Amendments are expected for the Employment Relations Act to change the transition period for its proposed income threshold for unjustified dismissal claims to anyone earning over $180,000.
There are a number of changes to employment law which have been proposed by the Government, but where are these currently at?
In this article, we set out a brief update on some of the major changes announced over the past 12 months and set out what you need to know.
1. Income Threshold for Unjustified Dismissal Personal Grievances
Summary
The Workplace Relations and Safety Minister has stated that in 2025, it will amend the Employment Relations Act 2000 to introduce an income threshold for unjustified dismissal personal grievances.
The proposed changes would mean that employees with an annual base salary of $180,000 or more (considered to be the “high income threshold”) would not be able to raise a personal grievance for an unjustified dismissal.
This change does not prevent parties from negotiating their own terms and conditions in respect of the termination process.
What will I need to know?
It is unclear when the changes will take effect, however, the Minister has announced that once the law change has passed, there will be a 12-month transitional period for employees who already meet or exceed the income threshold.
During that transitional period, employees will still be able to raise a personal grievance for an unjustified dismissal. Parties may also use this time to renegotiate terms of the employment agreement.
Employees that sign a new employment agreement, once the law change has passed, will be subject to the new law with immediate effect.
Again, it is unclear when exactly this change will be taking place, so for the time being, the status quo remains.
2. Employment Relations (Termination of Employment by Agreement) Amendment Bill
Summary
This Bill proposes adding two new sections to the Employment Relations Act 2000.
The proposed section 101A allows for employers to make an offer to employees for the purpose of reaching an agreement to terminate the employment relationship, and for the employer to pay the employee a specified sum in full and final settlement of any cause of action arising out of the employment relationship. No employment relationship problem needs to be in place for the employee to do this, and such an offer is not grounds for a personal grievance.
However, agreements made under this proposed section would need to:
- be in writing and signed by both parties, and
- refer to the legislation allowing such agreements
The employer will also have to advise the employee that they should seek legal advice on the agreement before it is signed, and give the employee a reasonable opportunity to do so.
The proposed section 101B will prevent any negotiations made under propose section 101A inadmissible, effectively giving them the privilege of settlements reached in mediation or without prejudice negotiations.
Process
- This Bill passed its first reading on 9 April 2025, and was referred to the Education and Workforce Select Committee.
- Submissions to the Select Committee are currently open until 22 May 2025.
- The Select Committee’s report is due on 9 October 2025, so this Bill will likely not be passed until late this year at the very earliest.
What will I need to do?
Employers will not need to change any policies or agreements with staff following this amendment if it is enacted. However, it may be a useful tool in dealing with employment matters without going through a performance or disciplinary process first, or where there are no disciplinary or performance concerns, but an employee is not the “right fit”.
It will be important to note that while the amendment would allow employers to make such an offer to employees, the employee is not obliged to accept it, and if there are outstanding issues between the employer and employee, making such an offer may escalate tensions.
3. Employment Relations (Restraint of Trade) Amendment Bill
Summary
This Bill proposes to amend the Employment Relations Act 2000 to bring in rules and conditions around the use of restraints in individual employment agreements.
Specifically, the Bill proposes to prevent restraints of trades being incorporated into individual employment agreements for lower and middle income earners, and places parameters around restraints being imposed for higher income earners. The Bill proposes that:
- Restraints of trades would be prohibited for employees who earn less than three times the minimum wage (This would impact employees on annual salaries less than $146,640.00 based on the current minimum wage of $23.50/hour and a 40-hour working week).
- Where restraints are implemented for employees who earn more than three times the minimum wage, then the employer would be required to compensate that employee during the applicable restraint period at a rate of half the employees’ ordinary weekly earnings, for each week the restraint is in force.
- Where restraints of trade are imposed, they are limited to six months in duration.
Process
The Bill was first introduced in September 2022 with its first reading and referral to the Select Committee having took place on 26 July 2023. It is likely that any action (if at all) on this Bill will take place in late 2025.
