An update on key employment law changes in 2026 - time to prepare!

Throughout 2025, the team at Humankind have been carefully watching for updates on the proposed changes to New Zealand’s employment laws – not just from a compliance perspective, but considering what the changes could mean for people, leaders, and employment relationships.  

There are currently two key bills working through the legislative process that would bring significant changes to the employment landscape:

• Employment Relations Amendment Bill: if passed, this bill would bring about changes to determining worker status, adjust how personal grievance remedies are issued, introduce a high-income threshold for unjustified dismissal personal grievances, and remove the ‘30-day rule’ that applies to employers who are party to a collective employment agreement.

• Employment Relations (Termination of Employment by Agreement) Amendment Bill: if passed, this bill would introduce a legally protected process for employers and employees to negotiate an agreement to end their employment relationship, without these discussions becoming grounds for a personal grievance.

In April and August 2025, we shared articles that explained what these bills would mean for employment relationships in Aotearoa. In the past month, the Education and Workforce Committee (the Committee) released reports for each bill.  In this article, we summarise the Committee’s recommendations and explain the next steps.  

‍

Employment Relations Amendment Bill

The Committee has recommended that the Employment Relations Amendment Bill be passed with several key amendments. These recommendations have been endorsed by the Minister for Workplace Relations and Safety.

‘Gateway test’ for determining worker status

The Committee recommended several adjustments to the proposed gateway test, which aims to determine whether a worker is a ‘specified contractor’ (and therefore not an employee), including:  

• Allowing the worker’s written agreement to simply state the worker is ‘not an employee’, recognising that not all workplaces use the term ‘independent contractor’.
• Specifying that a worker's contracted hours of work don’t restrict them from performing work for others. For example, even if a contractor works full‑time hours with a contracting party, this alone could not be used to argue they’re prevented from working for others.
• Allowing workers who provide services through a legal entity to be classified as specified contractors, not just individuals.  
• Clarifying that a worker who performs work for a third party (for example, a cleaner engaged by a cleaning company but performing work for the cleaning company’s clients) could be a specified contractor.  
• Allowing contracting parties to vet subcontractors, not only for statutory compliance, but also to check for relevant qualifications and/or criminal record where it is relevant for the work.

High-income threshold for unjustified dismissal personal grievances

The Committee recommended significant changes to this part of the bill, including:

• Increasing the proposed remuneration threshold from $180,000 to $200,000 (with employees and employers still able to opt out of this change by written agreement).
• Basing the threshold on total remuneration rather than just base salary/wages. Total remuneration would include, for example, income from salary, bonuses, one-off payments, and employee share schemes.
• Delaying the first annual threshold adjustment to 1 July 2027, instead of 2026.  

‍

Employment Relations (Termination of Employment by Agreement) Amendment Bill

The Committee also examined this bill and recommended that it be passed, but with significant amendments. The most substantial change recommended by the Committee is to insert an entirely new Part 8B into the Employment Relations Act 2000, rather than making smaller amendments.  

If introduced, Part 8B would set out a framework for employers and employees involved in pre‑termination negotiations. Key elements include:

For employers considering requesting pre-termination negotiations:

• Employers could initiate a request even if an employment relationship problem does not exist.  
• The request itself would not be grounds for a personal grievance for unjustified dismissal or disadvantage.

When making a request for pre-termination negotiations, employers would need to:

• Limit requests to a specific employee to no more than one every six months, in most circumstances.
• Keep records of the request and the employee’s response.
• Inform the employee of their right to seek representation before responding to the request and give the employee a reasonable time for this.
• Inform the employee of specific information about the request and the pre-termination negotiation process, including the employee's right to decline the request.

When holding pre-termination negotiations:

• Negotiations could only begin with the employee’s agreement.
• The parties must avoid misleading or deceptive behaviour- breaches could result in penalties from the Employment Relations Authority (the Authority).  
• Employers must not act unfairly - this includes situations where an employee:
  
  • cannot fully understand the provisions or implications of the agreement (for example, due to age, health, disability, or emotional distress),  
    
  • relies on the skill, care, or advice of the employer; or
  • is pressured or induced to enter into the termination agreement.  

• The Authority would be able to cancel a termination agreement if an employee has been treated unfairly because the employer had not followed the required process.

If both parties agree to end their employment relationship:

• A written termination agreement would be required, signed by both parties.
• This agreement must include specific information, including the amount the employer will pay the employee for agreeing to end the employment relationship.
• Employers must advise the employee of their right to seek independent advice and provide reasonable time for this.
• The termination agreement would be a full and final settlement of any cause of action arising out of the employment relationship between the parties and could not be brought before the Authority or the court, except for enforcement.
• Penalties would apply for breaches of the agreement.

‍

Next steps

With both bills expected to progress through the final stages of the legislative process in early 2026, now is a good time for employers to pause and reflect on how these changes could shape the experience of your people.  

There are mixed feelings about these changes so it’s important to start preparing early, so any changes are rolled out in a way that feels right for your business and your people. For example, we recommend:

• Reviewing your employment agreements, policies, and internal processes to determine what may need to change if these bills are passed into law.
• Considering if and how you will communicate any changes to your people.
• Having early discussions with your leadership team and Board about your organisation’s position on each of these potential changes, especially the proposed high-income threshold for personal grievances. For example:
  
  • Would you allow some/all high-earning employees to opt back into the current PG rules?  
  • How would you communicate this change to your teams and work through the 12-month transition period (outlined in our article from August 2025)?  
  • How might this affect negotiations with new high earners, given this change could affect their perceived job security?
  • How might your annual pay review process be affected (i.e. if an employee’s pay increase would see their total remuneration exceed the threshold)?
• What would your organisation’s position on pre-termination negotiations be? When might you consider these? What internal processes will you need to introduce to ensure any requests and negotiations are handled in a fair and compliant way?

This early thinking and planning will help to ensure a smooth transition once any changes come into force.

‍

At Humankind we’re closely monitoring developments and are ready to support you to navigate these shifts in the right way for your organisation. If you’d like to discuss how these changes could impact your organisation and what steps you should be taking now, please get in touch.