The Coalition Government has today announced changes to employment regulations relating to collective agreements, to be included in the Employment Relations Amendment Bill due to be introduced this year. Here, we summarise the changes and assesses what the impacts may be for employers and employees.

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The rules relating to employers’ obligations to new employees around collective agreements are due to change, following the Coalition Government’s announcement regarding the proposed repeal of the 30-day rule, which applied the terms of any existing collective agreement to new employees.

Intended to simplify processes, align to contemporary privacy expectations, and reduce administration, this, along with other proposed changes, may impact on may impact on union membership and the uptake of collective agreements by new employees.

Repeal of the 30-day rule

Repeal of the 30-day rule, introduced by the previous government, is a key element of the proposed changes. The repeal would allow employees and employers to negotiate personalised terms from day 1 of employment, rather than adhering to collective agreement terms for the first 30 days. The Coalition Government’s view is that this change will allow for greater flexibility and individual choice.

Some employers may continue to offer the terms of the Collective Agreement to all new employees to create standardisation of terms and conditions across their workforce while enabling the opportunity for direct negotiation with non-union individual employees. For example, bargaining flat hourly rates inclusive of allowances and in lieu of overtime and penal rates.

Removal of the Active Choice Form  

The mandatory use of the Active Choice Form, which has caused confusion for both employees and employers, is proposed to be removed. Many employees misunderstood the form, believing it equated to union membership simply by indicating intent to join. For some employers, it added administrative complexity without clear benefits. The automatic sharing of employees’ personal information with unions unless opted out was also seen by some as problematic under modern privacy expectations. The Coalition Government’s intention of removing the form is to streamline the onboarding process while respecting employee privacy.

Reduced union information requirements

Employers will still be required to inform new employees about their ability to join a union, provide union contact details, and clarify that union membership binds employees to the collective agreement. This is intended to ensures employees can make informed decisions while removing a mandatory process.

Additional changes

With the removal of the 30-day rule, there is the ability for the 90 day trial period to be expanded to employees employed on individual terms, even if their role falls within coverage of a collective agreement. Some employers will welcome the opportunity for some of their recruitment needs. Employers who have collective agreements can expect some negotiating push back from Unions on this change.

The Employment Relations Amendment Bill introduces these reforms with the Coalition Government’s view of creating a balanced approach to personal freedom, workplace efficiency, and privacy protections. Expected to take effect by late 2025, these changes represent the Government’s view of a move toward clearer and more effective employment practices.

If you would like specific advice around how these proposed changes may impact your business, please get in touch with our team.

As 2025 unfolds, collective bargaining in New Zealand is being shaped by economic conditions, legislative changes, and shifting labour market dynamics. The repeal of the Fair Pay Agreements Act, alongside a government keen on tightening fiscal constraints, has created a challenging environment for negotiations. Perspectives from employees, employers and unions illustrate the complexity of these negotiations, with each party facing distinct pressures and priorities.

The Employee perspective

For employees, the economic outlook is mixed. While unemployment has risen to 5.1% and is forecast to climb to 5.4% in 2025, some skilled sectors still face labour shortages. Employees in high-demand industries such as healthcare, IT, and engineering continue to see wage increases of 3% to 4%, although this is lower than previous years.

Those in lower-skilled roles, particularly in retail, hospitality, and logistics, are experiencing smaller wage increases of 1% to 3%. Many employees are finding that wage growth is not keeping up with their expectations, particularly as employers cite economic uncertainty as a reason for conservative pay rises.

Industrial action is increasingly seen as a viable option for employees frustrated by stagnant wage growth. The use of military personnel to replace striking civilian defence staff in late 2024 was a stark reminder of the government’s willingness to intervene. Many employees feel that collective action is necessary to secure meaningful wage increases, though they also recognise the risks to workplace relationships and long-term job security.

The Employer perspective

Employers are facing a paradox: while workers expect wage increases of 3% or more, economic indicators point to a slow recovery and ongoing cost pressures. Many businesses are restructuring, particularly in the public sector, where the government is seeking to reduce expenditure.

