The Employment Relations Amendment Bill 2025 (“the Bill”) has now been confirmed and became law on 21 February 2026.
Our previous article covered the core changes under the Bill. Following several recommendations by the Education and Workforce Committee (“the Committee”), the final Bill contains some material changes from the first draft.
This article highlights the key changes under the final version of the Bill which has now become law. In summary:
- Workers who meet a set list of criteria will be treated as independent contractors and will not be able to claim that they were in fact employees.
- Employees who earn over a specified threshold will no longer be able to raise a personal grievance in relation to their dismissal.
- Employees who contributed to their grievance/dismissal may have their remedies reduced or removed entirely.
- The 30-day rule for employers will be removed, meaning employees do not need to be employed under the applicable collective agreement for the first 30 days.
These changes are explained in more detail in the below.
Contractor Classification
A statutory “gateway test” has been introduced to determine when a worker qualifies as a genuine independent contractor.
Importantly, a worker will be considered an independent contractor where:
- they perform work for the principal, or for a third party and the work is facilitated by the principal. For example, drive-share arrangements such as Uber or Ola, where the company facilitates work being provided by drivers to riders
- the written agreement states that the worker is an independent contractor, or states that the worker is not an employee
- they are able to work for any other person except when actually performing work for the principal. At the Committee’s recommendation, it was clarified that just because a contractor works full-time hours for one business, it doesn’t mean they are prevented from working for others
- they are not required to provide their services as specific times or on specific days. Otherwise, the worker must be permitted to sub-contract their work to others with no/minimal vetting by the principal
- the engagement cannot be terminated simply because the worker declines an offer of additional work, and
- they had a reasonable opportunity to seek independent advice before accepting the engagement.
This clarifies the situations where a worker will be considered an independent contractor rather than an employee. Where these criteria are met, the worker will not have any grounds to claim they were in fact an employee.
Income threshold for Dismissal Claims
Employees earning $200,000 or more in total annual remuneration are no longer eligible to bring a personal grievance claim in relation to their dismissal, unless their employment agreement specifically preserves that right.
Following recommendations from the Committee, this threshold was broadened to include total remuneration, not just salary/wages. This means other benefits such as medical insurance, company vehicles, professional membership fees, employee share schemes, bonuses, and commissions will all count towards the threshold.
This change applies immediately for new employees. For existing employees, there is a 12-month transition period before this threshold will take effect, during which time employers and employees can negotiate for other protections to be included in the employment agreement or for the employee to retain the ability to challenge their dismissal. If the employee chooses to change roles or change employers during that transition period, the change will take effect immediately on the employee changing roles/employers.
For employees whose remuneration approaches or exceeds the threshold, negotiation of termination protections is essential. Notice provisions, severance clauses, and other exit mechanisms may become the primary safeguards.
Deductions for Contribution
Where an employee has committed serious misconduct and this materially contributed to the situation giving rise to a grievance, compensation and reinstatement may be reduced or unavailable entirely.
This does not remove the requirement for employers to follow a fair and reasonable process. Procedural fairness and good faith obligations remain fundamental. However, this change strengthens the employer’s position where serious misconduct is established, and it reduces the likelihood of substantial compensation in those circumstances.
Employees should be aware that conduct will now have an even more direct impact on the remedies available in a successful grievance.
Removal of 30-day Rule
Employers must still inform new employees about applicable collective agreements and the option to join a union, however, they are no longer required to automatically place the employee under the applicable collective agreement for the first 30 days of employment.
This change means individual employment agreements can be offered from day one without temporary collective coverage.
Justification Test
When determining whether an employer’s decision was justified, the courts must now consider whether the employee obstructed the employer from following a fair process. This could include where the employee hinders the employer’s ability to investigate allegations raised against the employee.
It has also been clarified that an employer’s decision must not be found to be unjustifiable solely because of defects in the process if the defects did not result in unfairness. This removes the additional requirement that the procedural defect also had to be “minor”. This change means the focus is exclusively on whether the procedural defect resulted in unfairness to the employee, regardless of whether the defect was minor or not.
Key Takeaways
These reforms reflect a broader policy change that focuses on contractual clarity and reduced compliance risk for businesses. At the same time, these changes place greater responsibility onto individuals, particularly contractors and senior employees, to negotiate and protect their own interests.
Employers and employees could take this opportunity to review their existing terms of employment and consider whether any updates are needed in light of these reforms.
