The long-awaited Employment Relations Amendment Bill was announced on 17 June 2025. As New Zealand’s legislative landscapes shift, employers are facing a wave of significant changes that will impact the way workplaces are managed.
Navigating these changes can feel overwhelming. At Gaze Burt, we’re committed to guiding you through every development and ensuring your business remains protected, prepared, and ahead of the curve. This article is designed to recap and forecast these changes and provide you with a roadmap to help you adapt with confidence.
CHANGES ALREADY MADE
- Minimum Wage Increase 1 April 2025
The minimum wage in New Zealand increased as of 1 April 2025. The new minimum wage is $23.50 per hour for adults and the starting-out and training minimum wage increased to $18.80 per hour. Compliance is easier to keep track of with employees on an hourly wage, however if you have salaried employees, you will also need to keep an eye on the amount of hours they are doing. This equates to $48,880 for a full-time salaried employee working 40 hours per week.
While salary generally allows for employees to work some additional hours without additional pay, employers are still required to ensure that the salary paid is sufficient to meet minimum wage across all hours worked.
- Changes to Equal Pay Act 1972
The Equal Pay Act 1972 has been amended to update the framework for raising and resolving claims of pay equity, particularly regarding sex-based undervaluation in the pay of female-dominated work. Among other changes, there is a new threshold for what qualifies as work that is “predominantly performed by female employees”.
To meet the new threshold, claimants will now have to show that 70% of the workforce in the relevant area is female and that this has been the case for at least 10 consecutive years. The previous threshold was 60%. Current pay equity claims will be discontinued and new claims will need to be raised under the amended legislation.
- Crime for Employers to Intentionally Withholding Pay
Usually, when an employer withholds pay from an employee without justification, it is dealt with as a civil claim by the Employment Relations Authority and Employment Court.
The Crimes Act 1961 has been amended to allow criminal convictions for employers who intentionally withhold money from employees without a reasonable excuse. While this standard is higher than the civil standard, the new change should not be taken lightly and adds another layer of risk that employers will need to consider when deciding whether or not to withhold employee wages.
- Employers Required to Ensure Employment Agreement is Readily Accessible
The Employment Relations Act 2000 now requires that employers must ensure that an employee does not hold the only copy of the employment agreement. Employers are now also required to be more proactive by making sure the employer’s copy of the employment agreement, or intended agreement, is readily accessible.
PROPOSED CHANGES IN PROGRESS
- Proposed Termination by Mutual Agreements
A new bill proposes to allow discussions of mutual termination agreements between employers and employees. While negotiated exits of this nature are common, these discussions generally take place under the protection of “without prejudice” privileged negotiations. However this protection requires a dispute to exist between the parties first. Without a dispute, exit discussions initiated by an employer can result in an employee raising a constructive dismissal personal grievance claim. This barrier makes difficult to initiate an exit discussion with an employee, even if that proposed exit is the best option for both parties.
The Employment Relations (Termination of Employment by Agreement) Amendment Bill would allow for protected negotiations to occur between employers and employees in the right circumstances. Employers would be able to propose a settlement agreement for termination by mutual consent without worrying that the employee could use those discussions as evidence to support a claim. This could help open the door to negotiations faster and help the parties reach amicable resolutions before a dispute arises or a relationship breakdown occurs. The Bill has passed its first reading and the Select Committee report is due in October 2025.
- Proposed Changes to Employee Remuneration Disclosure
The Employment Relations (Employee Remuneration Disclosure) Amendment Bill proposes to prevent employers from taking action against employees for discussing their remuneration with any other person, including another employee.
The Bill proposes that if an employer engages in adverse conduct against the employee for discussing remuneration, that will allow the employee to raise a personal grievance against the employer.
This is designed to promote transparency and fairness regarding pay discussions within workplaces. While employees would still be able to choose not to disclose their remuneration, employers should no longer presume that employees will keep their remuneration confidential if this change is implemented.
- Proposed Deductions for Partial Strikes
A partial strike generally occurs when an employee is still working, but they are lowering their output at work or refusing to do certain tasks within their role as part of a strike action.
The Employment Relations (Pay Deductions for Partial Strikes) Amendment Bill proposes to allow employers to make deductions to an employee’s pay when they are partaking in partial strikes. The Bill proposes that employers could choose to either deduct 10% of an employee’s wages for not doing the tasks or, alternatively, the employer could assess the amount of work not being done (using the appropriate assessment guidelines) and then deduct a proportionate percentage from the employee’s pay.
- Pause to Bill Proposing Restriction on Restraint of Trade provisions
The Employment Relations (Restraint of Trade) Amendment Bill was intended to prevent the use of restraints of trade for employees who earned less than three times the minimum wage. It also proposed new compensation requirements for employers to use when including restraint clauses in employment agreements. This Bill has now been postponed until further notice.