What will I need to know?
There is currently nothing that you need to do and all restraints of trade in current employment agreements will continue to be in effect until further notice (with any challenges on reasonableness to be determined by the Employment Relations Authority/Courts). There has been strong opposition on the implementation of the Bill from the current Government, so it will be interesting to see where this Bill goes.
In the event the Bill is passed (in its current form) then Employers will need to be aware of the parameters and obligations when imposing a restraint of trade in an employee’s employment agreement.
4. Employment Relations (Employee Remuneration Disclosure) Amendment Bill
Summary
This Bill proposes to add one new section and one amendment to section 103 (Personal grievance).
The proposed section 110C would prevent employers from taking any adverse action against an employee for disclosing or discussing remuneration with colleagues or another person. Adverse actions include dismissing the employee, failing to offer the same terms of employment that they would have otherwise, or subjecting the employee to some detriment that they would not have if it were not for the remuneration disclosure.
It also proposes to add to the list of potential personal grievances set out at section 103 “that the employer has, in relation to the employee, engaged in adverse conduct for a remuneration disclosure reason”.
Process
- This Bill passed its first reading on 6 November 2024, and was referred to the Education and Workforce Select Committee. Submissions to the Select Committee closed on 23 January 2025.
- The Select Committee’s report is due on 6 May 2025, so we should see some movement on this Bill shortly.
What will I need to do?
Most employers will not need to change any policies or agreements with staff following this amendment if it is enacted. However, some employers may have policies in place or clauses within employment agreements that expressly require confidentiality around remuneration. If that is the case, these should be amended as appropriate.
5. Employment Relations (Pay Deductions for Partial Strikes Amendment Bill)
Summary
This Bill introduces the ability for employers to make pay deductions in response to partial strikes.
It does so by largely returning the settings around partial strikes to those that were in the ERA 2000 in 2018, before it was amended.
At the moment, employers cannot deduct wages from employees if they partially strike. This is different from a full strike, where in general, employees do not receive remuneration.
This Bill provides employers with a specific response to partial strikes. It sets out two ways to calculate pay reductions in response to partial strikes. This Bill will not force an employer to make deductions to pay, however, if they do choose to do so, the employee must be given written notification prior to deductions being made.
There are exceptions to the rule:
- When the strike is on the grounds of safety or health
- When the employee is paid by piece of work and the strike results in a reduction in output
- When the strike involves only a refusal to work overtime or perform call-out work if the employee would otherwise receive a special payment for performing the call-out work, or for any period of a strike that involves such refusals.
The Bill defines the meaning of a partial strike as:
- an act of the employees who are a party to a strike in continuing to perform some work for their employer or employers during the strike instead of wholly discontinuing their employment during the strike, and includes, without limitation,—
- a partial discontinuance of work through a refusal or failure to accept engagement for work that forms part of the employees’ normal duties:
- a reduction in the employees’ normal performance of work, normal output, or normal rate of work:
- means an act of the employees who are a party to a strike in breaking their employment agreement, whether or not the act involves any reduction in the employees’ normal duties, normal performance of work, normal output, or normal rate of work
Pay reductions will be calculated by either:
- estimating the employees’ usual hours of work in proportion to the strike action (time spent and work uncompleted), or
- 10% of the employee’s salary/wages.
Process
- The Bill was introduced on 8 December 2024 and passed its first reading on 10 December 2024.
- It was then referred to the Education and Workforce Select Committee, for which submissions closed on 30 January 2025.
- The Select Committee released its report on April 14, 2025.
What will I need to do?
Employers will likely not need to change any policies or agreements should this amendment be enacted. Employees will need to be aware of the possibility their pay may be decreased in the event of a partial strike.
6. Equal Pay Amendment Bill
Summary
The Equal Pay Amendment Bill was introduced to the house on 6 May 2025, being progressed under urgency to “ensure the system is workable and sustainable.” There will be no public consultation on the Bill and it is anticipated to come into effect in the coming days.
