Welcome to our latest quarterly update, highlighting key employment law developments affecting NZ employers.

The big news this quarter is the introduction of the Employment Relations Amendment Bill, which now formally proposes major changes - clarifying contractor status, limiting personal grievance rights for high earners, removing the 30-day rule, and reforming grievance remedies.

We also cover updates to parental leave, the Equal Pay Amendment Act, and upcoming KiwiSaver contribution changes.

Read on for a summary of what’s changing and what it means for your business.

1. Introduction of the Employment Relations Amendment Bill

Last month, Workplace Relations and Safety Minister Brooke van Velden announced the introduction of the Employment Relations Amendment Bill to parliament. In summary, the Bill proposes the following key changes:

A Contractor “Gateway Test” - clarifying the distinction between employment and principal/contractor arrangements.
High-Income Threshold for Personal Grievances - introducing a high income threshold for unjustified dismissal claims.
Removal of the 30-Day Rule - removing the “30-day rule” for workplaces with collective agreements.
Reform of Personal Grievance Remedies - changing the way that personal grievance remedies are assessed.

The Amendment Bill still needs to progress through the full parliamentary process before coming into effect. However, if passed in its current form, it would mark a significant shift in New Zealand’s employment landscape - tilting the balance toward greater flexibility and certainty for employers.

1. Contractor "Gateway Test"

The Bill proposes a formal test to determine when someone can be classified as a "specified contractor" rather than an employee. A person will be classified as a contractor - and therefore unable to claim they should be treated as an employee - if all five of the following criteria are met.

However, if any one of these criteria is not satisfied, the existing test under Section 6 of the Employment Relations Act will apply. In that case, the individual can ask the Employment Relations Authority or the Court to determine the “real nature of the relationship.” The five criteria are:

There is a written agreement in place that states the individual is an independent contractor; and

The business does not restrict the person from working for other businesses (except while completing tasks for them); and
The business either does not require the person to work at specific times or for a minimum period, or the person can subcontract the work (subject to vetting to meet legal requirements); and
The business does not terminate the contract if the individual declines additional tasks beyond those originally agreed upon; and
The individual was given a reasonable opportunity to seek independent legal advice before entering into the agreement.

The fifth criteria is a new addition that had not been included in previous government announcements.

2. High-Income Threshold for Personal Grievances

As mentioned in our April update, employees earning over $180,000 per year would no longer be able to bring a personal grievance claim for unjustified dismissal unless they explicitly opt in via their employment agreement. If an employee does not opt in:

Employers won’t be required to follow standard good faith consultation processes before dismissal.
Employers won’t need to provide a reason for dismissal.
Employees cannot raise a personal grievance for unjustified dismissal or disadvantage related to the dismissal.
However, employees can still raise grievances related to discrimination, unjustified disadvantage (not linked to dismissal), or breaches of minimum entitlements.

A 12-month transition period will apply for existing employees, giving employers time to update employment agreements if needed.

It’s expected that many employers will choose not to include the opt-in, but this could lead high-earning candidates or employees to negotiate additional protections - such as longer notice periods, termination payments, or even adjustments to remuneration to fall below the threshold.

3. Removal of the 30-Day Rule

The Bill proposes removing the current requirement in the Employment Relations Act that individual employment agreements (IEAs) must mirror the terms of an applicable collective agreement for the first 30 days of employment.

Under the proposed changes, employers would instead need to provide new employees with information about the relevant collective agreement, details about the union, and a copy of the collective agreement itself. The employee could then choose, from the start of their employment, whether to be covered by the collective agreement or to enter into an IEA - with the ability to negotiate terms accordingly.

‍4. Reform of Personal Grievance Remedies

The Bill proposes that:

If an employee’s actions amount to serious misconduct and contribute to the grievance, they will be ineligible for any remedies.
If the employee contributed to the situation giving rise to the personal grievance but did not commit serious misconduct, they will be barred from receiving:
- reinstatement
- compensation for humiliation, loss of dignity, or expected benefits.
In such cases, other remedies (like lost wages) may still be awarded but could be reduced by up to 100%.

When introducing the Bill, Ms van Velden described the purpose of the change was to “ensure that hardworking New Zealanders don’t see bad behaviour rewarded.”

‍5. Parental Leave Changes

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The parental leave payment rate increased on 1 July. The payment is a weekly amount from Inland Revenue to support eligible employees who are not working while caring for a new child.

The maximum parental leave payment rate for eligible employees and self-employed parents has increased from $754.87 to $788.66 gross per week.
The minimum parental leave payment rate for self-employed parents has increased from $231.50 to $235.00 gross per week.

Changes to the Parental Leave and Employment Protection Act 1987 also took effect on 1 July. These changes include:

Certain absences – such as authorised time off due to ACC, sickness, or unpaid leave – can now be included when determining if someone is entitled to parental leave payments.
Clarification that preterm baby payments are in addition to primary carer leave and extended leave.
Clarification of when people who are a primary carer but not the birth mother or their spouse/partner (for example, through adoption, surrogacy, or whāngai) can start their paid parental leave.

6. Changes to Equal Pay Act

The Equal Pay Amendment Act 2025 came into force on 6 May, aiming to tighten the process for making pay equity claims and ensure they focus on genuine cases. Key changes:

To bring a claim, the relevant workforce must now have been at least 70% female for the past 10 consecutive years up from 60% at any point in time under the previous law.
A new hierarchy of “comparators” has been introduced. A comparator is someone doing similar work that’s used to assess whether pay is fair. Under the new rules, comparisons must be made first with employees from the same employer. If that’s not possible, only then can external comparators be considered. If no suitable comparator is found, the claim cannot proceed.
Employers now have greater ability to challenge or discontinue claims - particularly if the work being compared isn’t substantially similar to the claimant's role.

7. KiwiSaver Changes Coming in 2026

From 1 April 2026, the default KiwiSaver contribution rates will increase:

Employee and employer contributions will rise from 3% to 3.5%.
A further increase to 4% will take effect from 1 April 2028.

‍8. Opt-Down Option for Employees

To support flexibility, an opt-down option will be available for employees who are unable or unwilling to contribute at the higher rates. Key points:

Available from 1 February 2026.
Employees can apply to remain at 3%, citing reasons such as affordability.
If approved by Inland Revenue (IRD), employers must also contribute at 3%.
Opt-down approvals are valid for up to 12 months, with the option to reapply each year.

9. Employer Obligations

Employers are required to match the employee’s contribution rate:

If the employee contributes at the new default rates (3.5% in 2026 or 4% in 2028), the employer must match that rate.
If the employee is approved for the opt-down to 3%, the employer must also contribute 3%.
The IRD will notify employers directly if an employee’s opt-down request is approved.

These changes aim to gradually boost retirement savings while offering flexibility for those who may need it.

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