NZ Unveils Bill to Revamp Employment Law, Boost Business Confidence

In a major move to modernize workplace laws and foster a more flexible labour market, New Zealand’s Workplace Relations and Safety Minister, Brooke van Velden, has introduced the Employment Relations Amendment Bill to Parliament. This legislation aims to support businesses in making confident employment decisions, while ensuring fair and transparent workplace practices.

The changes are anchored in the commitments outlined in the ACT–National Coalition Agreement, reflecting a pro-business shift in government policy with a focus on contractual clarity, reduced compliance burdens, and streamlined dispute resolution mechanisms.

Key Features of the Employment Relations Amendment Bill

1. Introduction of a Gateway Test for Contracting

One of the most significant changes proposed is a new gateway test to clearly distinguish between employment and contracting arrangements.

• This aims to remove ambiguity in work relationships from the outset, offering clarity for both employers and contractors.

• The test is designed to foster innovative and flexible business models, especially in sectors reliant on independent contractors.

Minister van Velden emphasized the benefit of this change, stating it would “provide greater certainty for all parties and allow more innovative business models to flourish.”

2. Reform of the Personal Grievance Process

The Bill introduces major amendments to how personal grievances (PGs) are handled, focusing on:

• Excluding remedies for serious misconduct: If an employee’s behaviour qualifies as serious misconduct, they will no longer be eligible for remedies such as reinstatement or compensation.

• Reducing “rewards for bad behaviour”, as described by the Minister, is intended to lower the cost burden and procedural stress for employers.

Furthermore, the Bill sets an income threshold of $180,000, above which employees will not be able to bring forward a PG for unjustified dismissal. The rationale is that high-income roles often carry significant responsibilities and organizational impact, and this change will allow companies more leeway in ensuring the right fit without fear of costly litigation.

3. Scrapping the 30-Day Rule

Currently, new employees must be employed under terms consistent with collective agreements for the first 30 days. The Bill removes this constraint, allowing:

• Immediate negotiation of individual terms and conditions.

• Increased flexibility for employers and employees to enter mutually beneficial arrangements from day one.

Van Velden underscored this move as a way to “cut compliance at the beginning of employment” and “give businesses the confidence to hire faster and smarter.”

Implications for Business and Workers

These reforms are positioned as pro-growth and pro-innovation, aiming to:

• Enhance business agility and decision-making in hiring and contracting.

• Minimize legal risks and overheads associated with employment disputes.

• Ensure that only justified claims receive legal remedies, preserving the integrity of the grievance process.

However, critics are likely to raise concerns over reduced protections for high-income earners and the potential erosion of worker rights in contracting relationships. These issues are expected to come under scrutiny during the upcoming Select Committee review, where the public and stakeholders will have the opportunity to submit feedback.

Next Steps

The Bill's introduction marks the beginning of a formal legislative process, including:

• First and second readings in Parliament.

• A Select Committee phase open for public submissions and expert commentary.

• Final legislative revisions before a potential enactment later in the year.

Minister van Velden concluded, “I am committed to building business confidence, ensuring a strong economy that will lift wages, create opportunities, and help Kiwi workers get ahead.”

The Employment Relations Amendment Bill represents a significant shift in New Zealand’s employment landscape. With its focus on clarity, flexibility, and streamlined processes, the Government hopes to position New Zealand as a more attractive environment for business and innovation, while still ensuring fairness and accountability in workplace relations.