The Employment Relations (Amendment) Bill (Bill) was introduced to Parliament on 17 June 2025. As foreshadowed in several speeches by Workplace Relations and Safety Minister, Brooke van Velden, the Bill proposes to make several decisive changes to the Employment Relations Act 2000 (ER Act).
The changes are aimed at “re-tilting the personal grievance scheme to better balance employer and employee interests and discouraging poor behaviour”. 1 The Bill also seeks to clarify aspects of the ER Act that remain unclear, such as the distinction between an employee or “contractor", which was recently considered in the Supreme Court appeal of the “Uber case”.2
The key proposed changes include:
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Providing greater certainty on the “contractor question” – by introducing a test for when a worker will be considered a “specified contractor”
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Changing eligibility for remedies for personal grievances – including to allow for up to a 100% reduction in remedies for employee misconduct
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Limiting the ability to raise unjustified dismissal grievances – by introducing a maximum remuneration threshold of $180,000 per annum, to be updated annually
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Amending provisions – relating to collective agreements and new/prospective employees.
What can we expect, and what remains unclear?
The status of a contractor
The Bill introduces the concept of a “specified contractor” to section 6 and excludes such persons from the definition of “employee”. The factors that will be considered in determining whether someone is a contractor include:
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A written agreement specifying that the person is an independent contractor
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The freedom to work for other businesses except while working for the contracting business
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Either freedom to arrange their own schedule or the ability to subcontract (subject to vetting).
The definition of “specified contractor” also provides some worker protections. For instance, a contract cannot be terminated if a specified contractor declines additional work offered to them, and before entering a contracting arrangement, the person must have had a reasonable opportunity to seek independent advice. There is still some uncertainty that could be addressed as the Bill progresses through select committee; however, some questions may need to be resolved on a case-by-case basis.
For example:
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Will the common law tests currently used to determine the real nature of the relationship be redundant? 3
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Can businesses restrict contractors from working with competitors through confidentiality or conflict of interest provisions?
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Will the amendments have an impact on the engagement of casual, part-time, or fixed-term employees?
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What recourse do contractors have if their contract is terminated for not accepting additional tasks?
Changes to remedies
The proposed new section 123B provides that if an employee’s conduct contributed to the circumstances giving rise to a personal grievance, where that behaviour amounts to serious misconduct the employee will not be entitled to any remedies.
If the behaviour was contributory but does not amount to serious misconduct, under the proposed new section 123C the employee will not be entitled to:
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Reinstatement to their former position
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Compensation for humiliation, loss of dignity, or injury to feelings
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Compensation for the loss of any benefit (whether financial or otherwise) that they could reasonably have expected to receive had the personal grievance not occurred.
Other remedies such as compensation for lost wages will still be available under section 123C. However, a proposed amendment to section 124 provides that where an employee has contributed to the situation, the Employment Relations Authority (Authority) or Employment Court will have the discretion to reduce any available remedies, including lost wages, by up to 100%. This is a notable shift from the current position, where it is rare for the Authority or the Employment Court to reduce remedies by more than 50% due to an employee’s contribution.
The proposed amendments have the potential to alter the way employers approach formal employment processes. If an employer is satisfied that serious misconduct has occurred, they may be more prone to dismissing the employee without conducting a fair process on the basis that they consider the employee will not get any remedies. Despite this, employers should still proceed with caution as employees may be able to pursue other legal claims or remedies, such as penalties for breaches of the duty of good faith under the ER Act.
Additionally, because the term “serious misconduct” is not defined in legislation, its meaning could be open to interpretation if it is not clearly defined in the employment agreement or the employer's policies. This could create uncertainty around whether an employee’s conduct meets the threshold for serious misconduct in any particular situation. It will be interesting to see how this provision will be interpreted and applied in the Authority and the Employment Court.
Threshold for unjustified dismissal personal grievance
If an employee’s base wage or salary meets or exceeds the threshold provided by section 113B (currently proposed to be $180,000 per annum), they will not be able to bring a personal grievance or initiate legal proceedings in relation to their dismissal. However, employees may still raise personal grievances on matters unrelated to their dismissal. In these situations, employers are also not required to comply with the good faith consultation obligations under section 4(1A)(c) of the ER Act as well as the obligation under section 120 to provide reasons for dismissal upon request.
Section 67J makes it clear that these threshold restrictions on personal grievances can be negotiated, and that the employee and employer have the ability to opt out of the new rules. A 12-month transition period will apply during which employees captured by this amendment are still able to bring personal grievance claims while they negotiate new terms with their employers. There are also specific exceptions, such as for employees redeployed or transferred due to restructuring or business sales.
If the Bill comes into force, we anticipate employees earning above the threshold amount will negotiate to opt back into the personal grievance regime or for other contractual protections. Some examples could include redundancy compensation, longer notice periods, and no-fault termination clauses.
On the other hand, we could see employers use these provisions to reduce their own risk of a personal grievance claim by increasing employee wages or salary if employees are on a wage or salary that is close to the threshold.
Collective agreement and new/prospective employee related provisions
The requirement that a collective agreement applies to an employee’s terms and conditions of employment for the first 30 days of their employment would be removed under the Bill. Instead, at the time an individual employment agreement is signed, employers would have specific information requirements related to the union and the collective agreement (including informing the employee that a collective agreement exists and providing the employee with a copy of the agreement).
Considerations
While the Bill is still progressing through Parliament and may be revised or may not come into force at all, it signals substantial changes on the horizon for both employers and employees. It will be important for all parties to stay informed as the Bill advances and to consider how these proposed reforms could affect their workplace practices in the future.
For more information and advice about managing the potential changes ahead, please contact a member of our employment team.
Co-authored by Sanne Vitalis (law clerk).
[1] Explanatory Note to the Employment Relations (Amendment) Bill.
[2] This was an appeal of the Court of Appeal decision: BV v E tū Inc [2024] NZCA 403.
[3] The current tests relate to intention, control, integration and economic reality.
