The Employment Relations (Termination of Employment by Agreement) Amendment Bill will have its first vote in parliament on 19 February. It aims to simplify the process of ending employment contracts by mutual agreement.  The Bill introduces a protected conversation process, allowing employers and employees to negotiate the terms of termination without the risk of personal grievance claims.  This article will explore the potential pros and cons of this proposed legislation, drawing on the experiences of other countries with similar laws.  

Pros:

• Reduced Disputes and Costs: The Bill could lead to a decrease in costly and time-consuming personal grievance claims, benefiting both employers and employees.  By providing a clear framework for termination negotiations, it may encourage amicable resolutions and reduce the need for formal legal proceedings.   

• Flexibility and Efficiency: The protected conversation process could offer a more flexible and efficient way to terminate employment relationships compared to traditional methods.  This could be particularly beneficial in situations where redundancy processes are lengthy and expensive.   

• Employee Compensation: In many cases, employment contracts do not include redundancy payouts.  The Bill's framework allows employees to negotiate compensation for the termination of their contract, providing a financial safety net.   

• Improved Communication: The protected conversation process could foster open dialogue between employers and employees, leading to a better understanding of each other's needs and expectations.  This could help to resolve issues and potentially avoid termination altogether.  

• Confidentiality: Discussions and offers made during the negotiation process are generally inadmissible in future legal proceedings, ensuring confidentiality and encouraging open dialogue.   

Cons:

• Potential for Power Imbalance: There is a risk that the protected conversation process could be used by employers to pressure employees into accepting unfair termination terms.  This is particularly concerning if there is a significant power imbalance between the employer and employee.  

• Reduced Access to Justice: By waiving their right to pursue personal grievance claims, employees may be giving up their ability to seek redress for unfair or unlawful termination.  This could leave them vulnerable to exploitation.  

• Complexity and Uncertainty: The Bill introduces new legal concepts and procedures, which could create complexity and uncertainty for both employers and employees.  This could lead to unintended consequences and legal challenges.  

• Lack of Transparency: The confidentiality provisions in the Bill could make it difficult to monitor the fairness and effectiveness of the protected conversation process.  This could make it harder to identify and address any potential issues.  

How Might This Law Work in New Zealand?Similar legislation exists in the UK, where it has been credited with reducing the number of employment disputes.  However, there have also been concerns raised about the potential for employer abuse and reduced access to justice for employees.  

In New Zealand, the effectiveness of the proposed law would depend on several factors, including:

• The strength of existing employment protections: New Zealand already has a relatively strong employment relations framework, which could mitigate some of the risks associated with the Bill.
• The level of awareness and understanding among employers and employees: It is essential that both parties are fully aware of their rights and obligations under the new law.
• The availability of independent legal advice: Employees should have access to independent legal advice before entering into any termination negotiations.
• The effectiveness of enforcement mechanisms: There need to be robust mechanisms in place to ensure that employers comply with the law and that employees are not pressured into accepting unfair termination terms.

Overall, the proposed Employment Relations (Termination of Employment by Agreement) Amendment Bill has the potential to offer benefits to both employers and employees. However, it is important to be aware of the potential risks and to ensure that appropriate safeguards are in place to protect the rights of employees.

We will update you as/if the Bill becomes law.