Employment Relations Act Update
Recently announced policies
The Government has announced significant upcoming changes to employment law. Several legislative updates are slated to be introduced as amendments to the Employment Relations Act in 2025, alongside amendments recently made to the Crimes Act. Employment law Members’ bills are also progressing in parliament.
The stated aim of these reforms is to address key workplace issues, including pay transparency, dismissal protections, employee misconduct, and wage theft.
The proposed changes will have widespread implications for both employers and employees, affecting employment agreements, workplace rights, and business operations. Understanding these developments is essential to ensure compliance and to adapt to the evolving employment landscape.
Below is an overview of the key proposed legislative changes and their potential impact.
Income Threshold Policy
The Minister for Workplace Relations and Safety has proposed excluding employees earning $180,000 or more (base salary) from unjustified dismissal protections in the Employment Relations Act. This threshold aligns with the top tax rate and will be periodically adjusted. Benefits and incentives will not be included in the threshold calculation.
Employees earning above this threshold will be able to negotiate with their employer to opt back in to having access to personal grievance provisions for unjustified dismissal in their employment agreement. They can also negotiate alternative severance arrangements (e.g. payment of a specified salary amount if they are dismissed without cause).
Minister van Velden claims this change will allow employees and employers to agree on their own dismissal procedures, ensuring the right fit for high-impact leadership and specialist roles. The justification for the policy is that it will ‘provide greater labour market flexibility, enabling businesses to ensure they have the best fit of skills and abilities for their organisation. It allows employers to give workers a go in high impact positions, without having to risk a costly and disruptive dismissal process.’[1]
Key details:
- The threshold will apply to all new employment agreements once the bill becomes law.
- Employees earning over $180,000 will have 12 months from when the bill is passed to renegotiate their current employment agreements.[2]
- After this transition period, the threshold will apply to all existing employment agreements, however during this 12-month period, employees can still raise a personal grievance.
- If the following occurs in the 12-month transitional period, the employee’s agreement will no longer be considered an ‘existing employment agreement’:
- The employee moves to a new employer (new agreement required).
- The employee changes roles within the same employer (unless this is due to a restructure, in this instance the 12-month transition period will still apply).
No draft legislation has been released. The Government has stated it intends to introduce the legislation this year and to pass it before the end of 2025.
Changes to Contributory Behaviour settings
The Government has also announced reforms that will impact personal grievance remedies where there is evidence of employee misconduct.
Minister van Velden discussed the justification for the bill, stating ‘it is important employees are not rewarded in the personal grievance system for poor behaviour or performance.’ The changes intend to strike a better balance between employee accountability and employer certainty.[3]
Proposed amendments include:
- If serious misconduct (e.g. violence, bullying, harassment, fraud) is evident in a claim it will result in removal of all remedies.
- Employees who contribute to a workplace issue (e.g. repeated poor performance) will lose eligibility for reinstatement and compensation for emotional harm.
- Allowing a reduction of up to 100% of the remedy where an employee has contributed to the situation which gives rise to the personal grievance.
- The Employment Relations Authority and Employment Court will assess whether the employee’s conduct hindered the employer’s ability to fulfil their obligations.
- Employees seeking to raise a personal grievance must establish a higher threshold of procedural errors to receive remedies if the employer’s decision is deemed to be justified.
The Minister’s release of 4 December 2024 notes that behaviours which count as serious misconduct include but are not limited to:
- Violent behaviour
- Bullying
- Sexual, racial or other harassment
- Theft or fraud
- Behaviour that endangers the health and safety of yourself or others
- Using illegal drugs at work
- Dishonesty
Contributory behaviour may include:
- Unproductive behaviour
- Repeated lateness
- Misuse of company resources
- Underperformance
- More severe offences like violence, theft or fraud
Again, no legislation has been released, so details on the changes are limited to Government announcements.
Removal of the 30-day Rule
The Government is proposing to remove the 30-day rule from the Employment Relations Act. Under the current law, the 30-day rule means a new employee joining a workplace with a collective agreement is automatically employed on the terms of this agreement for their first 30 days, even if they are not a union member. After these 30 days they can elect to negotiate individual terms or join the union. The removal of this rule will mean employees will be employed on individual employment agreements if they do not join the union.
The Government is also proposing to remove the requirement for all new employee information to be shared with the relevant union, unless the employee objects. Employers will still need to communicate to new employees that they may join a union which is a party to the collective employment agreement, how to contact the union and if that if they join the union, the collective agreement will bind them.
