Having wrapped up the first quarter of 2026, if you are anything like us your head might be spinning with the landslide of employment law changes coming your way. Given this flurry of developments in a short period of time, we have put together a much-requested overview of everything employers need to know about recent key employment law developments.
Employment Relations Amendment Act 2026
There has been plenty of coverage of the Employment Relations Amendment Act (the "Amendment Act") and the significant impact these changes have had on employment law. We know that many organisations are well progressed with navigating these new developments. Our summary of the key points is set out below.
Gateway test
One of the most talked about changes is the introduction of the "gateway test" for determining whether a worker is an employee or an independent contractor. The Amendment Act creates a category of "specified contractor" whereby those meeting the applicable test are excluded from the definition of an "employee". If an individual does not satisfy the test, the existing "real nature of the relationship" test continues to apply.
To be a specified contractor the following criteria must be met:
- Written agreement confirming that Person A is an independent contractor or not an employee;
- Person A is not restricted from performing work for any other person except while performing work for (or facilitated by) Person B (noting that working full-time hours does not, of itself, constitute a restriction on working for others);
- Person A is either:
- not required to work at a specified time or on a specified day or for a minimum period; or
- has the ability to subcontract the work to Person C and Person B does not require vetting of Person C or requires vetting only to ensure compliance with relevant statutory requirements or, if justified by the nature of the work, to check for a relevant qualification and/or criminal record;
- The arrangement may not be terminated because Person A declines work offered to them that is additional to the work Person A agreed to perform under the arrangement; and
- Person A had a reasonable opportunity to seek independent advice prior to entering into the arrangement.
Key action item
If you are an organisation that engages contractors, you should review your current contractor agreements and consider whether (a) you might already satisfy the gateway test; and (b) it is commercially practical to do so given the specific requirements. Many of our clients have identified that they are unable to satisfy point (3) above and, on that basis, the existing "real nature of the relationship" test will likely continue to apply.
Income threshold
The Amendment Act also imposes an income threshold whereby those earning over $200,000 total remuneration (inclusive of any bonuses) are unable to raise a personal grievance relating to their dismissal. This change is in effect now for new employees, but a 12-month transitional period applies to existing employees (until February 2027).
There are various options available to address this change including:
- allowing the new law to apply without amendment;
- agreeing to contract back into the personal grievance regime; or
- agreeing something else such as enhanced notice or an additional contractual payment on termination.
Key action item
Decide how your organisation will deal with new employees. Candidates are already requesting changes to employment agreements in light of this development. For existing employees, you have time to figure out what approach to take including whether that will be consistent across the organisation or on a case-by-case basis. A number of our clients have opted to provide some additional payment or enhanced notice in recognition of the inability to challenge a dismissal in the future.
Personal grievance remedies
The Amendment Act introduced multiple changes which impact the way that personal grievance remedies are awarded, where there has been contributory behaviour by the employee. These include:
- the removal of remedies for a personal grievance where any action by the employee contributed to the situation that gave rise to the personal grievance and that action amounts to serious misconduct;
- the removal of reinstatement and compensation for hurt and humiliation or the loss of a benefit where the employee contributed to the situation that gave rise to the personal grievance (but serious misconduct has not occurred); and
- confirming that the Authority and the Employment Court can reduce remedies by up to 100% where the actions of the employee contributed towards the situation that gave rise to the personal grievance.
Given the significant restriction on remedies, what will constitute "contribution" and/or "serious misconduct" are likely to be an area of challenge.
Key action item
Understand the changes and how they may impact your strategy on employee grievances and resolution. Ensure you keep a clear record of any matters which may constitute contributory conduct by an employee.
Justification test
The Amendment Act amends the section 103A justification test. The test now requires consideration of whether the employer was obstructed by the employee from taking any required action. Additionally, a dismissal or action is not unjustifiable solely because of defects in the process followed by the employer which did not result in the employee being treated unfairly. While a relatively minor change, we anticipate this amendment may be helpful for employers in scenarios where their employment process was flawed but no unfairness to the employee resulted.
30-day rule
Finally, the Amendment Act removes the requirement to employ new employees on terms and conditions based on an applicable collective agreement for their first 30 days. Employers now only need to provide certain information to applicable employees about relevant union(s) and collective agreement(s), and they must notify the union(s) about the new employee (with the employee's consent).
Key action item
Review onboarding documentation and processes for employees potentially covered by a collective agreement in light of the change in obligations.
Kiwisaver Act 2006
Changes to the KiwiSaver Act came into effect on 1 April 2026. Both employer and employee contribution minimums have increased to 3.5%, with the ability for employees to apply for a temporary rate reduction (to 3%). There will be a further increase from 1 April 2028 to 4%. Significantly for employers, where an employee has a temporary rate reduction, the employer can reduce their contribution to 3% for the relevant period to mirror the employee contribution.