In the private sector, employers in construction, manufacturing, and logistics are offering restrained increases (1%–2.5%) due to lower demand and concerns about profitability. Meanwhile, those in high-demand areas such as healthcare and IT acknowledge the need for competitive pay but remain cautious about long-term commitments given economic uncertainty.

A significant concern for employers is the shift in union bargaining strategies. The increasing number of less experienced organisers has led to earlier industrial action, sometimes before meaningful discussions have taken place. Employers argue that this makes negotiations more adversarial and less productive.

Additionally, the removal of the median wage requirement for Accredited Employer Work Visas has led to a more flexible hiring environment, but some employers remain cautious about over-reliance on migrant workers due to potential future policy shifts.

The Union perspective

Unions continue to push for wage increases that outpace inflation, arguing that real wages have eroded over the past few years. Despite CPI falling by 2.2% to December 2024, unions contend that workers still face rising costs in specific areas, such as housing and essential goods. The current Living Wage of $27.80 remains a key bargaining point for unions, especially in sectors where employers have resisted aligning pay rates accordingly.

However, unions are facing internal challenges. A high turnover of organisers has led to a less experienced negotiating workforce, with newer organisers more inclined to take industrial action when talks reach an impasse. As a result, strike activity is increasing, particularly in the public sector, where wage offers remain subdued (typically between 0% and 2%).

Union leaders have also raised concerns over proposed legislative changes, such as the reintroduction of partial wage deductions for partial strikes and restrictions on personal grievance claims for employees earning over $180,000. They argue that these measures disproportionately favour employers and reduce workers’ ability to advocate for fair pay and conditions.

In summary

Collective agreement bargaining in New Zealand at the start of 2025 is a high-stakes process, with unions, employees, and employers each navigating a complex set of economic and legislative conditions. The balance between wage growth, job security, and business sustainability remains delicate.

With continued industrial unrest expected, particularly in the public sector, all parties will need to engage in pragmatic, solutions-focused bargaining to avoid prolonged disputes and ensure fair outcomes for both workers and businesses in the evolving employment landscape.

 

2025 is shaping up to bring significant changes to employment law to in New Zealand. In this update, we summarise the key changes that employers and employees need to be aware of.

Increase to the minimum wage

From April 1st, the minimum wage will increase to $23.50 per hour. Employers must ensure that they are paying at least this amount by the specified date to avoid any compliance issues. Employers should check their payroll now to avoid any surprises.

Gateway test for contractors

The government is also planning to introduce a new ‘gateway test’ to determine whether an individual is an employee or an independent contractor. Although still in development, this test aims to provide greater clarity in employment classifications.

Income threshold for unjustified dismissal claims

Another notable potential change is that high-earning employees, defined as those earning more than $180,000 base pay per year, will no longer be able to make unjustified dismissal claims. This change is intended to simplify the hiring and termination processes for companies, reducing the risk of legal disputes.

However, given that there are already mechanisms available to employers to address employment matters involving high-earning individuals, it is unclear that this change would solve significant employment relations problems for Employers, as it is likely that employees who earn more than the threshold will negotiate alternative contractual arrangements to protect themselves, e.g. non-fault termination clauses, opting back into the current unjustified dismissal legislation.

The proposed Employment Relations (Termination of Employment by Agreement) Bill may offer an alternative legislative approach, as it would allow employers to approach employees with an offer of an agreed exit without the risk of constructive dismissal claims.

Other changes this year may include:

With these changes on the horizon, employers should review their policies and employment agreements to ensure compliance.

If you would like specific advice about any of these changes, please get in touch with our team.

For employers who are navigating organisational change, a careful consultation process is often the focus. However, there are several employment issues that may come out of a restructuring process which need to be handled with care.


Employers looking to hire after restructuring process may have the following questions:

  1. Do we have to offer vacant roles to affected employees first?
  2. Can we hire externally if affected employees don’t have the skills and attributes for the new role?
  3. We want to advertise vacant roles immediately after a restructure – is this ok?
  4. Can we change the duties or requirements of a role after the restructure?
  5. Can disestablished roles be re-created later?
  6. Can we hire a contractor or fixed-term employee instead of filling a new role permanently?
  7. Do we need to consult with employees if we create brand new roles after the restructure?


