In June 2025, New Zealand’s Workplace Relations and Safety Minister introduced one of the most significant proposed changes to employment law in recent years - the Employment Relations Amendment Bill.
The Bill aims to give businesses more flexibility and clarity in managing their workforce, but it could be expected to spark strong reactions from unions and employee advocacy groups.
The Government is aiming to pass the reform within 2025, so now is the time for businesses and workers alike to start preparing for change.
Here’s a breakdown of the key employment law changes and what they could mean for employers, employees, and contractors across Aotearoa.
New Test for Contractors: Clearer Distinction from Employees
One of the headline changes is the introduction of a "gateway test" to define who qualifies as an independent contractor versus an employee. Under this test, a person will be classified as a “specified contractor” (and not an employee) if they meet strict criteria. This criterion includes having a written contract, the freedom to work for others, flexibility in their working hours, and the ability to subcontract work.
This contractor specification is likely introduced to address employment issues gig-workers face. Known as the on-demand, ‘as and when needed’ business model, the gig-economy encompasses peer-to-peer transactions for the performance of ‘gigs’, or jobs.Encompassing contemporary services such as Uber and Airbnb, gig jobs are generally undertaken by contracted workers in response to a customer’s request for service. Such work is typically performed in real time through a digital platform and can encompass a variety of work types, however driving work (rideshare/passenger service and food/grocery delivery) is most common.
These workers are stuck in an undefined no-man’s land – not quite being an independent contractor, and not quite being an employee. Therefore, they do not get the protection or benefits of either.
This gateway aims to reduce disputes around such worker misclassification and provide for equitable protection for all kiwi workers.
Personal Grievance Claims: Stricter Rules, Fewer Remedies
Another significant shift is in how personal grievance claims (e.g. unjustified dismissal) will be handled. Under the amendment Bill:
- If an employee’s own serious misconduct contributed to the dismissal, they will not be eligible for any remedies.
- Even without serious misconduct, any misconduct by the employee that led to their dismissal may cause them to lose access to compensation for emotional distress or lost benefits.
- Remedies like lost wages could also be reduced by up to 100% depending on the extent of the employee’s own actions contributing to the dismissal.
This could lead employers to take a firmer stance during employment disputes. However, what “serious misconduct” actually entails remains undefined by the Act.
High-Income Employees: No More Dismissal Claims (Unless Opted-In)
Employees earning $180,000 or more may no longer be able to bring unjustified dismissal claims unless their employment contract explicitly opts them into this protection.
This gives employers more certainty when offboarding high earners but may lead to employees negotiating for alternative safeguards, like severance pay or longer notice periods, to replace lost legal protections.
A 12-month transition period is planned to allow existing high earners effected by this change a chance to renegotiate their contracts terms with employers.
The End of the 30-Day Rule: More Flexibility, Less Union Influence?
Currently, new employees in workplaces with collective agreements must be employed on the same terms as the Union’s collective agreement for their first 30 days, to provide them the protections and benefits of union membership from the beginning of their employment.
The Bill proposes scrapping this rule. Employers will instead be required to just provide information about the union and their collective agreement, but new hires will be free to sign individual employment agreements from day one.
While this cuts red tape for employers, unions may see it as a threat to membership growth. This could lead to union’s bargaining to reinstate this rule contractually.
Final Thoughts: A Turning Point for NZ Workplaces
These proposed reforms are part of a broader shift toward business-friendly employment law. If passed, the Bill could reshape how employment relationships are formed, managed, and ended, especially for those high-income earners and contractors.
However, the Bill is still yet to go through the full parliamentary process, including public submissions and Select Committee review.
Need help navigating the changes?
If you’re an employer thinking ahead or an employee wondering how this affects your rights, it’s worth seeking legal advice. The employment landscape in New Zealand could look very different by the end of this year – get in touch with Godfreys Law’s employment team today to ensure your business stays compliant.
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