Employment Practice Employment Practice

In Force from 21 February 2026

Employment Relations Amendment Act 2026

The most significant changes to New Zealand employment law in years. Here's what employers and employees need to know.

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Frequently Asked Questions

Covering the key changes under the Employment Relations Amendment Act 2026.

The Employment Relations Amendment Act 2026

What is the Employment Relations Amendment Act 2026?
It is an amending Act that changed parts of the Employment Relations Act 2000. The main changes relate to contractor status, personal grievance remedies, higher-income dismissal claims, the removal of the 30-day rule, trial periods, and the test of justification.
When did the changes start?
Most of the changes came into force on 21 February 2026.
What are the main practical changes?
In broad terms, the Act introduced a new gateway test for some contractors, reduced available remedies where employee conduct contributed to a personal grievance, introduced a $200,000 remuneration threshold for some dismissal claims, removed the 30-day rule for new employees, clarified the position for trial period dismissals, and changed the justification test so process defects alone will not necessarily make a dismissal unjustified.

Am I an Employee or a Contractor?

What is the new contractor gateway test?
The law now creates a category called a "specified contractor". Broadly, the arrangement must include a written agreement saying the person is an independent contractor or not an employee, the worker must not be restricted from working for others, must either have freedom around availability or be able to subcontract, must not have the arrangement ended for refusing extra work, and must have had a reasonable opportunity to seek independent advice before entering the arrangement.
If the gateway test is met, what does that mean?
If all of the statutory criteria are met, the worker is excluded from the definition of "employee" for the purposes of the Employment Relations Act. That is a significant change, because it can affect access to employment protections and personal grievance rights.
If the gateway test is not met, does that automatically make someone an employee?
No. If the gateway test is not met, that does not automatically make the person an employee. It means the usual common law test still applies to determine the real nature of the relationship.
Why does this change matter?
For businesses, it is intended to create more upfront certainty where genuine contracting arrangements are being used. For workers, it means the wording and structure of the arrangement now matter even more, especially around independence, availability, and the ability to work for others.

Personal Grievances

What changed with personal grievance remedies?
The Act now limits remedies more sharply where the employee's own conduct contributed to the situation that gave rise to the grievance. In some cases, reinstatement and compensation are no longer available. In more serious cases, no remedy can be awarded at all.
What happens if the employee contributed to the situation?
If the Authority or Court finds that the employee's conduct contributed to the situation that gave rise to the personal grievance, reinstatement and compensation under section 123(1)(a) and (c) are not available.
What happens if the employee's conduct amounts to serious misconduct?
If the employee's conduct contributed to the situation and amounts to serious misconduct, the Authority or Court must not award any remedy.
Can remedies now be reduced by 100%?
Yes. Section 124 was amended so available remedies may be reduced by up to 100%.
What does this mean in practice?
These changes increase the importance of conduct, documentation, and causation in grievance cases. Employers will want stronger investigations and clearer records. Employees will need to be careful about their conduct during disputes and should get advice early if problems arise.

The $200,000 Remuneration Threshold

What is the new $200,000 threshold?
The Act introduced a specified remuneration threshold of $200,000. Employees whose annual remuneration meets or exceeds that threshold may not bring an unjustified dismissal personal grievance, or an unjustified disadvantage claim where the claim relates to the dismissal.
Does the $200,000 threshold apply to existing employees?
Yes, but not always immediately. For certain employees who were already employed when the changes came into force on 21 February 2026, there is a transitional period of up to 12 months. That means the new dismissal rules may not apply straight away, including in some cases where the employee remains in the same role or moves roles because of restructuring. The employer and employee can also agree in writing for the new regime to apply earlier.
Does that mean higher-income employees lose all legal protections?
No. The new threshold does not remove every possible claim. Employees can still bring other personal grievance claims, such as discrimination or harassment claims where relevant, and can still bring unjustified disadvantage claims that do not relate to dismissal.
Can an employer and employee agree to keep the usual dismissal protections?
Yes. The Act allows the employer and employee to agree in writing that the new threshold provisions do not apply. In practical terms, that means the parties can agree to preserve the usual unjustified dismissal protections.
What counts towards the $200,000 threshold?
Annual remuneration includes PAYE income payments made by the employer, excluding ACC earnings-related payments, and benefits arising from an employee share scheme. In practice, this may include salary or wages, allowances, overtime, bonuses, cashed-in annual leave, back pay, lump sum holiday pay, restrictive covenant payments, gratuities, and employee share scheme benefits.
Will the threshold increase over time?
Yes. The threshold is indexed, but it cannot increase before 1 July 2027.
What does this mean in practice?
For higher-income employees, it is important to check whether the threshold applies, whether any transitional protection still applies, and whether the employment agreement preserves the usual dismissal rights. For employers, it is important to identify affected roles, calculate remuneration carefully, and decide whether to include an opt-in clause preserving the usual protections.

