Quick reminder: what’s on the horizon for employment law in 2025?
Between the coalition government, and individual members bills, there have been a number of employment related legislative changes proposed recently. Below is a quick reminder of what has been announced, and where you can find out more
Unjustified dismissal income threshold
The coalition government intends to introduce a Bill that would bar employees earning $180,000 (base salary) or more per annum from raising a personal grievance for unjustified dismissal.
The income threshold would apply to any new employment agreements once the Bill was passed, and existing employment agreements one year later. The transition period is to allow the parties to an employment agreement time to amend contracts if they wish. We expect this time would be utilised by the parties to negotiate bespoke dismissal provisions. There would also be the ability to opt back in to the unjustified dismissal framework.
The threshold would be updated annually based on upward (but not downward) changes in average earnings.
See our article here for more on this.
Restricted remedies for employees at fault
The Employment Relations Act (the Act) already allows employment institutions to make reductions to remedies where the employee contributes to their personal grievance, however in Hon Brooke van Velden’s view, the reductions have become smaller, while awards to employees have been increasing.
The Minister is of the view that the employment institutions are not striking the right balance, and as a result, has proposed the following legislative amendments:
- An employee is not eligible for any remedies where their behaviour giving rise to the personal grievance amounted to serious misconduct.
- An employee is not eligible for permanent reinstatement or compensation where their behaviour giving rise to the personal grievance contributed to the issue.
- The Employment Relations Authority / Employment Court can reduce other remedies that are still available (such as lost wages) up to 100% where an employee has contributed to the situation which gave rise to the personal grievance.
- The Authority/ Court must consider, in any personal grievance case, whether the employee’s behaviour obstructed the employer’s ability to comply with its obligations as a fair and reasonable employer.
See our article here for more on this.
Employee v Contractor gateway test
The Coalition Government has also proposed to introduce a ‘gateway test’ for businesses to distinguish between an employee and a contractor.
The proposed gateway test is:
- A written agreement with the worker, specifying they are an independent contractor, and
- The business does not restrict the worker from working for another business (including competitors), and
- The business does not require the worker to be available to work on specific times of day or days, or for a minimum number of hours or the worker can sub-contract the worker, and
- The business does not terminate the contract if the worker does not accept an additional task or engagement.
If all four criteria were met, the worker would be considered a contractor. If one or more factors were not met, then the existing text in the Act would apply.
See our article here for more on this.
Protected exit discussions
ACT MP Laura Trask’s Members Bill was drawn from the ballot and introduced into Parliament. The Bill proposes to allow employers to make an offer to an employee for the purposes of negotiating the termination of their employment.
Currently, such a conversation could give rise to an unjustified constructive dismissal claim. However if the Bill was enacted, such an offer of an exit settlement would not create grounds for a personal grievance claim.
Pay secrecy
Labour MP Camilla Belich’s Employment Relations (Employee Remuneration Disclosure) Amendment Bill was also drawn from the ballot. The Bill seeks to protect employees who discuss or disclose their remuneration, by introducing a personal grievance for if an employer engages in ‘adverse conduct’ for a ‘remuneration disclosure reason’.
See our article here for more on this.
Theft by employer
The Crimes (Theft by Employer) Amendment Bill has now passed its third reading. It will come into force the day after it receives royal assent.
The Bill amends the Crimes Act 1961 to state that where an employer intentionally fails, “without reasonable excuse”, to pay money owed to an employee, that constitutes theft. Once the Bill becomes law, an individual employer who commits wage theft could face either a fine of up to $5,000, or one year in prison, or both. The company which the employer works for could face a fine of up to $30,000.
The wording “without reasonable excuse” was introduced by New Zealand First’s Casey Costello in an amendment paper, in an attempt to ensure situations such as payroll glitches, delayed time sheets, or cash-flow issues are not captured.
See our article here for more on this.
Want to know more?
If you have any questions about employer obligations, please contact our specialist Employment Team.