Employment Law Reform to Introduce Income Threshold for Personal Grievance Claims

The new policy, part of the ACT-National coalition agreement, introduces an income threshold of $180,000 per annum for unjustified dismissal personal grievances.

Workplace Relations and Safety Minister Brooke van Velden has announced a significant policy shift under the Employment Relations Act, aimed at offering employers more flexibility in hiring and managing high-income workers.

The new policy, part of the ACT-National coalition agreement, introduces an income threshold of $180,000 per annum for unjustified dismissal personal grievances. Employees earning above this threshold will no longer be able to pursue claims for unjustified dismissal, although they can negotiate alternative protections in their contracts.

“This policy is about giving workers and employers more freedom to tailor their agreements to suit their specific needs,” said Ms. van Velden. “Highly paid professionals, such as senior executives or technical specialists, play a critical role in organisations, and this change allows businesses to address performance issues more effectively.”

Greater Flexibility for High-Impact Roles

The change is designed to ensure employers can confidently make decisions about leadership and specialist roles that are critical to organisational success. Poor performance at these levels, Ms. van Velden noted, can ripple through an organisation, affecting morale, productivity, and culture.

“Many hardworking New Zealanders have experienced the consequences of poor leadership, and this policy aims to reduce those risks while creating opportunities for ambitious professionals to step into high-impact roles,” she said.

Workers earning above the threshold will still have the option to negotiate protections against unjustified dismissal or alternative dismissal procedures as part of their employment contracts. This flexibility is intended to make high-level roles more accessible for those seeking to advance their careers. Key Details of the Policy

The $180,000 income threshold aligns with the top income tax bracket and covers approximately 3.4% of New Zealand's workforce.

The threshold will be adjusted annually to reflect changes in average weekly earnings.

Employers and employees can opt into dismissal protections if mutually agreed during contract negotiations.

Labour Market Impact

Supporters of the policy argue that it will foster a more dynamic labour market by reducing the risks associated with hiring for critical positions. Businesses may feel more confident in giving candidates a chance at leadership roles without the fear of lengthy and costly dismissal processes if the fit is not right.

Critics, however, caution that the policy could leave high-earning workers vulnerable to unfair treatment, despite their contributions to an organisation’s success. Some employment advocates are calling for safeguards to ensure equitable outcomes for both employers and employees.

Next Steps

The change will be introduced as part of the Employment Relations Amendment Bill in 2025. It marks a significant step in reshaping employment laws to balance flexibility with accountability in New Zealand’s labour market.

“The intent is to encourage employers to take chances on talent while ensuring the overall health and performance of their organisations,” said Ms. van Velden. “It’s a win-win for ambitious professionals and the businesses that rely on their leadership and expertise.”