What Changed in the Employment Relations Amendment Act 2026?

This article breaks down what actually changed, what the new provisions say, and what it means in practice for employers and employees across New Zealand.

The $200,000 high-income threshold

The most headline-grabbing change: employees earning $200,000 or more per year in total remuneration can no longer bring a personal grievance for unjustified dismissal.

But the implications go further than most people realise. Under new section 67J, employers are also not required to act in good faith when terminating the employment relationship with a high earner, and are not required to provide reasons for the dismissal. In practice, this means an employer needs only to comply with the contractual notice period. No reason. No process. Just the notice.

What counts as “total remuneration”?

The Act uses a broad definition tied to PAYE income payments under the Income Tax Act 2007. This includes salary, wages, bonuses, commissions, and any benefit arising from an employee share scheme (section 67I(5)). ACC earnings-related payments are excluded. The figure is annualised using a statutory formula based on remuneration paid over the preceding 364 days.

This is important: it is not just base salary. An employee on a $180,000 base with $25,000 in commissions is above the threshold.

Transitional provisions

For new employment agreements entered into from 21 February 2026, the exclusion applies immediately. For existing employment agreements, there is a 12-month transitional period until 21 February 2027. Both parties can agree to opt in earlier.

This gives existing high earners a window to negotiate contractual protections – enhanced notice periods, severance terms, or an express opt-in to personal grievance rights – before the default position takes effect.

What high earners retain

Personal grievance rights for unjustified disadvantage, discrimination, harassment, and duress remain fully intact. The Human Rights Act 1993, Health and Safety at Work Act 2015, and Holidays Act 2003 protections are unaffected. And critically, the parties can contractually agree to opt back in to PG rights and good faith protections for dismissal if they choose to.

Personal grievance remedies: employee conduct now controls the outcome

The Act fundamentally restructures how remedies work in personal grievance claims by placing the employee’s own conduct at the centre of the analysis.

Serious misconduct that contributed to the grievance

Under new section 123B, if the employee’s actions contributed to the situation giving rise to the personal grievance and that action amounts to serious misconduct, the Authority or Court must not provide any remedy at all. Both limbs must be satisfied – but if they are, the result is absolute: no reinstatement, no compensation, no lost wages, nothing.

This is a stark change. Previously, an employer could bungle the process entirely and still face significant liability even where the employee had committed genuine serious misconduct. Now, if the misconduct was serious and contributed to the situation, the employer’s procedural failures are irrelevant to the remedy.

Non-serious conduct that contributed

Under new section 123C, where the employee’s actions contributed to the grievance but the conduct was not serious misconduct, the Authority must not award reinstatement (section 123(1)(a)) or compensation for humiliation, loss of dignity, or injury to feelings (section 123(1)(c)). Lost wages remain available but can be reduced by up to 100% under the amended section 124(2).

Note the lower threshold here: section 123C does not require serious misconduct. Any contributory conduct – even relatively minor – triggers the loss of reinstatement and humiliation compensation.

Procedural fairness: the end of “gotcha” dismissals

Under the previous law, the Authority could only overlook “minor” procedural defects when assessing whether a dismissal was justified. In practice, this meant that most procedural errors – even those that caused no real unfairness – could invalidate a dismissal.

The Employment Relations Amendment Act 2026 changes this significantly. New section 103A(5) provides that the Authority or Court must not determine a dismissal to be unjustified solely because of defects in the process if the defects did not result in the employee being treated unfairly.

Critically, the word “minor” is gone. Any procedural defect – whether minor or significant – will not invalidate a dismissal if it did not cause actual unfairness to the employee. The test has shifted from technical compliance to substantive fairness.

New section 103A(3)(e) also allows the Authority to consider whether the employee obstructed or frustrated the employer’s process – a factor that was not previously part of the statutory test.

“This is not a licence to abandon process. A robust process remains the best protection against a grievance claim. But employers who make a genuine procedural misstep in an otherwise fair and substantively sound process are now far less likely to face liability for that error alone. The question has shifted from ‘did you follow every step perfectly?’ to ‘was this person treated fairly?'”
Andy Bell, Partner, Lane Neave (Legal 500 Recommended Lawyer; Doyles Guide Recognised)

90-day trial periods: strengthened, not expanded

A common misconception: the 2026 Act did not expand trial periods to all employers. That had already happened on 23 December 2023 via the Employment Relations (Trial Periods) Amendment Act 2023, when the coalition government restored trial periods for all employers regardless of size.

What the 2026 Act does is strengthen the protection. Previously, an employee dismissed during a valid trial period could not bring a personal grievance for unjustified dismissal. The 2026 Act extends that exclusion to also cover personal grievances for unjustified disadvantage where the claim relates to the dismissal.

