Employment law in 2025 – what employers should be thinking about in the new year, including the implications of proposed changes to employment-related legislation
How is it February already? 2025 looks to be one of change and development in the employment law space. Here are our things to be thinking about at this time of year for your organisation/business, and a hint at what we can expect in the next few months in terms of changes to legislation.
Employment agreements and associated documentation
It is that time of year when recruitment is ramping back up. With that in mind, now is a great time to be making sure employment documentation (for example, employment agreements and company/organisational policies) are compliant, and also tailored to suit the business/organisation and its needs.
If your documents have not been updated over the last 12-18 months, chances are there could be compliance issues. For example, do they record the 12-month limitation period to raise a personal grievance on the grounds of sexual harassment? What about 90-day trial period? Are you drafting them (and/or using them correctly)? Do your contracts and policies pre-empt the issues you see in your business/organisation? Different employers and industries face different challenges – tailoring your documents with expert support allows you to front-foot those issues and set clear expectations.
Introducing income threshold to raise a PG for unjustified dismissal
On Friday 29 November 2024, the Government announced it would introduce an income threshold of NZD $180,000 per annum (base salary) in relation to unjustified dismissal personal grievances. If implemented, that would prevent employees earning above the income threshold from raising unjustified dismissal claims (but these employees would still be able to raise other types of claims, such as unjustified disadvantage, discrimination and/or harassment). Employers and employees would be able to agree to opt back into the unjustified dismissal regime.
On 12 February 2025, the Workplace Relations and Safety Minister announced that Cabinet has agreed that the income threshold will apply to all new employment agreements once the change is enacted into law, and to existing employment agreements after 12 months. We understand that this transition period is intended to give employees and employers the opportunity to negotiate amendments to the employment agreement (for example, to contract into the unjustified dismissal protection or to negotiate tailored and individualised dismissal/exit arrangements).
You can find out more information on MBIE’s website, where the Regulatory Impact Statement, Cabinet Minute and Cabinet Paper in relation to this proposed change to the Employment Relations Act 2000 was published on 31 January 2025.
Poor employee behaviour to remove remedies
The Government is also focusing on employee behaviour, with the introduction of a new policy aimed to help “strike a better balance” and “increase certainty” for employers. Proposed changes include removing eligibility for all remedies where the Employment Relations Authority or Employment Court determine that the issue giving rise to the personal grievance amounts to serious misconduct, and removing eligibility to permanent reinstatement and compensation where an employee is found to have contributed to the personal grievance. While contribution is already a factor that the Authority is required to consider in assessing remedies, this proposed change aims to increase the effect of that consideration, in the employer’s favour.
MBIE also published a Regulatory Impact Statement, Cabinet Minute and Cabinet Paper in relation to this topic on 31 January 2025.
A new gateway test to determine the status of contractors – will this bring about more certainty in practice?
On 17 September 2024, the Government announced it proposes to introduce a gateway test, that would prevent workers challenging their status if the working arrangement meets the four factors set out as follows:
- There is a written agreement in place that specifies the worker is an independent contractor;
- The business does not restrict the worker from working in another business (including competitors);
- The business does not require the worker to be available to work on specific days/times or for a minimum number of hours or the worker can sub-contract the work; and
- The business does not terminate the contract if the worker does not accept an additional task or engagement.
While we recognise the intention for this new approach is to provide businesses with more certainty, it will be interesting to see whether these requirements will serve to provide certainty in practice or whether it will create more of a grey area. Our observation is that many businesses engaging contractors at present would not be able to meet all four tests. As we understand it, if not all four tests were met, the existing regime to determine status via the employment institutions would still be available, and genuine contractors could still exist even where the gateway test is not met.
Reintroduction of pay deductions for partial strikes
For those in the collective bargaining space, the Employment Relations (Pay Deductions for Partial Strikes) Amendment Bill has sought to reintroduce the ability for employers to deduct pay from employees who are involved in partial strikes.
Partial strike action is industrial action which normally involves employees turning up for work but refusing to partake in key duties or parts of their job (rather than simply refusing to work). The Minister has said the Government has proposed this change to try combat the disruption that partial strikes can cause to the public and employers, with deducting pay seen as “an ‘incentive’ for parties to return to the bargaining table and reach agreement sooner, while also minimising community impacts. The Bill sets out two different ways to calculate pay deductions and requires employers who decide to deduct pay to provide written notification about the deduction.
The Bill is currently at the Select Committee. Submissions on the Bill were due by 30 January 2025, and we can currently expect a report on the Bill by 22 April 2025.
Holidays Act 2003: Still no end in sight for a new Act/regime
Following a serious of consultations on a proposed Holidays Act reform Bill, the Government is going back to the drawing board. The Bill, which looked to build on work that had started under the previous Government, has scope for further simplification according to the Minister (and those groups that were consulted). The Minister explained that she wanted to get this legislation right, even if it meant it took a little bit longer to do so.
The Minister asked officials to begin work on an hours-based accrual model for annual leave which has the potential to achieve a much greater focus on simplicity. We understand this will likely mean another Bill would need to be drafted, increasing the time, energy and resources for this process. The Minister has stated that the aim is to have a new Act passed by the end of term, seeking a decision from Cabinet in 2025.
Minimum wage
Adult minimum wage is set to increase by 40 cents – from $23.15 (gross) to $23.50 (gross) per hour and training minimum wages and starting out wages are set to increase from $18.52 (gross) to $18.80 (gross) per hour from 1 April 2025. So, now is a good opportunity to be checking and sorting employment records, processes and systems.
With the above in mind, there is no doubt that the employment law landscape is set to change rapidly, so it is crucial for employers to not only think about the present, but also the future and the potential implications of the upcoming employment changes.
For more information
If you would like assistance with reviewing employment agreements and policies and/or drafting new employment documentation, or would like further information about any employment matters please reach out to Tess von Dadelszen, Partner of JB Morrison Lawyer’s employment law team, on 027 233 3895.
Tess von Dadelszen | 027 233 3895 | 04 495 8920 | tess.vondadelszen@jbmorrison.com
- Olivia Smith | olivia.smith@jbmorrison.com
- Sam McGuire | samuel.mcguire@jbmorrison.com
- Izaak Lynch | izaak.lynch@jbmorrison.com
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