Navigating Employment Law Changes in 2025: What Business Leaders Need to Know
As we move into 2025, a wave of employment law changes are set to impact businesses across New Zealand. From clearer contractor guidelines to simplified compliance with the Holidays Act, these reforms aim to make employment processes more straightforward and fair for both employers and employees.
Here’s a practical overview of what’s potentially on the horizon:
1. Holidays Act Reform
One of the most anticipated updates is the long-overdue reform of the Holidays Act. The goal is to simplify compliance, particularly for businesses with employees working variable hours or pay patterns. By reducing complexity, these changes should make it easier to calculate leave entitlements accurately and reduce disputes over holiday pay.
2. Contractor vs Employee Clarity
In response to the growing gig economy, the government is proposing a clearer test—referred to as the “gateway test”—to help determine whether a worker is a contractor or an employee. This shift is designed to provide greater certainty and reduce misclassification risks, helping businesses remain compliant with employment and tax obligations.
3. Industrial Action and Pay Deductions
New policies are being considered that would allow employers to make pay deductions during partial strikes. This would bring more structure and predictability to managing industrial action, potentially reducing operational disruptions. While still under consultation, employers should monitor developments closely to understand their obligations and rights.
4. Dismissal Flexibility for High Earners
A proposed reform could limit access to unjustified dismissal claims for employees earning above $180,000 per year. If enacted, this would offer employers more flexibility in managing employment relationships at senior levels, though careful consideration will still be required to manage reputational and legal risks.
5. Personal Grievance Remedies
The Coalition Government is exploring changes to how remedies are awarded in personal grievance cases. Employees found to have contributed to the breakdown of the employment relationship—especially where serious misconduct is involved—may lose entitlement to reinstatement or compensation for hurt and humiliation. These changes would significantly shift the current landscape and could provide more balanced outcomes for employers.
6. Pay Transparency
The Employment Relations (Employee Remuneration Disclosure) Amendment Bill seeks to ban pay secrecy clauses in employment agreements. If passed, it would be unlawful to prevent employees from discussing their remuneration. Additionally, employees who are disadvantaged or dismissed for sharing pay information could raise a personal grievance. While this promotes transparency, some employers—particularly SMEs—have raised concerns about pressure to match competitors’ wage levels.
Final Thoughts
These proposed changes reflect a broader effort to modernise employment law and bring greater clarity to key areas of the employer-employee relationship. While not all measures are confirmed, it's important for business leaders to stay informed and proactively prepare for potential impacts.
If you have questions about how these changes could affect your business, please don’t hesitate to get in touch. We're here to support you in navigating the road ahead with confidence.