The businesses that adapt early will be in the strongest position to minimise risk, avoid costly disputes, and take advantage of the opportunities these changes present.
What Employers Need to Know
New Zealand employment law has seen some of its biggest changes in recent years. From the introduction of the new contractor Gateway Test to reforms affecting personal grievance claims and the long-awaited replacement of the Holidays Act, employers should be taking the opportunity to review their employment agreements, workplace policies, and HR practices.
Here's what you need to know.
The Employment Relations Amendment Act 2026 came into force on 21 February 2026 and introduced a range of changes aimed at increasing flexibility, reducing compliance costs, and reshaping parts of the personal grievance system.
Contractors and the Gateway Test
One of the most talked-about changes is the introduction of a statutory test for determining whether a worker is a contractor or an employee. Known as the Gateway Test, it broadens the circumstances in which a worker may be treated as a contractor rather than an employee.
If all Gateway Test criteria are met, the worker will be classified as a "specified contractor" and will generally fall outside the employee protections available under the Employment Relations Act.
Importantly, if the Gateway Test is not satisfied, the worker is not automatically an employee. The traditional "real nature of the relationship" test still applies.
The reform is intended to provide greater certainty for businesses engaging independent contractors, particularly in sectors such as transport, construction, and professional services. However, it's not a set-and-forget exercise. Employers should still ensure that the reality of the working relationship matches what is written in the contract.
High-Income Employee Personal Grievance Rights
A new remuneration threshold means employees earning $200,000 or more a year under new employment agreements generally cannot pursue a personal grievance for unjustified dismissal, unless both parties agree otherwise in writing.
Existing employees have a transitional period before the new threshold applies to them.
For employers, this highlights the importance of carefully drafted executive employment agreements and may open the door to more negotiation around dismissal protections, restraint provisions, and other key executive employment terms.
Reduced Personal Grievance Remedies
The amendments also increase the consequences where an employee's own conduct contributes to a personal grievance.
The Employment Relations Authority and Employment Court must now reduce or, in some cases, remove remedies altogether. Where serious misconduct is involved, remedies such as reinstatement and compensation may not be available altogether.
That said, employers should not take this as a licence to cut corners. Fair process still matters in most situations, and procedural fairness remains a cornerstone of employment law.
At BuckettLaw, we expect to see disputes focusing more heavily on who did what, when, and why. We anticipate an increase in early personal grievance claims as parties move quickly to establish their positions and preserve evidence.
Removal of the 30-Day Collective Agreement Requirement
New employees are no longer required to work under the terms of a collective agreement for their first 30 days of employment.
For employers, this simplifies onboarding and provides greater flexibility to negotiate individual employment arrangements from day one.
Holidays Act Reform: The Biggest Leave Law Change in Decades
After years of complexity, underpayments, payroll headaches, and widespread compliance issues, New Zealand is finally replacing the Holidays Act 2003 with a new employment leave regime.
The Employment Leave Bill was introduced in March 2026, has passed through Parliament, and is expected to take effect in 2028 following a transition period.
The hope is that these reforms will finally address many of the leave calculation problems that have frustrated employers, employees, payroll providers, and advisers for years.
Some of the key changes include:
Annual and sick leave accruing from day one of employment.
Leave being recorded and taken in hours rather than weeks and days.
Simpler leave payment calculations using a single hourly leave rate.
Greater flexibility for employees to take part-days of leave.
New rules for casual and additional hours worked.
Even though implementation is still some time away, employers should not wait until 2028 to start preparing. Payroll systems, employment agreements, and workforce arrangements may all need attention to ensure a smooth transition when the new regime comes into force.
Migrant Worker Exploitation
Recent Employment Relations Authority decisions and ongoing enforcement activity show that migrant worker exploitation remains firmly in regulators' sights.
At BuckettLaw, we continue to be surprised by just how prevalent these issues remain. Many cases involve breaches of minimum employment standards, unlawful deductions, underpayments, or vulnerable workers being placed under significant pressure.
For employers, these decisions are a timely reminder that immigration compliance and employment law compliance go hand in hand. Sound recruitment practices, accurate wage and time records, and compliant employment agreements are essential. So too is fostering a workplace culture built on respect, fairness, and integrity.
Key Takeaways
With all of these changes in mind, employers should consider:
Reviewing contractor arrangements against the new Gateway Test.
Updating employment agreement templates.
Reviewing executive and senior employee employment agreements.
Ensuring disciplinary and performance management processes remain compliant.
Preparing payroll systems for the upcoming leave law reforms.
Auditing workplace practices to ensure compliance with minimum employment standards and migrant worker protections.
Embedding integrity into workplace and recruitment practices.
Employment law continues to evolve at pace. While many of these reforms are intended to provide greater certainty and flexibility, they also create new obligations and potential risks for employers.
The businesses that adapt early will be in the strongest position to minimise risk, avoid costly disputes, and take advantage of the opportunities these changes present.
At BuckettLaw, we're already helping employers navigate these reforms, update employment documentation, and prepare their businesses for what lies ahead.
If you'd like to discuss how any of these changes may affect your workplace, our employment law team is here to help.
Need advice about employment law changes? Contact BuckettLaw for practical, strategic advice tailored to your business and workforce.
