Employment Relations Amendment Bill 2026 NZ | Key Changes

The Employment Relations Amendment Bill passed its third reading recently bringing about four key changes to New Zealand’s employment law framework.
 

Unjustified Dismissal Income Threshold

A new income threshold of $200,000 for unjustified dismissal personal grievances has been introduced. The effect of this is that employees earning $200,000 and over may not raise a personal grievance claim in the event of their employment being terminated. Employers will not have to show they have acted fairly or reasonably when concluding the employment relationship in these instances, although there are still possibilities that employees may raise claims for unjustified disadvantage or discrimination if the termination was for a prohibited reason.

After receiving royal assent, the law will apply automatically to all new employment relationships and will apply to existing employment relationships on the first anniversary of the law taking effect. Parties may contract out of the income threshold.
 

Further clarification of the contractor v employee status

• The arrangement includes a written agreement that specifies the person is an independent contractor, or is not an employee; and
• The person is not required to perform or be available to perform work at a specified time or day or for a minimum period OR the person is allowed to sub-contract the work for another person without prior vetting (except to ensure compliance with any relevant statutory requirements, or, if justified by the nature of the work, to check for a relevant qualification or criminal record); and
• The arrangement may not be terminated for the reason that the person declines any work offered to them that is additional to the work that person agreed to perform under the arrangement; and
• The person had a reasonable opportunity to seek independent advice before entering into the arrangement.

If the person is a specified contractor they will not be deemed to be in an employment relationship, removing protections under the Act.
 

Amending remedies for personal grievances for contributing behaviour

The Employment Relations Authority and the Employment Court must no longer order reinstatement or any compensation for humiliation, loss of dignity, and injury to the feelings of the employee where an action of employee contributed to the situation that gave rise to the personal grievance and that action amounts to serious misconduct.

It is foreseeable that clarity will be required on what constitutes ‘contributing to the situation’ and ‘serious misconduct’.
 

Removal of the 30-day rule

The final change is removing the 30-day rule. Prior to this change, where a Collective Agreement applied to an employment relationship the employee was automatically for the first 30 days given the same conditions as the Collective Agreement, regardless of whether they were a member of a union. Now employees can be on individual terms from the outset.

These changes may require a review of employment agreements, contractor arrangements and internal processes. For practical advice on how they may affect you as an employer or contractor, contact Michael or a member of Gibson Sheat’s employment law team.