Deducting Doubts: Navigating Specified Pay Deductions and Partial Strikes Under the Employment Relations (Pay Deductions for Partial Strikes) Act

The Government recently reinstated the ability for employers to make specified pay deductions from an employee who is a party to a partial strike. We explore how this has been applied by the Employment Court in two recent decisions.

Employment Relations (Pay Deductions for Partial Strikes) Amendment Act

On 1 July 2025 the Government introduced an amendment to the Employment Relations Act 2000 (the Act) through the Employment Relations (Pay Deductions for Partial Strikes) Amendment Act (the Amendment Act). The amendment reintroduced an employer’s ability to make specified pay deductions from the salary or wages of an employee who is a party to a partial strike.

A partial strike occurs when an employee is at work but refuses to complete parts of their role or they breach their employment agreement. This may involve a reduction in the employee’s normal duties, normal performance or normal output/rate of work. Previously, if an employee was on a partial strike, their employer could not deduct their pay unless they suspended the employee or issued a lockout notice.

The Amendment Act now allows employers to make a specified pay deduction from the salary or wages of an employee who is a party to a partial strike. Alternatively, employers may impose a 10 percent deduction on the salary or wages otherwise payable to the striking employees. However, before any deduction is made, notice of the specified pay deduction must be provided to the employee in accordance with the requirements set out in the Amendment Act. In addition, if a union believes a pay deduction has been applied incorrectly, it must notify the employer as soon as reasonably practicable.

NZEI Te Riu Roa Incorporated v Secretary for Education

The Amendment Act was recently applied when NZEI Te Riu Roa Incorporated (NZEI), a registered union, sought an interim injunction restraining the Secretary for Education from making specified pay deductions to its members’ wages or salaries on the grounds that such anticipated deductions were unlawful.[1]

NZEI and the Secretary for Education were involved in two separate collective bargaining negotiations. During bargaining, employees issued strike notices that included bans on overtime, working beyond certain weekly hours, and taking on new cases. In response, the Secretary gave notice that it would make 10 percent deductions from the pay of those taking part, under the Amendment Act. The amount of total deductions was estimated to be $400,000 or higher.

NZEI asked the Employment Court for an interim injunction to stop the deductions. The Court declined, noting that although there was an arguable case that the proposed deductions were unlawful, the arguments were not so strong as to displace other considerations under the balance of convenience. The Court noted:

• NZEI submitted that the Amendment Act only takes effect if the employee is party to the partial strike. The strike notices were provided on behalf of all employees. NZEI argued it could not be established that all of those named would have been party to the strike. However, the Court found the strike notices showed the proposed action would be considered a partial strike under the Amendment Act.
• Although the Amendment Act does not allow deductions for overtime bans, in this case the Secretary’s deduction was related to refusing new cases which is permitted.
• The Secretary chose a flat 10 percent deduction. NZEI argued this was disproportionate. However, the Court noted the Amendment Act clearly allows a 10 percent deduction to be imposed even if once properly calculated the amount would have been more or less than 10 percent.

The Court decided it was not appropriate to make an order for an interim injunction and noted if the deductions were found unlawful in the substantive hearing the Secretary will be required to repay them.

Tōpūtanga Tapuhi Kaitiaki o Aotearoa – The New Zealand Nurses Organisation Incorporated v Health New Zealand

The Amendment Act was also tested when the New Zealand Nurses Organisation (NZNO) sought an interim injunction restraining Te Whatu Ora – Health New Zealand from making specified pay deductions from its members covered by strike notices.[2] NZNO argued the anticipated deductions were unlawful.

NZNO and Te Whatu Ora were bargaining for a national collective agreement. Strike notices were issued for partial strikes, where nurses at Whangārei Hospital would not work outside Ward 4 (surgical) and nurses at Auckland City Hospital would not work outside the Cardiothoracic and Vascular Intensive Care Unit. The strike ran from 18 to 23 August 2025, with a Life Preserving Services Agreement in place to provide for patient safety. On 6 August 2025, Te Whatu Ora notified NZNO it intended to deduct 10 percent of wages for affected members under the Amendment Act.

NZNO claimed the notice was non-compliant because it was not given “as soon as reasonably practicable” and was sent only to the union, not individual employees. Te Whatu Ora later issued individual notices on 15 August and a further notice on 18 August, but NZNO maintained these were still non-compliant. NZNO also argued the original notice did not correctly specify the relevant pay period as required by the Amendment Act.

The Court recorded that while all NZNO submissions were arguable, the strongest argument was Te Whatu Ora not specifying the relevant pay period. Therefore, NZNO had an arguable case.

The Court had to weigh which impact was greater: withholding 10 percent of NZNO members’ wages or preventing Te Whatu Ora from making deductions it might be entitled to (the balance of convenience). It found that NZNO members would be adversely impacted because even with damages available, they would remain out of pocket for some time. By contrast, Te Whatu Ora’s loss was modest (around $45,000) for an enterprise of its size and while it could not recover under the Wages Protection Act, it could recover through the Employment Relations Authority. The Court held the 10 percent deductions would have a greater impact on NZNO members than difficulties faced by Te Whatu Ora in attempting to recover the money or having to forego the amount it was entitled to deduct. As such, an interim injunction was granted restraining Te Whatu Ora from making deductions.

Considering pay deductions under the Amendment Act?

If your business receives a strike notice and you are considering making partial deductions under the Amendment Act, it would be prudent to seek advice first. Careful compliance with the Amendment Act’s requirements is essential, as recent case law illustrates that the process can be complex and litigation may follow.

[1] [2025] NZEmpC 171.

[2] [2025] NZEmpC 189.

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