If passed, the Employment Relations (Allowing Higher Earners to Contract Out of Personal Greivance Provisions) Amendment Bill will allow Higher Earners (those on an annual gross salary greater than $150,000) to contract out of the personal grievance provisions in the Employment Relations Act 2000. In order to contract out of the personal grievance provisions of the Act:
• the term must be stated in an agreement signed by both the employee and the employer;
• the employee must have received advice from a lawyer on the effect and implications of the term;
• the lawyer would also have to witness the employee’s signature of the agreement; and
• the lawyer would also have to provide a certificate confirming that he or she advised the employee on the term and witnessed the employee’s signature.
The rationale behind the Bill is that employees earning over $150,000 are not vulnerable employees and are more able to negotiate an exit package for themselves. Therefore, they do not require the same protection as other employees. Other jurisdictions have legislation in place which recognises this. For example, in Australia those employees earning more than A$140,000 per year are unable to bring claims for unfair dismissal. In the UK, the amount of compensation an employee can receive for unfair dismissal is capped at the lower of: one year’s salary; or £80,541, making unfair dismissal claims less attractive for higher earners.
Personal grievances (see Personal Grievance) include claims for unjustified disadvantage (see Unjustified disadvantage) , unjustified dismissal and discrimination (see Discrimination). Therefore, if the Bill passes, in addition to being prevented from bringing a claim for unjustified dismissal (see Unjustified dismissal), those employees who contract out of the personal grievance provisions in the Act will be prevented from bringing a personal grievance for discrimination. However, they would still have protection under the Human Rights Act 1993. An unintended result of the Bill may be an increase in claims for discrimination under the Human Rights Act 1993.
The Bill has passed its first reading.