The Workplace Relations and Safety Minister for New Zealand announced late last year that the government would propose an earnings limit of NZD 180,000 (known as a “threshold”), beyond which employees would not be able to bring an unjustified dismissal personal grievance claim against their employer. The Minister has now provided further detail on how the proposed reforms will operate in practice.  

Minister van Helden has clarified that the proposal is for the threshold to apply to new employment contracts immediately but to existing employment agreements after a transition period of one year.

Providing further detail, the Minister added:

An employee is no longer on an existing employment agreement if they move to a new employer, or they shift to a new role within the same employer. However, if the employee shifts to a new role with the same employer as a result of a restructure, the transition period will still apply.

If an employee is dismissed before the threshold applies to them, the employee will be able to raise an unjustified dismissal grievance within the 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.

The policy intention is to stimulate opportunity by reducing some of the risk attaching to hiring high-value employees. For now, employers don’t need to change their contracts or employment approach generally.

Littler will revert with full analysis of the reforms once an amendment bill to NZ’s employment legislation is released later this year.