The core rules remain unchanged: the trial period must be agreed in writing before the employee starts work, it must be genuine, and a poorly worded or late-signed clause will be invalid.

The specified contractor gateway test

The Employment Relations Amendment Act 2026 introduces a new statutory gateway test under section 6(7) to determine whether a worker is an independent contractor rather than an employee. If all five criteria are met, the worker is a “specified contractor” and cannot bring an employment status claim to the Employment Relations Authority.

The five criteria (all must be satisfied):

1. There is a written agreement stating the worker is an independent contractor
2. The worker is not restricted from working for others, except while actually performing work for the contracting party
3. The worker is not required to be available at set times, or has the ability to subcontract the work
4. The arrangement does not end solely because the worker declines additional work
5. The worker had a reasonable opportunity to seek independent advice regarding the arrangement before entering into it

If any criterion is not met, the traditional common law “real nature of the relationship” test applies. The gateway test provides a more certain route to contractor status, but it is not a shield for sham arrangements – simply labelling someone as a contractor and ticking the boxes will not override the reality of how the relationship operates day to day.

Other changes

30-day rule removed

New non-union employees no longer need to be employed on terms consistent with the applicable collective agreement for their first 30 days. Employers can negotiate individual terms from day one.

Union information obligations reduced

The active choice form for union membership (sections 62A and 62B) has been repealed, along with section 63B. Employers must still inform new employees that a collective agreement exists and provide the union’s contact details, but the employer need only notify the union of the new employee with the employee’s consent.

What did not change

Good faith obligations remain in force for the employment relationship generally – except for the specific carve-out on dismissal for high earners above the $200,000 threshold. Personal grievance rights for unjustified disadvantage, discrimination, harassment, and duress are untouched, even for high earners. The Human Rights Act 1993, Health and Safety at Work Act 2015, Holidays Act 2003, and minimum employment standards all remain unaffected.

What should you do now?

• Employers: Audit which employees fall above the $200,000 threshold. Review existing employment agreements and consider whether they need to be renegotiated before February 2027. Review contractor arrangements against the five-criteria gateway test.
• High earners on existing agreements: Use the 12-month transitional window to negotiate contractual protections – enhanced notice periods, severance terms, or an express opt-in to PG rights – before the default position applies.
• High earners on new agreements: Understand that accepting a role above the $200,000 threshold means losing PG rights for unjustified dismissal and the employer’s good faith obligations in relation to termination. Negotiate protections upfront.
• All employers: Continue to follow fair process. The procedural fairness changes are not a licence to cut corners – they protect against technical missteps in an otherwise fair process, not against genuinely unfair treatment.

Frequently Asked Questions

Can high earners above $200,000 still bring a personal grievance?

High earners above the $200,000 threshold can no longer bring a personal grievance for unjustified dismissal. However, they retain the right to bring grievances for unjustified disadvantage, discrimination, harassment, and duress. The threshold applies to PAYE income (including bonuses and commissions), not just base salary. Existing employees have a 12-month transitional period until 21 February 2027.

Does the 2026 Act change how procedural fairness works?

Yes. Under the new section 103A(5), a dismissal cannot be found unjustified solely because of procedural defects if those defects did not result in the employee being treated unfairly. The previous law limited this to “minor” defects only – the 2026 Act removes the word “minor”, meaning any procedural defect is potentially excusable if it didn’t cause actual unfairness.

What happens to personal grievance remedies if the employee’s conduct contributed?

If the employee’s conduct contributed to the grievance and amounted to serious misconduct, no remedies at all will be awarded (section 123B). If the conduct contributed but was not serious misconduct, reinstatement and compensation for humiliation are unavailable (section 123C), and remaining remedies can be reduced by up to 100% (section 124).

What is the specified contractor gateway test?

The 2026 Act introduces a five-criteria test under section 6(7). If all five are met – written agreement, freedom to work for others, flexibility on hours or ability to subcontract, no termination for declining work, and opportunity for independent advice – the worker is a “specified contractor” and cannot bring an employment status claim. If any criterion is not met, the traditional test applies.

When do the changes take effect?

Most provisions came into force on 21 February 2026. The key transitional date is 21 February 2027, when the 12-month grace period ends for existing employees above the $200,000 threshold. Annual adjustments to the threshold begin from 1 July 2027.

Andy Bell is a Partner at Lane Neave, specialising in employment law and relationship property across Wellington and Auckland. He is a Recommended Lawyer in the Legal 500 Asia Pacific and recognised by Doyles Guide for employment law.

Last updated: 29 March 2026