With the General Election only a few months away, a change in government may shift the employment landscape away from the current government’s pathway.
Under the National-led coalition, employment law has moved in a more employer-friendly, flexible direction and is likely to continue on that path if a National-led government remains in power.
However, a Labour-led government is likely to shift back towards stronger employee protections and greater regulation, the extent of which will depend on whether Labour governs alone or with support from the Greens or Te Pāti Māori. In practice, this could mean unwinding key changes to the Employment Relations Act 2000 (Act) introduced earlier this year, and revisiting aspects of the 2025 pay equity reforms.
What could change
A Labour‑led government could move quickly to undo changes introduced by the Employment Relations Amendment Act 2026, (Amendment Act) which came into force on 21 February 2026. In particular, a new government may:
Reverse changes made to the test of justification:
- Before the Amendment Act, section 130A(2) of the Act provided that the Authority or Court must not determine a dismissal or action to be unjustifiable solely because of minor process defects, provided those defects did not result in unfair treatment of the employee.
- The Amendment Act removed the word “minor”, so a dismissal or action will no longer be unjustified solely because a defect occurred, only if that defect caused actual unfairness to the employee. For example, providing an employee with an unreasonable timeframe to respond to allegations would not render a dismissal unjustified if the employee had legal representation, gave a full response, and suffered no prejudice.
- This shifts the focus from the seriousness of the procedural defect to whether it caused actual unfairness, broadening employer protection.
Expand employees’ access to remedies:
- The Amendment Act significantly limited employees’ access to remedies where they contributed to their personal grievance. Where the employee’s conduct amounts to serious misconduct, no remedy is available. Where the conduct falls short of serious misconduct but still contributed to the grievance, only lost wages may be recovered.
- As a result, employees can be denied meaningful relief despite successfully establishing a personal grievance.
Reintroduce Fair Pay Agreements, which were introduced by the Labour government then later repealed by the current coalition. A change in government could result in:
- The re-introduction of Fair Pay Agreements in some form;
- Implementing alternative sector-wide bargaining arrangements; and
- Increasing minimum standards in industries with historically low wages and poor conditions.
How fast could change happen?
Even with a clear mandate, change takes time. The Amendment Act took roughly eight months from first reading to pass into law. Significant legislation requires a bill, first reading, and select committee process, so we expect there to be some notice of changes.
Regardless of the election outcome, employers should plan for current law to remain unchanged through early 2027, and monitor bills signalling forthcoming changes. Our expert Employment Law team will be watching developments closely and will continue to share updates as they come.
