway for genuine reasons.
In Mr Campbell’s case, the Authority determined it was appropriate to deduct $9,000 he had earned after his dismissal, and reduce the award sought from his actual loss to a period of 9 months to account for the possibility that his employment might have come to an end during this time for genuine reasons.
This case demonstrates the law will remedy lost income where its caused by the unfair actions of an employer.
If you need advice on your specific situation please contact the Watermark team directly to make an appointment.