Some people who have lost their jobs are being crippled by unexpected and exorbitant fees charged by their employment advocates.
File photo. Photo: 123RF
These advocates use no-win, no-fee contracts, failing to state up front what they do charge for a successful outcome - and there is no requirement for them to do so.
There are reports of advocates charging 40 percent of a client's settlement, and setting debt collectors on to them to pay up.
Employment advocates perform a similar role to lawyers in disputes, but their clients have no complaints avenue if things go wrong.
The Employment Law Institute was set up more than two decades ago to offer self-regulation.
Its president, and advocate, Kelly Coley, said some people who were already financially vulnerable, without a job, were being fleeced and chased by debt collectors.
"There's quite a few I know of where the consumer owes money to the advocate and there might be a dispute around that," she said.
"In terms of getting debt collectors on to them people are very concerned about their credit ratings and what I see the most of is just quite severe emotional distress."
Any lay person can be an employment advocate, there's no need for training and no compulsory code of conduct.
Coley said in one case a consumer had approached her but had no real avenue for complaint given the sector was unregulated.
"An advocate rang up and abused, racially and verbally, a consumer. They [the advocate] had told them they weren't going to run their claim then yelled at them saying they would still be getting a bill and if they didn't pay that would be going to debt collection."
Coley said in some cases, advocates fees forced the people they represented to seek a settlement because they could not afford the alternative, to drop the claim and pay the representative out of their own pocket.
She said she was regularly called by people who owed advocates money but disagreed with the fees charged.
Lawyer Robbie Bryant, based in Central Otago, has seen his fair share of no-win-no-fee contracts that take excessive cuts from a settlement.
"The highest I've seen is 40 percent it seems to me to be quite a high percentage to take in some circumstances part where the matter might settle quite quickly and not much work would need to have been done."
He said such fees were often out of kilter with the actual work achieved.
Employment specialist and lawyer Barbara Buckett said advocates must sign-on the people they represented and these contracts varied.
"These contracts are problematic. I've seen no-win-no-fee and yet there's also in the small print that they charge fees I mean I've seen some very, shall we say, questionable agreements."
She was among founders of the Employment Law Institute 24 years ago when the sector first called for regulation and a code of conduct.
"It's been falling on deaf ears. We regulate immigration advisors, real estate agents, all sorts of people are regulated - it's consumer protection. I don't know why it's not seen as something that's not really pressing."
The Ministry of Business, Innovation and Employment has confirmed it was considering the role of employment advocates as part of a wider review of the disputes resolution system - but it was down the to-do list.
Buckett said that was not good enough.
"It's a big organisation everything should have its priority and if it's causing grief like this then it needs to be put to the top."
She said lay advocates were an important part of employment law, especially when a lawyer was unaffordable, and the role needed to be regulated.
There is one area the authority may be able to wield power: and that's concerning the contracts these advocates have with clients.
It has taken one advocate - CultureSafe - off a case because of a contract which appears to give the representative decision-making powers that should lie with the client.
But fellow advocate Ashleigh Fechney is challenging that decision in the Employment Court.
"My concern is that if the authority can stop CultureSafe from representing in this situation can they stop another advocate from representing in a similar situation, where does that lead to? To me it's a lot of power at quite a low level."
The decision is due to be released in coming weeks.
