The promotion trap and the Employment Relations Act 2000: what high earners and their employers need to know

Effective from 21 February 2026, the Employment Relations Amendment Act 2026 made two key changes to the Employment Relations Act 2000 for employees earning above the current remuneration threshold of $200,000 per annum.

1. Section 67I removes the employer’s obligation to consult the employee before dismissal (under section 4(1A)(c)) and to comply with any request by the employee for written reasons for dismissal (under section 120).
2. Section 113A removes the employee’s right to bring a personal grievance for unjustified dismissal, or for unjustified disadvantage related to a dismissal. Employees keep their right to raise a personal grievance on all other grounds, such as discrimination or harassment.

Importantly, high-earning employees aren’t totally boxed-in by the new amendments but do need to be wary.

Negotiations, transitions and promotions

A separate section, Section 67J, allows an employer and employee to agree in writing, as a term of employment, that both sections 67I and 113A do not apply. In that situation, the employer must still follow a fair process before dismissal, and the employee can still raise a personal grievance related to their dismissal.

Additionally, employees who were employed before 21 February 2026 have transitional protection under Schedule 1AA. This means sections 67I and 113A do not apply to them for up to 12 months from that date, provided they continue to hold the same position (or a different position following a restructuring). This gives them time to negotiate an “opt back in” agreement with their employer under section 67J.

If no written agreement on these terms is reached before the transitional period ends (21 February 2027 at the latest), sections 67I and 113A apply by default. This is despite any terms recorded in the employment agreement pre-dating 21 February 2026 that refer to the employee’s ability to raise a personal grievance.

What many employees may not realise, though, is that accepting a promotion during the transitional period can remove this interim protection. The transitional protections only apply where the employee holds the same position as before 21 February 2026, or a different position as a result of a restructuring. A promotion therefore can leave the employee who accepts it unable to raise a personal grievance if they are dismissed.

Key points for employers

For best practice and to avoid any ambiguities surrounding an employee’s employment terms, employers who wish to rely on sections 67I and 113A following a promotion should:

1. Address sections 67I and 113A expressly in the promotion letter, making clear that both apply going forward. Alternatively, enter into a fresh employment agreement in writing if the intention is to preserve the employee’s rights.
2. Avoid the phrase “all other terms and conditions remain the same” without first checking whether existing personal grievance provisions in the employment agreement could amount to contracting back into the personal grievance provisions pursuant to section 67J.
3. Take legal advice before terminating a promoted high-income employee and before assuming that sections 67I and 113A apply.

Key points for employees

Employees who are high earners and are offered a promotion should:

1. Be aware that accepting a promotion could remove your transitional protection under Schedule 1AA immediately.
2. Consider negotiating a written agreement pursuant to section 67J with your employer before accepting the promotion, so that your right to a fair process and to raise a personal grievance for unjustified dismissal is preserved in writing.
3. Take legal advice before accepting a promotion if you are unsure about the effect of the new role on your employment rights.

For assistance or more information on the above issues, reach out to our specialist Employment Team.