Employment Relations Amendment Act 2026: Must knows for Employers and Employees
The Employment Relations Amendment Act of 2026 had obtained Royal Assent on 20 February 2026 and came into force on 21 February 2026. The reform aims to increase labour market flexibility, reduce compliance costs for employers, and rebalance of the personal grievance system.
The new Act shows significant changes to New Zealand’s employment law structure in recent years. Employers are to represent a shift in striking a balance with employment relations matters. Employers being able to navigate these changes, practical advantages can be resultant. This article outlines the key changes and what this means for employers and Human Resources teams as well as the risks that remain.
Key focuses for the Amendments
Clarifying the contractor and employee distinction
Income threshold for unjustified dismissal claims
Changes to test of justification for dismissals
Reduction in remedies where an employee’s behaviour contributed to the grievance
Key Changes in the 2026 Act
Removal of the 30-Day Rule
New employees are not required to be on the same terms as a collective agreement for their first 30 days.
Employees are able to choose to agree to an individual employment agreement from day one or choose to join a collective employment agreement.
Employers no longer need to provide the ‘active choice’ form whilst giving employees information and guidance to help them decide about union membership.
New rules apply when there is more than a singular collective agreement that covers the work undertaken by the employee.
“Specified contractor” Gateway Test
A new ‘gateway test’ sets out the criteria to make it easier to assess if a worker is a contractor or an employee.
The criteria includes that the written agreement must state that the worker is an independent contractor, can work for others, there is no control over the hours or days that the worker works, the agreement cannot be terminated if the worker refuses extra work and the ability to obtain legal advice prior to signing the agreement.
If any of the gateway test criteria is not met, the common law test of employment status will apply.
The aim is to provide more upfront certainty for both employers and employees.
High-Income Threshold for Dismissal Claims
Employees earning $200,000+ per year cannot raise personal grievances for unjustified dismissal, though a 12-month transition applies to existing staff.
The threshold will initially be at $200,000, with annual adjustments from 1 July 2027.
Employers and employees can agree in writing to keep dismissal protections in place if this approach is preferred.
Employees on current agreements have a 12-month timeframe requirement before the threshold applies to them.
Employers and employees are given more time to adjust and renegotiate employment agreements.
Changes to the Test for Justification
Procedural defects alone will not result in an unjustified dismissal unless those defects resulted in unfairness, regardless of whether it was minor or not. The Authority or Court will assess whether the employee obstructed the employer from undertaking a ‘fair process’.
Reduced Remedies for contributory behaviour
Remedies for personal grievances can be reduced by up to 100% if the employee’s conduct contributed to the situation.
The Authority cannot award any remedies where the employee’s behaviour amounted to serious misconduct and contributed to the situation
If the employees behaviour contributed to the situation the Authority may reduce the level of remedies awarded.
What this means for employers and employees
Employers may need to review its:
Templates for individual employment agreements.
Hiring and onboarding systems.
Workplace policies around conduct, performance and disciplinary processes.
Contractor engagement frameworks.
Workers and advisers may also want to understand how the new rules may affect rights, obligations and remedies.
Onpoint Consulting can assist your business with navigating the changes and exploring how the changes may impact your current work arrangements, policies and agreements.