If a current government bill is passed, wage and salary earners on $180,000 a year or more will lose a key part of their employment rights. Employers, employees and other interested parties have only a very short time to assess the Employment Relations Amendment Bill, and to submit - for or against - to the select committee.

Inland Revenue 2024 statistics record just over 125,000 employees as earning above that level.

The Bill will if passed:

• Mean all new employees paid above that level cannot raise an unjustified dismissal personal grievance – unless their employer has agreed they can;
• After a 12 month transitional period, all current employees will lose that right - unless their employer agrees to retain it; (During this transitional period they can still raise an unjustified dismissal personal grievance or other proceedings contesting their dismissal.) 
• Employees whose pay rise takes them above $180,000 will then lose the right;
• Other legal claims in respect of dismissals are also affected.

Wellington law firm Bartlett Law says the changes, as government policy, have important implications for employers and employees. They have expressed concern that the Bill is a further erosion of employee rights. It follows on from the extension of no-fault trial periods to all employees and the recent changes to the pay equity legislation.

A "dismissal" includes any termination of employment; not only termination for serious misconduct. Constructive dismissal claims may also be barred.

Employers will not have to tell an employee paid $180,000 or more why their employment was terminated. Their dismissal can be instant, unexplained, and without remedy. They need get no prior warning.

The firm says its experience over more than 30 years shows no connection between level of salary and likelihood of unjustified dismissal. Its experience includes senior staff, including chief executives, being unjustifiably dismissed.

It says the change has no real advantage for employers. If the Bill passes, the focus will shift to a wide range of other possible litigation, instead of a well-established current process.

Employees subject to the Bill will also lose several good faith rights. Currently when an employer is proposing to terminate an employee's employment, the employee is to be provided with information about the proposal and must have the opportunity to comment on the information before the termination decision is made. The Bill takes away these rights. Employers could dismiss instantly with or without justification, in any situation including redundancy.

The firm predicts thousands of affected employees will seek "contracting in", which will be legally possible, but can only happen if both parties agree. There will be no obligation or incentive on employers to do so.

The Bill includes other significant changes to employee rights, including refusing remedies to “at fault" employees.

Note: The 125,000 figure is derived from the IRD data September 2024 at: https://www.ird.govt.nz/about-us/tax-statistics/revenue-refunds/wage-salary-distributions/wage-and-salary-statistics-datasets

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