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Workplace Relations and Safety Minister Brooke van Velden says an income threshold for unjustified dismissal claims will apply to existing employment agreements after one year.

The income threshold was announced last year and will be introduced as part of upcoming changes to the Employment Relations Act. It delivers on the ACT-³Ô¹ÏÍøÕ¾ coalition agreement commitment to set an income threshold above which personal grievances cannot be pursued.

“Cabinet agreed that the income threshold applies to existing employment agreements with a 12-month transition period and I can now announce further details. This means:

• 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 $180,000 threshold will apply to new employment agreements once the Bill is passed and will apply to existing employment agreements 12 months after the Bill is passed,” says Ms van Velden.

The transition period gives 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.

“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.”

“This policy will provide more flexibility and choice by allowing high income workers and employers to negotiate the terms and conditions related to dismissal that best suit their preferences and circumstances,” says Ms van Velden.

Editor notes:

• The Cabinet paper and Cabinet minute have been proactively released on the MBIE website: https://www.mbie.govt.nz/about/open-government-and-official-information/release-of-information/cabinet-papers-and-minutes
• You can find more information on this web page: https://www.mbie.govt.nz/business-and-employment/employment-and-skills/employment-legislation-reviews/employment-relations-act-2000-amendments
• The income threshold for unjustified dismissal personal grievances is $180,000 per annum, meaning employees earning above that will be unable to raise an unjustified dismissal claim.