The much-anticipated update to the Employment Relations Act 2000 is now in force with many significant changes taking effect straight away. The key changes in the Employment Relations Amendment Act 2026 are set out below.

Personal grievance remedies

Highlights:

  • The focus is on an employee’s action and their contribution to a situation where a personal grievance is raised. While contribution has always been relevant, the impact is now far more significant, either drastically reducing, or entirely removing, remedies. 
  • The remedies of reinstatement (s123(1)(a)) and compensation for injury to feelings, or loss of benefits (s123(1)(c)) are no longer available where an employee has contributed to the situation.
  • Where an employee contributes to a situation giving rise to a personal grievance, and that action amounts to serious misconduct, no remedies will be available.

The inclusion of ‘serious misconduct’ in this amendment has the potential to create uncertainty given the term is not defined in the legislation – and is already the subject of employment litigation regarding disciplinary processes determining what type of behaviour tips the scales from misconduct to serious misconduct.  We suggest you review disciplinary policies with this change in mind.

Contractor test

Highlights:

An expanded definition (from the earlier draft Bill) of ‘specified contractor’ includes a worker (Person A) that meets the following criteria:

  • Enters into an arrangement with Person B; or
  • Performs work for a third party facilitated by Person B (rather than doing work directly for Person B); or
  • Supplies services to Person B through a legal entity (such as a limited liability company).

In addition, criteria for a ‘specified contractor’ also includes:

  • The need for the written agreement to specify either (a) the worker is an independent contractor, or (b) they are not an employee.
  • No restriction on the worker being able to undertake other work (except when performing work for, or facilitated by, Person B).
  • The arrangement must not be terminated because Person A declines extra work offered by Person B.
  • Person A is not required to perform (or be available to perform) work for Person B at a specified time, day, or for a minimum period.
  • Person A is allowed to sub-contract to another person (Person C).
  • Person A must have had a reasonable opportunity to seek independent advice before entering the agreement.

If a person does not meet the ‘specified contractor’ criteria, then the real nature of the relationship must be considered in order to determine whether the person is an employee or a contractor. These changes signal a good time for organisations to review contractual arrangements and consider if individuals currently working as contractors meet the ‘specified contractor’ test and whether agreements need to be updated, or variations negotiated.

It is important to note the ‘specified contractor’ test will not apply retrospectively, so will only apply to arrangements following the commencement date. As with many of the significant changes included in this legislative update, judicial interpretation will provide greater clarity regarding how contractors will be treated – including we expect if the contract includes the right information, but the relationship operates differently in reality.

High-income employees

Highlights:

  • Where an employee’s remuneration is $200,000 or over (which can include commissions/bonuses):
    • The employee cannot raise a personal grievance regarding their dismissal (other grounds for raising a personal grievance are still available);
    • The employer is not required to act in good faith with the employee in terminating the employment relationship; and
    • The employer is not required to provide reasons for the dismissal.
  • There is a 12-month transition period before this amendment will apply to existing employment relationships, however the changes will apply to new employees from the date of commencement.
  • Employers and employees can agree to opt out of this amendment.

Employers will now need to consider if they wish to opt back into the unjustified dismissal grounds for high-income earners and negotiate agreement with employees, potentially raising the need for some sensitive and strategic conversations. This amendment might also promote consideration of alternative contractual protections for high-income employees, such as longer notice periods or enhanced termination arrangements – and a variation of other claims from high-income earners, such as breach of contract and discrimination. 

30-day rule for collective agreements

Highlights:

  • When entering a new individual employment agreement, employers are now required to provide employees with certain information regarding any applicable collective agreement, and the applicable union(s) (including how to contact the union and a copy of the collective agreement).
  • Employers are no longer required to provide employees with the terms and conditions of an applicable collective agreement for the first 30 days of employment.
  • Employers are no longer required to share new employee information with an applicable union.

These changes should prompt employers to review their employment agreements to ensure the terms and conditions reflect current arrangements where a collective agreement may apply and there is an applicable union. This may allow employers to be more flexible in negotiating the terms of employment agreements where previously an applicable collective agreement prevented this.

As with any significant legislative change, there will be a period of uncertainty for both employers and employees until the new measures are tested by the Employment Relations Authority and/or the Employment Court. The change in focus from employee to employer interests could see judicial decisions take a conservative approach to interpretation, a good prior example being the conservative approach to 90-day trial periods given the impact of 90-day trial clauses on employees, however we look forward to following the progress and development of these legislative changes.

For more information

If you or your organisation need advice on any aspect of employment law and/or this latest update, please do not hesitate to reach out. For more information, contact 04 472 0020 or one of our employment law experts.

Tess von Dadelszen | 027 233 3895 | 04 495 8920 | [email protected]

Angela Williams | 021 284 3366 | 04 978 8136 | [email protected]

Sam McGuire | [email protected]