The new Employment Relations Amendment Bill is a move towards flexibility and certainty
On June 17th of this year, Minister Brooke Van Velden introduced the Employment Relations Amendment Bill to Parliament. This legislation is said by Hon. Brooke Van Velden to improve market flexibility and help businesses grow, innovate, and employ with confidence and certainty.
Here’s what the Bill proposes:
1. Clearer rules for contractors vs. employees
The Bill introduces a streamlined “gateway test” to define when a worker is a contractor, not an employee. If all conditions are met, such as having a written agreement declaring independent contractor status, freedom to take on other work, flexibility in scheduling or ability to delegate, plus a chance to get independent advice before signing, the worker is legally a “specified contractor,” and cannot contest that status.
2. New limits on personal grievance remedies
Under the proposed changes, employees who commit serious misconduct or contribute to their own grievance may find themselves ineligible for certain remedies: no reinstatement, no compensation for hurt or loss of benefits, and any other compensation could be reduced by up to 100 per cent. However, the claims for lost wages may still be possible.
3. High-income threshold for unjustified dismissals
Workers earning at least NZ$180,000 annually, excluding bonuses or incentives, could be excluded from standard unjustified dismissal protections unless they opt in. During a 12-month transition, high-income employees on pre-existing agreements retain their rights, but future contracts may see opt-outs in exchange for enhanced notice or severance terms.
This gives employers clarity over termination processes with high-earning staff but also shifts negotiation power, making upfront agreement on termination terms crucial.
4. Abolishing the “30-day rule”
Currently, new hires under the collective agreements automatically get covered by union-negotiated terms for the first 30 days. The Bill would overturn this, letting employers and employees negotiate individual terms from day one. Employers still need to provide info about collective agreements and unions, and only notify the union with the employee’s consent.
This change removes a compliance burden and gives employers more flexibility, but unions might push to include the 30-day rule in their collective agreements to preserve it.
This proposed legislation aims to give employers much-needed flexibility by clarifying contractor rules, strengthening protections against frivolous grievances, streamlining onboarding, and offering optional dismissal protections for high-income roles. All of these changes could significantly reduce litigation risk and simplify workforce management.
But it remains a work in progress. Its final form and impact will depend on the outcome of public feedback, committee recommendations, and parliamentary deliberation.
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