Submissions open on ERA amendment

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Proposed legislation which seeks to amend the Employment Relations Act has reached the next step in parliament after submissions were officially opened yesterday.

First introduced last year, the bill would give employers the right to opt-out of personal grievance provisions when engaging an employee who earns a gross annual salary over $150,000.

“The logic behind the bill is that if an employee is skilled enough to command a salary of $150,000, they are unlikely to require personal grievance rights or protection,” says Laura Scampion, partner and employment lawyer at DLA Piper.

“The premise is that these well paid, highly skilled employees can negotiate for themselves,” she explains.

Scampion predicts that – if the bill becomes law – New Zealand will likely start to see terms increasingly being included in employment agreements that provide for damages payments to be made to senior staff in the event of a termination without cause.

Sometimes referred to as a “golden handshake” or “golden parachute”, Scampion says these caluses are already making their way into some senior executive employment agreements in New Zealand – but she warns that they’re still largely untested by the courts.

“We are finding that a number of our clients are already comfortable with this concept and that senior employees don’t often dispute these tailored termination provisions being included in their agreement from the outset,” she tells HRM.

“If, as the bill anticipates, an employee had contracted out of their right to bring a personal grievance such clauses would almost certainly be upheld.”

Either way, Auckland-based Scampion says the concept creates certainty for employers by removing the threat of a personal grievance with regard to high-ranking employees.

Scampion also says employers can look to similar legislation over the Tasman as a signal of what might come.

“Australia already has a ‘high income threshold’ (over AU$138,900) that bars an employee from pursuing an unfair dismissal claim under Australia’s Fair Work Act 2009,” she reveals.

“The figure increases every year and we expect that if the bill were to become law, New Zealand would adopt a similar approach.”

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