Strengthening employee accountability in the personal grievance process

The need for reform

The government has identified key concerns with the current personal grievance system, including:

• Strict procedural requirements: Employers must follow a rigorous disciplinary process, and minor errors can result in significant penalties, even if the employee engaged in serious misconduct.
• Rising compensation payouts: The average award for personal grievance cases has increased significantly, particularly for non-economic damages such as humiliation and distress.
• Reduced remedy reductions: Although courts can reduce remedies based on an employee’s contributory behaviour, recent case law has limited reductions over 50%, making it harder for employers to fairly mitigate their liability.

Proposed changes

To address these issues, the government has proposed five key reforms:

• Exclusion of remedies for serious misconduct:
  • Employees found guilty of serious misconduct (e.g., violence, fraud, dishonesty) will be ineligible for any financial remedies.
  • This ensures that employers can take justified disciplinary actions without fear of costly legal consequences.
• Limited remedies for employees who contribute to grievances:
  • Employees who contribute to the situation leading to a grievance will no longer be eligible for reinstatement or compensation for humiliation and distress.
  • They may still be entitled to reimbursement for lost wages.
• Allowing remedy reductions up to 100%:
  • Courts and tribunals will have full discretion to reduce remedies in proportion to the employee’s role in the dispute, including complete elimination of financial awards.
• Recognition of obstructive employee behaviour:
  • Decision-makers must consider whether the employee’s conduct (such as avoiding disciplinary meetings or delaying investigations) obstructed a fair process.
• Higher threshold for procedural errors:
  • The law will no longer penalise employers solely for minor procedural errors if their actions were otherwise fair and reasonable.

Expected impact

These changes are designed to:

• Provide a more balanced framework that holds employees accountable for their behaviour.
• Reassure employers that justified disciplinary actions will not automatically result in financial penalties.
• Reduce the number of speculative or low-merit personal grievance claims.
• The reforms align with international employment practices, particularly in Australia, where compensation for distress is limited in cases of employee misconduct.

Conclusion

The proposed reforms to the Employment Relations Act 2000 mark a significant shift toward ensuring fairness in personal grievance claims. By strengthening accountability and preventing unwarranted financial awards, the government aims to create a more balanced and predictable employment dispute resolution system. These changes will give employers greater confidence in managing workplace discipline while maintaining protection for genuinely unfairly treated employees.