The $200,000 Unjustified Dismissal Threshold in New Zealand

Since 21 February 2026, an employee whose total remuneration is $200,000 or more a year cannot raise a personal grievance for unjustified dismissal in New Zealand. The rule comes from the Employment Relations Amendment Act 2026, and it only removes the dismissal related grievance, not every kind of personal grievance.

This is general information about New Zealand employment law, not legal advice. For your own situation, consult a lawyer or your local Community Law centre.

Where this rule comes from

The $200,000 threshold was introduced by the Employment Relations Amendment Act 2026, which came into force on 21 February 2026 and amended the Employment Relations Act 2000. It is one of two major changes in that Act; the other creates a new gateway test for contractor status. Both are covered in more detail in the employment law hub.

Who is caught: how total remuneration is measured

The threshold looks at total remuneration, not just base salary. Employment New Zealand's guidance says the figure includes salary or wages, allowances, overtime, annual or special bonuses, cashed in annual leave, and employee share scheme benefits. It excludes accident compensation earnings, employer superannuation contributions that are not paid as salary, and anything already covered by fringe benefit tax.

To work out whether an employee is above or below $200,000, an employer adds up the employee's gross earnings over the 364 days before the day they were notified of the dismissal, not counting the current pay period. If the employee held that role for less than the full 364 days, the total is divided by the number of days actually worked in the role and multiplied by 364, to produce an annualised figure. The result is compared against the $200,000 threshold at the time of the dismissal.

New agreements compared with the 12 month transition

There is a 12 month transition that protects employees who were already in the job. If, at the time of the dismissal, the employee is in the same position they held immediately before 21 February 2026, or in a different position because of a restructure, they keep the right to raise an unjustified dismissal grievance for a dismissal that happens before 21 February 2027, provided the grievance is still raised within the usual 90 day window. Someone hired into a role paying $200,000 or more on or after 21 February 2026 is covered by the exclusion straight away, unless the parties agree otherwise in writing. From 21 February 2027, the threshold applies to everyone earning above it, regardless of when their agreement was signed.

Contracting back in

An employer and employee do not have to accept the default position. They can agree, in writing, as a term of the employment agreement, that the employee keeps the right to raise an unjustified dismissal personal grievance even though their remuneration is above the threshold. Without that written term, the statutory default applies.

What the threshold does not touch

An employee above the threshold keeps every other personal grievance available under the Employment Relations Act, including grievances for discrimination, sexual harassment, and duress connected to union membership. The threshold also has no effect on minimum wage, annual leave, sick leave, or public holiday entitlements, and it does not change the 90 day trial period rules that already existed for a different group of employees.

The practical effect

For a high earning employee, the threshold means a dismissal generally cannot be challenged through an unjustified dismissal personal grievance once the transition period has passed, unless the employment agreement says otherwise in writing. For an employer, meeting the threshold does not remove the need to follow a fair process; it removes only one legal avenue an affected employee could otherwise use to challenge the outcome. Anyone close to the $200,000 figure, on either side of an employment relationship, should check how their own agreement defines and dates remuneration rather than assume the general rule applies exactly as described here.

Frequently Asked Questions

Does the $200,000 threshold stop a high earner from raising any personal grievance?

No. It removes only the unjustified dismissal grievance, and an unjustified disadvantage grievance that relates to the dismissal. Grievances for discrimination, sexual harassment, and other reasons unrelated to the dismissal are still available.

How is total remuneration calculated for the threshold?

It is based on gross earnings over the 364 days before the dismissal, including salary or wages, allowances, overtime, bonuses, cashed in annual leave, and employee share scheme benefits, but not accident compensation earnings or most superannuation contributions. Anyone who held the role for less than 364 days has their earnings annualised over that period.

What if my employment agreement was signed before 21 February 2026?

A 12 month transition applies. If the agreement was signed before that date, the employee keeps the existing right to raise an unjustified dismissal grievance for a dismissal happening before 21 February 2027. From that date, the threshold applies regardless of when the agreement was signed.

Can an employer and employee agree to keep the grievance right anyway?

Yes. The employer and employee can agree in writing, as a term of the employment agreement, that the employee keeps the right to raise an unjustified dismissal grievance even if their remuneration is above the threshold.

Does the threshold apply retrospectively to older dismissals?

No. The change came into force on 21 February 2026 and applies from that date, subject to the 12 month transition for employees already on an existing agreement.