New employment legislation effective 19 February 2026
The Employment Relations Amendment Act 2026 (Act) came into effect on 19 February. This Act represents the most significant update to New Zealand employment law since the 2018 changes and brings in major reforms focused on increasing employer flexibility, redefining worker status, and changing how dismissals and personal grievance claims are handled.
The changes are relatively employer-focused, with the stated aim of backing businesses, promoting hiring confidence, and increased flexibility in modern working arrangements.
The four main areas of change to New Zealand employment law are:
- Clearer criteria for contractor workers
- Changes to personal grievance remedies
- High-income threshold for unjustified dismissal claims
- Removal of the 30-day rule for collective agreements
New contractor ‘gateway test’
The Act introduces a new “gateway test” designed to make it easier to determine whether a worker should be treated as an independent contractor or an employee. For employers, the test is intended to provide greater certainty when engaging contractors and reduce the litigation risk highlighted in recent contractor versus employee disputes.
To rely on the gateway test, businesses must ensure that all of the conditions set out below are met for the worker to qualify as a contractor. If one or more of these conditions are not satisfied, the traditional test will apply. This involves assessing the “real nature” of the relationship, including factors such as how integrated the worker is within the business and the intentions of the parties in entering into the arrangement.
A worker will be a specified contractor if they meet all of the following conditions:
- A written agreement that states the worker is an independent contractor;
- The worker has freedom to work for others (note that a worker working full time hours for a principal will not always amount to a restriction on working for others);
- A worker is not required to be available at set times, and they will have the ability to subcontract;
- The arrangement does not end solely because the worker declines additional work; and
- The worker had reasonable opportunity to get independent advice before signing.
Changes to personal grievance remedies
The Act has introduced significant limitations to the remedies available to employees who raise personal grievances:
- If an employee’s own actions contributed to the situation that gave rise to the personal grievance, they will not be entitled to reinstatement, or to compensation for humiliation, loss of dignity or injury to feelings.
- And if an employee’s own actions amounted to serious misconduct (having contributed to the situation that gave rise to the personal grievance), the employee will not be entitled to any remedies.
In terms of practical impact, the new law will provide employers with a greater ability to defend personal grievances where employee behaviour is a significant factor.
Also, to be noted, a dismissal will not be unjustified solely based on a flaw in the process followed. However, where the process failure may have led to the employee being treated unfairly, that failing may still result in an unjustified dismissal.
High-income threshold for unjustified dismissal claims
The Act also introduces a new income cutoff for unjustified dismissal claims. Originally set at $180,000, the Select Committee later raised the threshold to $200,000 and increased the scope from just salary to include salary and bonuses. If an employee is earning at or above this threshold, they will be unable to raise a personal grievance for unjustified dismissal.
This reform is intended to give employers greater confidence in appointing candidates to high income positions and will allow for greater freedom to restructure or end employment relationships at the highest levels, without facing costly and disruptive dismissal processes.
For existing employees already earning above $200,000, there is a 12-month transition period before the new rule applies to them. This allows time for the parties to discuss and negotiate whether they will agree to opt out of this rule.
Removal of the 30-day rule
Previously employees who were not union members had to be employed on the terms consistent with the applicable collective agreement for their first 30 days of employment. The new Act removes this requirement, meaning:
- Employers and employees can agree on individual terms from day one; and
- There is no obligation to apply collective agreement terms for the initial 30-day period.
- This change is intended to increase contractual flexibility at the start of an employment relationship.
For employers, this reduces compliance and administrative tasks and reduces the union involvement in the formation of employment relationship. Employees will have more of a responsibility to seek out union information proactively.
What to prioritise as a result of these changes:
- audit contractor agreements to ensure the new gateway test criteria are met
- review contractor engagement practices
- review templates for individual employment agreements
- revise onboarding and trial‑period processes
- update disciplinary processes to reflect new misconduct‑related restrictions on remedies
- Review high‑income roles and update agreements for employees
- Remove 30‑day collective alignment requirements from HR documentation.
For help to review your employment templates, processes and practices and ensure you are up to date and compliant under the new legislation. Reach out at hello@hellomonday.co.nz or give us a call on 09 377 5200.