The Employment Relations Amendment Act 2025 came into force on 21 February 2026. Let’s find out what’s changed.
The changes to employment legislation are some of the most significant in years, particularly regarding personal grievances. The key changes are outlined below:
1. Personal grievance reductions
The new Act introduces stronger consequences where an employee’s conduct contributed to a personal grievance.
Remedies may be reduced up to the full amount if employee conduct contributed to the grievance, and serious misconduct may eliminate remedies entirely.
2. Employees earning $200K or more cannot bring unjustified dismissal claims
An initial $200,000 'total remuneration' threshold (e.g., salary plus any bonuses, commissions, etc.) has been introduced, with annual adjustments from 1 July 2027.
Employees at or above this threshold will no longer be able to challenge their dismissal through a personal grievance.
Employers are also no longer required to follow certain good-faith procedural steps (e.g., consultation regarding redundancy) when dismissing an employee whose remuneration meets or is above that thereshold.
Employees on current agreements have 12-months before the threshold applies to them. Employers and employees can agree in writing to keep dismissal protections if they wish
3. Contactor vs employee gateway test
To be considered a contractor, the following “gateway test” must apply:
A written agreement outlines that the worker is an independent contractor (or not an employee)
Ability to work for others (unless temporarily restricted while performing specific work)
Flexibility with time requirements or the ability to subcontract
No termination for declining additional work; and
A reasonable opportunity to seek independent advice before entering into the contractor arrangement.
If one or more of those conditions are not met, the 'old' test, i.e., the examination of the 'real nature' of the relationship, will apply.
4. Increased trial period protection
The new Act provides that employees dismissed under a valid trial period cannot raise a personal grievance for unjustified dismissal or unjustified disadvantage relating to the dismissal (previously it was just unjustified disadvantage).
5. Removal of 30 day rule
New employees no longer have to begin on terms and conditions of the collective employment agreement for their first 30 days.
Employees can now choose to agree to an individual employment agreement from the first day of work, or choose to join a collective employment agreement.
Action for employers
Employers may need to review:
Employment agreement templates
Hiring and onboarding processes
Policies relating to conduct, performance, and disciplinary processes
How contractors are engaged and that they meet the “gateway test”.
If you have any questions about these changes and how they might impact your organisation, please get in touch with one of the team.
This information is general guidance only, and you should not solely rely on this information; specific advice should be sought for your situation.