While the first year of the National-led Government’s term has seen some minor tweaks to the employment relations landscape, 2025 looks like it will bring more significant change given the recent announcement that an Employment Relations Amendment Bill will be introduced in 2025.
Employment Relations Amendment Bill
Income threshold for personal grievances – limits on personal grievances for employees earning over $180,000 per annum
It is proposed that employees earning over $180,000 per annum won’t have the ability to raise a personal grievance for unjustified dismissal. Employees would still have the ability to raise other forms of personal grievances and could also renegotiate the ability to pursue a personal grievance for unjustified dismissal with their employer.
As this change won’t have retrospective effect, it is likely that many employees will seek to agree compensation with their employer in advance (i.e. before the employment relationship commences) before finding themselves in a situation where they no longer have the right to challenge their dismissal. These types of arrangements are already commonly seen at CEO level.
This change won’t prevent employees from raising other forms of personal grievances so it remains to be seen whether there will be a reduction in claims from highly paid workers or, as in other jurisdictions, these claims are simply resolved in a different manner .
Restrictions on personal grievances
The Government has also announced further changes with the stated purpose of simplifying personal grievances. This involves an update to the Employment Relations Act 2000 which will give more consideration to an employee’s behaviour when awarding remedies as a result of a personal grievance. This includes:
- removing all remedies for employees whose behaviour amounts to serious misconduct;
- removing eligibility for reinstatement and compensation for hurt and humiliation when the employee’s behaviour has contributed to the issue, for example where there have been repeated instances of poor performance.
Other changes include:
- Allowing remedy reductions of up to 100%where an employee has contributed to the situation which gave rise to the personal grievance.
- Requiring the Employment Relations Authority and the Employment Court to consider if the employee’s behaviour obstructed the employer’s ability to meet their fair and reasonable obligations.
- Increasing the threshold for procedural error in cases where the employer’s actions against the employee are considered fair.
While a number of these changes are clearly aimed at addressing long-standing bug bears of employers, whether they have the effect of simplifying the personal grievance regime remains to be seen. In reality, the above contributory factors are already taken into account by the Employment Relations Authority and Employment Court.
Changes for Contractors
Included in the Bill will be the previously announced new ‘gateway test’ for determining whether workers are contractors. If the worker meets the new gateway test, then they will be considered an independent contractor and cannot challenge that status in Court.
The criteria for the gateway test are:
- a written agreement with the worker, specifying they are an independent contractor;
- the worker is not restricted from working for another business (including competitors);
- the worker is not required to be available to work on specific times of day or days, or for a minimum number of hours OR can sub-contract the work; and
- the business does not terminate the contract if the worker does not accept an additional task or engagement.
If the working arrangement in question meets the above four factors, then the person would be considered a contractor. If one or more of these factors are not met, then the existing test, which looks at the real nature of the relationship, would apply, and the worker can challenge their contracting status in the usual manner.
This change follows the Court of Appeal’s decision earlier this year which found that some Uber drivers were employees. Uber drivers would likely meet the proposed new gateway test and be considered contractors.
This new gateway test would be a significant change to the Employment Relations Act 2000 and the test for determining whether or not a worker is an employee. It significantly increases the hurdles a worker has to get over to show that they are an employee. Even after they have met this gateway test, the worker would then need to show that the ‘real nature of the relationship’ is one of employment.
It’s not clear at this stage whether a worker will be assessed against the gateway test solely based on the wording of the relevant agreement, or whether the working arrangement (and how it has developed) will also be relevant. If the working arrangement is relevant, then this new gateway test may not give as much certainty as the Government intends.
Changes to the Holidays Act 2003 – taking a break
Late this year the Government consulted on an exposure draft Bill for improving the Holidays Act 2003. Following that consultation, the Government has decided that the draft Bill was not going to solve the longstanding issues with the Act.
As a result, the Government has asked officials to go back to the drawing board, including developing an hours-based accrual model for annual holidays. The Minister has stated that it is still her ambition to pass a new Holidays Act by the end of this term but whether that is realistic remains to be seen.
We will keep you updated on all of these changes as they progress. Thanks for all of your support this year and we hope you all have a restful break.