The New Zealand government has proposed updates to the Employment Relations Act 2000 that will impact high-income earners and senior roles.
Workplace Relations and Safety Minister, Hon Brooke van Velden, recently announced the proposed changes. These proposed updates aim to give employers and employees more choices for managing workplace relationships. They will affect how employers deal with employment disputes. They will also change the process for dismissing an employee in a high-paying job.
The reforms include adjustments to personal grievance rights, employee remedies, and the handling of exit discussions. Together, these proposals aim to resolve employment relationship problems by providing employers and employees with more options and addressing specific challenges in the workplace.
One of the key changes is the introduction of a $180,000 annual income threshold for unjustified dismissal claims. Employees earning above this amount would no longer be able to raise personal grievances for unjustified dismissal. This threshold applies to base salary only and excludes other forms of income, such as bonuses and benefits. It will be updated yearly to reflect changes in average earnings.
Minister van Velden says the goal is to provide more flexibility in job agreements. This will let people negotiate terms that fit their needs. Employees and employers can choose to return to unjustified dismissal protections. They can also agree on different dismissal procedures in their conditions of employment.
Employees earning above the threshold can still bring other personal grievances if they feel they have been treated unfairly. This includes claims for unjustified disadvantage or discrimination. They can also make claims under human rights laws.
Another proposal examines how decision-makers determine remedies, like compensation, in personal grievance cases.
Key updates proposed include:
- Employees dismissed for serious misconduct cannot claim remedies like getting their job back or compensation for emotional distress.
- Employment authorities will look at the employee’s actions in disputes. They could reduce compensation by up to 100% if the employee's behaviour caused the problem.
- Employers would have more flexibility when procedural mistakes happen, as long as their actions are fair overall.
These changes aim to make remedies better match the details of each case. This is especially true when an employee's behavior has affected the outcome.
The Employment Relations (Termination of Employment by Agreement) Amendment Bill, introduced by ACT MP Laura Trask, complements these proposals. This proposed Bill would let employers have "protected" talks with employees about ending their jobs. These discussions cannot serve as evidence in claims like constructive dismissal. Similar laws exist in the UK, where they provide a framework for open discussions about ending employment relationships.
While this is currently a Member’s Bill, its alignment with the government’s broader goals suggests it may gain traction. If enacted, it would provide a clearer and safer pathway for discussing exit terms.
These proposed changes represent a departure from the universal protections traditionally provided under New Zealand employment law. The high-income threshold, in particular, is a notable shift, aligning with similar approaches in countries like Australia.
The government wants to give employers more ways to handle performance problems. At the same time, it will keep basic protections for employees. As demonstrated in Australia, these changes will likely lead to more complex cases in the New Zealand Employment Court.
The Employment Relations Amendment Bill, expected in 2025, will formally introduce accepted changes. If passed, they provide new chances for flexibility. However, we must carefully consider how to balance employer needs with employee rights.
As these changes happen, they will likely start discussions. People will discuss balancing flexibility for employers and fairness for employees.
Whether you are an employer or an employee, it is important to review any contract before signing. You should understand the implications and potential risks involved in the terms and conditions.
My Advocate provides a Contract Review service. We help find any potential issues and guide you on the best steps to take. Click here to Contact Us
View the recent press release here.