Adrian Tocker draws on his 20 years of extensive experience advising employers across all aspects of employment law, collective bargaining, and workplace relations. In this insight, he provides a practical, balanced, and informed analysis of the proposed Employment Leave Bill, exploring its potential implications for employers, employees, and workplace practices. Adrian offers valuable perspectives on the key changes being proposed, the challenges organisations may face in adapting to them, and the considerations employers should keep in mind as the legislation progresses.

The Select Committee has now reported back on the Employment Leave Bill, the proposed replacement for the Holidays Act 2003. The Committee has recommended the Bill proceed, while making a number of practical improvements aimed at improving workability around issues such as notional rosters, multi-role employees, public holidays, annual leave and remediation.

Having spent many years advising employers on Holidays Act compliance, remediation projects, collective bargaining issues and payroll disputes, my overall view is that the Bill represents a serious attempt to address the systemic problems that have existed under the current legislation for decades. The proposed move to an hours-based model is not simply a payroll change – it is a fundamental shift in how leave entitlements are earned, recorded and paid.

Is it perfect? No.

There are legitimate concerns about the impact on some employees, particularly those with highly variable work patterns, significant additional hours, casual arrangements, or part-time work. Those concerns deserve proper consideration and will undoubtedly continue to be debated as the Bill progresses.

However, we also need to acknowledge an uncomfortable truth.

The Holidays Act has become one of the most difficult pieces of employment legislation for employers to administer correctly. Despite significant effort and good faith by many organisations, payroll compliance issues have become widespread. Numerous employers have spent years and millions of dollars rectifying historical underpayments, often arising from genuinely complex calculation requirements rather than deliberate non-compliance.

For many employers, the attraction of the proposed framework is not reducing employee entitlements. It is the prospect of finally having a leave system that is easier to understand, easier to explain and easier to administer.

The proposed framework provides:

• clearer leave accrual rules
• a more consistent payment methodology
• greater certainty around public holidays and otherwise working day assessments
• improved payroll transparency
• clearer record-keeping requirements
• greater confidence that employees are receiving the correct entitlements and payments.

The political question will be whether the Bill survives largely intact following the upcoming election?

Regardless of where employers sit politically, I think organisations should be paying close attention now. If enacted, implementation is likely to require significant work across employment agreements, collective agreements, payroll systems, rostering practices, HRIS platforms, policies and manager capability. The proposed two-year lead-in period may sound generous, but for larger and more complex employers it will pass quickly.

There are some practical steps employers can start considering now:

• reviewing guaranteed hours and availability arrangements
• identifying employees working regular “additional” hours
• assessing casual employment arrangements
• reviewing multi-role employee structures
• understanding how payroll systems would manage an hours-based leave model
• considering how standard hours, additional hours and roster patterns would be recorded and maintained
• continuing any existing Holidays Act remediation work, as current obligations remain unchanged.

Perhaps the biggest challenge for employers will be ensuring that the new framework is implemented as intended. The success of the model will depend heavily on genuine alignment between employment agreements, actual work patterns, rostering arrangements and payroll treatment. If those things are not aligned, many of the issues we see today will simply reappear in a different form.

Having worked with Holidays Act issues for many years, I’m not convinced the Bill is perfect. But I am convinced the status quo isn’t. The proposed framework feels like a serious attempt to align leave entitlements with how people actually work in modern New Zealand workplaces.

If implemented well, that should lead to clearer entitlements, more accurate payments, greater compliance certainty and, ultimately, a system that works better for both employees and employers.

With 22 years experience helping organisations resolve complex employment issues, Senior Associate Raymond Wheeler shares his insights into what makes relational based bargaining an important strategic approach for both employers and employees and working with unions.

Relational Based Bargaining: Using Good Faith as a Strategic Advantage  

What is the Nature of Bargaining?

Bargaining is not won by clauses alone, nor by coverage, budgets, rosters, hours of work and many other exchanges, or who can hold the strongest position for the longest. The key point is that bargaining is about people, trust, credibility, and the ability of parties with different interests to reach an outcome they can live with and implement.

Employers are rightly focused on sustainability, operational flexibility, responsible management, and securing long-term employment.

Unions and members are equally focused on relevance, certainty, protection, influence, and improving terms and conditions.

