The Employment Relations Amendment Act 2026 came into force on 21 February 2026, bringing some of the most significant changes to the Employment Relations Act 2000 (the Act) and employment law in New Zealand in recent years.
For employers, the changes create opportunities to level the playing field. But the changes come with the risk of being misunderstood or applied incorrectly. Below we set out the key changes and what they mean in practice.
High-income employees
A major change is the introduction of a $200,000 remuneration threshold. Employees earning above this amount are no longer able to bring a personal grievance for unjustified dismissal or unjustified actions causing disadvantage related to the dismissal (unless they agree with their employer to contract back in).
What this means in practice:
- Employers need to look more carefully at how total remuneration is calculated, including the use of bonuses, incentives and other benefits, to determine whether the threshold is met.
- Litigation risk will be reduced significantly in respect of dismissing employees over the high-income threshold. However, a poorly handled dismissal can still create exposure – high-income employees can still bring breach of contract or discrimination claims, for example.
- Employees earning above the threshold are expected to be in a position to negotiate more favourable provisions in their employment agreements to counterbalance the reduced statutory protections.
Limits on personal grievance remedies
The changes to the Act limit remedies where an employee has contributed to the situation that gave rise to their grievance. In some cases, if the matter has reached the Employment Relations Authority:
- remedies can be reduced significantly, or
- removed entirely where serious misconduct is established.
What this means in practice:
- Employers should review their workplace policies and documents and consider whether any existing definitions or examples of serious misconduct require amendment.
- How disputes are argued and settled is likely to materially change as employers are now in a stronger position where employee conduct is clearly at issue. However, there is risk in considering this a shortcut. Employers still need to properly investigate, and serious misconduct remains a high threshold to meet.
- Employers should turn their minds to documenting evidence of the ways in which the employee has contributed to the problem as part of their standard process, not just after the fact when litigation is a real prospect.
A new “gateway test” for contractors
The changes to the Act introduce a statutory gateway test to determine when a worker is a “specified contractor” and not an employee. If the statutory criteria are met, employers have certainty that the worker will fall outside employment protections.
In practice this means there is greater certainty for businesses who engage contractors going forward. This will be particularly relevant for industries where the distinction has historically been blurred.
However, if the test is not satisfied, the traditional “real nature of the relationship” test still applies. Note also that, while the test applies to arrangements entered into before the changes to the Act came into force, the test is not retrospective. Businesses should review their contractual arrangements in light of the new gate-way test.
Trial periods strengthened
The new changes to the Act now provide that employees subject to a trial period clause will no longer be able to bring a personal grievance for unjustified actions causing disadvantage arising from their dismissal under the trial period clause. This aligns with the new rules for high-income employees.
This means that employees subject to a valid and enforceable trial period clause can no longer bring a personal grievance in respect of their dismissal or any of the circumstances related to it.
What this means in practice is that trial periods are now a more powerful risk management tool. However, they must be implemented correctly. Technical non-compliance (for example, failing to include the clause properly in the employment agreement before employment has commenced) will invalidate the protection entirely.
Removal of the 30-day rule
The requirement to employ new employees on collective agreement terms for their first 30 days has been removed.
Employers now have full flexibility to negotiate individual terms from day one. This simplifies onboarding and reduces administrative burden but also shifts greater responsibility onto employers to ensure fair and competitive terms are offered upfront.
Clarification of the justification test
The changes to the Act confirm that a dismissal will not be unjustified solely due to minor procedural defects, provided the employee was not treated unfairly overall.
This is a subtle but important shift. It reduces the risk of claims based purely on technical flaws. However, employers should not take this as permission to cut corners, with procedural fairness remaining central to defensible decision-making.
Get in touch
If you would like any further information regarding the above changes, and what this may mean for your organisation, please get in touch with our Employment Law experts.
