Significant Rewrite of Bill on Ending Employment by Mutual Consent

The Employment Relations (Termination of Employment by Agreement) Amendment Bill (Bill) has undergone a major rewrite following Select Committee scrutiny.

Originally pitched as a simple mechanism for employers and employees to agree on ending employment, the Bill now introduces a structured, highly regulated process which adds a significant amount of complexity.

What does the Bill mean?

The original Bill proposed adding two sections to the Employment Relations Act 2000, allowing employers to offer compensation for a mutual termination and making those negotiations inadmissible in legal proceedings.

The new version includes the following changes:

• Formal Request Process
  Employers would have to make a written request to start negotiations and employees would need to consent before discussions began.

• Frequency Limits
  Requests could only be made once every six months unless there were “genuine reasons”.

• Termination Agreements
  Would have to be in writing, signed, and include specific legal statements. Agreements would be binding and could not be cancelled under contract law.

• Safeguards Against Unfairness
  There is a proposed prohibition on unfair negotiations (e.g., undue influence, diminished capacity). Breaches could lead to cancellation and penalties.



• Evidence Rules
  There are proposed rules on pre-termination negotiations remaining confidential, but exceptions would apply for unfairness or procedural defects.

Key Takeaways for Employers

This Bill has not yet passed, and further changes may occur before it completes the legislative process. As such, the key takeaway is “watch this space” – we’ll keep you posted.

Disclaimer: We remind you that while this article provides commentary on employment law topics, it should not be used as a substitute for legal or professional advice for specific situations. Please seek guidance from your employment lawyer for any questions specific to your workplace.