Employment Relations (Termination of Employment by Agreement) Amendment Bill

The Employment Relations Amendment Bill (Termination of Employment by Agreement), introduced by ACT MP Laura Trask, is a significant step toward modernizing New Zealand's employment framework.

The Bill seeks to streamline the process of mutually agreed terminations between employers and employees. It aims to reduce costs and legal complications associated with employers addressing performance-based, conduct issues, relationship breakdowns or interpersonal conflicts, etc by paving a clear pathway and framework for the parties in an employment relationship to resolve employment problems via agreed exits/terminations in certain circumstances.

Ending an employment relationship often comes with complex legal considerations & requires extensive documentation, including legal intervention if disputes arise. This can place a burden on small businesses and create an environment of reluctance around hiring due to potential costs businesses face if the relationship doesn't work out.

The Bill draws from the UK’s "protected conversations" model, allowing for confidential, "without prejudice" discussions. This enables employers and employees to openly discuss ending the employment relationship without legal repercussions. If both parties agree, termination terms are formalized, side-stepping the sometimes costly and stressful process involving a corresponding employment dispute.

A key feature of the Bill is that it proposes to allow an employer to terminate an employee’s employment in return for specified compensation where the parties have agreed to that and ensures related discussions and/or correspondence about that is protected via ‘without prejudice privilege’. This means such discussions could not be used as part of a Personal Grievance Claim, or other legal proceedings against an employer.

Overall, this Bill is a relevant and practical proposal for fostering healthy employment dynamics, making it easier to adapt to business needs while ensuring respectful, fair treatment for employees.