Labour laws should be changed to make it easier to dismiss highly paid staff who are underperforming, the NZ Initiative says.
The think tank has issued a new report, which calls for the removal of unjustified dismissal provisions for people in senior management roles, earning more than $250,000 a year.
Since 1991, all New Zealand employees have been able to take a personal grievance if they were dismissed unfairly and without good reason.
Report author and NZ Initiative chairman Roger Partridge said underperforming senior managers could have a negative effect on an entire business, and could depress the wages that were able to be paid to other staff.
But he said the provisions – intended to protect vulnerable staff – meant that the only way an underperforming chief executive could be dismissed was if a board of directors developed a performance management plan, consulted with the chief executive about the plan and then monitored the executive’s performance over an extended period.
In the meantime the business could be failing under the person’s watch.
“No one wants vulnerable workers being unjustifiably dismissed. But by constraining firms from getting rid of underperforming bosses, laws introduced to protect the jobs of ordinary workers may be placing those jobs at risk,” he said.
I agree. When you get to a certain level of seniority and pay, your employer should be able to terminate your employment without the hugely complex and time intensive process used for more junior staff.
An employer can carry an underperforming junior staffer, but an underperforming CE or CxO can cripple a business.