Employees earning over $180,000 will be ineligible to file unjustified dismissal claims
Employees earning more than $180,000 per annum will no longer be able to raise an unjustified dismissal claim under a new policy proposed by the New Zealand government.
The country's Cabinet has agreed to introduce an income threshold of $180,000 per annum for unjustified dismissal personal grievances.
The income threshold refers to a regular base salary and excludes other income, such as incentive payments and benefits like vehicle use, according to the government.
Workplace Relations and Safety Minister Brooke van Velden said the policy will help employers ensure that they have the right people for high-impact leadership and specialist roles.
"This change will provide greater labour market flexibility, enabling businesses to ensure they have the best fit of skills and abilities for their organisation," van Velden said in a statement.
"Workers who are wanting to move up the career ladder and be considered for more challenging positions will benefit from this policy. This policy allows employers to give workers a go in these high-impact positions, without having to risk a costly and disruptive dismissal process if things don't work out."
The income threshold is expected to cover about 3.4% of New Zealand's workforce, according to the minister. It is also currently aligned with the top income tax rates and will be adjusted annually to match increases in average weekly earnings.
The government clarified that the threshold will only be for unjustified dismissal claims, meaning these employees will still be able to raise other types of personal grievances.
The proposal will be progressed through the Employment Relations Amendments Bill, which van Velden said she plans to introduce in 2025.
Roger Partridge, chair and senior fellow of the New Zealand Initiative, said they welcome the recently announced change, which implements a recommendation from the think tank's research in 2021.
"This is good news for New Zealand workers and businesses," Partridge said in a statement. "When a senior manager is not performing well, the whole business suffers – and that puts everyone's jobs at risk."
