Upcoming Employment Law Changes: A Test of Leadership, Not Just Compliance
Anyone keeping an eye on the headlines will know that employment law in Aotearoa is set for significant change in the next 12-18 months. The Government has explained that the changes aim to boost productivity and make it simpler for employers to ‘hire and fire’ and reduce compliance costs. While these changes are good news for employers, they will need to consider how to implement any changes - some of which could be worrying for employees - in a way that aligns with their values and supports the kind of experience they want to create for their employees.
These potential changes are at varying stages - we do not have full details of all the proposed reforms yet and how they might affect workplaces if they become law but this article provides an overview of what is on the horizon:
- Changes relating to employment relationship issues
- Protected exit negotiation discussions
- Introducing a high income threshold for unjustified dismissal personal grievances
- Changes to employee remedies
- Health and safety reforms
- Privacy changes
Changes relating to employment relationship issues
Protected exit negotiation discussions
Status: draft legislation has been introduced to the House for debate and discussion.
What could change?
- Based on similar legislation in the UK, this change would allow an employer to offer an employee a specified payment to agree to end their employment relationship, without this conversation itself becoming grounds for a personal grievance.
- Under current law, employers and employees can already negotiate exit agreements, but these generally arise from disputes or grievances - offering an exit settlement without a dispute can give rise to a constructive dismissal claim.
- The employer would need to ensure certain conditions were met, including setting out any agreement in writing, and ensuring the employee was informed of their right to seek independent advice on the proposed agreement before signing.
What could this mean for you?
- If passed, employers and employees could have pragmatic and respectful conversations about ending their employment relationship in a low-risk way.
- However, acting in good faith by being communicative with your people will still matter. Employees could feel blindsided by an exit offer if issues haven’t been raised properly before. Making an exit offer may become easier for employers but there is no guarantee that the employee will accept it – and an employee who refuses an offer may feel insecure and discouraged at work, creating bigger issues in your workplace.
Introducing a high-income threshold for unjustified dismissal personal grievances
Status: ‘Watch this space’ - the Government has discussed its intention to introduce this legislation but has not shared draft legislation
What could change?
- The Government has proposed a change to the Employment Relations Act 2000 that would prevent employees whose annual base salary is over NZD$180,000 from bringing an unjustified dismissal claim.
- This change would apply to any employees whose employment starts after the legislation is introduced and existing employees earning above the income threshold, after a 12-month transition period.
- Employees and employers would be able to ‘opt back in’ to the existing personal grievance regime by agreement or negotiate their own dismissal procedures.
- This represents a big change for Aotearoa but is similar to legislation in other jurisdictions, including Australia and the UK.
What could this mean for employers?
- High-earning employees may be more inclined to negotiate their compensation package structure (i.e. to ensure their base salary falls under the $180K limit).
- High-earning employees may want to opt back into the existing personal grievance (PG) rules or negotiate their own.
- If a dispute arises with a high-earning employee, it will be even more important for employers to check the IEA to understand what kind of PG the employee can raise, and whether any specific terms relating to dismissal have been negotiated.
- Because this change would only apply to unjustified dismissal PGs, not every dispute with a high-earning employee would be risk-free. Employers still need to act fairly, reasonably, and in good faith.
- If this becomes law, employers should consider how they will communicate this change to existing high-earning employees and whether they would be willing to negotiate with these employees on PG/dismissal terms and compensation structure.
Changes to employee remedies
Status: ‘Watch this space’ - the Government has discussed its intention to introduce this legislation but has not shared draft legislation yet
What could change?
- The Government is proposing changes to how personal grievance remedies are determined, giving more consideration to an employee’s behaviour.
- These changes would mean that if an employee’s behaviour was found to be serious misconduct, they would not be entitled to any remedies.
- Additionally, if the employee’s behaviour contributed to the issue that gave rise to the grievance:
- the employee’s remedy could be reduced by up to 100%
- the employee may be prevented from seeking reinstatement
- the employee may be prevented from seeking compensation for hurt and humiliation.
What could this mean for you?
- To address concerns that employers are often punished for minor procedural flaws when the employee is more seriously at fault, the threshold for ‘procedural error’ would be raised.
- We may see a reduction in the number of PGs being raised and employers may feel less forced to settle rather than defend a PG.
- The courts may raise the bar of what constitutes ‘serious misconduct’, given this will now affect an employee’s eligibility for remedies.
- Keeping good records of issues will be even more important - employers may be required to demonstrate that the employee’s actions contributed to the dispute and to justify why the behaviour was found to be serious misconduct.
- Following a fair process will still matters – a PG is one risk of not following a fair process but there are many more – for example, damage to your team’s engagement, your brand as an employer, and your reputation.
Health and safety reforms
Status: ‘Watch this space’ - the Government has made several announcements regarding these changes and has indicated it will share draft legislation this year with a view to see changes coming into force in 2026
On 31 March 2025, Workplace Relations and Safety Minister, Brooke van Velden, announced that the Government intends to reform health and safety legislation to “lessen the cost and burden of compliance on low-risk businesses”. Some of the key changes announced include:
- Distinguishing between health and safety governance and management: the Government has explains that the reforms will clarify the distinction between governance and operational management health and safety responsibilities, making it clear that day-to-day management of health and safety risk is to be left to managers to that directors and boards can focus on governance and the strategic oversight of the business.
- Simplifying requirements for small, low-risk businesses: these businesses will only have to manage critical risks and provide basic facilities to ensure worker welfare.
- Clarifying responsibilities of the owners of land where recreational activity takes place: the Government has explained that landowners will not be responsible if someone is injured on their land while doing recreational activities - health and safety responsibilities will sit with the organisation running the activities.
Privacy changes
Status: After its introduction in September 2023, the bill is awaiting its third reading in the house where it will be debated for the final time and the House will vote on whether it will become law.
A new Information Privacy Principle (IPP3A) is likely to come into force in May 2026. This principle would introduce changes when personal information is collected indirectly. Currently, there is no requirement for an organisation to notify an individual when it collects personal information from an indirect or third-party source. Often this means an individual does not know that an organisation holds and uses their personal information.
Organisations will be required, when collecting personal information from any source other than the individual concerned, to inform the individual about certain specified matters, such as the collection of the information and its purpose. Limited exceptions will apply.
When IPP3A comes into force, all organisations will need to have systems in place to meet the new requirements. This will include updating privacy policies and developing systems to notify individuals.
The team at Humankind are watching these potential new laws closely and will keep you up to date with any changes. In the meantime, if you’d like to discuss how these changes could affect your workplace and how you can prepare for changes, please reach out.