There are and will be times where expectations will not align and tensions will occur between the parties due to the inherently diametrically opposing views.

Is Good Faith an Obligation or a Strategy?

The Employment Relations Act establishes obligations around good faith. It requires parties to engage openly, be responsive and communicative, and avoid misleading or deceiving one another.

Effective bargaining with the strongest outcomes are often achieved through the quality of relationship and the credibility built throughout the process.

This is where relationship based bargaining and good faith become more than legal obligations – good faith serves as a strategic tool when used effectively.

Using good faith strategically, bargaining shifts from defending fixed positions to understanding the interests behind them and enabling practical options to be properly explored.

An example is when an employer’s operational requires flexibility clauses. The business rationale (interest) may be maintaining customer service levels or adapting to changing demand.

Likewise, employees may resist change not because they oppose flexibility but because they seek certainty and predictability.

Understanding interests does not mean an agreement is guaranteed, but often creates more options than positional bargaining alone.

Relationship based bargaining also recognises a key reality that the parties still have to work together to when bargaining ends. An agreement reached through an acrimonious bargain can create long term damage that outweighs any short-term gains.

It doesn’t mean avoiding difficult conversations or abandoning  commercial mandates as employers remain entitled to maintain positions and unions are entitled to advocate strongly.

Good faith does not require agreement – it requires engagement. A significant but often underestimated benefit of a relationship-based approach is its ability to build credibility to support more constructive engagement between the parties.

How can credibility be built?

• With information being shared appropriately and early.
• When business rationales are explained clearly.
• When questions are answered directly.
• When commitments are honoured and followed through.
• When feedback is genuinely considered.

When is credibility often lost?

• When outcomes appear predetermined.
• When information is selectively presented.
• When consultation becomes procedural (and how many times have we heard the phrase “it is just a tick box exercise”) rather than meaningful.
• When parties negotiate publicly then avoid constructive discussion privately.

A misconception is that bargaining strength comes from withholding information. In practice, withholding information can create suspicion and entrench positions. Strategic transparency can improve decision-making and reduce unnecessary disputes. However, it does not require disclosure of everything; it means providing enough information to support informed participation and achieve a pragmatic outcome.  

How Does The Quality of the Process Support Bargaining?

There will be times when expectations do not align. Commercial realities, affordability, operational requirements, and workforce expectations will not always point in the same direction and invariably that is where the tension is. At this point, the quality of the process becomes critical.

Parties are more likely to accept outcomes they may not fully agree with when they consider the process to have been fair, their views to have been genuinely heard, and the reasons for the outcome to have been properly explained. Even where there is disagreement with another party’s position, a fair and transparent process can reduce unnecessary escalation, preserve working relationships, and maintain trust between the parties.

Does Relationship Mean Friendships?

Importantly, relationship-based bargaining should not be mistaken for passivity or capitulation. Constructive bargaining can still be firm and disciplined, while remaining respectful and good faith focused.

A strategic approach to bargaining may involve

• explaining business constraints with supporting information early.
• testing assumptions rather than defending positions.
• separating people from issues, even when there are egos to navigate around.
• looking for multiple pathways to achieve outcomes.
• keeping discussions future-focused by looking beyond settlement to how the agreement will be implemented and sustained.

Good faith should not be seen as limiting bargaining strategy. Used effectively, it is a practical and valuable tool in any bargaining team’s toolkit. The real question is whether parties treat good faith as a compliance exercise, or recognise its practical value as part of effective bargaining strategy.

Senior Associate Adrian Tocker shares valuable update on the 2026 collective bargaining landscape and offers insight into why wage negotiations are getting tougher.

NZ Collective Bargaining Outlook June 2026:

Why Wage Negotiations Are Getting Tougher

If we had to describe the current collective bargaining environment in one line, it would be this: employee expectations are being driven by cost-of-living pressure, while employer positions are being driven by affordability and sustainability.

That gap is widening. And in practical terms, it means harder negotiations, more resistance to wage claims, and a higher risk of disputes over the next 6–12 months.

For employers, that is the central bargaining challenge in 2026. It is not just about whether inflation is high at a point in time. It is about whether any pay movement can be justified and sustained over the life of the agreement.

