Employment Relations Amendment Act 2026 - what changed and when it applies

Parliament has amended the Employment Relations Act 2000 (the "ERA") in several important ways. This page is a practical, plain-English guide to (1) what changed and (2) how to think about when those changes apply to dismissals, personal grievances (PGs), and employment agreements.

Contents

• How to work out which law applies
• Default rules and leading cases on retrospectivity
• Change to the "test of justification" (ERA s 103A)
• Remedies: contribution and "serious misconduct" (new ss 123B/123C, s 124)
• From balance to babysitting: Employment Relations Bill gets contribution wrong
• New $200,000 remuneration threshold for dismissal PGs (new ss 67I, 113A, 113B)
• Contractor vs employee: new "specified contractor" gateway test (s 6)
• Collective agreements: the 30-day rule is removed
• Trial periods: scope of the "no PG for dismissal" bar widened
• Practical checklist for advisers
• References

How to work out which law applies

The hard part with any amendment is not the wording - it is the time question: do we apply the old law or the new law to a particular case?

Start here:

1. Read the commencement clause. This Act "comes into force on the day after Royal assent".
2. Check for transitional provisions. This amendment includes explicit transitions (especially for the new remuneration threshold and the new "specified contractor" gateway test).
3. If there is no transition for a particular change (for example, the changes to s 103A and the remedy rules), you usually argue from:
   • the general presumption against retrospectivity (Parliament is assumed not to take away rights or impose new burdens for past events unless it clearly says so); and
   • how the Employment Court and Authority have handled similar amendments before.

A practical way to frame it is:

Example from case law: In Rittson-Thomas t/as Totara Hills Farm v Davidson the Court noted that because the relevant events occurred before 1 April 2011, the earlier version of s 103A applied. That is a useful template for how to argue the same point for 2026 ch

Default rules and leading cases on retrospectivity

Where the amendment Act does not include an express transitional rule for the specific change you are dealing with, the Authority and the Employment Court will usually work from the default interpretation rules in the Legislation Act 2019, and then test the result against the "real world" context (what changed, and what would be unfairly altered if the new rule was applied to past events).

Legislation Act 2019: the backbone

• s 12 (no retrospectivity): "Legislation does not have retrospective effect." (This is the modern equivalent of the old Interpretation Act 1999 s 7.)
• s 34 (savings on repeal/amendment): repeal or amendment does not affect a liability to a penalty or "any other remedy or relief" (and related matters), subject to the section and any contrary intention.

Practically, those two sections are your starting point for arguments like:

• Old law applies to past events (for example, a dismissal in January 2026) unless Parliament clearly says the new law applies to that earlier event.
• Accrued positions are preserved, including the availability of remedies or relief tied to what happened under the old law, unless Parliament clearly displaces that position.

Foodstuffs (Auckland) and Crown Health Financing: how the courts talk about it

Foodstuffs (Auckland) Ltd v Commerce Commission is widely treated as the leading New Zealand authority on the general approach to retrospectivity. The "headline" idea you see repeated in later cases is that the courts strike a balance between giving effect to reforms and protecting vested rights (if any) that are put in jeopardy by new legislation.

The facts of Foodstuffs are useful because they show how sharp the edge can be: it concerned an amendment to the Commerce Act merger threshold, where an application had been lodged just before the change was due to commence. The Court of Appeal (by majority) applied the new threshold to that pre-commencement application, and Parliament then passed a validation amendment to reverse the wider effect. The lesson for employment practitioners is simple: if Parliament wants a different timing outcome, it can and does write targeted transitional rules.

Another often-cited authority in the same area is Crown Health Financing Agency v P, and the related Supreme Court proceedings P and B v Crown Health Financing Agency. Even though the facts are far from employment law, the framing is the same: identify the relevant "trigger date" and decide whether Parliament intended a later-enacted (or later-commencing) provision to attach new consequences to earlier events.

How this helps you with the 2026 ERA changes: if you are dealing with a dismissal or disadvantage that occurred before 21 February 2026, you argue from s 12 and s 34 (and the Foodstuffs line of authority) that the new substantive tests and remedy bars should not be back-dated, unless the amendment Act clearly says they are.

