Thank you to everyone who joined our recent Employment Law Update webinar, presented by Matthew Dearing, Senior Legal Counsel, on behalf of Edwards Sluiters Employment Lawyers.
The webinar generated a wide range of thoughtful questions from employers, HR professionals and business leaders across New Zealand. As there wasn't enough time to answer every question during the live session, Matthew has kindly provided written responses to the questions submitted by attendees.
We've included those responses below to help employers better understand some of the practical implications of the recent employment law changes.
Please note: The information provided below is general guidance only and is not intended to be legal advice for any individual or organisation. Every workplace situation is different. If you require advice specific to your circumstances, we recommend seeking independent legal advice.
Questions & Answers
1. Regarding the High-Income Remuneration Threshold, can we continue following our existing fair and reasonable dismissal process for high earners without opting them back into the statutory dismissal protections?
The short answer is yes. An employer can choose to continue following a full fair and reasonable dismissal process for employees earning above the remuneration threshold without opting them back into the statutory dismissal protections.The key distinction is between how the employer chooses to behave and what legal rights the employee retains. Employers may still choose to follow a fair process, even though they are not legally required to do so. If the company wishes to:
continue investigating allegations or dealing with concerns,
consult with the employee,
provide opportunities to respond,
consider alternatives,
make reasoned decisions
While not agreeing to opt the employee back into the statutory protections, there is nothing in the legislation preventing that. The compqny is effectively providing more process than the Act requires, but not more legal rights to the employee. Simply because an employer voluntarily follows a fair process does not mean the employee regains the statutory right to bring an unjustified dismissal personal grievance.
The Act says employees only retain those dismissal protections if there is a written agreement in the employment agreement stating that the remuneration threshold does not apply. There is no suggestion that voluntarily following a process amounts to an implied opt-in. However, this is new law and the courts will need to interpret it and this brings some risk. Also, the company should act consistently in applying its approach. Be aware that an employee may try to bring a personal grievance during a process for matters such as bullying for example to try and get leverage during this exit process. The company should update its employment agreements and any relevant policies to have explicit wording regarding this situation making it clear that it has not opted out of the statutory provisions and a personal grievance cannot be raised for a high income threshold dismissal even though it follows a process in good faith. EMA legal can assist you with this, as we are doing for other businesses.
2. When might we see the amended legislation applied or reflected in case law?
This is a tricky question to answer but there are a variety of cases before the Authority and Employment Court dealing with the interpretation and application of the new laws. This means of the next 6-18 months these cases will be raised and determined (and potentially challenged/appealed) as these cases are decided, we will keep clients updated.
3. Have there been any cases before the courts relating to the new employee "contribution" provisions?
There have been no significant Employment Court or appellate decisions that have authoritatively interpreted the new "contribution" provisions introduced by the Employment Relations Amendment Act 2026. The amendments only came into force on 21 February 2026, so there has been relatively little time for cases to progress through the Employment Relations Authority (ERA) and into the Employment Court. But we will keep business updated as such cases are determined.
4. If an employee is habitually one hour late, has only received informal conversations (not formal warnings), and is then given a first and final warning after 30 instances over three months, is this considered fair?
The company should follow standard disciplinary processes for lateness. This is approached by a tiered warning process (first, final, possible termination). There would be risk jumping straight to serious misconduct, if previous steps formally raising concerns have not been followed as it could be viewed as unreasonable when there is a process for dealing with lateness in general. Remember, the s103A test of ‘what a fair and reasonable employer could do in all the circumstances at the time’. This is probably a lesion that instances of lateness should be dealt with sooner in a formal sense of a disciplinary process with a warning to properly put the employee on notice.
5. If no "opt-in" discussions to preserve dismissal protections were ever initiated, does the $200,000 high-income threshold automatically apply after the 12-month transitional period?
Yes. If neither the employee nor the employer initiates an opt-in discussion and no written agreement is reached to preserve dismissal protections, the high-income threshold will automatically apply once the 12-month transitional period ends.
6. Does the High-Income Threshold apply immediately to existing employees who move into new roles with remuneration over $200,000?
Yes. In most cases, the high-income threshold applies immediately where an existing employee moves into a new role with the same employer and enters into a new employment agreement with remuneration of $200,000 or more. They do not retain the benefit of the 12-month transitional period simply because they were already employed by the organisation
The transitional provisions were intended to protect employees who remained on their existing employment arrangements when the law commenced on 21 February 2026.
The legislation and Employment New Zealand guidance make it clear that the transition continues only where the employee:
remains in the same position they held immediately before 21 February 2026; or
moves to a different position because of a restructure.
If, instead, the employee:
successfully applies for a promotion,
voluntarily transfers to another role,
accepts a newly created position, or
signs a new employment agreement for that role
7. Is the High-Income Threshold linked to a probationary or trial period, or can it apply at any stage of employment?
The high-income remuneration threshold is entirely separate from trial periods and probationary periods.
