The New Zealand Initiative Welcomes Employment Law Reform For High-Income Earners

The New Zealand Initiative welcomes today's announcement that New Zealand will follow Australia in excluding high-income earners from personal grievance claims for unjustified dismissal.

The change implements recommendations from the Initiative's 2021 research note "Nothing Costs Nothing: Why unjustified dismissal procedures should not apply to the highly paid" (available here: https://www.nzinitiative.org.nz/reports-and-media/reports/research-note-5/).

"This is good news for New Zealand workers and businesses," says Roger Partridge, chair and senior fellow of The New Zealand Initiative. "When a senior manager is not performing well, the whole business suffers – and that puts everyone's jobs at risk."

"Under current law, even before dismissing an underperforming CEO, boards must first develop a performance improvement plan, consult about that plan, and then monitor performance over an extended period. In the meantime, both the business and the jobs of ordinary workers might be in jeopardy."

"Australia solved this problem in the mid-1990s by excluding high-income earners from unjustified dismissal protections. This flexibility may help explain why Australian workers are so much more productive than Kiwi workers," Partridge said.

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