The Employment Relations Amendment Act 2026 (“Amendment Act”) came into force on 21 February 2026, introducing significant reforms to New Zealand employment law, including, among other things, clarification on contractor status and changes to personal grievance eligibility and remedies.
Employee or Contractor?
Section 6 of the Employment Relations Act 2000 (“the Act”) now excludes a “specified contractor” from being an employee and therefore being subject to the provisions of the Act. This provides greater certainty for business owners and reduces exposure to leave entitlements and personal grievance claims.
A person (“Party A”) will be a specified contractor where Party A has an arrangement to perform work for another (“Party B”), or a third party facilitated by Party B, and all of the following are satisfied:
(a) The parties entered into an independent contractor agreement (or an agreement stating Party A is not an employee).
(b) Party A is not restricted from performing work for others, except while working for Party B (or as facilitated by Party B).
(c) Either (i) Party A has subcontracting rights, or (ii) Party A is not required to perform, or be available to perform, work at a specified time, on a specified day, or for a minimum period.
(d) The arrangement cannot be terminated because Party A declines additional work.
(e) Party A had a reasonable opportunity to seek independent legal advice.
Party A is not treated as being restricted from working for others merely because the hours worked for Party B make additional work impracticable.
If any factor above is not met, the status of the relationship reverts to the previous “real nature of the relationship” test.
Personal grievance salary threshold
Employees who meet or exceed the “specified remuneration threshold” cannot raise:
A. An unjustified dismissal claim; or
B. An unjustified disadvantage claim which relates to the dismissal.
The current threshold is $200,000.00 per annum, with annual increases from 1 July 2027.
Remuneration includes PAYE income payments and employee share scheme benefits.
The Amendment Act prescribes a calculation method based on income received in the 364 days prior, preventing potential artificial inflation to meet the threshold for the purposes of dismissal.
Parties may contract out of this threshold by agreement.
Contributory conduct and remedies
Remedies available to an employee may be reduced or eliminated all together for contributory conduct that amounts to “serious misconduct” (section 123C). Serious misconduct is undefined.
Reinstatement and compensation are unavailable if the employee “contributed to the situation that gave rise to the personal grievance” (section 123B). There is no serious misconduct threshold in respect of this provision.
Where to from here?
We expect to see an increase in litigation as courts interpret the provisions of the Amendment Act. In particular:
1. Under the new specified contractor test, can a business place restraints on a contractor’s ability to work elsewhere for the duration of the contract, or only while the contractor is actually performing work (i.e., no restraints after hours/weekends)?
2. How close must an employee’s contributory conduct be to the grievance to bar reinstatement or compensation?
3. How will the courts determine the definition of “serious misconduct”?
Businesses with employees should review and update their individual employment agreements to align with the Amendment Act before entering new arrangements. This may include expressly defining key terms (for example “serious misconduct”) to mitigate interpretive issues.
Businesses engaging contractors should review and update their independent contractor agreements to ensure all specified contractor criteria are met.
Chloe Wilson, Associate
STEINDLE WILLIAMS LEGAL, Level 2, Suite 2.1,
18 Sale Street, T: 09 361 5563, www.swlegal.co.nz
