Employment Law Update - The Future Is Now

As we move further into 2026, a number of significant employment law changes have now come into force, with more on the horizon. None of these changes will come as a surprise, but the practical implications are hitting the coalface. While some have been signalled for a while, we’re now at the point where employers need to start taking action.

From 21 February 2026, several amendments to the Employment Relations Act took effect.

One of the more notable changes is the introduction of the Contractor Gateway Test. This is intended to provide greater certainty when determining whether a worker is an employee or an independent contractor. In simple terms, if all five elements of the test are met, the worker will not be considered an employee. For businesses that rely on contractor models, this will be an area worth reviewing closely.

Another significant shift is the introduction of a high-income threshold for personal grievance claims. Employees earning $200,000 or more in total remuneration are now generally excluded from bringing an unjustified dismissal claim. This includes salary or wages, as well as commissions, bonuses and allowances.

There is, however, flexibility built into the regime. Employers and employees can agree to opt back into the personal grievance framework if they choose. For existing employees, there is a 12-month transition period to review and renegotiate arrangements where appropriate. Employers should be identifying which roles may be affected and considering whether employment agreements need to be updated.

The amendments also place greater emphasis on employee conduct when it comes to remedies (The financial ‘payouts’ that may be awarded to employees who raise a personal grievance against their employer). The Employment Relations Authority and courts now have clearer scope to reduce or deny remedies where an employee’s behaviour has contributed to the situation. While we will need to see how this develops through case law, it signals a more balanced approach when determining outcomes.

Another practical change is the removal of the 30-day rule for collective agreements. If a collective agreement is in place with an employer, new employees are no longer required to adopt collective terms for their first 30 days. They must still be informed of any applicable collective agreement, so offer letters and onboarding processes should be updated to reflect this, but it does allow greater flexibility at the start of employment.

Alongside these changes, several related developments are already in effect or just around the corner.

Since August 2025, remuneration disclosure provisions have been in force. Any clause that prevents employees from discussing their pay is now unenforceable and employees must not be disadvantaged for sharing that information. Employers should ensure any pay secrecy clauses are removed and that confidentiality provisions do not unintentionally restrict lawful discussions.

There has also been a significant shift with wage theft now carrying potential criminal liability. Intentional failure to pay wages or employee entitlements can result in prosecution under the Crimes Act. This places increased importance on having accurate payroll systems, carrying out regular compliance checks and addressing any issues promptly.

From 1 April 2026, both minimum wage rates and KiwiSaver settings will change. The adult minimum wage will increase to $23.95, with starting-out and training wages increasing to $19.16. KiwiSaver contributions for both employers and employees will rise to 3.5 percent, and 16 and 17-year-old employees will become eligible for compulsory employer contributions. These changes will have a direct cost impact and should be factored into planning and budgeting.

Looking ahead, we are also awaiting the repeal and replacement of the Holidays Act 2003. A new Bill is expected to be introduced mid-2026, with an estimated implementation period of around two years. While the detail is still to come, proposed changes include leave accruing from day one, simpler and more consistent calculation methods and improved provisions for casual employees. This is likely to require significant system and process changes, particularly for payroll.

In the meantime, there are some clear steps employers can be taking now. Reviewing contractor arrangements and high-income roles is a good starting point, along with updating employment agreements where needed. It is also important to ensure payroll systems are robust and compliant, remove any outdated pay secrecy clauses and start planning for upcoming cost increases. With Holidays Act reform on the horizon, allowing time to prepare for more substantial system changes will be critical.