The Equal Pay Act 1972 (“the Act”) was introduced to prevent sex-based discrimination in remuneration, ensuring equal pay for the same work. In 2017, the Court of Appeal confirmed that this requirement extended to pay equity for different work of equal value. In 2020, the Act was amended to allow for pay equity claims to be raised outside of the Court, implementing an accessible process based on the existing bargaining framework in the Employment Relations Act 2000.
The key changes that will occur if the Equal Pay Amendment Bill is passed are as follows:
- Changing the threshold for a pay equity claim being raised and progressing, from a claim that “is arguable” to a claim that “has merit”.
- Redefining “predominantly performed by female employees” from 60 percent to 70 percent and requiring that this has been the case for at least 10 consecutive years.
- Prohibiting a subsequent pay equity claim being raised less than 10 years after a claim in relation to the same employees and work has been settled.
- Placing a larger onus on employees to prove that there are reasonable grounds to believe the work is historically and currently undervalued, including a requirement for evidence.
- Providing further clarity and guidance on the use of comparators – work performed by men that is different to the claimant’s work but has similar skills, responsibilities, levels of experience, or working conditions to the claimant’s work.
- Extending settlement timeframes to allow for agreed phases over a maximum period of 3 years from settlement.
Importantly, these amendments would discontinue all current pay equity claims. Instead, claimants will be directed to raise them as new claims under the new requirements of the Act. Review clauses in existing settlement agreements will be unenforceable.
Process
- The Bill passed its third reading on 6 May 2025 (the day it was also introduced). We anticipate the bill will achieve royal assent in the coming days.
What will I need to do?
Employers will likely not need to change any policies or agreements should this amendment be enacted. It should be noted however that any existing pay equity claims will be discontinued. For employers and employees alike, they should familiarise themselves with the new requirements for raising and resolving claims.
7. Changes to Remedies in the Employment Relations Authority and Employment Court
Summary
There has been an indication that amendments will be made to the Employment Relations Act 2000 to strongly consider an employee’s accountability for their behaviour when a personal grievance is raised. In particular, the Employment Relations Authority (“ERA”) and Employment Court will allow remedies to be reduced by 100%.
The changes will also mean that if an employee has been dismissed for serious misconduct, and the ERA or Court find that serious misconduct has been established, the employee will not be eligible for any remedies.
The changes also aim to prevent an employee from being awarded reinstatement to their role if the ERA or Court determines that their behaviour contributed to the personal grievance in any way. If this is the case, the employee would also be excluded from claiming compensation for hurt and humiliation, reducing remedies to a loss of earnings only.
Process
It is unclear when these changes will take effect, however, like many other amendments to the Employment Relations Act, the intention is to pass many of these changes by the end of 2025.
What will I need to do?
There is nothing you will need to do, and any matters currently before the ERA or Court will be determined in accordance with the current legislative parameters around remedies.
8. Removal of 30-day Rule for New Employees
Summary
The Workplace Relations and Safety Minister has announced that it will be repealing the current requirement for employers (with collective agreements in place) to reflect collective employment terms in an employee’s individual employment agreement for the first 30-days of employment.
The changes will also remove the requirement for an employer to utilise the “active choice form” currently in place and the requirement that employers must pass on information provided specifically by a union.
Employers (with collective agreements in place) will still be required to communicate to employees that they are able to join a union, how to contact the union, and inform them that the collective agreement will bind them if they choose to join.
Process
The Minister has indicated that the changes will come into effect by the end of 2025, however, the exact date is not clear at this stage.
What will I need to do?
The purpose of the change is to reduce the level of compliance burden on employers, meaning once the law change has passed, employers (with collective employment agreements in place) will be free to negotiate individual terms of employment from the outset, if the employee chooses to be employed on such an agreement.
