Under a new policy, those earning over $180k could be barred from bringing unjustified dismissal claims
This article was provided by K3 Legal
A new policy, which the government aims to introduce in 2025 through the Employment Relations Amendment Bill, could remove the right of high-income earners to raise unjustified dismissal claims. As part of proposed changes, workers earning over $180,000 annually could be excluded from raising claims. This policy is part of the ACT-National coalition agreement and would align New Zealand’s approach with Australia’s.
Currently, all employees can bring a claim against an employer if they believe that they were dismissed without good reason or through an unfair process. The usual process involves employees raising a personal grievance within 90 days under section 103 of the Employment Relations Act 2000 (Act). Under the new policy, high-income earners would be unable to raise a personal grievance for unjustified dismissal.
However, under section 120 of the Act, employees can request a written statement from their employer providing reasons for the dismissal. Employees must make this request within 60 days after the dismissal or within 60 days after the employee has become aware of the dismissal, and employers must respond within 14 days. If the proposed policy is introduced, it is possible that high-income earners may rely on section 120 to obtain statements for future employment purposes.
This proposed policy aims to increase market flexibility by allowing for more flexible dismissal processes for high-income workers. Employers would benefit by assuming less risk when hiring high-income workers, making it easier to find the right workers for high impact leadership and specialist roles. Employers would be more willing to hire high-income earners, which would increase job opportunities for employees.
It is important to consider whether this policy will apply to you if it is introduced next year. The $180,000 threshold aligns with the current top-income tax rates and will cover approximately 3.4% of the workforce. The threshold is based on regular base salary and excludes other income like benefits, incentives, and vehicle use. If introduced, the threshold would be adjusted annually in accordance with increases in average weekly earnings. Part-time workers are unlikely to be affected by this policy as the threshold is not adjusted for part-time employment.
While this policy may seem disadvantageous for high-income earners, it does not leave these workers without protections. Employees and employers can negotiate to opt back into unjustified dismissal protection or negotiate their own dismissal processes. Additionally, high-income earners retain the right to raise other personal grievances, such as claims involving discrimination or sexual harassment.
