What the Employment Relations Amendment Bill means
On 17 June 2025, Workplace Relations and Safety Minister Brooke van Velden introduced the Employment Relations Amendment Bill (the Bill) to parliament.
The changes have been well-signalled since the coalition government formed in 2023 and together, have the potential to significantly change New Zealand’s employment law landscape.
The most significant changes proposed include:
Introducing a new “Gateway Test" for independent contractors.
Reducing remedies for personal grievances (PGs) where an employee is found to have contributed to the situation.
Introducing a wage and salary threshold for unjustified dismissal cases.
Removing the “30-day rule” for workplaces with collective agreements.
A “Gateway Test” for independent contractors
A widely anticipated and talked about change, the “Gateway Test” for independent contractors gives greater weight to the intention of contracting parties. It is intended to reduce uncertainty over contractor vs employee status.
Under the Bill, workers falling within the definition of a "specified contractor" would be excluded from the definition of an employee. A “specified contractor” is when:
there is a written agreement that specifies the worker is an independent contractor; and
the worker is not restricted from working for others; and
the worker is:
not required to be available to work certain times or days or for a minimum period; or
able to sub-contract the work; and
the business does not terminate the arrangement for not accepting an additional task.
If a worker does not fall within the definition of a specified contractor, the current "real nature of the relationship" test would apply.
Reducing remedies for PGs where an employee is found to be at fault
The Bill includes a number of proposed changes to the way personal grievance remedies are awarded, including:
removing eligibility for any remedies for employees whose behaviour amounts to serious misconduct; and
removing eligibility for reinstatement into a role, and compensation for hurt and humiliation and loss of any benefit, for employees who contributed to the situation that led to the personal grievance; and
clarifying that the Employment Relations Authority (ERA) and the Employment Court have the full spectrum of remedy reductions (up to 100%) available to them; and
requiring the ERA and the Employment Court to consider whether the employee’s behaviour obstructed the employer’s ability to meet their obligation to act as a fair and reasonable employer; and
increasing the threshold for procedural error to narrow the focus to solely being on whether any errors in the employer’s process resulted in the employee being treated unfairly.
Wage and salary threshold for unjustified dismissal
The Bill introduces a wages and salary threshold, above which a personal grievance for unjustified dismissal could not be pursued.
The threshold will initially be set at $180,000 per annum and then updated annually based on upward changes in average weekly earnings. This means:
when considering termination of an employee over the income threshold, an employer is not required to undertake a process in accordance with the usual good faith consultation process; and
employees over the threshold are unable to bring a personal grievance or legal proceedings in respect of their dismissal (however the employee would be able to bring other claims including, for example, a claim of discrimination).
The Bill includes a transitional period during which the new provisions would not apply to existing employees for 12 months after the passing of the Bill. Employers and employees would therefore have 12 months in which to negotiate any additional terms and conditions (i.e. they could agree to opt back into unjustified dismissal protection).
Removing the “30-day rule”
This proposed change is directed at workplaces which have collective agreements in place and supports the Government’s intention for 90-day trials to be available to all employers. The proposed changes will remove:
the requirement that the terms of a new employee’s employment agreement reflect the terms of a collective agreement for the first 30 days of employment; and
the employer’s obligation to provide an active choice form to a new employee to indicate whether they intend to join a union; and
the employer’s obligation to convey the completed active choice form (if the employee returns it), or a notice that the employee did not complete and return the active choice form, to the union; and
the ability for unions to specify information that an employer must provide to the employee about the union.
Other proposed changes
The Bill also proposes a number of less significant changes, including:
Amending the clause that sets out the test of whether a dismissal or an action by an employer is justifiable. This is proposed to include a consideration of whether the employer was obstructed by the employee from taking any required action. The changes also provide that the ERA or Employment Court must not determine a dismissal or an action to be unjustifiable solely because of defects in the process followed by the employer if those defects did not result in the employee being treated unfairly.
Clarifying that an employee who is dismissed during a valid trial period may not pursue any unjustified disadvantage grievance if it relates to the dismissal (however they can still pursue other types of personal grievances).
In addition to this Bill, a member’s bill introduced by Labour passed its second reading on 16 July and, with support from the National Party, looks set to become law. The Employment Relations (Employee Remuneration Disclosure) Amendment Bill seeks to stop employers enforcing gag orders on workers talking about their salaries. Currently, employers can put pay secrecy clauses in workers' contracts. This bill would make these clauses unenforceable, meaning employers could not take legal action if an employee does talk about their pay.
Next steps
Both Bills need to work their way through the parliamentary process including opening for public submissions at the Select Committee stage. Timing for this is still unknown however, the Minister has indicated an intention for her reforms to be enacted within 2025.
No doubt there will be mixed views on the changes and we will watch with interest to see whether this debate will have any impact on the final legislation.
