A major shift is coming for high‑earning professionals in New Zealand – and it has the potential to quietly remove one of the strongest workplace protections executives have relied on for decades.
Under the current Employment Relations Act, every employee – from entry‑level roles through to executives – enjoys a fundamental safeguard: if they are dismissed, the employer must demonstrate both a fair process and a genuine reason. If these standards aren’t met, the employee can bring a Personal Grievance for unjustified dismissal.
But proposed legislative changes are about to redraw that landscape. And the group affected most directly? Anyone with total remuneration of more than $200,000.
A new “High Income Threshold” – and what it really means
The Employment Relations Amendment Bill introduces a cap that removes the statutory right to claim unjustified dismissal for workers who earn above a designated income threshold. The Select Committee is now recommending this threshold be set at $200,000, calculated on total remuneration rather than base salary alone.
That distinction is critical.
A senior leader on a base salary of $170,000 may assume they fall safely below the line. But once allowances, KiwiSaver, insurance benefits, and potential bonuses are factored in, many executives will unexpectedly exceed the threshold.
Crossing that line has dramatic consequences: the right to challenge an unfair dismissal under the Act simply disappears. Effectively, high‑earning employees may find themselves working under conditions closer to “employment at will.”
The risk of relying on goodwill
Executives often reassure themselves with sentiments like: “My board would never do that,” or “I’ve built a strong relationship with the leadership team.”
But relationships evolve. Boards change composition. Businesses are acquired. New leadership teams arrive with different priorities – and sometimes with their own preferred people.
In those moments, the only real protection an executive will have is the wording of their employment agreement. If it doesn’t expressly preserve dismissal safeguards and the employee earns more than $200k, the law will offer no fallback.
Contractual protection is now essential
The legislation does provide one escape route: employers and high‑income employees may mutually agree to reinstate dismissal protections within the employment agreement.
But many employers will be reluctant to give up the additional flexibility these changes provide, which means the responsibility falls on senior employees to negotiate the protections they need.
These are three contractual mechanisms many executives are now seeking:
- The “Contractual Just Cause” clause
By specifying that the employer must still demonstrate cause and follow a fair, reasonable process, the agreement effectively rebuilds the protections removed by proposed bill.
- The “Golden Parachute” (liquidated damages)
If an employer refuses procedural safeguards, some executives negotiate monetary compensation instead – for example:
“If employment is terminated without cause, the employer will pay a lump sum equivalent to six months’ remuneration.”
This turns dismissal risk into something quantifiable.
- The enhanced notice period
When termination can occur more easily, additional job security can come from longer notice periods.
Extending notice from three months to six or even nine months provides valuable financial continuity, and time to transition.
The takeaway for senior leaders
For anyone earning close to or above the $200k mark, the days of assuming that legal protection against unfair dismissal applies automatically are ending. Your employment agreement is no longer just a formality – it becomes your primary defence against sudden, unchallengeable termination.
Before accepting a new role or agreeing to a remuneration adjustment that may push you above the threshold, it’s now crucial to ensure your contract contains the protections the law may soon remove.
