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As we approach the end of the year, we run through recent employment law changes and look at what’s on the horizon for 2026. It has been an exciting year for employment law reform and 2026 promises an even more significant shake up.
Suite of changes to relax labour market regulations
The Employment Relations Amendment Bill (the Bill), reported back from select committee on 8 December 2025, aims to reduce labour market regulation across several areas. These include:
- removing the requirement that, where there is a collective agreement in place, new employee individual employment agreements must reflect the collective terms for the first 30 days of employment (the 30-day rule)
- removing the requirement on employers to provide an ‘active choice’ form to new hires and to pass on any union-supplied information on the role and functions of unions
- reducing access to the personal grievance (PG) regime by:
- removing all PG remedies for employees whose behaviour is determined to amount to serious misconduct
- removing eligibility for reinstatement or compensation for hurt and humiliation when the employee’s behaviour has contributed to the issue that gave rise to the personal grievance
- requiring the Employment Relations Authority (ERA) and the Employment Court to consider whether an employee’s conduct obstructed the employer’s ability to meet their fair and reasonable obligations
- increasing the threshold for procedural error in cases where the employer’s actions against the employee are considered fair, and
- denying access to the PG procedure for unjustified dismissal to employees who earn a base salary of $180,000 a year or more, unless the employment agreement negotiated between the parties specifically allows otherwise.
Cabinet subsequently decided that a more realistic assessment of remuneration at the higher end of the scale would include such things as bonuses and share schemes and that the $180,000 threshold should be raised to $200,000 to ensure that this did not increase the number of employees captured.
The committee has recommended amendments to incorporate these decisions.
The threshold will be adjusted annually, beginning 1 July 2027, to reflect changes in Statistics NZ’s average weekly earnings data and will be applied to existing employment agreements after a 12-month transition period - provided the employee remains with the same employer in the same role or is moved as part of a broader workplace restructure.
The Bill also clarifies the status of contractors through what is referred to as the contractor ‘gateway test’ comprising five criteria which, when all are present, classify the worker as “a specified contractor”.
We set them out below, including in italics tweaks proposed by the select committee and subsequently supported by the Minister:
- there is a written agreement that specifies the worker is an independent contractor or, for businesses that do not use that characterisation (e.g., platform-based arrangements), specifies that the worker ‘is not an employee’, and
- the worker is not restricted from working for others, a non-restriction that will be deemed to apply even if someone is contracted to work the equivalent of full-time hours, and
the worker is - not required to be available to work certain times or days or for a minimum period, and
- able to sub-contract the work, and
- the business does not terminate the arrangement for not accepting an additional task, and
- the worker has had a reasonable opportunity to seek independent advice before entering into the agreement.
A clarification will also be added to the Bill to allow employers to vet sub-contractors for particular qualifications or require a criminal record check of a sub-contractor if justified by the nature of the work.
A new Employment Leave Act on the horizon
Workplace Relations and Safety Minister Brooke van Velden announced in September that Cabinet had agreed to repeal and replace the Holidays Act 2003 with a new 'Employment Leave Act'. The intention is that the proposed Act will reduce complexity and cost for both employers and employees.
Leave payments
- All leave will begin to accrue from day one of employment.
- Annual leave and sick leave will be accrued and paid at an hourly leave pay rate (base wage). Variable components (such as bonuses and commissions) will not be included in leave pay calculations. Fixed allowances are paid in full during leave.
- Annual leave is accrued at the employee’s full rate during parental leave and is paid at their usual pay on return to work.
- Employers will also be required to provide clear pay statements each pay period itemising pay and leave in a way that is easy and transparent for employees to understand.
Annual leave
- The current four weeks' entitlement after 12 months' continuous service will be replaced by a system under which annual leave will accrue continuously from the first day of employment, in proportion to contracted hours of work.
- Annual leave will accrue at a rate of 0.0769 hours per each contracted hour of work (equating to four weeks a year for employees who work 40-hour work weeks).
- Annual leave will accrue when an employee is on paid leave, and workers will be able to request to cash up to 25% of their annual leave balance in each 12-month period.
Sick leave
- The current 10-day entitlement after six months' continuous service will be replaced by an hours-based accrual system at a rate of 0.0385 hours per contracted hour of work (capped at 160 hours).
- This will result in a proportionality between sick leave accrued and the number of hours an employee works, meaning that part-time employees will have lower entitlements.
