Significant changes to employment law are likely to have important implications for businesses that rely on effective project delivery, workforce planning, and the retention of key leadership talent, writes commercial lawyer Andrew Skinner.
The Employment Relations Amendment Act 2026 introduces some of the most significant reforms to New Zealand employment law in recent years. For businesses that rely on effective project delivery, workforce planning, and the retention of key leadership talent, these changes are likely to have important implications for employment practices, organisational policies, and risk management strategies.
The Amendment Act, which came into force on 21 February 2026, amends the Employment Relations Act 2000 in two key areas: changes to how dismissal decisions and employment remedies are assessed and restrictions on unjustified dismissal claims for high-income employees.
Changes to dismissal assessments
The Amendment Act modifies how the Employment Relations Authority and Employment Court assess whether a dismissal was justified.
A new consideration allows decision makers to examine whether an employee obstructed or hindered the employer from following steps that would ordinarily be expected during a fair employment process. This could become particularly relevant in workplace investigations where an employee refuses to cooperate, withholds information or otherwise impedes an inquiry.
The legislation further provides that a dismissal cannot be found unjustified solely because of procedural defects if those defects did not cause actual unfairness to the employee.
In practical terms, this means that minor procedural errors are less likely to invalidate an otherwise reasonable dismissal decision. For employers, this may reduce the risk associated with technical process mistakes, provided the employee was not materially disadvantaged.
Tougher approach to remedies
The reforms also introduce significant changes to remedies available in successful personal grievance claims.
Where an employee's conduct contributed to the circumstances giving rise to the grievance, remedies such as reinstatement and compensation may be reduced or denied altogether.
More significantly, where an employee's conduct amounts to serious misconduct, the Employment Relations Authority or the Employment Court may not award any remedy.
New rules for high-income employees
A major change is employees earning at or above $200,000 per year are no longer able to bring a personal grievance claim for unjustified dismissal.
This may affect senior leaders such as executives, regional managers, commercial managers, project directors and other high-level employees whose total remuneration exceeds the threshold.
Importantly, the threshold is not limited to base salary. The Amendment Act adopts a broader definition of remuneration, including benefits received through employee share schemes. As a result, employees earning less than $200,000 in base salary may still fall within the threshold once bonuses, commissions or incentive schemes are included.
Where an employee earns at or above the threshold, the employer is no longer required to provide access to relevant information or give the employee an opportunity to comment before making a dismissal decision.
While these changes provide employers with greater flexibility, they do not eliminate employment risk altogether. High-income employees may still pursue claims relating to discrimination, harassment, retaliation, duress and other statutory protections.
Greater emphasis on employment agreements
One likely consequence of the reforms is a renewed focus on employment agreements, particularly for senior staff.
Without access to unjustified dismissal claims, high-income employees may seek stronger contractual protections, including:
- Extended notice periods
- Agreed termination payments
- Enhanced restraint and redundancy provisions
- Specific dispute resolution mechanisms
Businesses recruiting or retaining senior talent should expect greater scrutiny of employment agreement terms during negotiations.
The Act also allows employers and employees to contract out of the high-income threshold provisions by mutual written agreement. This enables senior employees to retain the ability to challenge a dismissal through the personal grievance process if both parties agree.
Key takeaway
The Amendment Act gives employers greater flexibility in managing dismissals, particularly in relation to employees earning $200,000 or more. It also places increased emphasis on employee conduct when determining both liability and remedies.
Despite the reforms, good employment practice remains essential. Employers should continue to follow fair, transparent and well-documented processes when managing performance, disciplinary matters and dismissals. Strong documentation, clear communication and robust employment agreements will remain the best protection against future disputes.
For employees, particularly those in senior leadership positions, now is an appropriate time to review employment agreements and understand how the new rules may affect their rights and protections.
Disclosure: The information presented in this article is general in nature and not intended to be legal advice for individual situations. You should speak to an expert about your specific circumstances and needs.
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