While many are gliding across the finish line of 2024 dreaming of holidays, Christmas mince pies and the beach, the Government has been busy. In an unexpected flurry of activity at the end of the year when we are almost (but not quite) in holiday mode, multiple potential employment law changes have been announced. We thought it was a fitting close to 2024 to highlight some of those key proposed changes.
Income threshold for personal grievances
In the first of a number of statements, Minister Brooke van Velden announced that Cabinet has agreed to introduce an income threshold of $180,000 per annum for unjustified dismissal personal grievances in 2025. This would mean that employees earning above this threshold would be unable to raise an unjustified dismissal claim. This change reflects the commitment contained in the Act-National coalition agreement.
The policy behind this change is to assist employers with finding the right fit for high impact leadership roles. Employers and employees would be able to opt back into unjustified dismissal protection or agree on alternative dismissal procedures.
This change would bring New Zealand in line with Australia, where there is a high-income threshold of $175,000 AUD per annum for unfair dismissal cases. Australia's regime differs from the proposed change in New Zealand, as "income" in Australia includes non-monetary benefits. However, Minister van Velden has clarified that "income" in New Zealand would be limited to the employee's base salary.
This change is likely to have an impact on the types of terms negotiated in employment agreements for high earners. The contractual provisions agreed (including the use of no-fault termination provisions and the like) will be key in terms of the approach for ending the employment relationship. Further, as employees excluded from raising unjustified dismissal claims will still be able to raise other types of personal grievances, we could see increased personal grievances brought on other grounds.
Removing awards for contributions to personal grievances
Minister van Velden has also proposed changes to an employee's ability to seek remedies for a personal grievance if they contributed to the situation which gave rise to the issue.
In cases of serious misconduct, employees would not be eligible for remedies. Examples of serious misconduct provided include violence, bullying, harassment, theft, fraud and dishonesty. Where an employee contributed to the issue that gave rise to a personal grievance, they would not be eligible for reinstatement or compensation for hurt and humiliation. What would be sufficient to constitute "contribution" is likely to be an area of challenge. However, examples provided are unproductive behaviour, repeated instances of lateness, misuse of company resources, underperformance and violence, theft, or fraud. In addition, in cases of contribution by an employee, remedies could be reduced by up to 100 per cent. The stated intention of these changes is to reduce costs and increase certainty for employers.
Currently, reducing awards for contributory behaviour is governed by s 124 of the Employment Relations Act 2000. This requires the Authority or Court to consider the extent to which the actions of the employee contributed to the situation that gave rise to the personal grievance and, where appropriate, to reduce the remedies that would otherwise have been awarded accordingly.
As reductions to awards are often relatively conservative, the changes proposed by the Minister could materially reduce an employee's ability to seek remedies in these types of scenarios. While there are a number of questions around how this will work in practice, and when the applicable thresholds will be met, we may have more clarity once a Bill is introduced in 2025.
Pay deductions for partial strikes
On 9 December, the Employment Relations (Pay Deductions for Partial Strikes) Amendment Bill was introduced. The Bill would reintroduce pay deductions for partial strikes (e.g. reductions in normal output or refusal to perform certain duties). Under the Bill, during a partial strike, employers would be able to either:
- reduce an employee's pay by a proportionate amount (calculated based on a specified method); or
- deduct 10 per cent of an employee's pay.
The Bill does not allow deduction for partial strikes in certain excluded circumstances, including strikes on health and safety grounds.
Submissions on the Bill are open until 20 January 2025. We expect this to be of interest to many unions and employers so watch this space.
Holidays Act reform
To encourage people to read to the end of the article, we have left the Holidays Act to last. This one has been a long journey of potential reform. On 13 December, Minister Van Velden announced that she is changing the proposed direction of that reform. Targeted consultation on an exposure draft Bill has recently concluded, and concerns were identified in relation to the complexity of the draft Bill and the costs of compliance.
Minister van Velden has confirmed that it is back to the drawing board and work is commencing on an hours-based accrual system for annual leave. She has also signalled that she will be looking for greater simplicity.
Minister van Velden has stated that she is hoping to pass new legislation by the end of this parliamentary term and will be seeking Cabinet decisions in 2025. Many businesses will be eagerly watching these developments to see what this new reform will reveal.
All of these areas are likely to see developments next year, but for now it's "watch this space", embrace the holiday spirit, eat the mince pies, and we will see you in 2025.