The Government has unveiled plans to reduce the amount aggrieved employees can be compensated by their employers – to zero in some cases.

Minister for Workplace Relations and Safety Brooke van Velden has detailed proposed changes to the Employment Relations Act, which are aimed at giving egregious employers more power in disputes with employees, who have behaved badly themselves.

She is worried that as it stands, employees can be incentivised to “try their luck” raising a personal grievance (usually at a cost) in the hope of getting a payout.

Both the Employment Relations Authority and Employment Court can make an employer compensate an employee if the employee can successfully argue they’ve been personally aggrieved – unjustifiably dismissed, sexually harassed, or treated unfairly for lawfully refusing to work in certain circumstances, for example.

Remedies can be discounted to reflect the employee’s culpability in the dispute.

For example, the authority might reduce the amount it requires an employer to pay if it found the reason for the dismissal stemmed from the employee performing terribly.

Van Velden wants to change the law, so that employees found to have engaged in “serious misconduct” get nothing, even if their complaints are upheld or their employers are found to have acted egregiously.

“I’ve heard of personal grievance cases where employees have engaged in serious misconduct such as violence, fraud and theft, yet their former employer has had to pay them financial remedies or reinstate them into their roles,” van Velden said.

For employees that did something wrong, but didn’t go so far as to engage in “serious misconduct”, van Velden wants the law to clarify that their awards can also be wiped out completely, or discounted by up to 100%.

Van Velden also wants to remove the ability for an employee to be reinstated in a role, and compensated for “hurt and humiliation”, if their behaviour contributed towards the dispute.

She said she’d heard of a case where a health professional was dismissed for being physically violent toward a patient but was still reinstated into their role following a successful personal grievance.

“Dismissing an employee is often a decision businesses make very reluctantly, given doing so can lower the morale of the workplace, risk harming the employer’s reputation, and because employee turnover is generally costly,” she said.

Van Velden said she would introduce a bill – the Employment Relations Amendment Bill – to Parliament next year to bring about the changes.

She hoped they would give employers more certainty and reduce their costs.

Changing the personal grievance regime is part of Act’s coalition agreement with National.

Jenée Tibshraeny is the Herald’s Wellington business editor, based in the Parliamentary press gallery. She specialises in Government and Reserve Bank policymaking, economics and banking.