The Government is proposing several amendments to the Employment Relations Act 2000 in the Employment Relations Amendment Bill 175-1 (Government Bill). This article identifies how these will impact on high-income earners and their ability to lodge a claim against their employer for unjustified dismissal.
The Change
Employees earning more than $180,000 a year will not be able to raise an unjustified dismissal claim if this proposed change becomes law. Unjustified dismissal is when an employer terminates the employment of their employee without good reason and / or in the absence of a fair and proper process. This is a significant amendment.
A few important points to note regarding this proposed change:
- Employers and employees can choose to retain unjustified dismissal protections or agree on customised dismissal terms that suit their needs.
- The $180,000 threshold refers to the base salary only, not other income (like benefits or incentives).
- The $180,000 threshold aligns with the highest tax rate and will be periodically adjusted.
- Employees will still be able to raise other types of Personal Grievances, for example on the grounds of discrimination or unjustified disadvantage.
Reasons for Change
A controversial amendment, the Government has outlined the following reasons for the proposal:
- To empower the employer (and employee) to negotiate contracts more flexibly.
- To tackle the risks of poor leadership by addressing underperformance in senior roles.
- To boost labour market agility, helping businesses secure the right talent for the job.
The counter argument to this is, irrespective of how much someone earns, all employees should be subject to proper processes and be treated reasonably by their employer.
When Does this Change Occur?
The Employment Relations Amendment Bill is only partway through the Parliamentary process and it will need to progress fully before it becomes law. The Government is targeting the end of the year for this legislation to come into force.
Transitional Period
It is proposed a 12-month transitional period will apply for current employees (unless the parties agree to a different arrangement earlier) from when the bill becomes law. During this period, employees will still be able to claim unjustified dismissal.
Get in Touch
Whether you are an employer with staff earning over $180,000, or an employee affected by this change, Blackwood Montagna can help you navigate the risks and protect your interests. Get in touch to find out how we can support you through this transition.
