New Personal Grievance Rights for High-Income Employees

Published 26 February 2026 | 4 min read

Recent changes to employment law mean that, from 21 February 2026, high-income employees will no longer have the same ability to bring unjustified dismissal personal grievance claims.

What was the law before 21 February 2026?

Under the Employment Relations Act 2000, all employees, regardless of how much they earn, had the right to raise a personal grievance if they believed they had been unjustifiably dismissed.

This included the right to challenge:

• The substantive reason for dismissal
• The process followed by the employer
• Redundancy decisions
• Any failure to meet good-faith consultation requirements

Employers were required to ensure both substantive justification and procedural fairness, including genuine consultation and consideration of alternatives where relevant.

What is changing?

The amendment introduces a $200,000 total remuneration threshold.

“Total remuneration” includes:

• Base salary
• Bonuses
• Commissions
• Incentive payments
• Other monetary benefits

Under the new law:

• Employees earning $200,000 or more per year will no longer be able to bring a personal grievance for unjustified dismissal.
• This restriction also applies to related claims connected with the dismissal process.
• Employers will not be legally required to follow certain procedural obligations (such as redundancy consultation requirements) when dismissing employees above this threshold.

The Act includes a defined method for calculating total remuneration to determine whether the threshold applies.

Transitional Period

The amendment provides:

• New employees who meet the threshold will automatically fall under the new regime unless their agreement states otherwise.
• Existing employees earning $200,000 or more will have a 12-month transition period to renegotiate their employment agreements.
• After the 12-month period expires, the bar on unjustified dismissal claims will apply unless the parties have agreed to contract out of it.

Importantly, the legislation allows employers and employees to contract out of the bar, meaning they can agree that unjustified dismissal rights will continue to apply.

What This Means in Practice

For Employers

The reform significantly alters risk at the senior and executive level.

As of 21 February 2026, employers will have:

• Greater flexibility to restructure senior roles
• Reduced exposure to costly dismissal litigation
• Fewer procedural requirements when terminating high-income employees
• Increased confidence when making executive hiring decisions

This may reduce:

• Legal costs
• Time spent on complex performance or restructuring processes
• Settlement pressure in high-value disputes

However, employers should note:

• Other legal obligations remain in place (e.g., discrimination, harassment, whistleblowing protections, contractual obligations, and good faith in other contexts).
• Reputational and relational risks still exist.
• Contractual termination provisions must still be complied with.

Options for Employers

Employers should consider the following strategic steps:

1. Review Remuneration Structures

Identify which roles exceed or may exceed the $200,000 threshold, including incentive components.

2. Audit Employment Agreements

Determine whether to:

• Allow the statutory bar to apply; or
• Contract out and preserve unjustified dismissal rights (in exchange for other negotiated protections).

3. Consider Contractual Safeguards

Employers may wish to:

• Strengthen termination clauses
• Clarify notice provisions
• Include executive-style exit mechanisms
• Revisit restraint and confidentiality protections

4. Prepare for the 12-Month Transition Window

For existing employees:

• Decide whether to initiate renegotiations
• Consider whether enhanced benefits (e.g., longer notice, agreed exit payments) may be appropriate in exchange for accepting the bar
• Document any variations carefully

5. Maintain Best Practice Process (Where Appropriate)

Even where procedural fairness is not legally required, many employers may still choose to follow fair process to:

• Protect culture
• Mitigate reputational risk
• Avoid disputes framed as discrimination or contractual breach

Considerations for High-Income Employees

Employees earning $200,000 or more should:

• Review their remuneration structure
• Seek legal advice before agreeing to vary employment terms
• Carefully assess whether to contract out of the statutory bar
• Negotiate enhanced contractual protections if dismissal rights are removed

The 12-month transition period is critical. Once it expires, affected employees may lose the ability to challenge dismissal unless their agreement provides otherwise.

Broader Implications

This reform represents a significant shift in New Zealand employment law by:

• Creating a two-tier dismissal regime
• Moving senior employment relationships closer to a contractual (rather than statutory) model
• Aligning more closely with executive employment frameworks in some overseas jurisdictions

It signals a policy intention to increase labour market flexibility at senior levels while maintaining protections for lower and middle-income earners.