The new coalition Government promises to bring significant changes for employment law.

Both ACT and New Zealand First have separate coalition agreements with National, and in this article we outline our analysis of the proposed employment changes that may impact your business.  

The National and ACT coalition agreement contains five substantial changes to employment law:

  1. Repeal the Fair Pay Agreement regime by Christmas 2023. This regime provides unions and employer associations with a system to bargain for minimum employment terms, resulting in binding agreements which would apply at an industry-wide level. Although applications have been made under the legislation (with the first received on 1 December 2022) and bargaining has commenced, no Fair Pay Agreements have been concluded. The Government has now released the Fair Pay Agreements Act Repeal Bill, which will repeal the Act and remove the ability for any FPAs to be finalised. Therefore, any current FPA bargaining will come to an end.

  2. Expand 90-day trial periods to apply to all businesses. Currently 90-day trial periods only apply to employers with fewer than 20 employees. The National Party introduced 90-day trial periods in 2009 and the size of the employer who could use 90-day trial periods has been a political football ever since then.    Therefore, this change comes as no surprise, but will we see much of an uptake from larger employers to reintroduce these in employment agreements? Given the 30-day rule that applies to any new employees whose work is covered by a collective employment agreement (meaning that they are initially employed on the terms of that collective), there are also likely to be practical limitations on the ability to use 90 day trial periods within workforces where a collective employment agreement is in place. The new Minister for Workplace Relations and Safety, Brooke van Velden, has confirmed that a bill to extend 90-day trials will be passed under urgency before Christmas.

  3. Reform health and safety law and regulations. What laws and regulations will be reformed is yet to be seen. However, in its Policing Red Tape and Regulation policy, ACT has commented that poor regulation has led to poor productivity. National has made similar comments in its Rebuilding the Economy policy. Therefore, some existing laws and regulations may be repealed.

  4. Consider simplifying personal grievances and in particular removing the eligibility for remedies if the employee is at fault, and setting an income threshold above which a personal grievance could not be pursued. In its Reducing Cost of Personal Grievances policy, ACT claimed the current system was open to abuse. In the policy, ACT promised that they will make the process fairer, faster and more certain as well as decreasing the risk of employing people.

    In our view, removing eligibility for remedies may be unnecessary given the Employment Relations Act 2000 already allows for remedies to be reduced if an employee is at fault, as the Employment Relations Authority is already required to assess an employee’s contribution to their personal grievance when awarding remedies. The current regime recognises that there will be differing levels of ‘contribution’ by employees and allows for remedies to be reduced proportionate to the level of contribution.

    The income threshold model is already used in Australia. Specifically, employees who earn more than A$167,500 (NZ$179,867) a year cannot pursue an unfair dismissal claim against their employer. However, those employees still have the ability to raise other claims against their employer. For example, alleging that they were subjected to an adverse action by their employer, discrimination, or a breach of contract. Therefore, we query whether the introduction of a high income threshold in New Zealand would lead to fewer claims by employees, or simply lead to different types of claims being pursued (for example, alleging matters such as discrimination). 

  5. Maintain the status quo that contractors who have explicitly signed up for a contracting arrangement can’t challenge their employment status in the Employment Court. The intention of this aspect of the coalition agreement is unclear as, currently, the “status quo” is that contractors who have signed up for a contracting arrangement can challenge their employment status. Currently, the Employment Court and Authority can decide that a contractor is, in reality, an employee based on certain legal tests. ACT had campaigned on removing this possibility so that contractors cannot challenge their employment status in the Employment Court where certain minimum conditions are met in relation to their contractual arrangements. Based on the wording of the coalition agreement, it remains unclear as to whether National is considering any such changes.

The National and NZ First coalition agreement combines both employment and immigration.  The first point relates to the obligations, and associated sanctions for non-compliance for people on the Jobseeker benefit. The third point outlines a commitment to moderate increases to the minimum wage every year. This is unlikely to be of any particular significance as the minimum wage has increased every year since 2000. The remaining points relate to immigration.

The previous Government was looking to address modern slavery and proposed the introduction of new legislation requiring operation and supply chain transparency from entities. It had also carried out a consultation on bullying and harassment at work. At this stage, it is unclear as to whether the new Government will be looking to continue any of this work. 

While we are yet to see what proposed changes make it through the legislative process to become law, it is clear that change is on the horizon. However, based on the coalition agreements, it appears that our clients’ top pre-election priority of Holidays Act simplification[1] is not a current priority for the Government. We will continue to advocate for our clients in this space.


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