This proposal has been criticised as being anti-union, however Minister van Velden maintains it is beneficial as employers and employees can negotiate terms and conditions which suit their personal preferences.
The Minister also highlighted that a further benefit from this change is that 90-day trials (reinstated under the coalition Government) can start at the beginning of employment, if the employee chooses an individual employment agreement. This is currently a point of contention with the 30-day rule in place.
Crimes (Theft by Employer) Amendment Bill
This Members Bill, supported by New Zealand First, the Labour Party, the Greens and Te Pāti Māori received royal assent on 13 March 2025. It amends the Crimes Act 1961 to create a new criminal offence for employers who owe and intentionally do not pay wages to an employee.
This includes the intentional underpayment of money which an employee is entitled to, whether this is under their employment agreement or the law. Prior to this amendment, employees stealing money from employers was a criminal offence, but the reverse was not. Camila Belich MP, sponsor of the bill aimed to close this gap, saying ‘this is a tough-on-crime Bill that will protect NZ workers from exploitation and introduce accountability for bad faith actors.’ Employers who are found liable for this crime could face either imprisonment of up to one year, a fine of up to $5,000, or both. In any other case, a company can face a fine not exceeding $30,000.[4]
Prior to the change, employees who suffer from wage theft only had civil remedies available to them. In using this avenue, workers had to spend their own money to argue their case in the Employment Relations Authority or Employment Court. This was often too high a cost for many, meaning cases of theft by employer go unpunished and unresolved. The Bill’s general policy statement noted existing policies were too complex and could be a deterrent for those that are victims of wage theft. Current offences under the Crimes Act relating to theft by a person in a special relationship were insufficient to account for wage theft by employers.[5]
Employee Remuneration Disclosure Amendment Bill
This Member’s Bill (Camilla Belich) aims to amend the Employment Relations Act 2000 to promote pay transparency and fairness by protecting employees who discuss or disclose their remuneration.
Currently the law allows for employment agreements to include provisions which prohibit workers from discussing or disclosing their remuneration with colleagues or third parties. Violating these provisions may be considered a breach of good faith and the employment agreement, potentially leading to disciplinary action. Such clauses often enable unchecked pay discrimination.
In the Bill, any attempt by an employer to enforce pay secrecy would provide grounds for a personal grievance. This means if an employee is dismissed or disadvantaged for inquiring about a colleague’s pay, discussing salaries, or disclosing their own, they could take legal action against their employer.[6]
The Bill proposes to insert a section 110C in the Employment Relations Act. Section 110C (1) defines adverse conduct for a remuneration disclosure reason as:[7]
- dismissal of an employee; or
- denying the employee the same employment terms, conditions, benefits or opportunities as others with similar qualifications and experience; or
- subjecting the employee to any detriment not applied to others in comparable roles; or
- retiring the employee or requiring/causing the employee to retire or resign.
Employers would only be found in breach if remuneration disclosure was a substantial reason for their actions.
The Bill was supported to Select Committee by the National Party and would require its continued support to be passed into law (currently unconfirmed).
If your organisation is currently utilising pay secrecy or confidentiality clauses you will need to consider the implications for your business if the Bill passes into law and begin canvassing any systems which need to change.
With these legislative changes on the horizon, employers and employees alike should stay informed and prepare for potential impacts on workplace policies, agreements, and compliance requirements. Organisations may need to review existing agreements and update HR policies to align with the new legal landscape.
Assistance
If you would like assistance understanding any of the changes and your obligations, talk to a member of the Dyhrberg Drayton Employment Law team today!
Ruby Prescott, Lawyer and Lachlan Spence, Lawyer
[1] Hon Brooke van Velden “Twelve months to re-negotiate contracts before income threshold policy takes effect” (press release, 12 February 2025).
[2] Hon Brooke van Velden “Twelve months to re-negotiate contracts before income threshold policy takes effect” (press release, 12 February 2025).
[3] Hon Brooke van Velden “Removing rewards for poor employee behaviour” (press release, 4 December 2024).
[4] Crime (Theft by Employer) Amendment Bill (245—1), clause 4.
[5] Crime (Theft by Employer) Amendment Bill (245—1), general policy statement.
[6] Employment Relations (Employee Remuneration Disclosure) Amendment Bill 2024 (32—1), General policy statement.
[7] Employment Relations (Employee Remuneration Disclosure) Amendment Bill 2024 (32—1), clause 5.
