Record $98K pay-out raises bar

by Hannah Norton20 Mar 2015
The decision in the case of a crudely-iced cake has raised the bar for injury to feelings compensation payments under the Privacy Act, an employment law specialist says.

Napier woman Karen Hammond – who iced a cake with derogatory comments about her previous employment and posted it to social media – this month won her claim in the Human Rights Review Tribunal (HRRT) that her privacy was breached when the company took an image of the cake from her Facebook page, and used it to harm her employment opportunities.

EY Law employment law leader Christie Hall told NZLawyer the case had set a high standard with regards to injury to feelings compensation payments under the Act.
“The $98,000 awarded to the plaintiff for injury to feelings - the total award was more than $168,000 - has signalled a “recalibration” in the assessment of injury to feelings in privacy cases.”]

Hammond was under notice from credit union Baywide when she baked the cake for a former colleague’s dinner party, and posted it to Facebook, where it was accessible by 150 friends. The image came to the attention of Baywide’s HR manager, who coerced a junior employee into allowing her to take a screenshot of the cake – which was then circulated around recruitment agencies.

Hall said while Baywide’s conduct was “unquestionably out of line”, what set the case apart was that $98,000 quantum for injury to feelings.

This award is notable for several reasons.

"The amount more than doubles the previous top award ($40,000) for injury to feelings under the Privacy Act.”
The tribunal was aware it was recalibrating previous benchmarks, setting an informal banding system of low (up to $10,000), medium ($10,000 - $50,000) and high (above $50,000), she said.
“It said award levels need to move as understanding of the law develops, and in accordance with changes in perception and economic factors, such as inflation.”

It was unusual to see an injury to feelings award of more than $30,000 in employment law case, even in serious sexual harassment cases, Hall said.

“Of the 393 Employment Relations Authority injury to feelings awards in the two years to July 2014, only 15 have exceeded $15,000 and none has exceeded $40,000.

“The Hammond case emphasises the divide between privacy and employment injury to feelings awards at the upper end.”

In a pre-litigation scenario, the award is likely to affect settlement negotiations in both the privacy and employment spheres, she said.

“It may also provoke Inland Revenue to reconsider the settlement levels that provoke an investigation for tax purposes.”

Finally, because the HRRT has jurisdiction also to decide discrimination claims under the Human Rights Act, employees may be encouraged to bring claims under that process, rather than the Employment Relations Act, in the hope of securing a higher award, Hall said.

“Whatever the eventual implications, there is plenty of food for thought here, for employers, employees and their counsel.”