After months of debate and commentary, the Employment Relations Amendment Act 2026 has now received Royal Assent.
With that, one of the most significant shake-ups of employment rights in almost two decades is no longer theoretical.
Workplace Relations Minister Brooke van Velden described the reforms as a necessary “rebalancing”, restoring confidence, flexibility and certainty for business.
Critics have called it a dark day for workers.
The truth, as always, lies somewhere in between. But make no mistake, the balance of risk in employment relationships has shifted.
One of the headline changes is the introduction of the “specified contractor” gateway test.
If a worker ticks a prescribed set of boxes, including having a written agreement labelling them a contractor, freedom to work elsewhere, no availability requirements, the ability to subcontract, and protection from termination for declining extra work, they are excluded from the statutory definition of “employee”.
If the gateway is met, the courts do not move on to assess the established “real nature of the relationship” test.
This appears to be a direct response to increasing litigation arising from the gig economy, including the recent Supreme Court’s ruling declaring Uber drivers to be employees.
For businesses, this may offer certainty. For workers, it narrows the path to employee status and with it, access to minimum entitlements and personal grievance rights.
The second major reform is highly contentious, as it removes the right to bring an unjustified dismissal claim for employees earning $200,000 per annum or above.
The policy logic is straightforward: high earners have bargaining power and should negotiate their own exit protections. But does this reflect reality?
The threshold is an employee’s “annual remuneration”, which captures salary, bonuses, commissions and share schemes. For employees with variable earnings, whether the threshold is met may not be obvious until after dismissal.
While the changes are intended to simplify personal grievance processes, this has the potential to do the opposite.
Expect arguments over remuneration calculations, contractual notice clauses, good faith obligations during negotiations, and whether opt-out provisions were properly explained.
High earners are also unlikely to accept the “fire at will” status without extracting something in return so pre employment negotiations are likely to become more fraught.
Potentially even more contentious is the change to an employee’s rights to remedies.
Under the previous framework, if an employee materially contributed to their dismissal, remedies could be reduced proportionately. It was a discretionary, fact-specific exercise based on what was deemed fair and reasonable.
The new regime is cut throat.
If an employee’s behaviour “contributed” to the situation giving rise to the grievance, they lose entitlement to reinstatement. Loss of earnings and compensation for humiliation, loss of dignity and injury to feelings may also be reduced by up to 100 per cent.
If the conduct amounts to serious misconduct and the employee contributed to the dismissal, no remedies are available at all, even where procedural defects occurred.
Despite having such significant implications, the Amendment does not define “contribution” or “serious misconduct”.
The Act also reframes procedural fairness as an assessment “in all the circumstances”, including whether the employee’s behaviour obstructed the employer’s ability to act fairly.
While this may reduce the impact of minor technical missteps, it does not abolish process.
Employers who treat these reforms as a licence to shortcut investigations may find the serious misconduct threshold harder to establish than anticipated.
Less dramatic, but still significant, is the repeal of the 30-day rule. Employers are no longer required to offer new non-union employees the terms of any collective agreement which covers their position, for their first 30 days where a collective agreement applies.
From a practical perspective, this enhances flexibility at the hiring stage. From a relational perspective, it reduces unions’ early engagement with new employees.
Taken together, these reforms prioritise certainty, contractual clarity and managerial discretion.
They narrow judicial inquiry in contractor disputes, limit statutory recourse for high earners, and constrain remedies where employee fault is established.
Whether that constitutes “balance” depends on one’s starting point.
But, proceed with caution; this amendment is not a free pass. Good faith obligations remain, and fair process still matters. Misjudging the contribution threshold or overreaching on contractor status will carry risk.
The courts will now do what they always do with broadly framed legislative language: interpret, refine and test it. The real shape of these reforms will emerge not from the Beehive press conference, but from judicial decisions in the years ahead.
Originally published in The Post