As of 1 April 2026, employers are also required to make employer contributions for 16- and 17-year-old employees who opt to contribute to KiwiSaver.
Key action item
Ensure that you are complying with the updated obligations and that appropriate record keeping is maintained.
Privacy Amendment Act 2005
The Privacy Amendment Act 2025 introduced a new information privacy principle 3A (IPP 3A) which comes into force on 1 May 2026. This relates to the indirect collection of personal information and is applicable where an employer collects personal information from a source that is not the individual themself, including when conducting reference or background checks. Those collecting such information must take reasonable steps to ensure that the person is aware of certain information including the fact that the information has been collected, the purpose of collection, intended recipients of the information and rights of access and correction.
Whilst an employer should obtain consent from a candidate to undertake reference checks (and that process should largely ensure compliance with the new IPP 3A), it is important that privacy policies and recruitment procedures comply with the new IPP 3A.
Key action item
Employers should review privacy policies and onboarding processes and documentation to update them as necessary.
Employment Leave Bill 2026
The Employment Leave Bill was introduced into Parliament on 9 March 2026 and is intended to replace the current Holidays Act 2003. It appears that the government's intention is to progress this Bill in advance of the election in November. It aims to simplify the complexity and uncertainty arising from the current legislation.
The Bill introduces a raft of changes relating to leave entitlements. It introduces three categories of working hours which underpin how leave will be accrued and paid:
- Standard hours: hours an employee is required to work under their employment agreement and for which the employee must be paid;
- Additional hours: hours an employee works in excess of their standard hours if the employment agreement provides for additional payment; and
- Casual hours: hours worked by an employee whose employment agreement does not require their employer to offer any work and does not require them to accept work.
Leave accrual from day one
Employees will accrue leave from their first day of employment based on hours worked as follows:
- annual leave will accrue at 0.0769 hours per standard hour (equivalent to four weeks per year for most full-time employees); and
- sick leave will accrue at 0.0385 hours per standard hour, capped at 160 hours (pro-rated but equivalent to 10 days per year and capped at 20 days for most full-time employees).
Employees will be able to take annual and sick leave in hours, including for part days. Where working hours are not clearly defined in the employment agreement, a notional roster will need to be agreed between the parties.
This shift to hours-based accrual is expected to particularly benefit employers with part time or variable hour workforces as the entitlements for these employees should be simpler to calculate.
Bereavement leave and family violence leave will also be available from day one but will continue to accrue in days.
Leave payments
A single hourly leave pay rate will apply to all leave types based on the employee’s pay on the day leave is taken. Fixed allowances would continue to be paid during leave. However, variable pay components such as bonuses, commissions and variable allowances will be excluded, which will materially affect employees with these types of payment components.
The Bill introduces a Leave Compensation Payment set at 12.5% for all additional and casual hours worked (in lieu of accruing annual and sick leave).
Public holidays and other changes
Employees working part of a public holiday will receive time and a half for hours worked, plus a leave payment for contracted hours not worked. Alternative holidays will accrue on an hour for hour basis for time worked on a public holiday, rather than a full day.
A new test will apply to determine whether a public holiday falls on a day an employee would have worked but for the public holiday (an otherwise working day). This will be based on whether the employee worked or was on leave on 50% or more of the same day of the week in the preceding 13 weeks.
Additional proposed changes include:
- potential cashing out of up to 25% of annual leave per year;
- ensuring that annual leave taken following a return from parental leave is paid at the same rate as leave taken at any other time, removing the current potential disadvantage faced by returning parents;
- payment statements showing pay and leave entitlements; and
- annual leave balances will be banked in hours, rather than adjusting when work patterns change.
When do these changes come into effect?
The Bill has passed its first reading and has been referred to the Select Committee. The Select Committee report is due on 13 July 2026. A 24-month transitional period is proposed acknowledging the significant changes employers will need to make to employment agreements and payroll systems and processes.
Key action item
Watch this space and start thinking about the impact on your workforce. We anticipate the Bill being passed in materially its current form, but changes may occur following the Select Committee process. Given the 24-month transitional period, there will be sufficient time to implement appropriate payroll processes but inevitably some complexity as employers grapple with the new requirements and transition their processes. Payroll providers are already working on the changes which would be required to implement the new requirements.
What's next?
If the first quarter of 2026 is anything to go by, this will continue to be a significant year for employment law. Being an election year, there is a real possibility that a change in government could result in a reversal of some of the recent legislative developments. Employers are therefore in a difficult position in terms of how to respond. Our suggested approach is to determine and implement the changes needed to address the recent developments but bear in mind that they may need to be revisited come the end of the year.
Our firm will continue to monitor key developments. Please contact one of the team if you have questions about how any of the above changes may affect your business.