On 8 December 2025, the Education and Workforce Committee Select Committee reported back on the Employment Relations Amendment Bill, recommending by a majority that it be passed.

The changes proposed in the Bill will significantly change New Zealand’s employment law landscape, shifting the dial more in favour of employer rights. The Select Committee has tinkered with aspects of Bill rather than making any fundamental changes. The notable changes suggested by the Committee are:

• To amend the contractor “Gateway Test” to clarify that businesses that do not classify workers as “independent contractors” can still access the test if their workers are specified as not being “employees”, as well as suggesting some additional clarifications to the operation of the test; and
• To increase the “high income threshold” to $200,000 based on a “total remuneration” approach.

Key differences between the original Bill and the Report’s recommendations

	The Bill as introduced	The Bill as per the Report
Gateway test for specified contractors	The gateway test only applies if person A performs work directly for person B.	The gateway test also applies if person A performs work for a third party facilitated by person B.
	A specified contractor is a “natural person".	A specified contractor is a “person” - which includes legal entities.
	The gateway test requires a written agreement that person A is an “independent contractor”.	The written agreement can specify that person A is an “independent contractor” or “not an employee”.
	Person A must not be restricted from working for other parties, except during periods when they are engaged in work for person B.	For clarity, person A is not prohibited from working for others solely because their work schedule for person B - or as arranged by person B - limits their availability (for example, if they work 40 hours per week for person B).
	If person A chooses to subcontract work to a third party, person B is permitted to vet the third party to ensure compliance with statutory requirements.	Where justified by the nature of the work, person B can also vet for relevant qualifications and criminal records.
Threshold for personal grievance claims for unjustified dismissal	A wage and salary threshold restricts eligibility for unjustified dismissal claims.	The threshold is determined by total remuneration, including commissions, bonuses, and other payments.
	Annual wages or salary is calculated by the total amount of wages or salary payable to the employee each year as specified in the employment agreement.	Annual remuneration (ar) for the purposes of the threshold is calculated by:              ar = (r ÷ d) × 364 r = total remuneration paid to the employee in the period that consists of the pay periods that start and end within the 364 days immediately before the first day of the pay period within which the employer notifies the employee of the dismissal d = the number of part or full days for which the employee has held the position with the employer in the 364 days immediately before the first day of the pay period within which the employer notifies the employee of the dismissal
	Threshold of $180,000.	Threshold of $180,000.
	Increases to the threshold take effect on 1 July of the given year.	Increases to the threshold do not occur in 2026 and begin on 1 July 2027.

Opposing views

Notably, the Report recorded the New Zealand Labour Party and the Green Party of Aotearoa New Zealand's strong opposition to the Bill. The Labour Party maintained the proposed changes represent a “direct attack on the rights and dignity of working people” and further submitted the Bill:

• undermines the principle of employment relations to foster relationships by promoting good faith and disrupts the equilibrium struck by the Act to balance the inequality of power between an employee and an employer;
• erodes the fairness of the personal grievance system by removing essential protections;
• entrenches the vulnerability of workers who are misclassified as employees to deny them employment rights; and
• diminishes collective power in relation to bargaining.

The Green Party submitted the Bill “undermines workers rights consistent with this Government’s anti-worker agenda”.

What’s next and what do we think?

The Committee of the whole House will now consider, debate and vote on the Report. The Bill is expected to be passed into law in early 2026, coming into force the day after it receives Royal assent.

The Report’s proposed changes to the gateway test are timely following the recent decision of the Supreme Court finding that four Uber drivers were employees.[1] Although the gateway test would allow businesses such as Uber to maintain their current operating model, the Bill will not apply retrospectively despite some submitters calling for this.

It is also worth noting that the gateway test could become a focal point for political debate if there is a change in government. Similar to provisions such as “90 day trial periods”, this could potentially become a provision that comes in and out of law depending on the government currently in place. Therefore, even once the Bill passes into law, there is likely to remain a degree of uncertainty for businesses as to how to best structure their contracting models going forward. 

In our view, the “total remuneration” approach to the income threshold aligns with the intent of the legislation, noting that many employees receive a high “total remuneration” package based on payments such as commissions, bonuses and allowances, but have a lower base salary. There will be a 12-month timeframe before the high income threshold takes effect. Within that transitional period, we recommend that employers assess which of their employees are likely to sit above this threshold and consider their position on whether to allow any employees to “opt back in” to the unjustified dismissal framework, or to negotiate any customised dismissal procedures. 

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