Key takeaways:

What is driving collective bargaining in New Zealand in 2026?

The economic backdrop has shifted. Budget 2026 and the Reserve Bank’s May 2026 Monetary Policy Statement both point to a more challenging near-term outlook than many expected earlier in the year.

A significant external cost shock, largely flowing from conflict in the Middle East and its effect on oil and energy prices, is expected to lift headline inflation through 2026, delay the economic recovery, and constrain both household spending and business investment.

That matters in bargaining because it is pushing the parties in different directions. Employees and unions are likely to keep anchoring claims to visible cost increases and short-term inflation. Employers are increasingly focused on forward-looking affordability, business sustainability, and softer demand conditions.

Why is collective bargaining getting tougher?

The short answer is that on both sides the pressure is real. Employees are dealing with household cost increases. Employers are dealing with weaker growth, margin pressure, and higher operating costs.

The latest data in the landscape update reflects that tension:

At the same time, wage benchmarks are still moving. The adult minimum wage increased to$23.95 per hour from 1 April 2026, and the Living Wage will increase to $29.90 per hour from 1 September 2026.

So when bargaining becomes more contested, that should not be surprising. Employees can point to real cost pressures. Employers can point to equally real affordability constraints.

Is the labour market still driving wage pressure?

Not in the same across-the-board way it was previously. The labour market is now more balanced overall. Labour supply is improving, including through migration effects, and recruitment pressure has moderated in many sectors. Wage growth is described as modest and stable, with overall pressure on wages easing compared with prior years.

That does not mean shortages have disappeared. Your update identifies ongoing shortages in specialist healthcare and skilled technical roles.

But the broader point is important: not every workforce is now in a shortage market. That changes bargaining strategy. It gives employers more room to differentiate between genuine high-demand groups and workforces where broader market pressure has eased.

What do recent collective agreement settlements show?

Recent settlements still suggest a market characterised more by moderation and structure than by aggressive wage escalation. Our examples in the landscape update span public health, aged care, telehealth, local government, transport, manufacturing, media, retail and private healthcare.

Across those examples, many outcomes sit in the 2% to 4% range, often supported by:

These are important signals for employers. Settlements are still being reached. But many are being designed to manage cost risk carefully rather than embed large permanent increases quickly.

Why is industrial action still a risk?

The industrial relations backdrop remains active. The October 2025 “mega” strike day involving unions across a number of public and private employers, along with ongoing and recent action involving FENZ, Sanford fisheries, Woolworths call centre employees, and Resene workers seeking the living wage.

This matters because it shows that bargaining pressure is not abstract. In some sectors, expectations remain high and there is a willingness to escalate where the gap between claims and employer positions becomes too wide.

As a result, we expect a continued risk of longer, more drawn-out bargaining processes and a higher likelihood of disputes in negotiations where living wage and cost-of-living arguments remain central.

What should employers focus on in collective bargaining?

For employers, the most important strategic point is this: do not treat a temporary cost shock as if it were a permanent wage cycle.

Your landscape update makes that point clearly. The current environment is better understood as a temporary cost shock within a soft economic cycle, not a structural wage growth cycle.

That means the most defensible employer positions are likely to be those that:

This is not about ignoring employee concerns. It is about balancing those concerns against what the organisation can responsibly sustain over time.

What do we anticipate outlook for CA wage settlements over the next 3–6 months?

Based on the current market, the Three60 Consult wage guidance in your update remains relatively restrained:

Those ranges reflect a market where the overall direction is still restraint, with some flexibility where recruitment pressure remains real and sustained.

Final View: what does this mean for bargaining through the rest of 2026?

In our view, the defining issue for collective bargaining in 2026 is not whether cost pressure exists. It clearly does. The real issue is how that pressure is translated into agreement outcomes in a way that is fair, credible and sustainable.

Employers heading into bargaining need to hold two things at once. First, employees are experiencing genuine financial pressure. Second, not every short-term pressure should be converted into a permanent labour cost increase.

The employers who navigate this best will be the ones who stay commercially disciplined, recognise the external pressure employees are under, and explain clearly why sustainability matters just as much as sympathy.

In short: we expect bargaining to remain difficult, more contested, and more strategic, but still tilted towards restraint rather than acceleration.