0
Contact Us
Redefining exit strategies – The Employment Relations (Termination of Employment by Agreement) Amendment Bill explained
On 29 October 2025, the Education and Workforce Select Committee (Select Committee) presented its report (Report) on the Employment Relations (Termination of Employment by Agreement) Amendment Bill (Bill).
What is the Bill?
The Bill was introduced to the House in November 2024 and it proposed a new concept called 'pre-termination negotiations' (Negotiations).[1]
If enacted, the Bill would allow protected discussions regarding the potential termination of employment to take place (regardless of whether a current dispute exists between an employee and employer) without this giving rise to a personal grievance.
Aotearoa New Zealand currently follows the same model as Australia and Canada - providing legislative protection to ‘without prejudice’ conversations only where there is an existing employment dispute. Therefore, if enacted, the Bill would bring Aotearoa New Zealand's approach more in line with the United Kingdom, which has implemented a “protected conversation” regime for over a decade, which permits negotiations to terminate an employee’s employment without the need for a dispute (subject to certain safeguards).
The significance of the Report
The Report has largely rewritten the Bill. The Report focuses, for the most part, on providing additional safeguards and increased procedural requirements for entering into and engaging in Negotiations.
Key differences between the Bill and the Report
| The Bill as introduced | The Bill as per the Report | |
| Request to begin Negotiations | Not addressed in the Bill. | An employer may ask any employee to begin Negotiations (Request). The employee may decline the Request. If the Request is accepted, the employer must make a record of the Request and the employee’s response. The Request must:
|
| Time restriction on making multiple requests | Not addressed in the Bill. | A Request cannot be made more than once in a 6-month period unless a genuine reason based on reasonable grounds exists. |
| Grounds for personal grievance | An offer is not a ground for a personal grievance. | A Request by itself is not grounds for a personal grievance for unjustified dismissal or unjustified disadvantage. |
| Enforceability of agreement | The TA is only enforceable if it is in writing, signed, includes relevant legislation which applies to settlement agreements, and before it is signed the employer has advised the employee to seek independent advice and provides a reasonable opportunity for them to do so. | The TA is only enforceable if it is in writing, signed by the parties, specifies the sum to be paid to the employee for agreeing to the termination, and specifies that the TA has been made under section 100N of the Employment Relations Act 2000. |
| Admissibility of Negotiations or TA as evidence | Evidence of Negotiations are not admissible before the Employment Relations Authority (Authority), but for limited exceptions. | Evidence of Negotiations cannot be brought before Authority or Court but for limited exceptions, including for ‘Unfair Negotiations’ and defects in the process of requesting and engaging in Negotiations. |
| Unfair Negotiations and process defects | Not addressed in the Bill. The Employer must not engage in ‘Unfair Negotiations’. |
Unfair Negotiations are defined as when the employee:
The Authority can also cancel the TA if the employee is found to have been treated unfairly because of employers’ failure to follow the procedural requirements (outlined above under row “Request to begin Negotiations”). |
What’s next and what do we think?
The Committee of the whole House will now consider, debate and vote on the Report.
Notably, the New Zealand Labour Party and the Green Party of Aotearoa New Zealand submitted that an employer and an employee can already mutually agree to terminate an employment relationship through without prejudice conversations (provided there is an existing dispute). While that is technically correct, we have observed an increase in disputes relating to whether a conversation between an employer and an employee was genuinely ‘without prejudice’. The present position is complicated or can be difficult for parties to understand.
It would be beneficial for employers and employees alike to have clearer legal parameters and guidance when it comes to initiating what has been known as a ‘without prejudice’ conversation. In our view, the Report provides clearer and simpler procedures and help mitigate some of the power imbalance issues that were of concern in the Bill as introduced.
Get in touch
Please feel free to reach out to any of our experts if you have any questions about how your organisation will be affected by the Bill and the Report’s proposed changes.
Special thanks to Caitlin Walker and Isabella Peacock-Price for their assistance in writing this article.
[1] For completeness, we note that this concept is different from the proposed wage and salary threshold for exempting employees who earn $180,000 or more per year from filing unjustified dismissal personal grievance claims.
[2] A TA would serve as a full and final settlement of all employment-related claims. We understand a TA will be a different form of agreement to a settlement agreement entered into under section 149 of the Employment Relations Act 2000 and in particular, it will not require certification by a mediator.
[3] It is unclear in the current drafting how an employee would bring a claim in relation to a TA (ie whether it would be through the usual personal grievance process or via another circumvented process).
[4] The implications of cancelling a TA due to Unfair Negotiations or procedural defects are not clearly defined. This ambiguity may lead to challenging scenarios in which an employee has already received payment under the terms of the TA and employers may face difficulties in recovering such payments.