For questions 1-3, the answer is generally ‘yes’. Employers in New Zealand must ensure all affected employees have been given a genuine opportunity to apply for roles they are qualified for as a part of their good faith obligations. This includes assessing whether employees can reasonably perform the role with training or support. If there are no redeployment obligations remaining, employers may decide to proceed to external recruitment.

Actions covered in questions 4-7 may be possible but will require a nuanced approach based on preceding restructuring exercise and the individual circumstances of each workplace. For example, more consultation may be required with affected employees. Engaging a contractor or creating new roles immediately after going through a restructuring process should be consistent with the overarching premise of the change management process which led to the company’s reorganisation.

For specific advice around hiring after a restructure, please get in touch with our team.

This morning, Brooke Van Velden, Minister for Workplace Relations, announced that the proposed amendment to introduce a $180,000 per annum income threshold, above which employees cannot file personal grievances for unjustified dismissal, would be phased in over 12 months. Framed as a way to give employers more flexibility, this change could significantly impact workplace culture and leadership dynamics.

Workplace impact

One of the most obvious impacts of this change will be on trust and job security for senior employees. People in high paid roles may feel less stable, potentially leading to risk-averse decision-making and a reluctance to step out of the box, reducing innovation and evolution. While employers can more easily remove underperforming leaders, this may lower morale and create uncertainty across teams who may be unsettled by sudden changes or  wondering if they’re next. Insecurity at the leadership level has a way of trickling down, affecting not just high earners but also those who report to or work closely with them.

How will high earners address workplace issues?

The government suggests employees can negotiate contractual protections, but how likely is that in reality? Some companies may offer job security measures to attract and retain talent, while others could leverage the lack of protection to drive performance or maintain greater control over leadership decisions.

With unjustified dismissal protections removed, alternative dispute resolution processes—such as mediation and arbitration—are likely to become more common. Employees who feel unfairly treated may also turn to reputational damage, or even abrupt resignations, all of which can disrupt organisational stability.

Potential cultural & long-term effects

Workplaces that fail to navigate these changes carefully could see a decline in workplace culture. High-performing employees may seek roles in organisations that voluntarily provide greater job security. Companies that wish to retain top talent may need to offer additional contractual protections or higher compensation through remuneration or incentives, fostering an environment of fairness and stability even without legal obligations.

Despite the Minister’s assertion that this change will encourage internal promotions, there’s also a risk it could have the opposite effect. Employees who fear job insecurity may be less inclined to pursue leadership roles, knowing that stepping up comes with greater vulnerability to dismissal. This could ultimately hinder leadership development and succession planning within businesses.

Conclusion

The proposed law change will fundamentally reshape workplace relationships and how employment issues are handled for high-paid employees. While businesses will gain more flexibility in making leadership changes, they will also need to adapt their management strategies to maintain trust, motivation, and engagement at the senior level. The success of this shift will depend largely on how well companies foster an environment of fairness and transparency in the absence of statutory dismissal protections. Now is a good time to consider what your approach will be and how you will successfully balance changes with culture.

2024 offered a dynamic and challenging industrial relations environment in Aotearoa, with bargaining processes showcasing the complexities and opportunities of collective agreements.

Three60 Consult Founder, Paul Diver, reflects on collective bargaining in New Zealand in 2024.

 

Over the year, I participated in several significant bargaining processes, each offering unique experiences and insights.

Here are three examples:

MECAs – Multi-Employer Collective Agreements

A Multi-Employer Collective Agreement (MECA) sets the minimum terms and conditions of employment for a specific industry.

The unique challenge in this bargaining process is the need to facilitate multiple employers to reach agreement on an offer that can then be put to the Union and its members for consideration.

During 2024, each employer in this bargain had varying fiscal pressures and operating requirements. These competing interests made it challenging to bring a consensus position to the bargain.

National Award Bargaining had an advantage that it was undertaken with the benefit of a Conciliator to chair and provide leadership in the process. By taking a facilitative approach to the bargaining process, an acceptable outcome was reached.

Public Service Pay Adjustment – NZ Police (Constabulary) Collective Agreement

The NZ Police (Constabulary) Collective Agreement bargain played out in the public eye throughout 2023 up to July 2024.

