The Termination of Employment by Agreement Bill has come back from the Select Committee with extensive amendments aimed at addressing some of the concerns about the power imbalance created by the original Bill.
But even with these changes there is still a significant risk that the Bill will create a sanctioned pathway for employers to push workers out quietly, cheaply, and without a fair process.
So, what has changed?
The Select Committee has substantially reworked the original Bill, introducing a new concept; pre-termination negotiations, and layering procedural requirements around how these discussions can begin and how any resulting agreement will operate.
Under the revised proposal, an employer may request that an employee enter pre-termination negotiations but must meet certain criteria before doing so.
An employer must inform an employee of their right to representation, give them reasonable time to obtain that representation, expressly state that the employee may decline, and make it clear that employment can only end if both parties sign a termination agreement. Employers must also advise employees that the duty of good faith requires that neither party may mislead or deceive the other.
Further, an employer cannot make repeated requests in quick succession, with a six-month cooling-off period, unless genuine reasons exist to make an earlier request.
These safeguards reflect attempts to address criticism that the bill legitimises coercive conduct. They also appear designed to align the regime with the UK’s “protected conversations” model.
Under the current law, parties are not prevented from reaching an agreement that an employee’s employment will end. However, there are tight rules around when and how such discussions can occur.
The primary prerequisite is that there is an acknowledged employment relationship problem between the parties, and mutual agreement to explore options for resolution on a “without prejudice” basis.
Currently, a proposal to end employment without meeting these prerequisites may leave an employer exposed to a personal grievance as the discussion is unlikely to be protected and can be used by the employee as evidence of coercion or predetermination.
Under the Bill, making that first move becomes lawful, even protected, so long as the employer follows the scripted process.
This fundamentally shifts the balance of power. A discussion that places an employee's employment in a precarious position, and previously may have been grounds for a personal grievance, is now a readily available management tool.
A central narrative in support of the Bill is that employees cannot be coerced because they can say no. But the reality is more complex. Employees faced with a request from their employer, particularly in small workplaces or hierarchical environments, will likely feel significant pressure to capitulate regardless of the formal right to decline.
The inclusion of the right to representation and a “break” between requests are positive, but they do not eliminate the inherent vulnerability many employees experience when confronted with the reality that their employer wants them gone.
The Bill recognises this to an extent. Its new “unfair negotiation” ground allows the Employment Relations Authority to cancel a termination agreement where there has been undue influence, duress, diminished capacity or reliance on employer advice. But proving this will be difficult and will fall squarely on employees, who are, in most cases, the less well-resourced and less well-informed party.
Further, by the time a challenge is brought, the employee may have already left the workplace and accepted payment. What happens to that payment if the agreement is cancelled remains unclear, particularly where an employee has acted in reliance on it.
Perhaps the most troubling addition is the requirement that every termination agreement operate as a full and final settlement of all employment-related claims. In other words, the employee will be stripped of any right to legal recourse.
Critics are right to warn that this transforms pre-termination negotiations into a potential shield for employers against a wide range of liabilities.
Supporters argue the Bill introduces clarity and reduces confusion about when without-prejudice conversations can occur. But this overlooks the wider consequences, a likely reduction in proper performance management, disciplinary procedures, and problem-solving discussions.
Why work through a fair process when a “clean exit” can be purchased upfront?
Even with the Select Committee amendments, the Bill remains, at its core, a mechanism that empowers employers to initiate exit conversations, with near-complete protection. It reframes what was once a tread carefully step in employment disputes as an exercise of management prerogative.
Originally published in The Post
