Employment Relations Amendment Act – now in force 

The Employment Relations Amendment Act 2025 passed into law on 21 February 2026, with four key changes coming into effect. 

1. Introduction of a “specified contractor” gateway test

One of the more talked-about changes is a new gateway test for contractors. In simple terms, the Act now sets out prescribed criteria that, if met, will recognise a worker as a specified contractor and exclude them from the definition of an employee under the Employment Relations Act. If the criteria are not met, the common law test for contractors will apply.

While it appears to provide more certainty, the test is quite strict and mainly emphasises: 

• How the relationship is documented
• Whether the worker can take on other work
• Who controls when and how the work is done
• The worker’s ability to turn down additional work
• Whether independent advice was realistically available before the arrangement was entered into

The test is not retrospective and only applies to arrangements entered into from 21 February 2026 onwards. 

Employers that rely on contractors should take a closer look at each new engagement, apply the criteria and be prepared to update agreements or templates, rather than assuming the gateway test will apply by default. 

2. High income threshold for unjustified dismissal claims 

Another significant change is the introduction of a $200,000 annual remuneration threshold for unjustified dismissal claims. 

For employees on $200,000-plus annual remuneration, an unjustified dismissal personal grievance is generally taken off the table, and the Act doesn’t require the same good faith dismissal steps to be followed (unless you’ve agreed otherwise with the employee). 

A few practical points worth keeping in mind: 

• The new threshold doesn’t automatically override what’s already been agreed and existing employment agreements or policies may still shape how dismissal processes are approached.
• There is also a lead‑in period for current employees, with the change not fully applying to them until the end of the 12‑month transition.
• The law allows employers and employees to agree to retain dismissal protections if they choose to do so.
• Adding to the complexity, the $200,000 threshold is calculated using a statutory definition of remuneration, meaning it won’t always align neatly with base salary alone. 

For employers dealing with senior or executive roles, take a careful look at how employment agreements are structured and how this change fits alongside broader “people and risk” strategies. 

3. Removal of the 30‑day collective agreement rule 

Another change is the removal of the 30-day rule applying to new employees whose roles were covered by a collective agreement. Previously, they’d automatically be covered for their first 30 days of employment, even if they weren’t union members. 

Going forward, employers can agree individual terms with new employees from day one, provided the employee is given appropriate information about the relevant collective agreement and their right to join the union. 

This offers more flexibility to businesses operating in unionised environments, but it also calls for care. You’ll need to carefully consider how offer letters are framed, what information is provided during onboarding and how you explain collective coverage. 

4. Changes to personal grievance remedies 

This change is really about outcomes, with the finer details likely to emerge as case law develops. 

Until now, there has always been discussion around what remedies should be available, even when an employee’s behaviour has contributed to a situation. The amendments tighten this up and will likely shift how grievances are handled. 

Where the Employment Relations Authority or Employment Court finds that the employee’s behaviour amounts to serious misconduct and contributed to the personal grievance, the employee will not be entitled to remedies. 

The new legislation is also less lenient if the employee contributed to the problem, but their misconduct was not serious. In that scenario, certain remedies may be taken off the table, including reinstatement and compensation. Other remedies may still be available, but the Authority or Court can reduce any remedy down to zero where there is contributory conduct. 

Given the lack of case law at this stage, employers should resist the temptation to push the limits and instead focus on good faith decisions that can be justified if later tested. 

Changes taking effect from 1 April 2026 

April will bring a handful of other changes that employers will need to be ready for. 

Minimum wage increases 

From 1 April 2026, the statutory minimum wage rates will increase again. The adult minimum wage will rise to $23.95 per hour, and the “starting‑out” and “training” wages will increase to $19.16 per hour. 

For some businesses, this will be a straightforward adjustment. For others, the bigger issue will be pay relativity and shifting expectations across the business. 

KiwiSaver changes 

A number of KiwiSaver changes also take effect from 1 April 2026, and these will require some planning.

The default minimum contribution rate for both employers and employees will increase from 3% to 3.5%. This is the first of two scheduled increases, with a further rise planned in 2028. 

In addition, employees aged 16 and 17 who are KiwiSaver members will, for the first time, become eligible for compulsory employer contributions, provided they meet the usual criteria. 

Employees also have the option to apply to Inland Revenue for a temporary contribution rate reduction if they wish to remain at 3%. Applications opened on 1 February 2026 and employers can choose whether to match a reduced rate during the approved period. 

For employers, these changes mean it’s worth checking payroll settings early, understanding how contribution changes work with any total remuneration arrangements, and making sure employees are informed before the changes take effect. 

A practical way forward 

While there’s a fair bit changing, what matters most is knowing which changes are relevant to your business, and when it’s better to pause rather than react. 

A careful review of current arrangements, a check that payroll is ready for 1 April, and early advice in higher-risk situations will put most employers in a strong position as the year unfolds.  

If you require assistance with navigating these changes, our Baker Tilly Staples Rodway Employment Relations specialists are here to help.