Recent changes to New Zealand employment law have shifted how dismissals can be handled for higher-income employees. If you manage senior or highly remunerated roles, understanding what’s changed – and what it means for your agreements – is essential.

A new income threshold

The law now distinguishes employees based on total annual remuneration. Where an employee earns $200,000 or more, a different set of rules applies when it comes to dismissal.

This figure isn’t limited to base salary. Total remuneration includes:

base salary;

bonuses;

commissions; and or

other financial benefits.

That broader definition means more employees may fall within scope than you’d expect.

What’s changed?

High-income employees no longer automatically have the right to bring a personal grievance for unjustified dismissal. That’s a significant departure from the standard framework that applies to most employees.

That said, this doesn’t mean employers can act without process. The flexibility sits in what the parties agree to – employers and employees can use employment agreements to preserve dismissal protections or set out alternative arrangements.

For existing employees, a 12-month transition period runs from 21 February 2026 to 21 February 2027, allowing time to review and, where necessary, renegotiate current arrangements – ensuring changes aren’t imposed abruptly.

Contracts and staff communication

Employers should review employment agreements for anyone earning $200,000 or more. The law doesn’t automatically require updated contracts, but getting this right now will save considerable difficulty later. Agreements should clearly set out:

whether dismissal protections apply;

notice periods or severance arrangements; and

any custom termination provisions.

Affected employees should also be notified in writing. Clear communication upfront reduces the risk of disputes and keeps the employment relationship on solid ground.

What still applies?

These changes are specific to unjustified dismissal claims – other protections remain firmly in place. Employees can still raise grievances relating to discrimination or harassment, and contractual obligations such as notice periods and agreed exit terms are fully enforceable.

The bar for good employment practice hasn’t changed. Decisions still need to be fair, considered, and well-documented.

Why this matters

These changes give employers more discretion in managing senior employees – but that discretion only works if agreements are watertight. The focus has shifted from process-driven compliance to contractual clarity.

Consider carefully:

How remuneration is structured.

Whether dismissal protections should be retained.

What termination provisions are appropriate for each role.

Default legal settings won’t cut it here. A tailored approach is the smarter move.

How can Citation HR help?

Employment law changes like these can quickly become complex. Citation HR gives you access to expert HR advice from workplace relations specialists, available 24/7 – so you’re never making these calls alone.

Worried about your compliance? Reach out to our friendly team for a confidential chat.