People earning above $180,000 a year to lose right to claim unjustified dismissal
Friday, 29 November 2024
People on salaries of more than $180,000 a year won’t have the legal right to take personal grievance cases claiming they have been unfairly dismissed by their employer, Workplace Relations Minister Brooke van Velden has announced.
The ACT Party had promised before the election that it intended to take action to reduce what it believed to be an unfair burden on employers from the personal grievance regime.
The salary cap on grievance claims was the only reform to the regime that van Velden announced on Thursday.
However, ACT Party MP Laura Trask has separately tabled a private member’s bill that would allow employers to attempt to negotiate an end to a worker’s employment without the risk that doing so could provide grounds for a personal grievance.
The concept behind that proposal would be to help employers end their relationship with a worker by mutual consent in return for a negotiated payout, without the risk of further fall-out for the employer or any admission of fault by either party.
Van Velden said Cabinet intended to introduce the salary cap on unjustified dismissal claims through an amendment to the Employment Relations Act that would be tabled next year.
The cap aligns with the top rate of income tax and would not be reduced by bonuses or other incentives people might be earning, or adjusted down for higher earners who only worked part-time, she said.
It would also be raised annually to match increases in average weekly earnings.
People on higher salaries would still be able to take other forms of personal grievance cases that weren’t to do with unjustified dismissal, van Velden said.
Van Velden said the law change 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 and technical specialists could have a significant impact on organisational performance and culture, she said.
“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.
“I know there will be many hard-working Kiwis who have had to work under a manager who might not have been up to the task, and whose leadership might have harmed the morale or productivity of their team.”
Workers who wanted to move up the career ladder and be considered for more challenging positions would benefit from the policy, van Velden said.
That was because it would let employers “give workers a go in these high impact positions”, without having to risk a costly and disruptive dismissal process if things didn’t work out, she said.
Council of Trade Unions president Richard Wagstaff told The Post earlier this month it didn’t like the idea of an income-cap on personal grievances and didn’t see the need for one.
He also made clear the CTU intended to lobby hard against Trask’s private member’s bill.
The Employment Relations Authority fielded 2117 personal grievances in 2023 – little changed on two years prior – mostly triggered by claims of unjustified or constructive dismissal or “disadvantage”.
About two-thirds were resolved through mediation, but compensation was ordered in 195 cases, with the majority of those awards sitting between $500 and $55,000.