Change to the test of justification (ERA s 103A)

The core test remains "what a fair and reasonable employer could have done in all the circumstances at the time" - but two changes matter in practice:

• New factor: when applying s 103A(2), the Authority/Court must consider whether the employer was obstructed by the employee from taking one of the usual "fair process" steps (the existing s 103A(3)(a)-(d)) or any other relevant step considered under s 103A(4).
• Process defects: s 103A(5) is tightened. The Authority/Court must not find unjustifiability solely because of defects in process if those defects did not result in the employee being treated unfairly.

Practical take: if you are acting for an employee, you will want to prove that any process defects caused real unfairness (not just technical non-compliance). If you are acting for an employer, you will be framing the process issues as either (a) not unfair in outcome, or (b) caused by employee obstruction.

Remedies: contribution and "serious misconduct"

The amendments strengthen the effect of "contribution" by the employee. There are now three layers:

1. Serious misconduct contribution: if the Authority/Court finds an action by the employee contributed to the situation giving rise to the personal grievance, and that action amounts to serious misconduct, then no remedy is available.
2. Contribution (even if not serious misconduct): if an employee action contributed to the situation, then reinstatement and compensation (for humiliation/loss of dignity/injury to feelings) are not available.
3. Reduction power increased: the contribution reduction in s 124 can now be up to 100%.

Employment Relations Bill gets contribution wrong (balance to babysitting)

On the issue of the reduction of remedies for contribution in a personal grievance action, the amendment removes s 123(1)(a) (reinstatement) and s 123(1)(c) (compensation for humiliation, loss of dignity, and injury to feelings) entirely where an employee's action contributed to the situation giving rise to the personal grievance (new s 123C).

That means any contributory conduct by an employee - no matter how minor - can block the usual significant tranche of remedies that lawyers and advocates often seek. The "serious misconduct" layer is harsher again: if the contributory action amounts to serious misconduct, no remedy is available at all (new s 123B).

The Minister's public justification for this change was that remedy settings are "imbalanced", and that serious misconduct is still resulting in employees getting remedies. Two examples were used in that public debate: a restaurant worker said to have been dismissed for stealing food but still receiving $21,000 compensation; and a truck driver said to have been dismissed for falsifying timesheet information but still receiving $10,500 compensation and 13 weeks lost wages. (See: Beehive release).

We found both cases relatively quickly. The problem is not that the cases exist - the problem is what gets omitted.

The $21,000 example: Maheno v Carrington Resort Jade LP [2022] NZERA 635

Ms Maheno admitted consuming food to a sales value of $187, which was repaid/deducted. The Authority found the employer's treatment and process were unjustifiable, including public statements to staff that implied she was a drug user, and a public "announcement" that the Authority described as a serious breach of privacy. (See: determination PDF at [20], [17]-[21], [228]-[233], [237]).

Distress compensation was assessed at $30,000 and then reduced by 30% to $21,000 for contribution under s 124. Put bluntly: the $21,000 result is not "the system rewarding theft" - it is the Authority compensating for serious process and privacy failures, while still applying a contribution reduction for the admitted conduct.

With those facts laid out, is no remedy justified? Under the new law, even minor contribution can mean no compensation at all.

The $10,500 example: Wirihana v AML Limited [2021] NZERA 14

This example is often described as "falsifying a timesheet". But the Authority found there was no evidence of fraudulent intent. It ordered $15,000 compensation and assessed lost wages at $4,702, then reduced remedies by 30% for contribution - producing an effective compensation outcome of $10,500 (being 70% of $15,000). (See: determination PDF at [78], [94], [99]-[104]).

The contribution finding was not "timesheet fraud". It was essentially that the employee could have approached the employer informally to resolve a misunderstanding, but instead escalated the issue immediately to his union organiser and insisted on a formal meeting, which the Member found prevented informal resolution.

Practical consequence: settlements get harder

As practitioners in this field, whether advocates or lawyers, you should be concerned about the settlement impact. In almost every case, the employer will argue (whether meritorious or not) that "serious misconduct" has occurred and/or that there is contribution. We already have that debate in most cases. This change turns it into a high-stakes gateway fight, because the upside is no longer "a reduction" - it is removing compensation entirely.

Even under the old law, remedies could be reduced for contribution and, in rare cases, reduced to nil where "equity and good conscience" required it. The Full Court in Xtreme Dining t/a Think Steel v Dewar is a key authority, and MBIE has relied on that case in its own policy documents. (Employment Court note; MBIE RIS PDF).

