Last year saw the government introduce a raft of proposed changes to employment law.  Some of those changes have already come into effect, including:

  • the Equal Pay Amendment Act 2025, passed under urgency in May, which controversially reduced the scope for pay equity claims;
  • changes to the KiwiSaver scheme, which will see contribution rates for both employees and employers increase from 3% to 3.5% from 1 April 2026; and
  • the Employment Relations (Employee Remuneration Disclosure) Amendment Act 2025, which prohibits employers from taking adverse actions against their employees for discussing or disclosing their pay.

Depending where you sit on employment law, the changes thus far have been a bit of a mixed bag.

The changes expected this year are likely to be far reaching.  We have the most certainty about the Employment Relations Amendment Bill, which is at the Second Reading stage and, therefore, is likely to be passed relatively soon.  The Select Committee reported back in December and recommended a few tweaks.  Key changes will be:

  • the introduction of a clear ‘gateway test’ that will prevent some purported contractors from asserting that they are (or as is often the case when this comes up, were) actually employees;
  • a remuneration-based threshold above which employees cannot claim unjustified dismissal (unless the parties contract into the personal grievance process). The Bill originally proposed $180,000 base salary as the threshold; this is now more likely to be set at $200,000 total remuneration.  Depending on the wording eventually adopted, this could lead to interesting situations, with the size of bonuses deciding whether some employees have full employment protections or not; and
  • Reduction in remedies available to employees who are found to have contributed to their personal grievances, or who are found to have engaged in conduct amounting to serious misconduct. This change is likely to have a chilling effect on personal grievance claims.  Perspectives will differ as to whether this is a good or a bad thing for society, but with reduced remedies available to employees at the Employment Relations Authority, we expect to see employment settlement values dropping, along with a reduction in the frequency of matters reaching the Authority without prior resolution.  What will be interesting is seeing where the Authority sets the bar for whether an action of the employee ‘contributed to the situation that gave rise to the personal grievance’.  Such finding would prohibit the Authority from awarding compensation for hurt and humiliation or reinstatement.  That would mean those employees would be left pursuing what is typically three months’ lost pay, plus a modest contribution to costs.

The big change that most employers and employees will be looking forward to is the replacement of the Holidays Act 2003.  The indications are that we will be heading for a simplified accrual process for leave entitlements.  The current Act is, at times, unworkable in its complexity.  The big losers from the proposed changes in this area will be part-time workers, who are likely to see a reduction in their statutory sick leave entitlements to a pro-rated basis.

With all these changes coming, employers are going to need to keep alert to areas where their employment agreements might no longer accurately reflect the law.

Overall, the changes signal a shift away from New Zealand’s traditional ‘pro-workers’ rights’ approach to employment law.  We would be amongst the least protective of workers’ rights in the OECD.  It remains to be seen how many of the changes will survive a change in government, whether that’s this year or in a subsequent election.

 

Chris Scarrott is our employment law specialist, advising on everything from contracts to restructures and disputes. Brooke Cederwall works closely with Chris as a junior employment lawyer.