High-income workers lose unjustified dismissal claim rights under new policy

• Workers earning over $180,000 will lose the right to raise unjustified dismissal claims under a new policy.
• Workplace Relations and Safety Minister Brooke van Velden said the change allows more flexible dismissal processes for high-income employees.
• The policy aims to enhance labour market flexibility and will be introduced through the Employment Relations Amendment Bill next year.

Workers making over $180,000 a year will no longer be able to raise an unjustified dismissal claim if they lose their job once a new Government policy takes effect.

The upcoming change to the Employment Relations Act “will enable employers to ensure they have the right fit for their high-impact leadership and specialist roles”, Workplace Relations and Safety Minister Brooke van Velden said.

The policy, described as a “more flexible dismissal process for high-income employees”, delivers on the Act-National coalition agreement to set an income threshold above which personal grievances cannot be pursued.

“This policy is about offering workers and employers more choice when negotiating contracts.

“Employers and employees are free to opt back into unjustified dismissal protection if they choose to or negotiate their own dismissal procedures that work for them,” van Velden said.

She said the policy was “paving the way for the next generation of leadership” when she spoke to Mike Hosking on Newstalk ZB.

“One of the classic cases of grievance from businesses is you want to take a chance on someone, but you’re too afraid if something goes wrong, how on earth will it work out.”

“You’ve got someone in the workforce who is maybe quite skilled, got a good attitude, but if you push them up to that next leadership level into management, you know, if it doesn’t work out and they aren’t a good fit, this allows you to move them on.”

Van Velden said many people would have worked with a manager “who has led to poor productivity, low morale, and the boss and the workers are just sitting there and waiting for this person for years and years to want to move on”.

The change would provide greater labour market flexibility and would benefit employers and workers, she said.

“This policy allows employers to give workers a go in these high-impact positions without having to risk a costly and disruptive dismissal process if things don’t work out.”

The income threshold of $180,000 will cover about 3.4% of the workforce. The threshold will be adjusted annually to match increases in average weekly earnings.

“The change will be progressed through the Employment Relations Amendment Bill, which I aim to introduce in 2025,” van Velden said.

The income threshold refers to a regular base salary and excludes other income such as incentive payments and benefits like vehicle use.

Employees earning over $180,000 will still be able to raise other types of personal grievances.

Jaime Lyth is a multimedia journalist for the New Zealand Herald focusing on crime and breaking news. Lyth began working under the NZ Herald masthead in 2021 as a reporter for the Northern Advocate in Whangārei.