The Workplace Relations and Safety Minister, Hon Brooke van Velden, has provided further details in relation to one of the changes proposed to the Employment Relations Act 2000 (Act) announced late last year.
The income threshold for raising an unjustified dismissal claim will affect both existing and future employment agreements, with a 12-month transition period. Read the full announcement here.
To recap, the proposed change will be included in an Employment Relations Amendment Bill 2025 and, if passed, would mean an employee earning above a $180,000 base salary could no longer raise a personal grievance claim for termination of employment. Read our analysis of the proposed changes here.
What does this mean for employees and employers?
Assuming the new bill is passed, as it stands this income threshold would apply to all new employment agreements immediately.
However, for existing employment agreements, it is proposed that there will be a 12-month transition period to allow employees and employers to review and amend their employment agreements if they wish.
Examples of how the transition period will apply
- Employee dismissed during transition period: if an employee earning above the income threshold was dismissed during the transition period, they could still raise a claim for unjustified dismissal within the usual 90-day period.
- New employer or role: if an employee moved to a new employer or to a different role at the same company, the transition period would no longer apply.
- Restructure: if an employee was redeployed to a new role with the same employer due to a restructure, the transition period would continue to apply.
What should employers do to prepare?
We are yet to see a draft bill setting out how the government proposes changing the law. For that reason, we do not believe it is necessary to make any anticipatory changes to employment agreements.
However, it would be wise to anticipate that a new employee whose starting salary is at or above the income threshold may look to negotiate terms to better protect them should the law change. For example, employers may see prospective employees looking to negotiate longer notice periods, agreed termination payments or to structure their remuneration package so that their salary falls below the income threshold. For that reason, it may pay for employers to turn their minds to how they wish to handle the change in the law, should it come into force.
If you need further information on the changes or advice on what you could be doing now, please reach out to our expert employment team.
