New Zealand Employment Law Update: The 180k threshold - what leaders need to know
Emily Rust
New Rule Allows Employers to Dismiss High-Earning Executives Without Personal Grievance Risk
A major change to New Zealand’s employment law is set to reshape leadership dynamics across businesses. The government has introduced an income threshold of NZD 180,000 per annum, above which employees will no longer have the right to raise a personal grievance claim for unjustified dismissal. This policy, expected to take effect in 2025, aims to give employers greater flexibility in managing senior leadership and specialist roles.
What’s Changing?
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Employees earning over $180,000 per year will lose the automatic right to file a personal grievance claim for unjustified dismissal.
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Employers and employees can opt back in to unjustified dismissal protection through mutual agreement.
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The threshold will adjust annually based on average earnings to reflect wage growth.
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A one-year transition period allows businesses to update existing employment agreements before the rule is fully enforced.
Who is Affected?
Approximately 3.4% of the workforce, including senior executives, specialists, and high-earning professionals, will be impacted. The shift aligns New Zealand’s employment policies with similar frameworks in countries like Australia, where high-income thresholds limit unfair dismissal claims.
Why This Matters for Business Leaders
This change is designed to reduce the risks associated with hiring and managing top-tier talent, allowing businesses to make leadership decisions more efficiently. However, it also introduces new considerations for high-earning employees, who may need to negotiate contractual protections, such as longer notice periods or severance terms.
What Should Leaders Do Now?
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Review existing employment contracts to ensure compliance and clarity.
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Discuss dismissal terms with high-earning employees and consider offering opt-in protections where appropriate.
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Prepare for a more fluid executive talent market, as reduced dismissal risk may encourage faster leadership changes.
This policy signals a significant shift in employment rights and leadership accountability. Business leaders should proactively assess their talent strategies to ensure they align with both legal compliance and organisational needs.
For further details or legal guidance, businesses are encouraged to consult with employment law experts as they prepare for this transition.
See this Simpson Grierson article for further information.