Following an announcement from Workplace Relations and Safety Minister Hon Brooke van Velden, it appears the coalition government is preparing to implement some promised changes to New Zealand’s employment law, with new provisions to be introduced via the Employment Relations Amendment Bill.
Under the proposal, employees earning more than $180,000 annually may lose their right to raise personal grievances for unjustified dismissal. This change is expected to take effect in 2025 and is part of the government’s broader effort to increase labour market flexibility and reduce costs for employers.
Rationale Behind the Change
Workplace Relations and Safety Minister Brooke van Velden stated the reform is designed to provide businesses with greater flexibility when managing high-performing and high-impact leadership roles. If the bill proceeds, employers will be able to ensure their executive teams and senior specialists meet organisational needs without facing costly or disruptive grievance claims.
Van Velden highlighted the broader benefits of the policy, including:
- Allowing businesses to address performance issues among senior leaders without legal roadblocks.
- Supporting workers looking to step into challenging roles by reducing employer risks associated with providing these opportunities.
- Encouraging employers and employees to negotiate dismissal terms that reflect their unique requirements, including the option to contract back into grievance protections if desired.
Implications for Employers
This policy represents a shift in how high-earning roles could be managed in New Zealand workplaces. For employers, it may provide a greater degree of legal certainty when making employment decisions for senior staff, potentially improving organisational performance and workplace morale.
Implications for Employees
For employees, particularly those in executive or specialist roles, the changes may require careful consideration when negotiating contracts. Should the bill proceed, workers in high-earning positions should:
- Seek clarity in employment agreements about termination processes and protections.
- Negotiate contractual terms that address job security, severance pay, and dismissal procedures.
While employees earning above the threshold may lose access to unjustified dismissal claims, it appears they will retain the ability to raise grievances for other issues, such as for discrimination or unjustified disadvantage.
Next Steps
The Employment Relations Amendment Bill, which will include this provision, is expected to be introduced in 2025. As part of this process, the government is likely to hold consultations to gather feedback from stakeholders. Employers, employees, and other interested parties will have an opportunity to shape the final legislation.
How We Can Help
The proposed changes could significantly impact how businesses manage high-income roles and how employees negotiate their employment terms. Our team is here to assist to:
- Help businesses and individuals make their voices heard during the consultation process by providing submissions and advocacy support.
- Provide tailored strategic advice to help navigate legal and reputational risks associated with these changes.
- Ensure employment agreements are updated to align with new provisions through agreement reviews, should the bill progress.
The press release on this proposed bill can be found here.
Zachary Pentecost is a Christchurch Employment Lawyer with Edwards Sluiters – Employment Lawyers. You can learn more about Zachary and his vision for the new Christchurch office here.