New Employees, Unions & the 30-Day Rule

What happened to the 30-day rule?
The 30-day rule was removed. New employees no longer have to start on the terms and conditions of the relevant collective agreement for their first 30 days. They can agree to an individual employment agreement from day one, or choose to join the collective.
Do employers still have to give union information to new employees?
Yes. When an employee enters into an individual employment agreement, the employer must still tell them that a collective agreement exists, that they may join the union, how to contact the union, and that joining the union will bind them to the collective. The employer must also give the employee a copy of the collective agreement.
Does the employer still have to tell the union about a new employee?
Only if the employee agrees. The Act now makes union notification consent-based.
What if more than one collective agreement covers the work?
The employer must comply with the information requirements by reference to the collective that binds more of the employer's employees in relation to that work, and must also tell the employee about the other collective agreements.

Trial Periods & the Test of Justification

What changed for trial periods?
The law now makes it clearer that, where employment is terminated under a valid trial period, the employee cannot bring a dismissal-based personal grievance or legal proceedings in respect of the dismissal, including unjustified dismissal and unjustified disadvantage where the disadvantage claim relates to the dismissal.
Can employees still bring any claims if dismissed during a trial period?
Yes. Trial period provisions do not prevent claims that do not relate to dismissal-based disadvantage, and they do not prevent claims on the other personal grievance grounds in section 103(1)(c) to (k).
What changed to the test of justification?
Section 103A now says the Authority or Court may consider whether the employer was obstructed by the employee, and also says a dismissal or other action cannot be found unjustifiable solely because of process defects if those defects did not result in the employee being treated unfairly.
What does that mean in practical terms?
Minor process mistakes may not be enough on their own to make a dismissal unjustified. The focus is now more squarely on whether the employee was actually treated unfairly.

What Should I Do Now?

What should employers be doing now?
Employers should review contractor agreements, higher-income employment agreements, onboarding documents, union information processes, trial period clauses, and investigation and dismissal procedures. These changes increase the importance of careful drafting and proper record-keeping.
What should employees be doing now?
Employees should get advice before signing contractor arrangements, check whether higher-income agreements preserve dismissal protections, understand the limits of trial period claims, and seek advice early if dismissal or disadvantage issues arise. That is especially important where there may be arguments about contribution, serious misconduct, or threshold coverage.
Are all of these new rules settled and clear yet?
Not entirely. Some of the new wording is likely to be tested in the Authority and Court, especially around contractor status, serious misconduct, contribution, and the practical reach of the higher-income dismissal regime. The legislation is in force, but some meaning will become clearer as cases are decided.

Legal note: The information on this page is provided as general information only and does not constitute legal advice. While every effort has been made to ensure accuracy, employment law is subject to change and the application of the law will depend on the specific facts of each situation. Nothing on this page should be relied upon as a substitute for advice specific to your circumstances from a qualified legal professional. If you have a specific employment law issue, please contact us directly.

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Whether you're an employer reviewing your agreements or an employee facing a dispute, get clear advice from Andrew McInnes.

Email: andrew@employmentpractice.co.nz

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