- Rather than being taken in full days on a day that is an “Otherwise Working Day”, sick leave will be taken in hours against an employee's contracted hours, and any hours the employee has accepted.
Bereavement and family violence leave
- Bereavement and family violence leave will remain as a days-based entitlement but will apply from day one for all employees (rather than after six months' continuous service).
- Employees will be able to take part days.
Public holidays
- A new 'Otherwise Working Day' test will be introduced for workers without contracted days based on whether the worker worked on the day of the week that the public holiday falls for seven of the preceding 13 weeks.
- If a worker works on a public holiday that is an Otherwise Working Day, alternative holiday hours will accrue at a rate of 1:1 for every hour worked. The proposed Act also allows the alternative holiday to be cashed up at any time.
Leave compensation payments
- For casual workers or for overtime worked, 'Pay as you go' (8% of gross earnings) will be replaced by a leave compensation payment set at 12.5% of:
- a casual worker’s ordinary hours, and
- any additional hours worked by other workers (except those compensated by salary).
- This will replace annual and sick leave entitlements for casual workers.
- Fixed term workers will accrue leave from day one.
The Minister’s announcement suggested that the Government expects to pass this legislation before the 2026 elections, although no firm commitments have been made as yet. There will be a 24-month implementation period to allow for a smooth transition for employers and payroll providers. Initial reaction from the unions and other political parties suggest that the Government’s direction has been well received.
Remuneration - to disclose or not to disclose
The Employment Relations (Employee Remuneration Disclosure) Amendment Act 2025 received the Royal Assent on 26 September 2025, amending the Employment Relations Act 2000. The changes:
- allow employees to discuss or disclose their remuneration, without detrimental repercussions to their employment. The intention is that this will lead to greater transparency in pay and allow pay-based discrimination to be more easily identified and remedied, and
- create a new ground for a personal grievance where an employer engages in adverse conduct for a remuneration disclosure reason.
Pay secrecy clauses pre-dating 27 August 2025 are now unenforceable. Employers will not be required to amend their existing employment agreements but should update their template for future agreements.
Termination of employment by agreement
The Employment Relations (Termination of Employment by Agreement) Amendment Bill would allow an employer to request that an employee agree in writing to have their employment terminated in return for compensation without bringing a personal grievance.
It is a member’s bill introduced by ACT MP Laura McClure. Although the ACT Party is a member of the governing coalition, it is not a government bill. It has, however, been passed by a majority of the government-dominated select committee and will now proceed to its second reading.
If passed, pre-termination negotiations would be inadmissible in proceedings before the Employment Relations Authority unless certain exceptions applied.
Pay deductions for partial strikes now in force
The Employment Relations (Pay Deductions for Partial Strikes) Amendment Act 2025 came into force on 1 July 2025. It inserts new sections 95A-95D into the Act, setting out the circumstances in which an employer may deduct the pay of employees engaged in a partial strike.
Employers have the option to either deduct 10% of the employee’s wages or reduce them by a sum proportionate to the disruption being caused. Written notice must be provided of the intention to deduct as soon as is reasonably practicable but will not need to specify the amount to be deducted.
Deductions cannot be made where the partial strike is lawful on the grounds of safety or health; where an employee who is paid by piece work reduces their output; or where the employee refuses to work overtime.
Employment advocates
Minister van Velden has confirmed that regulation of employment advocates is not a priority of the current Government. The issue arose after the Employment Court ordered an employment advocate to personally pay costs because of their unacceptable conduct. There have been other instances in which advocates have used abusive tactics or provided substandard advice.
Unlike lawyers, employment advocates are not regulated despite long-standing calls from the legal sector to introduce standards and oversight.
WorkSafe Board – leadership update
The Government has gone for a business focus in its appointments to the WorkSafe Board. The new appointees are:
- Murray Jagger, an experienced director across high-risk industries, recently Chair of Marsden Maritime Holdings and a director of Manaia View Farms
- Brett O’Riley, former Employers and Manufacturers Association CEO, who brings strong industry networks and system-wide improvement experience, and
- Chris Alderson, CEO of CHASNZ, a construction health and safety leader, a director of Mates in Construction, and a Chartered Accountant.
They will serve three-year terms.
