Legislative Update: What Employers Need to Know About the Employment Relations Amendment Bill
The Employment Relations Amendment Bill came into law on 21 February 2026, marking the most significant update to New Zealand employment law since 2018. These reforms introduce changes to contractor status, personal grievance remedies, trial periods, and senior employee dismissals.
This guide summarises the key updates, what they mean in practice, and the steps employers can take to stay compliant and confident in managing employment relationships.
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1. Case Highlight: New ‘Gateway Test’ for Contractors
To qualify as an independent contractor under the new law, arrangements must meet all of the following:
- A written agreement confirming the worker is either:
- An independent contractor, or
- Not an employee
- Freedom to work for others (except temporarily restricted for specific work)
- Flexibility around time requirements or ability to subcontract
- No termination for declining additional work
- Reasonable opportunity to seek independent advice before entering the arrangement
Practical Impact: If any condition is not met, the “old” test—the examination of the real nature of the relationship—applies. Employers need to ensure compliance to avoid disputes.
2. Personal Grievance Remedies: Narrower Scope
The Bill limits circumstances where compensation or other remedies can be awarded.
Key changes include:
- Employee-contributed grievances:
- Remedies may be reduced up to 100%
- Reinstatement, compensation for hurt/humiliation, or loss of benefits may not be available
- Serious misconduct by the employee:
Minister Brooke van Velden has indicated contributory behaviour could include:
- Minor: lateness, unproductive behaviour, misuse of resources, underperformance
- Serious: theft, fraud, or violence
Employer Takeaway: Greater ability to defend personal grievances where employee behaviour is a factor, reducing reliance on settlement payments in misconduct scenarios.
3. Senior Employee Dismissals: Wage Threshold
Employees earning over $200,000 total remuneration are no longer able to bring a personal grievance for dismissal.
Key implications:
- Employers are not required to comply with current good faith consultation obligations
- No need to provide written reasons for dismissal
- Employees cannot raise personal grievance or legal proceedings
- Annual remuneration calculation includes bonuses, commissions, and employee share scheme benefits
Transitional arrangements: Affected existing employees have 12 months to renegotiate terms. Employers gain flexibility to restructure or end senior roles with confidence.
4. Expanded Trial Period Protections
- Employees dismissed under a valid trial period cannot raise personal grievances for unjustified dismissal or disadvantage
- Strengthens employer certainty and reduces legal risk during trial periods
5. Removal of the 30-Day Rule
- New employees are no longer automatically covered by the terms of the applicable collective agreement
- Employers must provide only:
- Information about the union and collective agreement
- A copy of the collective agreement
Employer Benefit: Full flexibility to negotiate individual terms from day one, including use of 90-day trial periods.
6. Section 103A Justification Test
Amendments provide greater clarity in justifying dismissals:
- Authority/Court must consider if the employee obstructed employer actions
- Minor process defects cannot make a dismissal unjustifiable if the employee was not treated unfairly
Employer Benefit: Reduces risk of personal grievances based on technicalities rather than substance.
Next Steps for Employers
- Review individual employment agreement templates
- Update performance and disciplinary processes
- Check contractor engagement practices
- Seek specialist advice where needed
Contact Michael at michaelp@businesscanterbury.co.nz for guidance or advice on implementing these changes.
As always, our team is here to help guide you through these changes—if you need assistance reviewing your agreements or processes, you can contact Michael at michaelp@businesscanterbury.co.nz.