The most significant changes to Employment Law in decades
On 21 February 2026, the Employment Relations Amendment Bill became law, as the Employment Relations Amendment Act 2025 (Act). The Act introduces some of the most significant changes to employment law in decades.
Key Changes
Specified contractors
The definition of “employee” in section 6 of the Employment Relations Act 2000 now expressly excludes “specified contractors”. To be considered a “specified contractor” certain criteria must be met, including:
There must be a written agreement stating that the worker is an “independent contractor” or is not an employee.
The worker must not be restricted from performing work for others, except while performing work for the principal, or work facilitated by the principal (together referred to as “work”).
Either the worker is not required to perform or be available to perform work at a specified time, a specified day or for a minimum period; or the worker is allowed to sub-contract the work, provided some vetting requirements relating to the sub-contractor are met.
The arrangement cannot be terminated solely because the worker declines work additional to that originally agreed.
If these criteria are not met, then the “real nature of the relationship” test applies. This test was recently considered by the Supreme Court in the “Uber” case. (A ruling by the New Zealand Supreme Court that Uber drivers were classed as employees rather than independent contractors).
Our advice to businesses in light of these changes is that they should closely review their current contractual documents and working relationships against this framework and update their practices or documentation where needed.
Personal grievance remedies
Substantial changes have been made to the remedy’s framework for personal grievance claims.
From 21 February 2026, if an employee is found to have contributed to a situation that subsequently gave rise to a personal grievance, then reinstatement cannot be ordered and no compensation for humiliation, loss of dignity and injury to feelings can be ordered. If the employee contributed towards the situation and that action amounts to serious misconduct, then no remedies can be ordered.
Case law prior to the introduction of the Act has canvassed what constitutes ‘serious misconduct’. However, we are likely to see further cases test whether these changes shift that position. For example, the threshold for serious misconduct could become higher.
Claims relating to dismissal of high-income earners
High income earners are employees whose remuneration (not limited to wages) exceeds $200,000 p/a. The threshold will be updated annually, but not before 1 July 2027.
High income earners will be prevented from bringing claims against their employer in relation to dismissal unless an exception applies. Exceptions include harassment, discrimination, and retaliation for a whistleblower complaint. Employers will also not be required to follow the usual good faith obligations to provide access to information to a high‑income earner, and give them an opportunity to comment on that information, before a decision to terminate their employment is made.
The changes apply to new employees on and from 21 February 2026, and on and from 20 February 2027 for current employees. Employers and employees can agree to opt out of these changes.
Employers should review their current contractual arrangements and policies that apply to high-income earners and consider their strategy for negotiating with currently employed high-income earners about these changes. High income earners are likely to want to build protections into their employment agreements such as longer notice periods or ex-gratia or other payments an employer is required to pay upon termination.
30-day rule
Previously, where an employee’s work was covered by a collective agreement, the employer was required to apply the collective agreement’s terms and conditions for the first 30 days, even if the employee was hired on an individual employment agreement. This is no longer the case.
Employer obligations to provide information to new employees have been reduced. Employers now only need to inform the employee that a collective agreement exists and covers work to be done by the employee, that they may join the union that is a party to that agreement, how to contact the union and explain that joining the union will bind the employee to the collective agreement.
Employers need to ensure they have given the employee a copy of the collective agreement, and then inform the union that the employee has entered into an individual employment agreement (if this is the case and the employee agrees).
This change provides more freedom to negotiate the terms of the employment relationship from day one. A further benefit for employers is the likely increased use of 90-day trial periods, as many collective agreements have not included these provisions.
Final comments
As 2026 is an election year, further change is possible. If a Labour Government is elected for example, we may see some significant amendments to, if not the rescission of, all or part of the Act, similar to what occurred with the Fair Pay Agreements legislation.
Our Employment Team is happy to answer any questions you may have about these important changes. Reach out to them at enquiries@toddwalker.com or +64 (03) 441 2743.
Disclaimer: This article is general in nature. Its purpose is to inform. It does not constitute legal advice. We recommend obtaining independent legal advice relevant to the specific circumstances before relying on any information in this article.
