Simpson Grierson surveyed 168 New Zealand employers to find out. Here's what they told us.

The $200,000 income threshold, which removes unjustified dismissal protections for employees earning above that level, came into force on 21 February. Nearly four weeks on, most employers are still working out how they will approach it for both new and existing employees.

Most employers are undecided

More than half of respondents (54%) have not yet decided how they will approach the threshold for new employees, rising to 57% for existing employees. Among those who have decided, 62% intend to take advantage of the new laws.
Private sector employers are more than twice as likely as their public sector counterparts to take advantage of the new laws for new hires (37% vs 17%). Undecided rates are higher still among not-for-profits (76%) and Crown entities and SOEs (69%).

Why are so many employers still waiting?

Three themes emerged consistently. Many employers are treating the threshold as potentially temporary, anticipating a future change of government. As one respondent put it: "I like it, but Labour won't." Others cited the complexity of variable pay, where employees may cross the $200,000 threshold in some years but not others. Meanwhile, some raised concerns that the threshold is set too low, capturing mid-level individual contributors rather than only senior executives.

The 12-month transition period for existing employees is already running. Uncertainty around how total remuneration should be calculated, how the provisions will be interpreted by the Authority and the Courts, the risk of alternative claims, and concerns about culture, engagement and fairness are all influencing decision making. In the short term, this appears to be driving a wait and see approach, with employers continuing to monitor market practice, legal developments, and the political space.

Click below to download our full survey report, including factors employers should be considering.

To discuss what the threshold means for your organisation, contact the Simpson Grierson employment team. 

Read the article in BusinessDesk Employment law reform: $200,000 dismissal threshold sees cautious uptake | BusinessDesk [paywall]

Special thanks to Meg Vogel for her assistance in preparing the survey.