The Advocate | Issue 367 | October 2025

Earn over 180k? No Way to Challenge Dismissal

The final instalment in our Employment Relations Amendment Series is the Employment Relations Amendment’s Bill’s (“Bill”) proposal to remove the right to raise a personal grievance (where that personal grievance relates to their dismissal) for any employee who earns $180k per annum or more. This change is likely to impact bargaining for senior employees’ employment agreements and lead to an increase in non-dismissal-related claims.

Currently the Bill is with Select Committee, and a report on the Bill is expected by 17 November 2025. 

No Process, No Reasons

The Bill introduces a new section that provides that an employee who is dismissed and earns more than the $180k threshold cannot bring a personal grievance for unjustified dismissal, nor can they bring a personal grievance for unjustified disadvantage if the disadvantage relates to the dismissal. The employee will still be able to raise a personal grievance on other grounds, such as discrimination or a disadvantage unrelated to their dismissal.

The Bill also provides that:

1. The employer is not required to provide all relevant information to the employee and give the employee the chance to comment on that information before a decision is made to terminate their employment; and
2. (The employer does not have to comply with a request by an employee to set out the reasons for the dismissal in writing.

These changes are similar to the provisions that prevent an employee dismissed under a trial period bringing a personal grievance in respect of their dismissal. As the Bill removes some of the rights and protections of these employees if they are dismissed, it is highly likely that the Employment Relations Authority and the Courts will take a similarly strict approach when applying the legislation. For example, a signed variation to an employment agreement is not usually required when an employee is given a pay rise. However, if an employee’s base salary is increased from $170k to $180k, the Authority/Courts may determine that an opportunity to seek legal advice on the variation and agreement in writing from the employee is required in order for the employee to be barred from raising a personal grievance if they are dismissed. An employee may also need to be given clear notice of and sign a declaration to the effect that they understand their employment could be terminated and they would have no right to bring a personal grievance with respect to the dismissal. Additionally, if employees are aware of these legislative changes, they may refuse to accept such a pay rise and preserve their right to bring a personal grievance if they are dismissed.

Parties will have the ability to agree to opt back into the usual personal grievance regime if they prefer.

Threshold is Base Remuneration

The $180k threshold must be the employee’s base remuneration and does not include:

• Allowances
• Bonuses/commission
• Overtime payments
• Penal rates
• KiwiSaver or other superannuation payments
• Payments/other benefits the employee receives as an owner of the business.

The threshold will not be pro-rated for part-time employment. The Bill also provides for the income threshold to be adjusted annually in line with the Quarterly Employment Survey published by Statistics New Zealand from 1 July each year. Employers will need to ensure that employment agreements and remuneration will need to be reviewed against the new threshold each year to ensure that employees who were above the threshold do not drop below it.

Transition Period

There would be a 12-month transition period before these changes would apply to existing employment agreements, unless the employer and employee agree otherwise. The Bill also provides that if an employee moves to a new role as a result of restructuring (with either the same employer or a new employer following a business sale/transfer), they are considered to be on an existing employment agreement, and the changes will apply to them after the end of the transition period. However, if the employee moves to a new role during the transition period for reasons other than restructuring, the changes will apply from the date they move to the new role.

These changes are likely to have a significant impact on bargaining for terms and conditions of employment for senior employees. Employees are likely to closely review the termination provisions of their employment agreements before accepting a role or promotion that pays close to or above the threshold. They may request to opt back into the usual personal grievance regime, or they may try to negotiate additional terms. For example, they may request a longer notice period, an agreed termination payment, or a lower base salary with other benefits such as a car, bonus/commission payments, higher KiwiSaver contributions etc. Current employees may seek agreement for their current terms and conditions to remain after the changes come into force. Some employees could be reluctant to step into leadership roles if they know they may be more vulnerable to being dismissed with or without cause.

The Bill does not provide for any change to the requirement to include a dispute resolution procedure clause in an employment agreement. However, the Bill states that any such clause that would allow for a current employee to raise a personal grievance for unjustified dismissal will not apply from the date that the Bill comes into force.

It is also likely that, even though unjustified dismissal personal grievances would be barred, we would see an increase in other claims such as breach of contract claims (where the breach is unrelated to the dismissal) or personal grievances, such as discrimination, sexual/racial harassment, or unjustified disadvantage. This has been the case in Australia and the UK where similar restrictions on challenging dismissals apply. Employees may also be more likely to leverage a threat of reputational damage or abruptly resign and/or take extended sick leave in order to cause disruption in other ways.

If you have any questions about these changes or would like us to draft or review your employment agreements to ensure you are prepared when the time comes, please contact us to discuss further.