Guiding exit negotiations: insights on the new employment relations Bill

Julia Shallcrass, Employment Lawyer and Founder of KiwiBoss, provides an overview of an amendment to the Employment Relations Act 2000 and outlines two HRNZ PD courses that can support you when working with exit negotiations.

When an employment relationship falters due to poor performance or misconduct, employers might offer a financial exit in a without prejudice discussion.

MP Laura Trask’s Employment Relations (Termination of Employment by Agreement) Amendment Bill would let employers agree to end the employment relationship without the risk of legal crossfire.

This amendment Bill aims to reduce the legal risks associated with settlement agreements, regardless of whether a ‘serious employment relationship problem’ exists. If passed, this change could give managers more confidence to address poor performance by clarifying when and how exit discussions can take place.

While employers wait for the Bill to progress, HRNZ courses, such as Managing Poor Performers and Negotiating Exits for Problem Employees, offer practical guidance for people managers and HR professionals.

These HRNZ courses presented through KiwiBoss provide essential skills for handling performance management and exit negotiations effectively, minimising legal risks.

CRITICAL ASPECTS OF THE PROPOSED BILL

‘Without prejudice’ discussions allow employers to negotiate potential exit terms with employees without the risk of that information being used against them in court.

Case law shows that such discussions are only protected where a ‘serious employment relationship problem’ exists, such as misconduct or a formal complaint.

What qualifies as a ‘serious problem’ is ambiguous, leaving employers to navigate a legal grey area when negotiating exit agreements.

Trask’s Bill seeks to simplify these negotiations by removing the requirement of a significant issue, enabling exit discussions without triggering personal grievances.

Employers would need only the employee’s consent, a fair compensation offer, and a reasonable opportunity for the employee to seek legal advice to begin negotiations. Negotiations that meet the Bill’s criteria would then be protected, reducing risks of personal grievances and court proceedings.

Professional Training

HRNZ provides live and virtual courses on managing poor performers and negotiating exits for problem employees. Through these courses, HR professionals and managers discover how to handle common situations responsibly and within legal frameworks. Led by myself, the courses integrate case law and practical activities, so you can apply legal requirements in the workplace.

While the proposed amendment Bill could simplify exit negotiations, the performance management process requires employers to act in good faith to remain compliant with employment law.

Regardless of the Bill’s outcome, the Managing Poor Performers and Negotiating Exits for Problem Employees courses provide vital insights to help New Zealand workplaces stay productive and positive while managing legal risks.

Managing Poor Performers

Dealing with ongoing poor performance can be challenging for employers. Poorly performing employees may consistently make mistakes, miss deadlines or lack the skills for the job. Many managers avoid dealing with the formal performance management process for fear of getting it wrong and facing legal action. This can lower team morale, reduce productivity and affect an organisation’s reputation.

The Managing Poor Performers course equips HR and people managers with strategies to manage performance issues constructively while ensuring they meet legal requirements.

Participants on this course will explore the following.

• Manage poor performance informally: Find out how to avoid poor performance in the first place, and informally address performance issues through coaching staff and feedback for improved performance.

• Set clear expectations and goals: Learn how to set Specific, Measurable, Achievable, Relevant and Time-bound (SMART) goals to clarify what improvement is required.

• Develop Performance Improvement Plans (PIPs): Find out how to write formal PIPs, which offer employees a structured pathway to improve. PIPs provide both documentation and a timeline, reducing the risk of personal grievances if the process leads to dismissal.

• Maintain fairness and good faith: Consider how to manage the duty of good faith, by consulting on the performance management process to avoid potential legal pitfalls.

If Trask’s Bill passes, it would give employers a clearer framework for offering exit agreements and empower employees with the option to leave during the performance management process. Where a PIP is unsuccessful, employers could pursue an exit settlement without fear of legal action, provided they comply with requirements under the Bill.

Negotiating Exits For Problem Employees

There may be times when, despite best efforts, an employee simply isn’t the right fit or a problem exists within the working relationship that is best resolved through an agreed exit.

The Negotiating Exits for Problem Employees course provides HR professionals and managers with a guide to exiting problem employees through negotiation or mediation.

This course is relevant given the uncertain legal environment surrounding exit negotiations that the Bill aims to address, by providing strategies to minimise risks when speaking ‘off the record’.

Participants on this course learn the following.

• Prepare for negotiation and mediation: Conduct risk assessments to understand both parties’ positions and potential outcomes without a negotiated agreement.

• Create mutually beneficial terms: Consider how to offer settlement terms that are fair to both parties, covering confidentiality, non-disparagement clauses, references and protection of property.

• Without prejudice discussions: This course emphasises professionalism in communication, with guidance on how to reduce the risk of a personal grievance.

This course empowers HR professionals and managers with the skills to handle exit processes effectively, covering legal requirements and risk management. Through case studies, participants build confidence in preparing for negotiated settlements.

Julia Shallcrass is the founder of KiwiBoss, an HR and employment law training company. Julia is an employment lawyer who provides in-house training to organisations throughout New Zealand. She presents many courses through HRNZ, including Effective Performance Reviews and Giving Feedback, Managing Poor Performers, Managing Mental Illness at Work, Negotiating Exit Settlements for Problem Employees, and Restructuring and Redundancy.