In November 2024, as part of the Act-National coalition agreement, Workplace Relations and Safety Minister Brooke van Velden announced Cabinet’s approval of a significant amendment to the Employment Relations Act 2000. Under this new policy, employees earning a yearly salary that surpasses $180,000 cannot raise a personal grievance for unjustified dismissal. Once in effect, employers will be able to dismiss high-income employees without just process or good cause: “at will”, so to speak. Despite this new policy, where the ability to contest termination is to be limited, protections against other forms of workplace misconduct and unfair treatment will remain in place.

Approximately 3.4% of New Zealand's workforce is above the $180,000 income threshold. The $180,000 figure refers solely to an employee’s base salary and does not include additional income such as bonuses, incentives, or benefits like vehicle use. If you are a part-time employee, regardless of your pro-rated earnings, you are not subject to this threshold.
While the amendment may seem radical at face value, employees earning above this threshold will retain their right to raise other types of personal grievances. These include claims such as unjustified disadvantage, discrimination, sexual or racial harassment, and breaches of good faith. Australia has also had a similar policy in place for some time, bringing New Zealand’s employment framework more closely in line with theirs. Australia’s income threshold for unjustified dismissal claims is currently $175,000 AUD per year and is subject to annual adjustments.
The primary motivation for this legislative change is to provide businesses with greater flexibility, particularly when managing specialist and senior leadership roles. According to Workplace Relations and Safety Minister Brooke van Velden, the policy ensures employers can place the right person in a high-income role without having to worry about the process otherwise expected for a dismissal.
This amendment offers flexibility for employees too when it comes to negotiating the terms of their employment agreements. While the amendment will apply to existing employment agreements, employers and employers can choose to opt back into the unjustified dismissal protection or negotiate their own dismissal process. It is further anticipated that high-income employees will seek to negotiate robust contractual terms to safeguard their interests. This may involve seeking longer notice periods, defined severance packages, or clear protocols for performance management. The onus will then be on employers to be prepared to engage in these negotiations, ensuring that employment agreements are clear and mutually beneficial.
It will be interesting to observe how the introduction of the $180,000 income threshold for unjustified dismissal claims affects New Zealand’s labour market once in place. It will become more important than ever to ensure that employment agreements are carefully negotiated and well-drafted to provide appropriate protections for both parties.

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