Special Edition – Employment Relations Amendment Act 2026
The Employment Relations Amendment Act 2026 came into effect on 21 February 2026, making changes to the Employment Relations Act (ERA).
The changes are relevant to employees, employers, contractors and businesses that engage contractors.
In this update we draw your attention to two of the most significant changes so that you and your business can be prepared.
New Remuneration Threshold for Unjustified Dismissal Personal Grievances
Employees earning $200,000 or more per year can no longer bring a personal grievance for unjustified dismissal or unjustified disadvantage relating to that dismissal.
Employees currently on agreements have 12 months (until 20 February 2027) before the prohibition will apply to them.
Employers and employees can agree at any time, including during the 12 month transition period, that the prohibition will not apply to them.
“Gateway Test” for Contractor or Employee Status
The ERA now sets out “gateway” test criteria (one of the criteria being, for example, that the written agreement between the parties specifies that the worker is a contractor or not an employee).
If a working arrangement meets all of the specified criteria, then the worker will be recognised as a contractor rather than an employee.
If any of the criteria are not met, the existing common law test of employee status will still be used to determine the true nature of the relationship.
While the purpose of the amendment is said to be to provide certainty for businesses and workers, as always the devil will be in the details.
Our Advice
We recommend that both employers and employees review their individual employment agreements, and consider whether they want the personal grievance remuneration cap to apply, or whether it is better to contract out. We can provide confidential advice on the pros and cons of this.
Businesses should review their contractor engagement documents and policies, and their onboarding processes, to ensure they are fit for purpose, and it is clear that the workers will be contractors under the new law.
If you think you may be affected by any of these changes, we encourage you to contact us for confidential advice – lawyer@btlaw.co.nz or phone 04-4725579.
Regards,
Penelope Carolyn
prl@btlaw.co.nz carolyn.heaton@btlaw.co.nz