Employment Relations (Termination of Employment by Agreement) Amendment Bill

Employment Relations (Termination of Employment by Agreement) Amendment Bill The Parliament of New Zealand enacts as follows: 1 Title This Act is the Employment Relations (Termination of Employment by Agreement) Amendment Act 2024 . 2 Commencement This Act comes into force on the day after Royal assent. 3 Principal Act This Act amends the Employment Relations Act 2000 (the principal Act ) . 4 New cross-heading and new sections 101A to 101B inserted After section 101, insert: Termination of employment by agreement 101A Agreement to terminate employment 1 Subsection (2) applies— a to an offer made by an employer to an employee— i for the purpose of reaching an agreement to terminate the employment relationship; and ii as part of that agreement, for the employer to pay the employee a specified sum in full and final settlement of any cause of action arising out of the employment relationship; and b regardless of whether there is an existing employment relationship problem. 2 An offer made to an employee under subsection (1) does not in itself constitute grounds for a personal grievance. 3 An agreement made under subsection (1) is enforceable only if— a the agreement is in writing and signed by each party; and b the agreement states the relevant legislation which applies to such settlement agreements; and c before the employee signed the agreement, the employer advised the employee that they should seek independent advice on the proposed agreement before signing; and d the employer gave the employee a reasonable opportunity to obtain independent advice before the employee signed the agreement. 4 An offer made under subsection (1) may include a requirement for both parties not to disclose any terms of the agreement to the employer’s current employees. 101B Negotiations to terminate employment inadmissible 1 Evidence of pre-termination negotiations under section 101A is inadmissible in any proceeding before the Authority. 2 In subsection (1) , pre-termination negotiations means any discussions held or offers made before the termination of the employment relationship in question, with a view to it being terminated on terms agreed between the employer and the employee. 3 Despite subsection (1) , the Authority may admit evidence of a communication or information in relation to pre-termination negotiations if satisfied that there is a prima facie case that the communication was made or received, or the information was compiled or prepared, for a dishonest purpose or to enable or aid anyone to commit or plan to commit what the person claiming the privilege knew, or reasonably should have known, to be an offence. 4 Subsection (1) does not apply to— a the terms of an agreement under section 101(A) ; or b evidence necessary to prove the existence of such an agreement in a proceeding in which the conclusion of such an agreement is in issue; or c the use in a proceeding, solely for the purposes of an award of costs, of a written offer that— i is expressly stated to be subject to this section except as to costs; and ii relates to an issue in the proceeding. 5 This section applies despite sections 106(2) and 189(2) . 4 New Part 8B inserted After section 100G, insert: 8B Termination of employment by agreement 100H Object of this Part The object of this Part is to enable an employer and an employee to— a begin pre-termination negotiations with a view to terminating the employment relationship; and b enter into an agreement terminating the employment relationship. 100I Interpretation In this Part, unless the context otherwise requires,— pre-termination negotiations means all discussions, correspondence, and other interactions between the employer and employee about the termination of the employment relationship, and includes— a all offers made during the negotiations; and b the employer’s request to begin pre-termination negotiations and the employee’s response to that request termination agreement means an agreement entered into by an employer and an employee under section 100N . Request to begin pre-termination negotiations 100J Employer may ask employee to begin pre-termination negotiations 1 An employer may ask an employee to begin pre-termination negotiations. 2 A request under subsection (1) must— a inform the employee of their right to obtain representation before responding to the request and at any other time in any process that follows under this Part; and b give the employee a reasonable opportunity to obtain that representation; and c provide the employee with the information specified in section 100K . 3 The employee may decline the request. 4 If the employee agrees to the request, the employer must make a record of the request and the employee’s response. 5 A request under subsection (1) — a may be made whether or not there is an existing employment relationship problem; and b is not by itself grounds for an employee to raise a personal grievance under section 103(1)(a) or (b) ; and c may not be made more than once in any 6-month period, unless there is a genuine reason based on reasonable grounds to make another request in that period. 6 For the purposes of subsection (5)(c) , a reminder of a request, given a reasonable time after the request is made, is not a new request. 100K Information about pre-termination negotiations For the purposes of section 100J(2)(c) , the employer must inform the employee of the following: a the employee may decline the request to begin pre-termination negotiations ( see section 100J(3) ): b negotiations may not begin without the employee’s agreement to begin the negotiations ( see section 100L ): c the duty of good faith under section 4 is met during pre-termination negotiations if the parties do not, whether directly or indirectly, do anything— i to mislead or deceive each other during the negotiations; or ii that is likely to mislead or deceive each other during the negotiations ( see section 100M) ): d the employee’s employment may be terminated under this Part only if the parties enter into a termination agreement ( see section 100N ): e the employee is entitled to obtain independent advice on the proposed terms of a termination agreement ( see section 100N(3) ): f the terms of a termination agreement are the full and final settlement of any cause of action arising out of the employment relationship between the parties ( see section 100N(4)(a) ). Pre-termination negotiations 100L Pre-termination negotiations not to begin without employee agreement An employer must not begin pre-termination negotiations without the employee’s agreement to begin the negotiations. 