New $200,000 remuneration threshold for dismissal PGs

New provisions create a "high income" threshold that blocks certain dismissal-related personal grievances. In simple terms:

• If an employee's annual remuneration meets or exceeds the specified threshold (starting at $200,000), they cannot bring a personal grievance for unjustified dismissal, or for unjustified disadvantage that relates to the dismissal.
• They can still bring other types of PGs (for example, discrimination, harassment, union-related grounds, etc).
• Employer and employee can agree in writing that the threshold rules do not apply (so the employee keeps dismissal protections).

Transitional time point: there is a 12-month "grace period" for employees on existing agreements (and certain restructures), before the threshold blocks their dismissal PG rights. There is also a delayed start for any first inflation-type adjustment: the threshold must not increase before 1 July 2027.

Contractor vs employee: new specified contractor gateway test

The ERA now defines a category called a specified contractor. If the arrangement meets all gateway criteria, the person is excluded from the definition of "employee" for ERA purposes.

The gateway criteria include (in summary):

• a written agreement that states the worker is an independent contractor (or not an employee);
• the worker is not restricted from working for others (subject to practical limits while doing the work);
• either (a) no minimum availability/time requirement, or (b) the worker can subcontract with only limited vetting restrictions;
• the arrangement cannot be terminated just because the worker declines additional work;
• the worker had a reasonable opportunity to seek independent advice before entering the arrangement.

Transitional time point: if a person meets the specified contractor definition on the commencement date for a pre-existing arrangement, they become a specified contractor from that date unless employee-status proceedings were already on foot before commencement.

Collective agreements: the 30-day rule is removed

The amendments remove the "first 30 days" settings that required non-union new employees to be employed on collective terms for the first 30 days. The replacement approach is broadly:

• Employees can choose to accept an individual employment agreement from day one, or join the union and be bound by the collective.
• Employers still need to tell new employees about applicable collectives, and how to contact the union, and provide a copy of the collective.
• Some associated obligations are repealed, including the old "active choice" form requirement.

Trial periods

The amendment to the trial period provision (s 67B) widens the dismissal bar. If a trial period dismissal is validly made, the employee cannot pursue a personal grievance (or legal proceedings) for unjustified dismissal, and also cannot frame it as unjustified disadvantage if the disadvantage ground relates to the dismissal.

Practical checklist for advisers

1. Always pin down the trigger date: dismissal date / disadvantage date / agreement start date.
2. For s 103A cases after 21 Feb 2026: plead and prove unfairness, and anticipate "employee obstruction" arguments.
3. For remedies after 21 Feb 2026: plead contribution carefully. If you represent an employee, argue causation (no contribution) or not serious misconduct. If you represent an employer, identify the "action" that contributed, then frame it as serious misconduct where possible.
4. For high income employees: check whether the threshold applies (new agreement vs existing agreement; 12-month grace; any opt-in/opt-out clause).
5. For contractors: assess gateway test criteria and the transition position. If status proceedings were not filed pre-commencement, expect the gateway to bite from commencement.
6. For collective agreements and onboarding: update templates and induction scripts (collective info and union contact details still matter, but the 30-day default does not).

References

• Employment New Zealand: Employment Relations Act changes take effect today
• Parliament Bill page (history and documents)
• Employment Relations Amendment Act 2026 (NZ Legislation)
• New Zealand Legislation (official Acts)
• Legislation Act 2019 s 12 (no retrospectivity)
• Legislation Act 2019 s 34 (savings on repeal/amendment)
• LDAC Legislation Guidelines: Chapter 12 (existing rights and retrospectivity)
• LDAC Legislation Guidelines: Chapter 13 (interpretation and application)
• P and B v Crown Health Financing Agency [2008] NZSC 102 (PDF)
• VUW Law Review: Facilitating and Regulating Commerce (Foodstuffs retrospectivity note)
• IRD Tax Technical case summary (citing Foodstuffs and Crown Health Financing on retrospectivity)
• Beehive: Removing rewards for poor employee behaviour
• Maheno v Carrington Resort Jade LP [2022] NZERA 635 (PDF)
• Wirihana v AML Limited [2021] NZERA 14 (PDF)
• Employment Court: Judgments of note 2016 (includes Xtreme Dining v Dewar)
• MBIE: RIS - strengthening consideration of employee behaviour (PDF)

General information only. For advice on a specific case, get specific advice with the documents and dates.