Reforms proposed
The Government is working toward significant changes to employment and health and safety at work laws. Some changes are clear and may come into force with the next 12 months, others are light on detail and further away. Below is a summary of what we know so far:
Unjustified dismissal regime not available to high earning employees
Employees earning $180,000 pa or more in base pay will be prevented from raising a personal grievance for an unjustified dismissal unless otherwise specified in their employment agreement. This threshold is expected to rise annually based on Stats NZ data. Currently, about 3.4% of the workforce earns above this threshold. This change would apply to all new employees immediately, and existing ones 12 months after the bill has passed. This 12 month period is designed to give employers and high-income employees the opportunity to revise their employment agreements to opt into the unjustified dismissal regime or add extra protections for the employee.
These proposed reforms are expected to be introduced in an amendment bill this year.
Changes to remedies for personal grievances
Key proposed changes include:
An employee found to have committed serious misconduct would not be entitled to any remedies for a personal grievance.
If an employee's behaviour is determined to have contributed to the issue causing the personal grievance, they would not be eligible for reinstatement or compensation for emotional distress.
In all cases, the courts would be required to consider whether the employee’s behaviour hindered the employer's ability to fulfil its duty to act fairly and reasonably.
These proposed reforms are expected to be introduced in an amendment bill this year.
New test for independent contractor status
To address the issue of independent contractors potentially being deemed employees, the Government is proposing a "gateway test". Under this test, individuals will be legally considered independent contractors if they meet the following four criteria:
There is a written agreement that explicitly designates an individual as an independent contractor.
The organisation does not terminate the contract if the individual refuses additional tasks or engagements.
The organisation does not dictate the individual’s specific working hours or days, or a minimum number of hours, and the individual can subcontract the work.
The organisation does not restrict the individual from engaging with other organisations, including competitors.
If these criteria are satisfied, individuals will not be able to challenge their contractor status in the Authority or Court. However, if the criteria are not met, the current test under the law will remain in effect, allowing individuals to contest their status and potentially claim employee rights.
These proposed reforms are expected to be introduced in an amendment bill this year.
Partial pay deductions for partial strikes
The Government is proposing a bill to allow partial pay deductions for employees participating in partial strikes, where employees perform some but not all their duties. The new bill offers two methods for determining pay reductions during partial strikes: a proportional reduction based on the employee's work reduction or a fixed 10% pay cut.
This bill was introduced in December 2024, with the select committee due to report back in April 2025. Legislation could be enacted within the current Government’s term.
Revisions to the Holidays Act 2003
The Government’s attempt to reform the Act, including a draft bill in 2024, was met with criticism for being overly complex and inadequate in addressing the core issues. As a result, officials have been tasked with creating a simpler, more cost-effective framework. A key proposal is to introduce an hours-based accrual system for annual leave. The Government indicated that the new holidays legislation could pass before the end of its current term, with a likely transitional period.
Other employment reforms
The Government has confirmed that the minimum wage will rise by 1.5% to $23.50/hr from 1 April 2025.
In addition, the following Member’s Bills are also under consideration:
Employment Relations (Termination of Employment by Agreement) Amendment Bill: This bill would allow employers to offer exit settlements to employees without the possibility of personal grievance claims.
Employment Relations (Employee Remuneration Disclosure) Amendment Bill: This would eliminate pay secrecy clauses in employment agreements, allowing employees to discuss their pay freely with others.
Health and safety at work changes
The Government has launched a review of the health and safety at work system. While specific changes are not yet detailed, the review covers everything from the Health and Safety at Work Act 2015 to regulations and the regulators.