Effective 21 February 2026 — here’s what changed and what you need to do now.
New Zealand’s employment landscape shifted significantly on 21 February 2026, when the Employment Relations Amendment Act 2025 came into force. For NZ employers, the changes are material — touching everything from how you engage independent contractors to what remedies apply when things go wrong with a dismissal.
Here’s a practical breakdown of the four key reforms and what they mean for your organisation.
1. Independent contractors: the five-gateway test
Misclassifying workers as independent contractors has always carried risk. The Act tightens this further by introducing a “specified contractor” gateway test — all five criteria must be met for an arrangement to qualify as genuine independent contracting.
The five criteria are:
- A written agreement that states the person is an independent contractor
- No restriction on the contractor working for others
- Either no set hours or minimum periods — or a genuine right to subcontract (with statutory vetting limited)
- The arrangement cannot be terminated simply because the contractor declines extra work
- The contractor had a reasonable opportunity to obtain independent advice before signing
If your contracting arrangements don’t tick all five boxes, the classification may not hold (the common law test applies). Now is a good time to review your contractor agreements and ensure your documentation is in order. Kinatico CVCheck background screening can play an important role here, verifying the identity and credentials of contractors before they’re onboarded.
2. High-income threshold and unjustified dismissal
A new income bar now limits access to dismissal-related personal grievances for higher-earning people.
From 21 February 2026, any new employee with total annual remuneration of NZ$200,000 or more cannot bring a personal grievance for unjustified dismissal or unjustified disadvantage relating to dismissal. Other personal grievances – discrimination, harassment, duress, and so on – remain available.
A few important points for NZ employers:
- The threshold applies to total remuneration for the prior 12 months, including PAYE income, bonuses, commissions, taxable allowances, employee share scheme benefits (excluding ACC earnings). This is different to Australia, which uses base salary only.
- There is a 12-month transition period for people who were in the same role before the Act commenced. For all new hires after 21 February 2026, the rule applies immediately.
3. Remedies reform: serious misconduct and contributory conduct
The Act introduces significant changes to what remedies are available when an employee has contributed to their own dismissal.
Under the new rules:
- Where an employee contributed to the grievance and the conduct amounts to serious misconduct, the Employment Relations Authority or Court must not award remedies — no reinstatement, no compensation, no lost wages, no section 123 remedies.
- Where the employee contributed but the conduct is not serious misconduct, the Authority must not order reinstatement and must not award compensation for humiliation, loss of dignity, or injury to feelings.
For employers, this reinforces the importance of thorough documentation when managing misconduct — both to support your position and to ensure any contributory conduct is clearly evidenced.
4. Collective agreements: removal of the 30-day rule
The automatic 30-day application of collective employment agreement (CEA) terms to new hires has been repealed.
Previously, where a CEA covered the work, its terms automatically applied to any new hire for the first 30 days — even if they weren’t a union member. Employers could not lawfully offer individual terms less favourable than the CEA during that period, and were required to provide specific union information via an “active choice” form.
From 21 February 2026:
- Employers and new employees can conclude individual employment agreements from day one, even where a CEA covers the work.
- The statutory “active choice” obligation has been removed — though employers must still provide information that helps new people make an informed choice about union membership.
What this means in practice
The Act materially increases employer flexibility in several areas, while also raising the stakes around documentation and process. Across all five reforms, a consistent theme emerges: having the right records matters.
Whether it’s a written contractor agreement that satisfies all five gateway criteria, documented evidence of an employee’s conduct during a misconduct process, or clear remuneration records for the high-income threshold — the employers best placed to navigate these changes will be those with rigorous, well-maintained people records.
Kinatico CVCheck helps organisations verify the people they bring on board — from background screening and identity verification to credential checks. Getting the foundations right at onboarding reduces risk downstream.
This article is intended as a general overview of the Employment Relations Amendment Act 2025 reforms. It does not constitute legal advice. We recommend seeking independent legal counsel for advice specific to your organisation’s circumstances.
