2026 promises to be a year of multiple changes to employment legislation. The first wave of change broke in February.
Overview
The Employment Relations Amendment Act 2026 came into force on 21 February 2026 (the day after Royal assent). The preceding Bill began with this general policy statement:
“The purpose of the Employment Relations Amendment Bill … is to implement the Government’s employment relations commitments and support the Government’s ‘Going for Growth’ agenda, by helping to make New Zealand’s business settings more competitive. Together, these changes will enhance labour market flexibility, reduce compliance costs, and re-tilt the personal grievance system to better balance employer and employee interests and discourage poor behaviour.”
Changes were made to the Bill during the (select and whole House) committee stages of the Bill. The resulting amendments to the Employment Relations Act 2000 (ERA 2000) are wide-ranging and far-reaching. They apply from the commencement date, subject to a 12-month transitional period that may apply in one instance, and subject to the usual rules about what effect the amendment of legislation has. (For initial case law on when the new legislation applies, see Board of Trustees v LGY [2026] NZEmpC 46 at [5]–[8].)
Employment Law (online ed, Thomson Reuters) on Westlaw New Zealand has been updated to include the consolidated ERA 2000 and introductory commentary on the changes: see the Employment Law — What’s New page for details.
Worker status: specified contractors vs employees
This change defines a “specified contractor” and excludes a qualifying worker from being an “employee” (even if employment proceedings determine that the worker was an “employee” before 21 February 2026).
This is the so-called “gateway” test for access to the rights (and obligations) of employees under the ERA 2000.
Relevant sections of the ERA 2000 (links are to Employment Law in Westlaw New Zealand):
- Section 6 (Meaning of employee) amended: new subsections (1)(d), (7) and (8) inserted.
- New schedule 1AA clause 27 (Person is specified contractor on and from commencement date unless proceedings brought before commencement) inserted.
Prospective and new (non-union) employees: bargaining and initial terms and conditions
This change removes the so-called “30-day rule”, under which the terms and conditions of an applicable collective agreement in the workplace (plus any mutually agreed additional terms and conditions) applied to a new employee who was not a union member for the first 30 days of employment.
Various information and compliance requirements associated with the 30-day rule are also removed or replaced, including in relation to bargaining with a prospective employee.
Relevant sections of the ERA 2000:
- Section 30A (Union may provide employer with information about role and functions of union to pass on to prospective employees) and the preceding cross-heading repealed.
- Section 62 (Terms and conditions for first 30 days of employment of new employee who is not member of union) amended: subsections (3)–(5) replaced and subsection (6) deleted.
- Section 62A (Employer must share new employee information with union unless employee objects) repealed.
- Section 63 (Terms and conditions of employment of employee who is not member of union after expiry of 30-day period) repealed.
- Section 63A (Bargaining for individual employment agreement or individual terms and conditions in employment agreement) amended: subs (1)(c) and (d) repealed.
- Section 63B (Additional employer obligations when bargaining for terms and conditions of employment under section 62) repealed.
Personal grievances: 90-day trial periods
This change clarifies/extends the existing prohibition on bringing a personal grievance or other legal proceedings in respect of a (procedurally correct) dismissal during a 90-day trial period covered by an appropriate “trial provision”.
Specifically, to the extent that a personal grievance for unjustified disadvantage “relates to the dismissal”, that grievance (or part thereof) is now barred in the same way that a personal grievance for unjustified dismissal is barred.
Relevant sections of the ERA 2000:
- Section 67B (Effect of trial provision under section 67A) amended: subsections (2) and (3) replaced.
Personal grievances: high-income employees
This change (which does not apply in some cases for up to 12 months, though it may be agreed to apply from 21 February 2026) relates to the dismissal of an employee whose “annual remuneration” (as defined) meets or exceeds the “specified remuneration threshold” (initially $200,000, and subject to increase each year from 1 July 2027 if average ordinary weekly earnings increase):
- Termination of the employee’s employment is not subject to certain requirements of the ERA 2000 relating to (a) good faith and (b) reasons for dismissal.
- The employee cannot bring a personal grievance (unjustified dismissal or disadvantage) or other legal proceedings in respect of the dismissal (even if a previously agreed dispute resolution procedure enables such a course of action).
