The Employment Relations Amendment Act 2025 came into effect on 21 February 2026, introducing significant changes to contractor definitions, personal grievances, high income dismissal thresholds and collective agreement provisions.
Below is a practical summary of the key updates and what they mean for employers:
New “Gateway Test” for Contractors
Previously, contractor status depended on the “real nature of the relationship,” meaning the Employment Relations Authority could find someone was an employee despite being labelled a contractor.
Now, a worker will be treated as a contractor (and excluded from employee rights) if all of the following are met:
- A written agreement states they are an independent contractor
- They are free to work for others (except while performing agreed work)
- They can subcontract (with limits) or are not required to work set days/times or minimum hours
- They cannot be terminated for declining additional work
- They had a reasonable opportunity to seek independent advice
If any requirement is missing, the traditional “real nature of the relationship” test applies.
The change applies immediately (except for existing cases before the Authority). For employers it provides greater certainty, but only where contractor agreements are properly structured.
High-Income Employees ($200,000+)
Employees earning $200,000 or more (total remuneration) can no longer bring unjustified dismissal personal grievances. Employers are also not required to follow certain good faith processes (such as redundancy consultation) when dismissing them.
- Employees (new or existing) can contract out of this change.
- Existing affected employees have 12 months to renegotiate terms if they don’t want this law change to affect them in the future
- After 12 months, the law applies automatically.
This gives employers increased flexibility when managing senior employment relationships.
Reduced Remedies for Employee Conduct
Previously, where an employee contributed to the circumstances giving rise to a personal grievance, remedies could be reduced but not completely removed.
Under the new law, if an employee’s conduct amounts to serious misconduct and contributed to the situation, no remedies will be awarded at all. Even where the conduct falls short of serious misconduct, reinstatement or compensation may be unavailable, and any remedies can be reduced by up to 100%.
Importantly, the Act does not define “serious misconduct,” so we will no doubt see its scope develop through case law.
These changes considerably strengthen an employer’s position where employee behaviour has played a significant role in the outcome.
Removal of the 30-Day Rule – Union Environments
The requirement that new non-union employees must be employed on terms consistent with a collective agreement for their first 30 days has been removed.
You can now negotiate individual employment terms from day one. This restores flexibility in how new hires in unionised environments are engaged.
Expanded Trial Period Protections
Employees dismissed under a valid trial period cannot bring a personal grievance for either unjustified dismissal or now unjustified disadvantage relating to that dismissal.
This increases certainty where trial periods are properly drafted and implemented.
Clarified Justification Test
A dismissal will not automatically be unjustified due to minor procedural errors if the employer otherwise acted fairly and reasonably.
The Authority or Court may also consider whether the employee obstructed the process.
This reduces the risk of claims based purely on technical procedural flaws where the overall process was fair and reasonable.
Changes to Union Information Requirements
Employers are no longer required to provide union information or share new employee details.
This reduces compliance obligations and allows greater flexibility in negotiating individual agreements, with employees now responsible for proactively seeking union information.
These changes are already in effect, making it timely for employers to review their agreements, policies, and processes to ensure they align with the new legal framework.
Please feel free to get in touch on 0800 00 00 49 or info@positivepeople.co.nz to discuss how these changes apply to your organisation.