Employer ERA Costs

What employers can really recover in ERA costs

A common employer shock is that even when you "win" in the ERA, recovering your actual legal spend from the employee is usually limited. Costs in the ERA are typically a contribution, not an indemnity. The starting point is the daily tariff approach and then the Authority makes adjustments up or down.

The employer's fee (a real example)

As an example we refer to DEVI v ECLIPSE RECRUITMENT LIMITED [2021] NZERA 42, where the final invoice to the employer was $35,396.14. The employer through its representative claimed full reimbursement of this amount, but only $6,500 was awarded against the unsuccessful party. I am only going to briefly discuss what is in the Authority costs determination on this point:

• It was not accepted that costs for mediation be awarded.
• It was not accepted that "costs on costs" be awarded. This included costs for the representatives reading the ERA substantive determination and undertaking legal research on the issue of costs.
• The uplift on top of the daily tariff was an extra $2,000 on the basis of rejection of a Calderbank offer and the investigation meeting going over time for the first day.

The representatives for the employer had charged hourly rates of $425.00, $350.00 and $275.00 respectively where none of these representatives were lawyers. It was expected that $35,396.14 would be awarded in full. That claim included mediation (which is not part of an Authority investigation meeting), and costs on costs, such as reading the decision and researching the law on costs.

The Authority, applying the law on costs, declared that only $25,000 of the over $35,000 claimed was actually attributable to ERA-related expenses. The outcome was decided based on PBO Limited (formerly Rush Security Limited) v Da Cruz [2005] 1 ERNZ 8080 which is described in the ERA practice note on costs.

$6,500 was ordered, not $35,396.14. An Authority determination will not tell whether a costs award is actually paid.

Here we go again

Another example we refer to KIM v MEGA PAINTING LIMITED [2021] NZERA 125, where the employer was claiming costs of $9,131 plus disbursements of $175.06. The company through its representative claimed full reimbursement of costs. Following my written submissions for the claimant employee to hand up to the Authority Member, the claimant employee was ordered to pay a total of $2,590. No surprise to us here:

• It was not accepted that costs for mediation be awarded.
• It was not accepted that the employee pay an ERA filing fee that the employer never paid.
• On a principled approach, and on the basis of this involving a part day to hear a preliminary issue, only part of a day of the first day according to the daily tariff was awarded.

$2,590 was ordered, not the over $9,000 that was sought by the company. An Authority determination will not tell whether a costs award is actually paid.