- However, the parties can agree in writing, as a term of the employment agreement, that these exemptions do not apply.
Relevant sections of the ERA 2000:
- Section 5 (Interpretation) amended: new definitions of “annual remuneration” and “specified remuneration threshold” inserted.
- New section 67I (Termination of employment of employee whose annual remuneration meets or exceeds specified threshold) inserted.
- New section 67J (Employer and employee may agree that sections 67I and 113A do not apply) inserted.
- New section 113A (Employee whose annual remuneration meets or exceeds specified threshold may not pursue personal grievance for unjustified dismissal or unjustified disadvantage) inserted.
- New section 113B (Specified remuneration threshold) inserted.
- New schedule 1AA clause 26 (Interpretation) inserted.
- New schedule 1AA clause 28 (Section 67I does not apply to certain employees for period of up to 12 months) inserted.
- New schedule 1AA clause 29 (Section 113A does not apply to certain employees dismissed within 12 months of commencement) inserted.
- New schedule 1AA clause 30 (Application of dispute resolution procedures that enable employees to bring personal grievance or legal proceedings) inserted.
- New schedule 1AA clause 31 (Specified remuneration threshold must not increase before 1 July 2027) inserted.
- New schedule 1AA clause 32 (Application of section 113B to first increase of specified remuneration threshold) inserted.
Commentary from author Phil Bartlett:
“The new s 67J may generate some interesting issues relating to good faith and other legal obligations, particularly as regards existing employees on individual employment agreements (IEAs) whose remuneration meets or exceeds $200,000 as at 21 February 2026. If such an employee wishes to retain the protection of the personal grievance procedure, they would need to request their employer to agree to a variation of the employment agreement so that it contains a term excluding ss 67I and 113A. That request would trigger good faith obligations (see s 4(4)(ba) of the ERA 2000). Most employers in that situation would no doubt prefer to take advantage of ss 67I and 113A, rather than exposing themselves to the future risk of a grievance. However, looking at the situation in terms of the ‘active and constructive’ and ‘responsive and communicative’ elements of the s 4(1A)(b) duties, would an employer’s settled preference, supported by the new provisions, of itself be a sufficient answer to the employee’s request? Or would the employer need to go further to explain and try to justify its view that an employee who, up until then, had potential access to the personal grievance procedure should no longer have access to it?
“Another issue that could arise where an employee requests a variation to exclude ss 67I and 113A relates to the requirements for bargaining for IEAs in s 63A and, more particularly, the requirements of s 63A(2). Under s 63A(1)(e), these extend to variations to IEAs. Subsection (2) obliges the employer to provide the employee with a copy of the ‘intended agreement’, and imposes associated obligations on the employer, such as considering and responding to issues raised. Where a desired variation arises due to an employee’s request (as seems likely under s 67J), rather than at the employer’s initiative, does the employer nonetheless have to comply with the obligations in that subsection? (This issue would not be confined to requests made in reliance on s 67J, but that new provision could well become a testing ground for it.)”
Personal grievances: test of justification
This change amends the test to be applied in personal grievance proceedings to determine whether a dismissal or an action by an employer was justifiable:
- The list of relevant factors now includes “whether the employer was obstructed by the employee” in relation to the other factors.
- The exclusion from the test of defects in the employer’s process — previously specified as defects that were both (a) “minor” and (b) “did not result in the employee being treated unfairly” — now consists of (b) only.
Relevant sections of the ERA 2000:
- Section 103A (Test of justification) amended: new subsection (3)(e) inserted and subsection (5) replaced.
Personal grievances: remedies where contributing behaviour by employee
This change amends the personal grievance remedy regime in various ways with respect to an employee’s contributory conduct:
- No remedies are available if there was contributory conduct that amounts to “serious misconduct” (not defined).
- The remedies of reinstatement and compensation are not available if there was contributory conduct (whether serious misconduct or not).
- In cases involving a “controlling third party”, the remedy of reimbursement (of wages or other money lost) must not be ordered against that third party if there was contributory conduct that amounts to serious misconduct; and the remedy of compensation must not be ordered against that third party if there was contributory conduct (whether serious misconduct or not).
