Employment Relations Amendment Bill – Summary

Following months of anticipation, speculation and media teasers, the Employment Relations Amendment Bill (“the Bill”) was finally introduced to Parliament on 17 June 2025, and passed its first reading on 15 July 2025. Public submissions on the Bill have now closed and the Education and Workforce Select Committee is due to report back in mid-November 2025.

In its current form, the Bill proposes a number of amendments across a range of employment topics, including: 

  1. Status – the age-old question regarding where the line is between contractors and employees.
  2. Employee behaviour – bringing out the microscope for employee behaviour in the personal grievance process.
  3. Remuneration threshold – introducing a wages and salary threshold for unjustified dismissal personal grievances.
  4. Collective agreements – removing the ‘30-day rule’ for collective agreements and associated compliance and information requirements.

Employee vs Contractor

The Employment Relations Amendment Bill introduces a new ‘gateway’ test to distinguish between employees and contractors by amending the definition of ‘employee’ in the Employment Relations Act 2000 (“the Act”) to exclude specified contractors. Under the proposed changes, a ‘contractor’ is a person who has entered into an arrangement to perform work for another person and meets the following requirements:

  1. There is a written agreement that specifies the worker is an independent contractor; and
  2. The worker is not restricted from working for others; and
  3. The worker is not required to be available to work certain times or days or for a minimum period or able to sub-contract the work; and
  4. The business does not terminate the arrangement for not accepting an additional task; and
  5. The person had a reasonable opportunity to seek independent advice before entering into the arrangement.

If met, these requirements would mean relevant contractors would be prohibited from claiming they are legally employees. This change is intended to try and provide clarity for contracting parties who have entered into an arrangement as principal or contractor.

If not all parts of the gateway test are met, that does not mean the individual will automatically be an employee, but rather they would be able to progress a “status claim” to challenge their legal status.  

The Government believes this will act as a barrier to a number of potential status disputes, however until the test becomes law and is tested by the Authority and/or Court its effect remains to be seen. 

Employee Contribution

The intention with this proposed amendment is to ‘better balance’ the personal grievance system. The Government has signalled it wants to put a higher level of accountability on employee actions and contributions that have led to the personal grievance being raised.

The two key proposals are:

  1. Where an employee’s behaviour has contributed to their personal grievance to the extent it amounts to serious misconduct, no remedies will be available; and
  2. Where the employee’s behaviour has contributed to their personal grievance (but not to the level of serious misconduct), they will not be eligible for reinstatement, compensation for hurt and humiliation, or the loss of any benefit.

This proposed change has the potential to have significant implications for employees, where employers may decide to ‘fast track’ an employment process where a finding of serious misconduct is made, potentially even effectively overriding obligations of good faith. It is also worth noting “serious misconduct” is not defined in the Act so there may be some difficulty for the Authority and Court in determining when this threshold has been met, especially where there is no definition in employment agreements or policies.

Income Threshold for dismissal personal grievances

This proposal would see employees paid $180,000 or over (in base salary or wages) unable to raise a personal grievance in relation to a dismissal. However, it would not prevent other personal grievance grounds from remaining accessible where they don’t relate to a dismissal. The ‘base wages and salary’ threshold may be updated annually and excludes other remuneration or variable payments such as allowances, incentives, commission, overtime, or superannuation contributions. Notably, an employer will not need to meet its good faith duties when making a decision to terminate an employment relationship.

The proposal would still allow employers and employees to have the option to contract back into protection against unjustified dismissal and unjustified disadvantage due to dismissal. The The Employment Relations Amendment Bill states that this change will affect all new employment agreements from when the legislation comes into force and there will be a 12-month transition period for existing employment agreements.

Removal of the 30-day Rule

The Government is also proposing to remove the 30-day rule for new employees entering an employment agreement with an employer who is party to a collective agreement that covers their work. The proposed change would remove the requirement for a new employee’s individual employment agreement to reflect the terms provided by the collective agreement for the first 30 days of their employment.

The proposed amendment would simply require basic reporting obligations for employers to inform employees that a collective agreement covering their work exists, that they may join a union and how to do that, and that joining a union binds them to the collective agreement.

These proposed amendments to the Act would signal a significant shift in employment law, aiming at redefining the rights and responsibilities of both employers and employees.  Whether the proposed changes have that effect in practice if the Bill comes into force, is another question. We will be keeping a close eye on the The Employment Relations Amendment Bill as it progresses through Parliament.

For more information

For more information and updates on the Employment Relations Amendment Bill, please reach out to Tess von Dadelszen, partner of JB Morrison Lawyer’s employment law team, on 027 233 3895. 

See more of our employment law articles here. 

Employment Relations Amendment Bill illustrated by the Wellington Beehive.