The Employment Relations Amendment Bill 2025 (Bill) has passed its first reading and is now before the Education and Workforce Select Committee.
The Bill proposes the most significant changes to the Employment Relations Act 2000 (Act) since it was introduced 25 years ago. In particular, removing the right to bring a personal grievance for unjustified dismissal for employees whose salary or wages exceed $180,000 and changing the test for whether an individual is an employee or a contractor.
Wage and Salary Threshold for Unjustified Dismissal
The Bill provides that if at the time of a dismissal an employee’s salary or wages meets or exceeds the specified wages and salary threshold (currently $180,000), then the employer is not required to undertake a process in accordance with the good faith provisions of the Act and the employee may not bring a personal grievance in respect of the dismissal.
What this means in practice is that employers would only be required to comply with the relevant notice provisions of the employee’s employment agreement and would not have to have any reason or follow any process prior to dismissing an employee whose wages or salary exceeded the threshold.
These provisions can be contracted out of if the parties wish – allowing the employee to continue to have a right to bring a personal grievance for unjustified dismissal. There is also a 12-month transitional period from the date the Bill comes into law for existing employees.
If this proposal is implemented it will be interesting to see how the market reacts in terms of the number of employers willing to ‘opt back in’ to these protections. As an alternative, employees may attempt to negotiate parachute payments which give them some form of compensation where their employment is terminated.
It will also be important for employers to not treat this change as a blank cheque. While employees may be prevented from bringing a personal grievance for unjustified disadvantage other forms of personal grievances – in particular for discrimination – can still be pursued. We know from Australia, which has a similar threshold, that senior employees still pursue claims they just come in a different form.
Employers should start thinking about the contractual arrangements they agree with employees above the threshold as these will become increasingly important going forward.
Meaning of employee
The Bill also proposes introducing a statutory gateway test for contractors. If all of the below questions can be answered with a ‘yes’, then the individual will be deemed to be a contractor and will not be able to challenge their status. If they can’t, then the usual real nature of the relationship enquiry will have to be undertaken.
The Bill states a specified contractor means a natural person (person A) who has entered into an arrangement to perform work for another person (person B) and:
- that arrangement includes a written agreement that specifies that person A is an independent contractor; and
- person A is not restricted from performing work for any other person, except while performing work for person B; and
- either—
- person A is not required to perform, or be available to perform, work for person B at a specified time or on a specified day or for a minimum period; or
- person A is allowed to sub-contract the work for person B to another person (who may be required to undergo vetting by person B to ensure compliance with any relevant statutory requirements before being sub-contracted by person A); and
- the arrangement does not terminate if person A declines any work offered to them by person B that is additional to the work that person A agreed to perform under the arrangement; and
- person A had a reasonable opportunity to seek independent advice before entering into the arrangement.
If the Bill is passed it will make it significantly more difficult for some independent contractors to challenge their employment status. However, the gateway test is mainly aimed at individuals in the ‘gig’ economy and so while it may provide significant certainty for this form of relationship there will be a number of contracting relationships which don’t pass this test and which will still have to be examined by assessing the real nature of the relationship – a test which brings with it many shades of grey. In particular, any individual who contracts via a company would not be able to pass the gateway test and so the usual test would apply.
The Supreme Court has now heard arguments in relation to whether some Uber drivers are employees. While that decision will be significant for historic relationships, this change could mean that those individuals working in the gig economy find it a lot more difficult to challenge their employment status in the future.
Further restrictions on personal grievances and remedies
The Bill next proposes to amend section 123 of the Act to bar the Employment Relations Authority or Employment Court from providing for any remedy if they determine that:
- an action of the employee contributed to the situation that gave rise to the personal grievance; and
- that action amounts to serious misconduct.
It is unclear at this point which definition of serious misconduct will be applied.
The Bill also states the Employment Relations Authority or Employment Court must not provide for any of the following remedies if they determine that an action of the employee contributed to the situation that gave rise to the personal grievance:
- reinstatement of the employee in their former position or the placement of the employee in a position no less advantageous to the employee; and
- payment of compensation by the employee’s employer under section 123(1)(c).
The Bill also proposes that employees may no longer raise a personal grievance for unjustified dismissal or unjustified disadvantage if they are dismissed under a 90-day trial period, and the ground relates to that dismissal. The Bill also requires that the Employment Relations Authority or Employment Court must not determine a dismissal or an action to be unjustifiable solely because defect in the process followed by the employer if the defects did not result in the employee being treated unfairly.
While we consider these changes address relatively rare situations, and in most cases employees who commit serious misconduct or contribute to the personal grievance don’t receive remedies, these changes will make it more difficult for employees to pursue personal grievances.
Removal of the 30-day rule
The final, and notable, change is the removal of the 30-day rule which provides that employees must be employed under any applicable collective employment agreement for the first 30 days of their employment. The 30-day rule has been repeatedly repealed and reinstated over the life of the Act. Previous repeals, and reinstatements, of this 30-day rule have had limited impact.
Where to from here?
Submissions on the Bill close on 13 August 2025. A report is then due from the Select Committee on 17 November 2025. At this stage, we expect the Bill to pass by the end of the year. We would expect some further tweaks as part of this process and will keep you updated as these significant changes progress.