- In any event, the remedies available may be reduced by up to 100 per cent if there was contributory conduct.
Relevant sections of the ERA 2000:
- Section 123 (Remedies) amended: new subsection (3) inserted.
- Section 123A (Remedies where controlling third party caused or contributed to personal grievance) amended: new subsection (4A) inserted.
- New section 123B (Remedies not available if contributing behaviour by employee amounts to serious misconduct) inserted.
- New section 123C (Reinstatement and compensation not available if contributing behaviour by employee) inserted.
- Section 124 (Available remedies reduced if contributing behaviour by employee) amended: heading amended and new subsection (2) inserted.
Commentary from author Phil Bartlett:
“Remedies for personal grievances based on dismissal, including reinstatement, have been available under New Zealand employment law from 1970, although initially only for union members and in cases of ‘wrongful’ as opposed to ‘unjustifiable’ dismissals. Prior to the present government there were eight distinct New Zealand governments since 1970. None had seen it as desirable to eliminate reinstatement as a remedy in situations where a grievant’s actions amounted to serious misconduct, much less where their actions had contributed to the situation that gave rise to the grievance. The current amendment arose from one of the ACT Party’s policy objectives recorded in its coalition agreement with National (November 2023), being that the government ‘consider’ removing eligibility for personal grievance remedies where the employee is at fault. In my view, the amending Act, evidently driven by a Party which achieved merely 8.64% of the popular vote, is both unnecessary and seriously flawed. I offer three reasons for that view:
- An employee’s contributory fault can often be minor, as shown by cases where only small reductions have been made from monetary remedies, sometimes as little as 10%. To eliminate the possibility of reinstatement in such cases is a ‘blunt instrument’ legislative approach to employee contributory fault that is likely to result in disproportionately harsh outcomes for employees.
- In cases of serious misconduct, there is a wide range of employee actions which can potentially fit that description, some of which will be significantly more reprehensible than others. I am reminded of dicta of Judge Shaw in the first Employment Court case under s 103A, Air New Zealand Ltd v Hudson [2006] ERNZ 415 (EmpC) at [139]. Her Honour referred to two hypothetical situations. One is where an employee is caught red-handed stealing large sums of money. The other is where an employee makes an accounting error which costs the employer money. On any view, the first situation is serious misconduct which will inevitably result in the person’s dismissal. The second is less clear-cut. It could result in dismissal, but whether that outcome is reached will depend on the employer’s evaluation of the circumstances. Different employers faced with the same factual situation could reasonably arrive at different conclusions on the issue of serious misconduct. Reinstatement would never be awarded in the first situation. However, it could be awarded in the second one even if the Court agrees with the employer that the accounting error was serious misconduct — for instance, if the employer’s process was botched and reinstatement is practicable. The blunt-instrument approach in the new legislation allows no room for valid distinctions to be justly drawn between different instances of serious misconduct depending on the degree of employee fault that is involved.
- That leads to my third point. Did not the requirement under s 125(2) for the Court to be persuaded that reinstatement is ‘practicable and reasonable’ give employers a sufficiently strong level of comfort that perverse outcomes in this area are very unlikely?”
What else is happening in 2026?
Among other things:
- The Public Service Amendment Bill 2025 (which includes various amendments related to employment in the public service) is awaiting its third reading and comes into force on the day after Royal assent.
- The Health and Safety at Work Amendment Bill 2026 (intended to reduce unnecessary compliance costs, increase certainty for PCBUs about their obligations, and reduce the incidence of workplace fatalities, injuries and illnesses) is at the select committee stage (report due in June).
- The Employment Leave Bill 2026 (intended to replace the Holidays Act 2003, with a 24-month implementation period) is at the select committee stage (report due in July).
For up-to-date employment law information and commentary, subscribe to Westlaw New Zealand.
Thanks to Kevin Leary, Senior Legal Editor, and Employment Law’s expert author team:
Philip Bartlett (formerly of Bartlett Partners)
Kylie Dunn (Partner, Smith Dunn)
Christina Inglis (Chief Judge, Employment Court of New Zealand)
Ashley-Jayne (AJ) Lodge (Partner, Anderson Lloyd)
Scott Worthy (Executive Partner, Kiely Thompson Caisley)
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