High Income Earners and Personal Grievances: Understanding the Proposed Reform

Proposed changes to the Employment Relations Act 2000 (ERA) would limit personal grievance rights for employees earning over $180,000—unless their employment agreement says otherwise.  This article explains the current law, what is proposed, and what it means for those affected.

Current Law

Under the ERA, all employees — regardless of salary — can raise a personal grievance if they consider they have been unjustifiably dismissed or disadvantaged.  An employee may claim they have been unjustifiably dismissed if their employer terminated employment without reasonable basis and/or without following a fair process.  Unjustified disadvantage in employment is a wide-ranging claim capturing any action or omission by the employer that unjustifiably disadvantages the employee in their employment.

Remedies currently available to employees include reinstatement, reimbursement of lost wages, compensation for hurt and humiliation, and costs.

Proposed Reform

The proposed reform — currently before Parliament — would limit access to personal grievance rights for unjustified dismissal and/or unjustified disadvantage where an employee earns over $180,000 gross per annum (adjusted annually for inflation).

Employees earning above the income threshold would not be entitled to raise a personal grievance for unjustified dismissal and/or unjustified disadvantage, unless:

• Their employment agreement expressly provides for it; or
• The grievance relates to any protected grounds – discrimination, sexual harassment, or union related duress.

Employers and high earners could agree to preserve grievance rights, but this would need to be clearly documented in the employment agreement.

High earners would still retain the right to pursue claims under the Human Rights Act 1993, Privacy Act 2020, or for breach of contract.

Reform Rationale

The Government explains the rationale behind the reform is that:

• High income earners are better resourced to negotiate contractual protections – they typically hold more bargaining power and access to legal advice.
• Statutory protections may be less necessary where tailored, negotiated agreements are in place.

The goal is to reduce strain on the Courts and encourage high earners to rely on negotiated contract terms instead of default statutory protections. 

Implications for Employees

Employees over the income threshold will need to take care when negotiating the terms of their employment agreements.  Employees should check that their employment agreement provides the right to raise a personal grievance for unjustified dismissal and unjustified disadvantage.  If it does not, the employee may have no recourse if, for example, they are treated unfairly or their employment is terminated unfairly. 

While negotiating power may be strong for employees entering a new employment relationship, those in existing relationships will not hold the same leverage.  There would be a 12 month transition period for existing employees and employers to negotiate terms. 

Implications for Employers

Employers can expect a reduction in personal grievances (relating to dismissal and disadvantage) from high income employees.  High income employees may start pushing for built in protection and be more focused on negotiating robust agreements at the outset of employment.  Employees may look to protect themselves with enhanced notice periods, severance payments and waivers of restraints of trade.

Going Forward

The Employment Relations (Termination of Employment by Agreement) Amendment Bill is still in the Select Committee stage, with the Committee report expected by 8 October 2025.  Accordingly, change is not imminent – the earliest we could expect the Bill to pass is late 2025.

Whether the Bill is passed or not, we recommend reaching out to our team to discuss your employment agreements and whether specific clauses should be added or removed to best suit your situation.

Employment Law Assistance

Our Workplace Law Team are able to assist with all employment processes and any other bespoke employment queries that you may have. 

Chantelle is an Associate in our Workplace Law Team and can be contacted on 07 958 7473.