100M No misleading or deceptive behaviour during pre-termination negotiations 1 The duty of good faith under section 4 is met during pre-termination negotiations if the parties to the negotiations do not, whether directly or indirectly, do anything— a to mislead or deceive each other during the negotiations; or b that is likely to mislead or deceive each other during the negotiations. 2 However, section 4 otherwise continues to apply to the employment relationship. 3 A person who breaches subsection (1) is liable to a penalty imposed by the Authority. Termination agreements 100N Termination agreements 1 This section applies if, as a result of pre-termination negotiations, the employer and employee agree to the terms on which the employment relationship is to be terminated. 2 The terms of the termination agreement must— a specify the sum the employer is to pay to the employee for agreeing to terminate the employment relationship; and b state that the agreement is made under this section; and c be in writing; and d be signed by the employer and the employee. 3 Before the employee signs the agreement, the employer must— a inform the employee that they are entitled to seek independent advice on the proposed terms of the agreement; and b give the employee a reasonable opportunity to obtain that advice. 4 The terms of the agreement— a are the full and final settlement of any cause of action arising out of the employment relationship between the parties; and b are final and binding on, and enforceable by, the parties; and c may not be cancelled under any of sections 36 to 40 of the Contract and Commercial Law Act 2017; and d except for enforcement purposes, may not be brought by a party before the Authority or the court, whether by action, appeal, application for review, or otherwise. 5 For the purposes of subsection (4) , a minor aged 16 years or over may be a party to an agreement, and may be bound by that agreement, as if the minor were a person of full age and capacity. 6 A person who breaches a term of an agreement is liable to a penalty imposed by the Authority. Effect of unfair pre-termination negotiations and process defects 100P Employer must not engage in unfair pre-termination negotiations 1 An employer must not engage in unfair pre-termination negotiations. 2 If the Authority finds that an employer has engaged in unfair pre-termination negotiations, the Authority may make an order cancelling the termination agreement and provide for any 1 or more of the following remedies: a reinstatement of the employee in the employee’s former position or the placement of the employee in a position no less advantageous to the employee: b the reimbursement to the employee of a sum equal to the whole or part of the wages or other money lost by the employee as a result of the termination: c the payment to the employee of compensation, including compensation for— i humiliation, loss of dignity, and injury to the feelings of the employee; and ii loss of any benefit, whether or not of a monetary kind, that the employee might reasonably have been expected to obtain if the termination had not occurred. 3 An employer who breaches subsection (1) is liable to a penalty imposed by the Authority. 4 For the purposes of this Part, unfair pre-termination negotiations means— a 1 or more of paragraphs (a) to (c) of subsection (5) apply to the employee; and b the employer or the employer’s representative— i knows of the circumstances described in the paragraph or paragraphs that apply to the employee; or ii ought to know of the circumstances in the paragraph or paragraphs that apply to the employee because the employer or the employer’s representative is aware of facts or other circumstances from which it can be reasonably inferred that the paragraph or paragraphs apply to the employee. 5 The circumstances are that the employee, at the time of pre-termination negotiations or entering into the termination agreement,— a is unable to adequately understand the provisions or implications of the agreement by reason of diminished capacity due, for example, to— i age; or ii sickness; or iii mental or educational disability; or iv a disability relating to communication; or v emotional distress; or b reasonably relies on the skill, care, or advice of the employer or the employer’s representative; or c is induced to enter into the agreement by oppressive means, undue influence, or duress. 100Q Effect of process defect 1 The Authority may make an order cancelling a termination agreement if an employee is found to have been treated unfairly because of— a any defect in the process followed by an employer under sections 100J(2) or (4) or 100N(3) ; or b a failure to comply with section 100N(2) . 2 However, the Authority must not determine a termination agreement to be invalid solely because of a matter referred to in subsection (1)(a) or (b) if it did not result in the employee being treated unfairly. Admissibility of evidence 100R Evidence of pre-termination negotiations inadmissible 1 Evidence of pre-termination negotiations is inadmissible in any proceeding before the Authority or the court. 2 Subsection (1) does not apply to— a unfair pre-termination negotiations ( see section 100P ); or b evidence of a defect in the process followed by an employer under sections 100J(2) or (4) and 100N(3) if the Authority finds that, because of the defect, the employee has been treated unfairly; or c evidence of a failure to comply with section 100N(2) if the Authority finds that, because of the failure, the employee has been treated unfairly; or d pre-termination negotiations if an employee raises a personal grievance under section 103(1)(c) to (k) in relation to those negotiations; or e evidence of pre-termination negotiations required to prove the terms of a termination agreement; or f evidence necessary to prove the existence of a termination agreement in a proceeding in which the conclusion of such an agreement is in issue; or g the use in a proceeding, solely for the purposes of an award of costs, of a written offer made during pre-termination negotiations that— i is expressly stated to be without prejudice except as to costs; and ii relates to an issue in the proceeding.