2026 is off to a racing start, bringing with it the most significant changes to New Zealand’s employment law landscape since the Employment Relations Act 2000 (ER Act) came into force over 25 years ago.
The Employment Relations Amendment Act 2026 (Amendment Act) received the royal assent on 20 February 2026 and came into force on 21 February 2026. The Amendment Act changes the ER Act in several ways that affect employers’ and employees’ rights and obligations to each other.
The changes include:
- Introducing a determinative ‘gateway test’ for identifying whether a worker is an independent contractor (as opposed to an employee). If the test is not met, the worker’s status is determined under the old rules.
- A stronger focus on employee conduct when assessing remedies for personal grievances. Under the Amendment Act, no remedies at all will be awarded if the employee’s own conduct amounted to serious misconduct and contributed to the situation resulting in the personal grievance, and no reinstatement or compensation will be ordered or awarded if the employee contributed to the circumstances giving rise to the personal grievance.
- Removing the right of high-income earners (those whose annual income is above a new specified threshold, currently $200,000) to raise a personal grievance in respect of their dismissal. This includes removing the ability to raise a personal grievance for unjustified disadvantage if the disadvantage relates to the dismissal.
- Removal of the 30-day rule relating to collective agreements. New employees will no longer be employed under the terms of a collective agreement for the first 30 days of their employment; however, employers are required to provide new employees with certain information.
- Clarification of the effect of trial period dismissals – where an employee is dismissed during a trial period, they will not be able to raise a personal grievance for unjustified disadvantage if the disadvantage relates to the dismissal.
Changes to the test of justification of an employer’s actions:
- A dismissal will no longer be unjustifiable simply due to procedural errors made by the employer which did not result in unfairness; and
- The Authority and Courts will now need to consider whether an employee has obstructed the employer’s process.
What Should You Do in Response to the Changes?
If You Are a Principal Engaging Independent Contractors
You should review your independent contractor agreements to check for compliance with the new gateway test. If the agreements do not appear to comply with the new gateway test, we recommend that you seek legal advice and consider updating any template agreements you use to ensure that, going forward, you have certainty around the status of your contractors.
If You Are an Employer
You should continue to seek legal advice before taking any action against your employee/s – even if they are a high-income earner, or if you consider that they have engaged in serious misconduct, or that the employee is obstructing your process. High-income earners will continue to have protection under the personal grievance scheme for 12 months, or until they voluntarily change their role or employer, so it may be some time before these changes take effect for existing high-income staff.
Whilst the changes will alter the potential exposure for employers in the event certain decisions or actions are challenged, they will not make employers immune to employee claims. Obtaining legal advice ahead of any action against an employee is also important for employers with insurance, as failing to do so may result in a denial of cover.
Where you are party to a collective agreement covering a new employee’s work, you must:
- Advise the new employee of the following:
- The existence of the collective agreement and its coverage of the new employee’s work.
- The employee has the right to join the union if they wish; if they do, they will be bound by the collective agreement.
- How to contact the union.
- Provide the new employee with a copy of the collective agreement.
- If the employee agrees, inform the relevant union as soon as practicable that the employee has entered into an individual employment agreement with you.
- If more than one collective agreement covers the new employee’s work, comply with the above obligations in relation to the collective that binds the largest number of employees doing the new employee’s work and inform the employee of the existence of the other collective agreement/s.
If You Are an Independent Contractor
You should review your independent contractor agreement to check for compliance with the new gateway test. If your agreement does not appear to comply with the new gateway test, you may be able to challenge your status as a contractor.
However, we recommend that you seek legal advice before making any important decisions or bringing any claim, as there may be cost implications if a claim is unsuccessful.
If You Are an Employee
- If you currently earn over $200,000 and your role and employer have not changed since 21 February 2026 (or have changed since 21 February 2026 but due to restructuring), you will continue to have the protections of the personal grievance scheme for 12 months, or until you voluntarily change roles or employer (whichever occurs first). If your employment is terminated within this period and you consider that your dismissal may be unjustified, we recommend that you seek legal advice.
- If you are a high-income earner negotiating with a potential new employer for a high-income role, or for a new high-income role with your existing employer, you will no longer have the protection of the personal grievance scheme once you commence with the new employer or in the role. You therefore may wish to negotiate to opt back in to the personal grievance framework, or alternatively, negotiate for a “good leaver” clause in your employment agreement, under which you are entitled to compensation for a no-fault termination. You may also wish to seek legal advice regarding your negotiations.
- If you are beginning employment with an employer who has a collective agreement covering your work, and you want your employer to pass your details on to the union, you should advise your employer of this. Previously, it was an ‘opt-out’ system where employers were required to provide new employees’ details to the union unless the employee objected. Now, this has been reversed, and the employer needs your consent to provide your details to the union.
- All employees should ensure that they are as cooperative as possible with their employer’s processes (whether that be an investigation, a performance improvement process, or a redundancy process), because if you unreasonably obstruct the process, this may affect what you can ultimately recover in the event you raise a grievance.
If you have any questions regarding the changes, get in touch with our team.
This article was written by Emily Crutchley and Lucy Korolainen