Ravjeev Sunder was head of Asia Pacific operations at Vasona Networks (Vasona) from April 2013 to November 2014. In November 2014, he was made redundant. Mr Sunder claimed he had been unjustifiably dismissed and sought reinstatement in the Employment Relations Authority (ERA).
Vasona is a start-up company that sells telecommunications equipment. Vasona faced challenges with its product and Mr Sunder was unable to gain any purchase orders during the 16 months he was employed. Vasona made the decision to close the company’s operation in the APAC region due to the company’s financial position. Vasona consulted with Mr Sunder, but the ERA held that the consultation was rushed and that Mr Sunder was not given sufficient information to allow him to make meaningful submissions on the redundancy proposal. The ERA found Mr Sunder’s dismissal to be unjustifiable on procedural grounds but substantively justified. The ERA ordered Vasona to pay $10,000 to Mr Sunder.
However, in a subsequent costs determination, the ERA ordered Mr Sunder to pay $12,058 to Vasona. This was due to the fact that during the dispute, and prior to the ERA case being heard, Vasona had made Mr Sunder an offer of $40,000 to settle the dispute. The offer was presented to Mr Sunder as a ‘Calderbank’ offer, which is a fairly standard offer of settlement made from one party to the other prior to a court hearing. If a party refuses the offer and is successful in the hearing, but is only awarded an amount less than that of the offer, the party who made the offer can put the offer before the ERA or court to take into consideration in its costs award.Given Mr Sunder had rejected the offer and proceeded with his claim, Vasona sought just under $63,000 in costs from Mr Sunder. Vasona argued that Mr Sunder had unreasonably proceeded with his claim.The ERA held that had the offer of $40,000 been accepted by Mr Sunder it would have resulted in “a far more favourable monetary outcome for [Mr Sunder] than he achieved through his partial success in the Authority”. The ERA ordered Mr Sunder to pay half of the company’s legal costs incurred after the settlement offer was rejected.
Take home points
- When an employment dispute looks as though it is heading towards the ERA, consider the potential merits, financial outcomes and whether a settlement offer is prudent.
- When making an offer of settlement, consider labelling it a Calderbank offer and explaining to the employee/other side what that practically means.
- We recommend seeking legal advice before making a Calderbank offer – it must contain particular elements to be effective.
If you have any questions, or require legal advice about making a Calderbank offer, please contact us.