Employment law updates affecting New Zealand employers in 2026
Several employment-related changes are now affecting New Zealand employers, with legislative updates taking effect alongside routine payroll adjustments.
Some of these changes affect how employment relationships are structured and managed, particularly in areas such as senior employment agreements, contractor arrangements, and grievance outcomes. Others are more operational, showing up in payroll settings and employment documentation.
Not every update will require immediate action. However, together they are a useful prompt for employers to check that employment agreements, workplace processes, and payroll systems still reflect current requirements.
What’s changed
Employment Relations Amendment Act 2026
The Employment Relations Amendment Act 2026 came into force on 21 February 2026 and introduces several changes to the way employment relationships are regulated.
In practical terms, this changes how senior dismissals, contractor arrangements, grievance outcomes, and collective agreement onboarding are handled.
$200,000 threshold for unjustified dismissal
A new income threshold has been introduced for unjustified dismissal claims.
For employees under new employment agreements with annual remuneration of $200,000 or more, the default position has changed. Those employees cannot bring a personal grievance for unjustified dismissal or unjustified disadvantage unless the employment agreement explicitly retains that protection.
Employers and employees can agree to keep dismissal protections if they wish, but it must be written into the agreement.
There is also a 12-month transition period for employees who were already employed in the same role with the same employer before the new law took effect. This gives employers time to review existing agreements and consider whether any changes are appropriate.
Why this matters for employers
For senior roles, termination discussions may now include more negotiation around notice periods, termination provisions, or contractual protections.
It also means that how executive agreements are structured becomes more important, particularly for senior hires or leadership roles.
What to consider
Employers may want to review executive employment agreements and think about whether dismissal protections should remain in place or be removed for new hires above the threshold.
Employee conduct and grievance remedies
The Act also changes how remedies are assessed when an employee’s behaviour contributed to the situation that led to a personal grievance.
Previously, remedies could be reduced in these circumstances. The law sets clearer limits on remedies where an employee’s behaviour contributed to the situation that led to a grievance.
There are now specific consequences in these scenarios:
- If the employee’s contributing behaviour amounts to serious misconduct, the Authority or Court must not provide any remedy at all
- If the employee contributed, even without serious misconduct, reinstatement and compensation are not available
- Other available remedies may be reduced, including up to 100%.
Importantly, employers still need to follow a fair and reasonable process when managing disciplinary or dismissal matters.
Why this matters
This change significantly alters the outcome of personal grievances where employee conduct is a contributing factor. Employees who engage in serious misconduct can no longer expect the Authority or Court to award remedies simply because an employer’s process was imperfect. In serious misconduct cases, all remedies are removed entirely, and even where conduct falls short of that threshold, reinstatement and compensation are no longer available.
In short, employee behaviour now has a decisive impact on what remedies, if any, can be awarded.
What to consider
Employers should be clear and well‑evidenced about the nature of the employee’s conduct and whether it contributed to the situation giving rise to the grievance. Investigation findings, disciplinary records, and decision‑making should clearly document the conduct relied on, particularly where serious misconduct is alleged, as this will directly affect the availability of remedies.
New statutory contractor test
Another significant change is the introduction of a gateway test for contractor status.
If a working arrangement meets all gateway criteria, the worker will be treated as not being an employee under the Employment Relations Act. If the criteria are not met, the existing common law tests will still apply to determine employment status.
The intention is to provide more upfront certainty around contractor arrangements.
Why this matters
Misclassification risks still exist, particularly where the reality of the relationship does not match what the contract says.
Businesses using contractors should ensure that contracts and working arrangements genuinely reflect a contractor relationship.
What to consider
This is a good opportunity to review contractor engagements and confirm that documentation and working practices align.
Removal of the 30-day collective agreement rule
The Act also removes the long-standing 30-day rule.
Previously, when a role was covered by a collective agreement, new employees had to start on the collective terms for the first 30 days before moving to an individual agreement.
That requirement has now been removed.
Employers can agree to individual terms from the first day of employment, although they must still inform employees about the relevant collective agreement and union options.
Why this matters
This change provides greater flexibility when onboarding employees in workplaces covered by collective agreements.
What to consider
Employers should review onboarding documentation and employment agreement templates to ensure they reflect the updated rules.
Minimum wage increase from April 2026
The adult minimum wage will increase again from 1 April 2026.
While this is a routine annual adjustment, it still requires practical updates across payroll systems and employment documentation.
The change
From 1 April 2026, the adult minimum wage increases from $23.50 per hour to $23.95 per hour.
The starting-out and training rates are $19.16 (80% of the adult minimum wage).
Why it matters
Minimum wage changes affect more than just employees currently on the minimum rate.
They can also impact:
• Payroll system settings
• Pay rates that sit close to the minimum wage
• Pay differences between junior and experienced staff
• Employment agreements that reference minimum wage provisions
What employers should do
Before the new rate takes effect, employers should:
• Update payroll systems with the new minimum wage rates
• Check employment agreements that reference minimum wage
• Review pay structures for roles close to the new threshold
These updates are usually straightforward, but they should be completed before the new rates take effect on 1 April.
KiwiSaver changes
There are also several confirmed KiwiSaver changes that employers should be aware of, with the first taking effect from April 2026.
The change
From 1 April 2026, the default KiwiSaver contribution rate for both employees and employers increases from 3% to 3.5% of gross pay.
Employees can apply for a temporary rate reduction from 1 February 2026, which takes effect from 1 April 2026. Where an employee receives a temporary reduction, the employer may choose to match the employee’s reduced contribution rate.
From 1 April 2026, eligible employees aged 16 and 17 who are enrolled in Kiwisaver will also begin receiving compulsory employer KiwiSaver contributions.
Looking further ahead, the default contribution rate is scheduled to increase again to 4% from 1 April 2028.
Why it matters
KiwiSaver changes mainly appear operationally in payroll systems and employment agreements.
Employers will need to ensure payroll settings reflect the new contribution rate from April, and that employer contributions are applied correctly for eligible employees aged 16 and 17.
What employers should do
Employers should:
• Update payroll systems to reflect the 3.5% contribution rate from 1 April 2026
• Check that employer contributions are being applied correctly for eligible employees aged 16 and 17
• Review employment agreements where KiwiSaver contribution wording is referenced
• Stay aware of the further increase to 4% scheduled for April 2028
Many payroll providers will implement these changes automatically, but it is still worth confirming that systems are configured correctly.
What employers should do now
Most businesses do not need major changes as a result of these updates. However, it is a good time to review a few key areas.
A practical starting point is to check:
• Executive and senior employment agreements
• Contractor arrangements and contractor documentation
• Investigation and disciplinary processes
• Onboarding templates and employment agreements
• Payroll settings for minimum wage and KiwiSaver
ConsultingHQ is currently updating employment documentation to reflect the legislative changes.
Version 1.8 of our employment agreements and related contracts will be available from 1 April, incorporating the new requirements introduced by the Employment Relations Amendment Act.
If your documentation has not been reviewed recently, this is a sensible time to do so.
Staying ahead of change
Employment law evolves regularly, and most changes become manageable when documentation and processes are reviewed consistently.
Keeping employment agreements, policies, and procedures up to date helps reduce risk and ensures managers can handle issues confidently when they arise.
If you would like help reviewing your documentation or understanding how these changes apply to your business, the ConsultingHQ team is here to help.
You can also contact us if you would like access to the updated employment documentation releasing on 1 April.
