Author: au_common_admin

Proposed changes to the Employment Relations Act 2000 (ERA) would limit personal grievance rights for employees earning over $180,000—unless their employment agreement says otherwise.  This article explains the current law, what is proposed, and what it means for those affected.

Current Law

Under the ERA, all employees — regardless of salary — can raise a personal grievance if they consider they have been unjustifiably dismissed or disadvantaged.  An employee may claim they have been unjustifiably dismissed if their employer terminated employment without reasonable basis and/or without following a fair process.  Unjustified disadvantage in employment is a wide-ranging claim capturing any action or omission by the employer that unjustifiably disadvantages the employee in their employment.

Remedies currently available to employees include reinstatement, reimbursement of lost wages, compensation for hurt and humiliation, and costs.

Proposed Reform

The proposed reform — currently before Parliament — would limit access to personal grievance rights for unjustified dismissal and/or unjustified disadvantage where an employee earns over $180,000 gross per annum (adjusted annually for inflation).

Employees earning above the income threshold would not be entitled to raise a personal grievance for unjustified dismissal and/or unjustified disadvantage, unless:

• Their employment agreement expressly provides for it; or
• The grievance relates to any protected grounds – discrimination, sexual harassment, or union related duress.

Employers and high earners could agree to preserve grievance rights, but this would need to be clearly documented in the employment agreement.

High earners would still retain the right to pursue claims under the Human Rights Act 1993, Privacy Act 2020, or for breach of contract.

Reform Rationale

The Government explains the rationale behind the reform is that:

• High income earners are better resourced to negotiate contractual protections – they typically hold more bargaining power and access to legal advice.
• Statutory protections may be less necessary where tailored, negotiated agreements are in place.

The goal is to reduce strain on the Courts and encourage high earners to rely on negotiated contract terms instead of default statutory protections.

Implications for Employees

Employees over the income threshold will need to take care when negotiating the terms of their employment agreements.  Employees should check that their employment agreement provides the right to raise a personal grievance for unjustified dismissal and unjustified disadvantage.  If it does not, the employee may have no recourse if, for example, they are treated unfairly or their employment is terminated unfairly.

While negotiating power may be strong for employees entering a new employment relationship, those in existing relationships will not hold the same leverage.  There would be a 12 month transition period for existing employees and employers to negotiate terms.

Implications for Employers

Employers can expect a reduction in personal grievances (relating to dismissal and disadvantage) from high income employees.  High income employees may start pushing for built in protection and be more focused on negotiating robust agreements at the outset of employment.  Employees may look to protect themselves with enhanced notice periods, severance payments and waivers of restraints of trade.

Going Forward

The Employment Relations (Termination of Employment by Agreement) Amendment Bill is still in the Select Committee stage, with the Committee report expected by 8 October 2025.  Accordingly, change is not imminent – the earliest we could expect the Bill to pass is late 2025.

Whether the Bill is passed or not, we recommend reaching out to our team to discuss your employment agreements and whether specific clauses should be added or removed to best suit your situation.

Employment Law Assistance

Our Workplace Law Team are able to assist with all employment processes and any other bespoke employment queries that you may have.

Chantelle is an Associate in our Workplace Law Team and can be contacted on 07 958 7473.

Keeping a healthy and productive employment relationship between an employer and employee is an important part of working together for the betterment and benefit of the overall business.  It goes without saying that issues and problems can crop up from time to time, whether intentional or unintentional, the best way to prevent employment relationship problems is to stop issues before they start.

Employment agreements must contain a simple, plan language explanation of how to resolve employment relationship problems and often referred to as dispute resolution.  It should be written clearly so that everyone knows what steps they need to follow if they think or if there is a problem.

Recognising an issue early

An employment issue includes anything that harms or that may harm the employment relationship. There can be many employment relationships, for example between:

• Employer and employee
• Employees
• Manager and employee.

It is important to think through the problem and gather all relevant information.  It is worth spending some time at this stage trying to identify the underlying cause in order to see how the problem might be resolved.  Generally, this would involve collecting the information is the first step in resolving an issue.  It is about being honest as missing out important facts or changing the facts can make the problem worse.

Before taking it up with an employer or employee, it might be a good idea to talk through a problem with another manager or HR department to clarify whether a problem exists and what the issues might be; the cause of a problem might not be obvious.  Always take care to respect the privacy of other and protect confidential information.

Some simple practices that can help make relationships smoother and prevent problems as an employee:

• Take time to communicate clearly. Poor communication can often cause disputes and misunderstandings.
• Raise concerns when they first appear can assist resolving them from becoming larger and/or harder to resolve.
• Making sure you know and understand workplace policies and procedures.
• Being prepared to engage in regular performance check-ins and stay updated on changes in the workplace.
• Use the proper channels to report concerns like bullying, discrimination, or harassment.
• Taking responsibility can help prevent and resolve misunderstandings, confusion or mistakes such as speaking up if you think there’s an error, like an overpayment.

On the other side, here are some simple practices that can help employers build smoother relationships and prevent problems:

• Encourage employees to raise issues right away to avoid escalation.
• Ensure workplace rules and procedures are easy to understand and well communicated, especially policies around resolving problems/concerns.
• Implementing clear systems for setting performance expectations, holding regular check-ins, keeping staff informed, and managing changes or performance issues.
• Having clear processes for addressing issues like bullying, discrimination, or harassment.
• Foster shared responsibility and encourage a culture where everyone helps prevent and resolve mistakes, such as reporting errors like overpayment.
• As long as you follow workplace policies, you can remain flexible and explore different ways to address concerns when considered separately, helping to resolve issues while acting in good faith.

Alternative resolution pathways

Both parties should first attempt to resolve issues between themselves to prevent escalation and maintain a positive working relationship.  If this informal approach does not work, mediation may be considered.  With both parties’ agreement, an independent mediator could help facilitate discussions, identify issues, and propose mutually beneficial solutions.  This service is free and provide by the Ministry of Business, Innovation, and Employment.

If you are needing advice about what dispute resolution process and/or policies you currently have in place or have current issues that you wish to resolve in a proper and fair way, McCaw Lewis has an experienced workplace team who can assist you.

Cree Ratapu is a Senior Solicitor in our Workplace Law Team and can be contacted on 07 808 6069.