The threshold is not a form of probation, nor is it limited to the beginning of employment. It can apply at any point during an employee's employment, provided the statutory requirements are met. Be sure to undertake the remuneration calculation correctly to determine if the threshold is met.
8. Do employers need to notify employees about the High-Income Threshold changes, and what should be included in employment agreements or policies?
Employers are not legally required to notify employees that the high-income threshold applies to them or that their statutory dismissal protections have changed.
However, there are good reasons from a good faith, employee relations and risk management perspective to communicate the change to affected employees.
To mitigate risk and to ensure clarity, you should also review your employment agreements and policies to ensure they are consistent with the new law and do not inadvertently create contractual rights that undermine their intended approach. I have wording to put into the employment agremeents and can assist with updating policies as well.
9. Have you seen employees negotiate higher salaries or additional compensation to offset the loss of personal grievance protections under the High-Income Threshold?
Yes, we have seen some employees that are being impacted by the high income threshold rules seeking to negotiate either compensation if the provisions for termination are triggered by an employer or trying to have the existing grievance regime continue to apply but having their employment agreements amended to reflect this.
10. Does the Contractor Gateway Test differ for New Zealand-based and internationally based contractors? If an overseas contractor is deemed to be an employee, would New Zealand employment law apply?
The new Contractor Gateway Test introduced by the Employment Relations Act amendments in February 2026 raises some interesting issues when applied to overseas workers. The legislation itself does not create a separate test for New Zealand-based versus internationally based contractors, but whether New Zealand employment law applies at all is a separate legal question.
The statutory Gateway Test is the same regardless of where the individual lives.
In my view, the test asks whether the parties meet the prescribed gateway criteria (such as having a written agreement stating the person is an independent contractor and the other statutory requirements). If all criteria are met, the worker is treated as a contractor and cannot challenge their status through a personal grievance or employment status claim (subject to the limited statutory exceptions).
The legislation does not distinguish between:
a contractor living in Auckland;
a contractor living in Australia; or
a contractor living in India.
However, before you even get to the Gateway Test, you need to determine whether New Zealand employment legislation applies to the relationship.
11. Are there any changes to how annual leave accrues during parental leave?
Yes. One of the more significant proposed changes in the Employment Leave Bill is how annual leave accrues during parental leave, and it is intended to remove one of the long-standing anomalies under the Holidays Act 2003.
Current law (Holidays Act 2003)
Under the current system:
Employees become entitled to 4 weeks' annual holidays on each entitlement anniversary, including while they are on parental leave.
However, for annual leave that becomes due during parental leave or within the 12 months after returning, the leave is generally paid at the employee's average weekly earnings (AWE) only, rather than the greater of:
ordinary weekly pay (OWP), or
average weekly earnings (AWE).
Because AWE is often significantly reduced by periods of unpaid parental leave, employees can receive substantially less holiday pay when they return. This has commonly been referred to as the "parental leave penalty."
Proposed Employment Leave Bill
The proposed reforms fundamentally change the leave system.
1. Annual leave accrues continuously rather than by anniversary
Instead of receiving a lump entitlement of four weeks each year:
annual leave will accrue from day one;
accrual will be measured in hours, not weeks; and
employees will accrue leave at a minimum rate of 0.0769 hours for every standard hour worked.
2. Annual leave continues to accrue during parental leave
Importantly, the Bill specifically provides that annual leave continues to accrue while an employee is on statutory parental leave.
So employees do not stop earning annual leave simply because they are on parental leave.
3. The parental leave holiday pay penalty is intended to disappear
One of the Government's stated objectives is to eliminate the situation where returning parents receive reduced annual leave payments because of the AWE calculation.
12. With the proposed simplified Holidays Act payment calculations, how should employers manage employees who may be financially worse off because they receive bonuses or commissions?
This is one of the biggest issues employers have raised with the proposed Holidays Act reforms.
Under the proposed simplified Holidays Act, annual leave would generally be paid using a single earnings-based calculation, rather than the current "greater of":
Ordinary Weekly Pay (OWP), or
Average Weekly Earnings (AWE).
Removing the AWE comparison simplifies payroll considerably, but it also means employees who receive irregular incentive payments (such as quarterly sales commissions or bonuses) will no longer receive a temporary uplift in annual leave pay simply because they take leave shortly after those payments
Many organisations with commissioned or incentive-based staff are already considering how to manage this from an employee relations perspective.
The options include;
Explain that the legislation has changed and that it is not the company’s change but parliaments.
Create a discretionary "leave top-up"
"If annual leave taken within X weeks of a commission payment would previously have resulted in higher leave pay, we'll provide a discretionary top-up."
This maintains employee goodwill, helps retain high-performing sales staff, can be targeted only where needed but it does add payroll complexity, requires clear rules, creates expectations if not documented carefully.
