Unreasonable Employment Lawyer Costs
Employers beware of high employment lawyer fees when defending a personal grievance claim. Even if you win, recovering your actual legal spend in the ERA is usually limited by the daily tariff approach.
The reality of costs in the ERA
A common employer shock is that even when you "win" in the Employment Relations Authority (ERA), recovering your actual legal spend from the employee is usually limited. The ERA starts from a daily tariff approach and then makes adjustments up or down.
Quick takeaways for employers
- Budget reality: treat legal fees as a business cost first, and any costs award as a partial contribution only.
- Ask for numbers early: get a clear estimate for each stage (responses, mediation, witness statements, investigation meeting).
- Do a costs-based risk analysis: settlement decisions should factor in likely remedies and likely costs exposure (not inflated threats).
- Conduct matters: timetable breaches, delays, and unnecessary steps can increase costs, even if you succeed on the merits.
Seeking indemnity costs
The seeking of indemnity costs is where a party seeks the full amount of costs that they have incurred. This is generally not available in New Zealand's courts unless the unsuccessful party has behaved either badly or very unreasonably during the course of the proceedings. This could include delaying tactics, timetabling breaches, or conduct that results in a party's preparation being unnecessarily duplicated. A clearly hopeless case could possibly meet the threshold for indemnity costs. Late withdrawal certainly is not a ground for indemnity costs.
The Employment Relations Authority's practice note on costs recognises that costs are dealt with in a way the Authority thinks reasonable. Contribution towards costs will be modest and not intended to punish. In doing so it uses a notional daily tariff as a starting point ($4,500 for the first day of an investigation meeting, and $3,500 for subsequent days). The daily tariff is adjusted upward or downward when taking into consideration party conduct that may have caused an increase in costs, or where reasonable offers to settle are rejected and not beaten.
These principles that apply to costs in the Authority should be well known to representatives. This knowledge should be shared with the client during the process and should be used effectively so that the employer defending a claim can make informed decisions regarding settlement.
If you are being threatened with big costs
- Compare it to the tariff: ask what day count they say applies and why.
- Ask for the basis: what conduct is alleged that justifies uplift (if any).
- Check the stage: a large invoice before an investigation meeting can be a red flag for overwork or inefficiency.
- Do not settle under misinformation: threats can be used to pressure settlement beyond what the law supports.
Trouble recovering ERA costs from an employee
JAMISON v PETS IN THE CITY MT WELLINGTON LIMITED [2022] NZERA 203
Through its advocates, Pets In The City sought against former employee Cassandra Jamison an award of indemnity costs, or alternatively a substantial uplift.
The total amount sought was $41,454.42.
The parties had not attended an investigation meeting; they were at the final stages of exchanging witness statements and documents.
The employer was only able to recover $2,000 from the employee, Ms Jamison.
![Jamison v Pets In The City Mt Wellington Limited [2022] NZERA 203](../../Images/Blog/jamison-v-pets-in-the-city.jpg)
Need employer-side help?
If you have received an ERA claim or you are trying to settle a matter without paying more than you should, we can help you evaluate risk, costs exposure, and strategy.
Employment law advice for employers
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