- Employment Relations Amendment Bill 2025
Some long-awaited proposed changes have recently been formally introduced in the new Employment Relations Amendment Bill on 17 June 2025 (Amendment Bill). Among other minor changes, this Bill introduced four main changes of note:
- New Contractor vs Employee Test
The Amendment Bill proposes to change the contractor employee test to one that focuses on factors that are considered to be more relevant. The Bill proposes that a person will be classified as a specified contractor and not an employee when:
- There is a written agreement specifying the worker is an independent contractor; and
- The worker is not restricted from working for others; and
- The worker is either:
- Not required to be available to work certain times or days or for a minimum period or
- Able to sub-contract the work; and
- The business does not terminate the arrangement if the worker does not accept an additional task; and
- The worker had a reasonable opportunity to seek independent advice before entering into the arrangement.
While the new test is intended to provide more certainty to the parties, this is still a contested area of employment law and these changes are still developing. The Amendment Bill has not clarified if the changes are retrospective or not. If the new test impacts current agreements, it is likely that many businesses will need to re-evaluate any contractor agreements that are currently in place and consider updating or varying these contracts accordingly.
- Update to Remedies
The Amendment Bill would require the Authority or Court to consider whether an employee’s behaviour contributed to the situation giving rise to a grievance. The outcome would directly impact the remedies that the employee could seek.
If it is found that the employee’s behaviour contributed to the situation, then the employee would not be entitled to remedies of reinstatement or compensation. The Authority or Court would also have the ability to reduce remedies up to 100% to reflect the employee’s contribution.
If the Authority or Court finds that, in addition to contribution, the employee’s actions amounted to serious misconduct, the employee would lose the right to any remedies at all.
The Amendment Bill is also designed to raise the threshold for procedural error by only holding employers to account for errors in the process that have resulted in the employee being treated unfairly.
- Proposed Limitation for Raising Claims for Employees on High Salaries
The Amendment Bill proposes a wages and salary threshold preventing high-income earning employees from pursuing unjustified dismissal personal grievances or unjustified disadvantage grievances that relate to the dismissal.
The Amendment Bill proposes to set this pay threshold at $180,000 per annum (excluding additional payments like bonuses, incentives, allowances, superannuation etc). It proposes to update this threshold annually according to upward trends in wages. Employees who meet or exceed this threshold at the time of the dismissal would be barred from raising dismissal claims.
If an employer is making a decision to terminate, the employer would not be bound to follow the good-faith process of section 4(1A)(c) of the Act (giving the employee the information relevant to the decision and an opportunity to comment on the information before an employer makes the decision to terminate the employment).
The proposed changes would be phased in over 12 months. During this time, employees over the remuneration threshold will still be able to raise unjustified dismissal grievances and they would have an opportunity to renegotiate their current employment agreements with their employers.
Employers can also agree to let employees opt out of these changes by expressly clarifying in the contract that the employer recognises the employee’s rights to raise personal grievances for dismissal.
- Proposed Removal of 30-Day Rule
When an employer has a collective agreement in place with a union, that employer is currently required to offer relevant new employees a contract with the same terms as the collective agreement for the first 30 days of their employment. At the end of that 30-day period, the new employee will decide whether they want to remain on an individual employment agreement or join the union and be bound by the collective agreement. This is done by completing an active choice form.
The Amendment Bill proposes to remove this 30-day rule. Employers would be allowed to offer different individual employment agreements to new employees from the outset and include terms like 90-day trial periods that would not normally be in the collective agreement.
Employers would also not be obligated to provide active choice forms to new employees and employers would not have a default duty to tell the union about the employee’s completion or non-completion of the active choice form.
POSSIBLE FUTURE CHANGES
- Holidays Act Change on the Horizon
It is no secret that the Holidays Act 2003 is complicated and difficult to navigate at the best of times. An ongoing issue for employers and employees is the complexity around the leave calculations and accruals. The Minister of Workplace Relations and Safety is exploring a new system for calculating and accruing holiday pay that is intended to make it easier for employees and employers to understand and calculate the relevant entitlements.
- Proposed Change to Health and Safety at Work Act
The Minister of Workplace Relations and Safety is proposing to update the objective of the Health and Safety at Work Act 2015 so that the focus of WorkSafe New Zealand is on management of critical risks. Again, this proposed change is intended to be more favourable to employers. Among other things, this would ease up the requirements for small businesses and focus more on providing these businesses with guidance and information on how to take safety steps that are proportionate to their risks.
Conclusion
In summary, there are a wide range of changes coming to New Zealand employment law. Some changes are shifting in favour of employees but there are many changes that will be beneficial to employers if they go ahead.
As these new changes develop, it is important for employers to be prepared to adapt their contracts and policies accordingly. If you have any questions or if you want to discuss the potential ramifications for your business, please reach out. Our Gaze Burt Employment Team will be more than happy to assist with all your employment queries.
Disclaimer:
This article is intended to provide a helpful summary of legal updates and this is not intended to be used or relied on as legal advice. As the changes are ongoing, the accuracy of this article is also likely to vary with time after the date of publishing. We strongly suggest obtaining legal advice to ensure you are up-to-date with all the changes. If you or your business require specific employment advice, please contact us directly for assistance.