Redesign the incentive scheme
Instead of, quarterly bonuses, you could consider:
monthly incentives;
more frequent commissions;
higher base salary with smaller incentives.
This smooths earnings and avoids large peaks.
Many remuneration specialists actually prefer this because employees receive income more regularly.
Introduce a specific "sales leave allowance"
Rather than changing salary, an employer could provide an additional contractual benefit, for example: Employees in commissioned sales roles receive a Sales Leave Allowance of $X per or X calculation year."
This separates remuneration from statutory leave calculations and is transparent and likely easier to budget for.
13. If the Government changes this year, which employment law reforms are likely to remain and which could be repealed?
The short answer is yes, for example a Labour-led government could repeal, amend, or reverse many of the 2026 employment reforms, but it is far from certain that all of them would be repealed. It would depend on Labour's election commitments, any coalition agreements and legislative priorities after the election.
Based on Labour's public statements and its criticism of the reforms while they were progressing through Parliament, the reforms most likely to be revisited are:
Contractor Gateway Test - Labour strongly opposed the statutory gateway test, arguing it makes it easier to classify workers as contractors rather than employees High-income dismissal threshold - Labour opposed limiting unjustified dismissal claims based on remuneration and is likely to repeal this provision. Personal grievance "contribution" changes - Labour criticised the reforms that give greater weight to employee contribution when determining remedies. They may restore a more employee-protective approach, although the exact form is uncertain.
Removal of the 30-day rule - Labour previously introduced and supported the 30-day rule and may reinstate it to strengthen collective bargaining.
Union notification changes - Labour has traditionally supported stronger union access and may revisit these provisions.
As of today, Labour has criticised the Employment Relations Amendment Act and opposed it in Parliament, but it has not yet released a comprehensive election policy promising to repeal every element of the 2026 reforms.
Employment law commentators generally expect employment law to become more employee-focused if there is a change of government, but the precise legislative programme remains to be announced.
14. Can an employee refuse to have a meeting recorded, even if they have been given advance written notice?
In short, yes. An employee can refuse to consent to a meeting being audio or video recorded, even if they have been given advance written notice that the employer intends to record it. However, whether the meeting proceeds, is postponed, or proceeds without a recording depends on the circumstances and whether the employer's actions are reasonable.
15. How are employee advocates likely to respond to the removal of "minor" from the procedural flaw test? Do you expect procedural issues to instead be argued as evidence that an employee was not treated fairly?
To be honest, some advocates/consultants may not even be aware of the change (unlike lawyers). However, the removal of the word "minor" from the procedural flaw provision does not remove procedural fairness as a relevant consideration. Instead, it changes how procedural issues are likely to be argued.
The question becomes much more direct:
Did the procedural issue actually contribute to the employee not being treated fairly?
That means the battleground is likely to move from the size of the error to the effect of the error.
16. Will the new High-Income Threshold make employees earning above $200,000 more vulnerable during restructures or cost-saving exercises?
Potentially, but in practice high income earners hold senior roles that undertake work that is not easily replaced or redistributed. However, undoubtedly there will be employers that are looking for cost savings who use the new provision as an alternative to a restructure to avoid redundancy compensation or other liabilities and to speed up the process, and mitigate risk of a personal grievance.
17. With collective agreements and the proposed Employment Leave Bill, what information is available about how parties will resolve issues arising under the new Act?
This is one of the areas where there is still relatively little guidance in the Bill itself, and I think it will become a significant issue in collective bargaining over the next few years.
From the Bill and supporting material released so far, the Government's focus has been on transitioning entitlements rather than prescribing how existing collective agreements are to be interpreted or amended
If a collective agreement specifies the annual leave payment calculation
There are a few possible scenarios.
1. The collective simply mirrors the legislation
Many collective agreements currently say something like:
Annual leave will be paid in accordance with the Holidays Act.
In that case, once the Employment Leave Act replaces the Holidays Act, the reference would generally operate by reference to the new legislation (or would be amended as part of transition arrangements). There is usually little difficulty.
2. The collective reproduces the current statutory formula
Some collectives don't merely refer to the Act—they actually specify:
greater of ordinary weekly pay or average weekly earnings
definitions taken directly from the Holidays Act
payment of relevant daily pay, etc.
This is where things become more complicated.
Those clauses become contractual promises negotiated between the parties. Unless there is:
a transition provision in the new Act,
agreement between the parties to vary the collective, or
a statutory override,
An employer may remain contractually bound to continue using the more generous formula for employees covered by that collective.
At present, I have not seen anything in the Bill that automatically rewrites those collectively bargained provisions.
Need Employment Law Advice?
If you have questions about how these employment law changes apply to your organisation, or require advice tailored to your specific circumstances, Matthew Dearing is willing to help.
Get in touch with Matthew to discuss your employment law needs.