High income workers unable to claim unjustifiable dismissal thanks to new policy

Friday, 29 November 2024

How the Employment Relations Authority works. (Video first published in June 2021)

A change to the Employment Relations Act would see high income earners unable to claim unjustifiable dismissal.

The threshold would be set at $180,000 per annum.

The policy aimed to offer workers and employers more choice when negotiating contracts, the minister responsible says.

Workers earning more than $180,000 a year will be unable to raise an unjustified dismissal claim under a new policy.

Cabinet agreed this week to introduce an income threshold of $180,000 per annum for unjustified dismissal personal grievances under the Employment Relations Act.

This means employees earning above that income will be unable to raise an unjustified dismissal claim. The threshold refers to a regular base salary and excludes other income such as incentive payments and benefits like vehicle use.

Workplace Relations and Safety Minister Brooke van Velden said the change would enable employers to ensure they have the right fit for their high impact leadership and specialist roles.

Brooke van Velden said the would enable employers to ensure they have the right fit for their high impact leadership and specialist roles.

“This policy is about offering workers and employers more choice when negotiating contracts. Employers and employees are free to opt back into unjustified dismissal protection if they choose to or negotiate their own dismissal procedures that work for them,” she said.

“Highly paid workers such as senior executives or technical specialists can have a significant impact on organisational performance and culture. Having a poor performing manager or executive can have big flow-on effects for the entire business and increase the risk of poor culture and low morale.”

The change would provide labour market flexibility, enabling businesses to ensure they have the best fit of skills and abilities for their organisation, she said.

Employees earning more than $180,000 per annum will still be able to raise other types of personal grievances.

The change would be progressed through the Employment Relations Amendment Bill, which van Velden aimed to introduce in 2025.

Labour workplace relations spokesperson Camilla Belich said the party did not agree with the policy.

“Regardless of how much someone earns, everyone deserves fairness and due process.”