Transition period will apply to employment agreements affected by proposed policy
The New Zealand government is setting a 12-month transition period for its proposed income threshold rule for unjustified dismissal claims.
The government last year proposed that employees earning more than $180,000 per annum will not be able to raise an unjustified dismissal claim as part of its efforts to improve labour market flexibility.
While the proposal has yet to be passed, Workplace Relations and Safety Minister Brooke Van Velden announced that a 12-month transition period will be in place for existing employment agreements that will be impacted by the rule.
"Cabinet agreed that the income threshold applies to existing employment agreements with a 12-month transition period," Van Velden said in a statement.
"The $180,000 threshold will apply to new employment agreements once the Bill is passed and will apply to existing employment agreements 12 months after the Bill is passed."
Under the 12-month transition period, employees will still be able to raise an unjustified dismissal grievance within a 90-day period.
"For example, if an employee on an existing employment agreement is dismissed 10 days before the end of the transitional period, they will be able to raise an unjustified dismissal claim after the end of the transition period, so long as it is within the 90-day period," Van Velden explained.
On the other hand, the transition period will not apply for employees who will move to a new employer, or shift to a new role under the same employer.
"However, if the employee shifts to a new role with the same employer as a result of a restructure, the transition period will still apply," Van Velden noted.
The transition period allows workers and employers time to adjust employment agreements, according to the minister. This includes opting back into unjustified dismissal protection or negotiating dismissal procedures by agreeing to changes in the agreement.
The new income threshold policy is part of the government's upcoming amendments to the Employment Relations Act.
"This policy 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.
"It allows employers to give workers a go in high-impact positions, without having to risk a costly and disruptive dismissal process if things don't work out."
She added that the rule also allows more flexibility and choice by giving high-income employees and employers the opportunity to negotiate the terms and conditions related to dismissal that best fit their preferences and circumstances.
The changes are expected to arrive later this year.
