Under the Employment Relations Amendment Act 2026, employees whose annual remuneration meets or exceeds $200,000 may not pursue a personal grievance for unjustified dismissal or unjustified disadvantage.
That is a significant shift for both sides of a senior appointment, and it changes what should be negotiated at the point of hire.
What it means for employers
The risk profile of terminating a senior employee changes substantially. The statutory backstop that made process failures expensive no longer applies above the threshold.
Practical consequences:
- Contractual terms carry the weight. Whatever the agreement says about notice, termination and payments is now the substance of the arrangement rather than a floor above statutory protection.
- Other grievance grounds remain. Discrimination, harassment and breach of good faith are not the same as unjustified dismissal, and this change does not remove all exposure.
- Reputation and market. Senior appointments happen in a small market. How you exit people is known.
What it means for senior employees
If you earn at or above the threshold, negotiate protections into the contract, because the statutory ones are gone.
What to seek:
- Notice period of meaningful length, or payment in lieu.
- Termination payment provisions, defined rather than discretionary.
- A contractual process requirement — consultation, opportunity to respond — which is enforceable as a contractual term even where the statutory grievance route is closed.
- Treatment of incentives on termination. Bonuses, share schemes and long-term incentives frequently lapse on departure, and that is negotiable.
- Restraint of trade scope and, importantly, whether it is paid for during the restraint period.
- Change of control provisions, if an acquisition is plausible.
What counts toward the threshold
Remuneration rather than base salary. That means the calculation may include more than the headline figure, and someone whose base sits below $200,000 could still be captured depending on total package.
Both parties should be clear about where an individual sits, because it determines what protections apply. Take advice where someone is near the line.
The wider remedies change also applies
Below the threshold, the same Act changed how remedies work generally. Where an employee’s conduct contributed to the situation and amounts to serious misconduct, the Authority or Court must not provide any remedy at all. Where contributory conduct falls short of serious misconduct, reinstatement and compensation for injury to feelings or loss of benefits are unavailable, and remedies can be reduced by up to 100 percent.
Taken together, employer exposure in dismissal has narrowed at both ends — entirely above the income threshold, and substantially where conduct contributed.
Process is still worth running properly
For employers, three reasons:
- Establishing contributory conduct requires evidence. An investigation that was not done cannot be relied on later.
- Contractual obligations are enforceable. If the agreement requires consultation, failing to consult is a breach of contract even where a grievance is unavailable.
- Other claims survive. Discrimination and harassment grounds are separate.
Restraints of trade for senior people
Worth attention on both sides, because a departing executive is where restraints are actually tested.
Restraints are unenforceable unless reasonable and protecting a legitimate proprietary interest — confidential information, customer connection, workforce stability. An employee’s general skill and industry knowledge belongs to them and cannot be restrained.
Duration, geography and scope of activity are all assessed. Payment during the restraint period is not required in New Zealand and it strengthens an employer’s position considerably.
Governance angle
For companies with a board, senior remuneration and termination arrangements are a governance matter. Directors should understand what the organisation is committed to on an executive departure, and where the threshold change has shifted risk from statute to contract.
That is worth reviewing across existing senior agreements rather than only on new appointments.
Employment New Zealand publishes guidance on employment agreements and personal grievances, and the Employment Relations Amendment Act 2026 is available free at legislation.govt.nz.
Act in force 21 February 2026. General information only, not legal advice.
