Employment Relations: Changes Now In Place
What you need to know about the Employment Relations Amendment Act 2026
The Employment Relations Amendment Act 2026 (the Act) came into force on 20 February 2026. The changes are designed to enhance employer flexibility and give certainty to the employment status of employment relationships. We summarise how these changes will impact employers and employees.
1. New high-income threshold for unjustified dismissal claims.
1. The Act has made it law that employees with annual remuneration exceeding $200,000 will no longer be able to raise a personal grievance for an unjustified dismissal (or unjustified disadvantage relating to the dismissal).
The Act provides a 12-month grace period before the change will apply to current employees above the threshold who remain in the same role, or who are restructured into different roles. Within the 12-month period, current employees who meet or exceed the threshold are able to request to re-negotiate the terms of their employment and opt back in to keep these protections in place for the employee, or, request more favourable terms for the employee in the event they are dismissed under the new Act.
Unfortunately for employees, employers are under no obligation to accept and agree, therefore it would be wise for employees in this boat to be prepared to present multiple options when entering into discussions for a better chance of coming to an agreement that is suitable to both parties.
2. Specified Contractor
A worker will be classified as a specified contractor if there is a written agreement that specifies they work as an independent contractor or that they are not an employee. This will apply where the worker is not restricted from performing work for another party and is not required to work certain days or times for a minimum period, or otherwise can subcontract the work to a third party. The business will not be able to terminate the arrangement if the worker does not accept additional tasks. However it will be a requirement that the worker has a reasonable opportunity to seek independent advice before entering the arrangement.
If the worker does not meet the criteria above, the Employment Relations Authority will have the ability to determine the true nature of the relationship, just as is already the case pursuant to Section 6 of the Employment Relations Act 2000.
3. Tightening of Remedies for Personal Grievances
The Act removed remedies for employees whose behaviour amounts to serious misconduct and contributed to the situation that gave rise to the grievance. It also allows the Employment Relations Authority to reduce remedies by up to 100% where an employee contributed to the situation causing the personal grievance.
The Act enhances the Employment Relations Authority's tolerance for procedural errors made by employers when disciplining employees and will heighten the focus on whether errors in the employer's process resulted in the employee being treated unfairly.
4. Removal of 30 Day Collective Agreement Rule
The Act removed the requirement that the terms of new employment agreements reflect a collective agreement for the first 30 days. This will enable employers and employees to agree on the terms of employment for the first 30 days of their employment and beyond.
The expected effect of these changes are to move the goalposts slightly in favour of the employer. They are designed to ensure there is certainty in whether an employee is a contractor or not and more heavily favour employers when disciplining an employee who has in fact committed serious misconduct.
Our Employment Team can advise on any of these changes and assist with any other employment issues you may have. Please contact team leaders Andrew Riches or Madison Prattley in the first instance.