Significant amendments to the Employment Relations Act

At a glance

• The much-awaited Employment Relations Amendment Bill (Bill) was introduced to Parliament on 17 June 2025. 
• The Bill introduces wide ranging changes that will, in the words of the Workplace Relations and Safety Minister, Hon. Brooke van Velden "enhance labour market flexibility, reduce compliance costs, and re-tilt the personal grievance system to better balance employer and employee interests and discourage poor behaviour". 
• The Bill introduces changes to the Employment Relations Act 2000 to provide greater certainty for contracting parties; strengthen consideration and accountability for employee's behaviour in personal grievance process; introduce specified wage and salary thresholds for unjustified dismissal personal grievances and; revoke the 30-day rule and reinstate information requirements. 

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Providing greater certainty for contracting parties – Contractor Gateway test

The Bill proposes amendments that give greater weight to the intention of contracting parties and are aimed at providing greater certainty to businesses and workers who use certain forms of contracting arrangements. The meaning of employee will be amended to exclude a specified contractor. 

If the arrangement meets defined criteria set out below, then the worker will be considered a contractor, and will be unable to mount a challenge in the Employment Relations Authority (Authority):

• There is a written agreement that specifies the worker is an independent contractor.
• The worker is not restricted from working for others (not only competitors), except while performing work for the contacting party.
• The worker is:
  • not required to be available to work at any specified times or days or for a minimum period; or
  • able to sub-contract the work (subject to vetting or statutory requirements).
• The business does not terminate the arrangement for not accepting an additional task.
• The worker has had a reasonable opportunity to seek independent advice regarding the arrangement before entering into it.

Strengthening consideration of and accountability for employee's behaviour in the personal grievance process 

The Bill proposes amendments to:

• Remove eligibility for any remedies for employees whose behaviour amounts to serious misconduct.
• Remove eligibility for reinstatement into a role, and compensation for hurt and humiliation and loss of any benefit for employees who contributed to the situation that led to the personal grievance.
• Clarifies that the Authority and the Employment Court (Court) have the full spectrum of remedy reductions (up to 100%) available to them.
• Requires the Authority and the Court to consider whether the employee's behaviour obstructed the employer's ability to meet their obligation to act as a fair and reasonable employer.
• Increases the threshold for procedural error to narrow the focus solely being on whether any errors in the employer's process resulted in the employee being treated unfairly. 

Specified wages and salary threshold for unjustified dismissal personal grievances 

The proposed wages and salary threshold will:

• Apply to personal grievances for unjustified dismissal and unjustified disadvantage where the unjustified disadvantage relates to dismissal but not other personal grievance grounds.
• Initially be set at NZD180,000, being updated annually.
• Automatically exclude employees above the threshold from raising an unjustified dismissal personal grievance, with the ability for employers and employees to contract back into unjustified dismissal protection or to agree their own terms and conditions relating to dismissals.

'Wages and salary' do not include other forms of remuneration or variable payments such as allowances, productivity-based, bonus or incentive payments (including commission), overtime payments, penal rates, employer contributions to superannuation schemes, or payments or other benefits received by the employee as an owner of the business. 

The income threshold is proposed to apply to employees on new employment agreements when the legislation comes into force. There will be a 12-month transitional period for employees on existing employment agreements. During this period, employment agreements will retain the ability to raise an unjustified dismissal personal grievance unless it is agreed between the parties to vary the employment agreement and have the income threshold apply early. Also, during this period, any change or employers or roles will end the existing agreement, unless the change occurs by way of restructure. 

After the transition period ends, unless the parties agree otherwise, the default position will be high-income employees will be unable to raise a personal grievance, and employers will no longer be obligated to comply with their obligations of good faith when dismissing employees. It will be a matter for negotiation as to whether employers allow high-income employees to opt back in to the unjustified dismissal framework, or to negotiate alternative provisions including 'no fault' termination clauses that provide a pre-agreed form of compensation for a dismissal.

Revocation of 30-day rule and reinstatement of related information requirements from 2015-19 period

The Bill proposes removing:

• The requirement that the terms of a new employee's employment agreement reflects the terms of a collective agreement for the first 30 days of employment.
• The employer's obligation to provide an active choice form to a new employee to indicate whether they intend to join a union.
• The employer's obligation to convey the completed active choice form (if the employee returns it), or a notice that the employee did not complete and return the active choice form, to the union.
• The ability for unions to specify information that an employer must provide to the employee about the union.

Employers will still however have obligations to inform new employees:

• that a collective agreement exists and covers their work; 
• that they may join the union party to the collective agreement;
  about how to contact the union; and
• that joining the union binds them to the collective agreement. 

Employers must also provide a copy of the collective agreement and inform the union (with an employee's agreement) that the employee has entered an individual employment agreement.

Impact 

This Bill combines many much awaited proposals and is likely to be contentious in some areas. The Bill is currently at its first reading stage which means there may be changes during the parliamentary and Select Committee process. The public and interested groups will have a chance to submit on the Bill when it is at Select Committee.