Major Changes to NZ Employment Law: What Employers Need to Know in 2026

Something we have been hearing lots from our members is how do we stay on top of these changes that seem to be popping up in the news?  Are there things we need to do right now? What are the actual impacts in terms we understand?  

Significant reforms to New Zealand’s employment landscape have now taken effect, with more changes on the horizon. From high‑income dismissal rules to a full rewrite of the Holidays Act, these updates reshape the rights, responsibilities, and relationships between employers and workers. 

Amendments with effect from 23rd February 2026: 

High‑Income Threshold for Unjustified Dismissal Claims 

The Employment Relations Act 2000 has been amended to introduce a high-income threshold whereby employees earning $200,000 per annum (total remuneration) or above cannot raise unjustified dismissal or related disadvantage claims unless their employment agreement expressly opts them back into this protection. These employees can still raise claims relating to discrimination, harassment, bullying, union activities, breach of contract, and privacy. The change applies from 23 February 2026 to new employees, with a 12 month transition period for existing staff. 

Contractor Gateway Test 

The new gateway test has been introduced to assist in determining whether a worker is legally a contractor. If all criteria are met the worker is likely deemed a contractor, and the relationship cannot be reclassified as employment. This is particularly relevant for contractor reliant business models, such as our subscribers, general practices, veterinary clinics and dental practices. The gateway test must meet the following ‘test’ requirements to be classified a contractor: 

• There must be a written agreement stating the worker is an independent contractor or not an employee.  
• The worker must have freedom to work for other businesses, including competitors.  
• The worker has control over their hours worked or the ability to subcontract the work (with reasonable vetting by the business).  
• The worker cannot be penalised for refusing work or have their contract ended for refusing extra tasks.  
• The worker must have had a reasonable chance to seek independent advice before signing the agreement. 

If even one Gateway Test criteria is not satisfied, the arrangement does not automatically default to employment status. Instead,  the assessment reverts to the existing four traditional tests, which continue to apply: 

• Intention test 
• Control vs independence test 
• Integration test 
• Fundamental/economic reality test 

These tests form the long standing “real nature of the relationship” analysis under Section 6 of the Employment Relations Act 2000. 

To clarify, the Gateway Test does not replace the current system – it only creates a shortcut in limited situations: 

• If all Gateway criteria are met, contractor status is confirmed with no further inquiry. 
• If not – the full, traditional multi-factor analysis still applies. 

Personal Grievance Remedy Changes 

The Employment Relations Amendment Act 2026 introduced a significant recalibration of the personal grievance remedies framework, with a strong emphasis on employee conduct and accountability when remedies are considered.  

It is important to note that these reforms do not remove the right to raise a PG relating to  discrimination, harassment, or retaliation, or remove good-faith obligations.  They also do not automatically excuse poor employer processes, these should still be the cornerstone of addressing any concerns. 

The changes: 

• No remedies for serious misconduct - where an employee has engaged in serious misconduct, they are ineligible for any remedies. 
• Loss of remedies - where an employee’s behaviour contributed to the situation that led to the personal grievance (but does not amount to serious misconduct), the employee will be ineligible for reinstatement, hurt and humiliation, or loss of any benefit compensation.   
• Remedy reductions of up to 100% - the ERA and Employment court may reduce remedies by up to 100% where employee conduct contributed to the grievance. 
• Mandatory consideration of obstructive employee behaviour - It will be required to consider whether the employee's behaviour obstructed the employer's ability to meet its obligation to act as a fair and reasonable employer. For example: the employee refuses to engage in a process, withholds information, or acts in ways that make a fair process difficult. Remedies may be reduced or denied if obstruction is found. 
• Higher thresholds before procedural errors invalidate an employer’s decision - Procedural errors will only be relevant where they result in the employee being treated unfairly, and a dismissal will not be unjustified simply because of minor process flaws, so long as the outcome was fair.  

Removal of the 30‑Day Rule 

The previous requirement for new non-union employees to be employed on collective terms for their first 30 days has been removed. Employers and employees may now negotiate an individual employment agreement from day one, even where a collective agreement exists. Collective coverage only applies to union members. 

Note - No changes have been made to 90-day trial provisions.  

Other changes on the horizon: 

KiwiSaver: From 01 April 2026 

• The default KiwiSaver contribution rate will rise from 3% to 3.5% for both employees and employers.  
• Employees can apply to IRD for a temporary rate reduction if they would like. If an employee’s application is accepted, they will receive a letter from IRD to give their employer as evidence of the applicable rate. Temporary reductions can apply for a period of 3-12 months.  
• Employers will also be required to contribute to KiwiSaver for employees who are 16 and 17. These employees must also meet all other eligibility requirements.  

Minimum Wage Change: From 01 April 2026, the adult minimum wage will increase to $23.95 per hour, and starting out/training wages will rise to $19.16 per hour (80% of the adult rate). 

Employment Leave Bill: Has been introduced to the House and is at Select Committee. More information on the proposed changes can be found here: Employment Leave Bill: what employers need to know 

Mutually Agreed End of Employment: In a second Bill which is still going through the process (at second reading). As a Member’s Bill there is no certainty it will be passed. 

If passed, it will enable employers and employees to enter protected, confidential negotiations to mutually end employment even where no dispute exists. Conditions include: 

• Employee consent is required before discussions proceed. 
• Employees must be informed of their right to representation and given reasonable opportunity to seek advice. 
• Negotiations cannot involve misleading or deceptive conduct. 
• Repeated requests are limited (generally once every six months). 
• Agreements reached must be written, signed, and act as full and final settlement of employment related claims. 

What Employers Should Prepare For: 

The 2026 employment law reforms represent some of the most significant changes in recent years. They collectively aim to promote clarity in employment relationships, rebalance personal grievance outcomes, expand flexibility in contracting arrangements, and modernise wage protections. Employers should review employment agreements, update policies, and ensure managers understand these new obligations to maintain compliance and reduce legal risk. 

As always, we’d welcome your input on the topics you’d like to see covered in our newsletters, webinars and articles throughout the year. 

If there are any key questions, practical scenarios, emerging issues, or general topics you’d like to learn more about, please enter them here. We’ll aim to address as many suggestions as possible over the coming months. 

Best wishes from the team, 
Mychaela, Nicole, Bonnie and Emma