Government to phase in new unjustified dismissal rules

Internal Affairs Minister Brooke van Velden. Photo / Mark Mitchell

A Government overhaul of employment rights for highly paid people will be phased in over a year, meaning the well-paid currently in work will be able to keep their right to raise an unjustified dismissal claim for a little longer.

The policy, part of the Act-National coalition agreement, would prohibit high earners from being able to raise an unjustified dismissal claim against their employer. Last year, Workplace Relations Minister Brooke van Velden set the income threshold at $180,000 a year.

Van Velden has now confirmed the rules will be phased in over a year, meaning that people already employed at jobs paying over $180,000 a year will still be able to raise unjustified dismissal claims against their employer for up to a year after the law comes into force.

New employees who earn over that amount will automatically have the new rules apply to them, and will not be able to take a claim.

Van Velden intends to introduce the new rules, which will amend the Employment Relations Act, later this year.

“Cabinet agreed that the income threshold applies to existing employment agreements, but with a 12-month transition period. When I announced this change, we were still working through some of the implementation details,” van Velden said.

The transition period would give “workers and employers time to amend employment agreements if they choose to”.

“This includes the ability to opt back in to unjustified dismissal protection or negotiate their own dismissal procedures by agreeing to any changes and including them in their employment agreement,” she said.

“This policy will provide greater labour market flexibility, enabling businesses to ensure they have the best fit of skills and abilities for their organisation. It allows employers to give workers a go in high-impact positions, without having to risk a costly and disruptive dismissal process if things don’t work out.”

Documents recently released by Mbie show the income threshold was initially set at $200,000, but was later brought lower. A similar policy in Australia has an income threshold set at the equivalent of $193,000.

Information supplied by van Velden’s office said if an employee were dismissed before the threshold applies to them, the employee will be able to raise an unjustified dismissal grievance within a 90-day period.

For example, if an employee on an existing employment agreement is dismissed 10 days before the end of the transitional period, they will be able to raise an unjustified dismissal claim after the end of the transition period, so long as it is within the 90-day period.

Thomas Coughlan is deputy political editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the press gallery since 2018.