Recent decisions
Uber drivers – Supreme Court dismisses Uber’s appeal
The Supreme Court has upheld the decisions of the Employment Court and the Court of Appeal in finding that the four Uber drivers who took the case against Uber were in fact employees rather than contractors.
The ruling was unanimous, although the bench was split 3:2 on the reasons.
The Government will seek to restrict any wider influence through the “gateway test” provided for in the Employment Relations Amendment Bill, discussed above.
But this will not remove Uber workers’ entitlement to benefits accrued before the law change takes effect and the Postal Workers Union of Aotearoa is taking a case next year to the Employment Court on behalf of a group of NZ Post couriers.
Soapi v Pick Hawke’s Bay [2025] NZEmpC 208
An Employment Court judgment in favour of three former Recognised Seasonal Employer (RSE) workers from the Solomon Islands against orchardist Pick Hawke’s Bay will have wider ramifications for the operation of RSE schemes.
The Court found that wage deductions that reduce an employee’s pay below the minimum wage are unlawful, even if the employee consents to the deduction. This materially changes the way in which RSE schemes can operate from an employment perspective.
Traditionally employers have made deductions from RSE workers’ wages for up front and accommodation costs. Now they may need to meet these costs themselves, and recover them through a reimbursement by the employee.
Accommodation and lodging deductions made by Pick Hawke’s Bay were also ruled unlawful because the cash value of the lodging was not fixed, and the employer deducted more than the 5% maximum that was permitted.
The Court also raised concerns about the employer requiring employees to surrender their passports while in New Zealand.
Leave to appeal the decision has been granted by the Court of Appeal.
Whakaari Management Limited v WorkSafe New Zealand [2025] NZHC 288
An appeal following a WorkSafe prosecution against Whakaari Management Limited (WML) has clarified the obligations under section 37 of the Health and Safety at Work Act 2015 (the duty of a Person Conducting a Business or Undertaking (PCBU)). WML leased Whakaari and granted commercial licences to tour operators at the time of the 2019 Whakaari volcanic eruption.
WML argued that it did not have a duty under section 37 because it did not manage or control the workplace where the walking tours took place. The Court agreed, concluding that the role of a landowner simply permitting others to carry out activities on the land is not sufficient to activate the duties imposed by section 37.
Pay equity
Entitlements under the Equal Pay Act have been substantially reduced through legislation passed under urgency in the run-up to the 20 May 2025 Budget. The changes:
- raise the “predominantly performed by female employees” threshold to 70% of the relevant workforce (from 60%) and require that the inequity has been existent for at least 10 consecutive years
- ensure there are reasonable grounds to believe the work is historically and currently undervalued, including a requirement for evidence, and
- provide further guidance on the use of comparators (work performed by men that requires similar skills, responsibilities, levels of experience, or working conditions to the claimant’s work), and enable employers to meet their pay equity obligations in a way that is sustainable for their business – for example through phasing of settlements.
All pay equity claims underway were discontinued, yielding an estimated $12.8b cost savings to the Government over the next four years. The move, and the fact that it did not go through the usual select committee submission process, proved divisive across the country and seems certain to become an election issue.
Labour has already committed to introducing a Pay Transparency Bill that will require large employers (150+ employees) to report pay differences and pay ranges in job advertisements.
Minimum wage
The minimum wage is reviewed annually and will be raised by 2% from $23.50 an hour to $23.95 at 1 April 2026.
H&S updates
Health and safety reform has been a key focus for the Government this year, with an emphasis on reducing unnecessary red tape and what Minister van Velden refers to as “tick-box” practices that absorb time and effort but do not protect workers from harm.
High level changes are:
- an instruction to the WorkSafe Board to “rebalance” WorkSafe’s effort away from enforcement and toward early engagement to assist businesses to manage their critical workplace risks
- proposed amendments to the Health and Safety at Work Act 2015 to:
- specify that day-to-day H&S management will be the responsibility of managers, leaving directors free to focus on governance and strategic oversight, and
- provide a “carve-out” for small, low-risk businesses so that they “will only have to manage critical risks and provide basic facilities to ensure worker welfare”. (The Minister says they will “still need to provide first aid, emergency plans, and basic facilities, such as suitable lighting, but wouldn’t need to have a psychosocial harm policy in place”.
Much of the reform activity, however, is directed at the sector level, particularly those sectors that have high injury rates (construction, agriculture and manufacturing).
