BIG SHAKE-UP: MAJOR EMPLOYMENT LAW CHANGES COMING IN 2025!

Posted by Tony Sung in News

The coalition government promised big changes when it took office in 2023—now they’re delivering. With a suite of employment law reforms on the horizon, New Zealand employers and employees should prepare for significant shifts. Here’s your punchy rundown of what’s coming:

1. High-income employees face new dismissal rules

If you earn $180,000+, you may soon lose the right to claim unjustified dismissal. Existing high-income earners will have 12 months after the law kicks in before this applies, while new hires (or those changing roles without a restructure) will lose that right immediately. Want protection? Negotiate it into your contract. High earners can still file other claims like unjustified disadvantage.

2. Bad behaviour? Say goodbye to payouts

The Employment Relations Authority (ERA) and Courts currently reduce compensation for employee misconduct—but the new law allows them to wipe it out entirely. If you contributed to your grievance situation, expect up to 100% slashed remedies.

3. Cracking down on contractor claims

Think you’re an employee? Think again. Under a proposed “gateway test,” if all these conditions are met, you’ll be locked into contractor status:

• Written agreement stating you're an independent contractor
• Freedom to work for others
• No obligation for set hours OR ability to subcontract
• No penalty for rejecting extra tasks

4. Pay deductions return for partial strikes

Partial strikes used to mean full pay—not anymore. Employers will soon be able to dock 10% or apply a proportional deduction when employees partially strike.

5. Holidays act overhaul (but not just yet)

The government wants to simplify leave entitlements and slash compliance costs. But pushback during consultations means the new Holidays Act likely won’t land this year. An hour-based leave accrual model is being considered.

6. Two members’ bills worth watching

a)  Pay Transparency Bill
Labour MP Camilla Belich wants to ban gag clauses in salary discussions. Under this proposal, employees could freely discuss pay without employer repercussions.

b)  “Pay-to-Go” Termination Bill
ACT MP Laura Trask proposes allowing employers to negotiate exits with cash offers without risking unfair dismissal claims. This would be a potential win-win solution for both sides.

Stay ahead of the curve

With sweeping reforms on the table, employers should review contracts, update policies, and stay informed. Employees—know your rights and how these changes may impact you.

For tailored advice, we’re here to help:

DeAnne Brabant | Partner | deanne.brabant@shieffangland.co.nz%20%20%20 

Tony Sung | Associate | tony.sung@shieffangland.co.nz