Upcoming and proposed changes to NZ employment law: what you need to know

Did you know that potential changes to NZ employment law are coming soon? With a new Amendment Bill on the table, and if it’s passed, everything from remuneration disclosure to worker classification will be impacted. In this article, we discuss the proposed Employment Relations Amendment Bill (the Bill) in detail, as well as the upcoming minimum wage increase, so you can be prepared for all forthcoming and potential employment law changes.

The minimum wage is increasing

From 1 April 2025, the adult minimum wage will increase from $23.15 to $23.50 an hour. This increase is designed to help employees with inflation and support businesses in the current economy. The starting-out and training minimum wage will remain at 80 per cent of the adult minimum wage which would in turn, be increased from $18.52 to $18.80 an hour, also from 1 April 2025.

Remuneration disclosure protection

Currently, employment contracts can have clauses that prevent employees from discussing their remuneration and conditions with their colleagues. The Employment Relations (Employee Remuneration Disclosure) Amendment Bill proposes to change that. If passed, it’ll mean that employers can’t include clauses preventing employees from disclosing their pay with others.

It’ll also mean that employees who believe they’ve been disadvantaged or dismissed for disclosing remuneration details will have the right to make a personal grievance claim against their employer. This change may further support progression to achieving pay equity. However, it may put pressure on some small-and-medium-sized enterprises to match remuneration with competitors, especially larger and more financially sound companies.

Partial strike pay deductions

Under the Employment Relations Act 2000, employers are required to pay remuneration if an employee is engaged in a partial strike, unless the employer suspends them or issues a lockout notice. The Employment Relations (Pay Deductions for Partial Strikes) Amendment Bill proposes to allow employers to make pay deductions in response to partial strikes. This of course, may result in parties reaching an agreement sooner which may minimise community impact due to the proposed pay deduction incentivisation.

Unjustified dismissal remuneration threshold

Another proposed change from the Bill would mean employees earning $180,000 or more wouldn’t be able to raise an unjustified dismissal claim against their employer.

This threshold (at present) would only be aimed at base salary and would exclude other income such as incentives and benefits. Workplace Relations and Safety Minister, Brooke van Velden says this would enable employers to ensure they have the right fit for their high impact leadership and specialist roles. She noted that highly paid workers can have “a significant impact on organisational performance and culture. Having a poor performing manager or executive can have big flow-on effects for the entire business and increase the risk of poor culture and low morale.”

Personal grievance remedies reduction

The Government is proposing changes to the personal grievance process to focus more on employee behaviour. Employees involved in serious misconduct, such as workplace violence, bullying, theft, or drug use, would no longer qualify for remedies like compensation or reinstatement. Similarly, employees who contribute to issues such as repeated lateness, misuse of company resources, or poor performance, would also lose eligibility for these remedies.

The Government is also proposing to make the personal grievance process less taxing. The Courts would be “required to consider whether the employee’s behaviour obstructed the employer’s ability to meet their obligations to act as a fair and reasonable employer.” For example an employee avoiding or delaying an investigation or formal meeting, or not responding to communications raising concerns. Lastly, the Government wishes to reduce the threshold for procedural errors. The size of procedural errors would no longer be the key focus of the Court’s assessment, instead they’d focus on unfair treatment.

Contractor gateway test

Another change proposed in the Government’s Employment Relations Amendment Bill includes providing clearer rules for defining and maintaining contractor status to reduce disputes about worker classification.

Under the proposal, if a working arrangement meets the four factors for the gateway test, the person would be considered a contractor, if one or more factors are not met then the existing test would apply.

The four factors for the gateway test are:

1. A written agreement with the worker, specifying they are an independent contractor.
2. The business does not restrict the worker from working for another business (including competitors).
3. The business doesn’t require the worker to be available to work on specific times or days, or for a minimum number of hours or the worker can sub-contract the work.
4. The business doesn’t terminate the contract if the worker doesn’t accept an additional task or engagement.

These employment law changes are critical to stay on top of. If the Bill is passed, employers will need to take significate action to remain compliant with the new laws. If passed, we’ll keep you updated through a number of resources. Watch this space.

How can Citation HR help?

We know that employment law and compliance can be confusing, especially regarding how these proposed changes may affect your business.

If any of the information in this article has raised any questions or concerns about upcoming or proposed laws, or if you have another workplace matter you need assistance with, we’re here to help. You can arrange a complimentary call with our 24/7 HR Advice Line and speak with an employment relations expert here.

About our author

Jessica Husband is an Employment Relations and Health & Safety Consultant at Citation HR. She assists clients with a range of employment relations and compliance matters via the 24/7 HR Advice Line. She has been helping businesses and employers with employment relations for over four years and counting.