The reforms aim to increase labour market flexibility, reduce compliance costs for employers, and rebalance elements of the personal grievance system.
Below is a summary of the key changes now in effect. Each section links to more information on our website.
30-day rule for collective agreements removed
New employees no longer have to start on terms and conditions of the collective employment agreement for their first 30 days.
- Employees may now choose to agree to an individual employment agreement from day one or choose to join a collective employment agreement.
- Employers no longer need to provide the ‘active choice’ form but still need to give new staff information to help them decide about union membership.
- New rules apply when there is more than 1 collective agreement that covers the work the employee is doing.
Collective and individual employment agreements
Clearer rules for contractor vs employee status
A new ‘gateway test’ now makes it easier to work out if someone is a contractor.
- Where a working arrangement meets all gateway test criteria, the worker will be recognised as a specified contractor.
- If any of the gateway test criteria are not met, the existing common law test of employment status will still be used.
- This aims to provide more upfront certainty for both businesses and workers.
New remuneration threshold for unjustified dismissal claims
Employees earning $200,000 or more per year under new employment agreements can no longer raise a personal grievance for unjustified dismissal (or unjustified disadvantage relating to the dismissal).
- The threshold will initially be $200,000 annual remuneration, with annual adjustments from 1 July 2027.
- Employers and employees can agree in writing to keep dismissal protections if they want to.
- Employees on current agreements have 12-months before the threshold applies to them. This allows employers and employees time to adjust and renegotiate their employment agreements.
Reduced remedies where employees contribute to the personal grievance
The new law introduces stronger consequences where an employee’s conduct contributed to a personal grievance.
The Employment Relations Authority and the Employment Court are now required to reduce or remove certain remedies.
What this means for employers and employees
From today, employers may need to review:
- templates for individual employment agreements
- hiring and onboarding processes
- workplace policies relating to conduct, performance, and disciplinary processes
- contractor engagement practices.
Workers and advisers may also want to understand how the new rules affect rights, obligations, and available remedies.