The driving force behind this bargaining process was to bring pay increase uniformity across the State Sector. An obvious benefit would be moderation in pay increases (and therefore lower fiscal pressure). A sign up to PSPA would mean less pressure through industrial action. This approach worked for many state employees. However, the Police Constabulary employees did not ratify the PSPA offer. The election and the establishment of a new Coalition Government created a frustrating 6 month period where no progress was able to be made.

The next development was when Police and the Police Unions moved to bargaining in the first quarter of 2024 ultimately leading to ‘Final Offer Arbitration’ (“FOA”). FOA is a necessary statutory requirement because Police are barred from taking industrial action.

My experience of three recent FOA processes is that it drives an adversarial approach as the outcome is determined by an independent Arbitrator.

FOA may reduce or remove the parties’ bargaining accountability and the ability to bargain fundamental change. There is the reality of “win/lose” for the parties concerned.

While Police Constabulary bargaining is always undertaken with a Mediator chairing the process, a conciliation-style approach could potentially create a better process and outcome rather than jumping to FOA as a back stop.

Facilitated Bargaining – A Conciliation Model

Facilitated Bargaining, available under the Employment Relations Act, involves an Employment Relations Authority (ERA) member working with the parties using a conciliation-style approach. This model is characterised by:

In one instance, while the parties couldn’t reach an agreement during facilitated bargaining, the ERA member’s recommendation served as a crucial pathway to ratification. This demonstrated the value of skilled facilitation in guiding parties toward resolution, even when consensus feels out of reach.

Key takeaways

Each bargaining process in 2024 highlighted the importance of tailored approaches to address the specific challenges and dynamics of each situation. Whether through facilitation, conciliation, or arbitration, the industrial landscape continues to evolve, underscoring the need for adaptability, collaboration, and a focus on sustainable outcomes.

As we look ahead, refining bargaining processes to prioritise collaboration and accountability will be essential in navigating the complexities of industrial relations in Aotearoa.

If your organisation requires support around collective agreements in 2025, please get in touch.

New Zealand’s wage outlook has shifted dramatically as record migration, a cooling economy, and fiscal constraints take centre stage. Workers and employers negotiating wage and pay increases within collective agreements in 2025 face a changed environment, where balancing pay increases with economic realities is tougher than ever.

In this article, our team summarise the current trends and their potential impact on pay rates in 2025.

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The economy has hit a slow patch

New Zealand’s economy is grappling with significant headwinds. Sectors like construction, trades, retail, and logistics are facing notable slowdowns due to falling consumer demand, high interest rates, and reduced business investment. Economic uncertainty has pushed many employers to focus on cost-cutting, limiting room for wage growth and while there are some green shoots for a more promising 2025, the general outlook is still challenging.

Public sector budgets are also tightening, with the government directing agencies to further cut costs by 5%-6%, leaving limited flexibility for pay increases.

Record migration eases labour market pressure in 2024

Over the last 18 months, New Zealand has experienced a record migration boom, with net migration exceeding 110,000 people annually. This has alleviated labour shortages in many industries, particularly in entry-level and mid-skilled roles. It will take some time for this workforce increase to reduce. With a larger workforce available, employers in sectors like retail, hospitality, and logistics are less likely to offer significant pay increases to attract or retain staff.

For highly skilled sectors, NZ simply cannot produce enough skilled workers like healthcare and IT, migration has provided some relief, but shortages persist, meaning modest pay increases may still be on the table.

Wage growth likely to slow across sectors

While inflationary pressures were a major driver of wage demands in previous years, inflation has eased significantly, dropping to 2.2% in the year ended September 2024. This means unions may face tougher negotiations when seeking pay increases above the cost of living.

Union expectations: high hopes, tough conversations

Unions, however, are still coming to the table with high expectations from their members. Many are pushing for wage increases that outpace inflation to make up for the perceived erosion of real wages over previous years.

Public sector unions argue that the cost-of-living crisis, particularly in essentials like housing and food, remains acute and justifies increases of 5% or more. The NZNO, representing nurses and other professionals, are pushing back hard against offers as low as 0.5%, calling them an insult to already stretched workers and are taking strike action. Union leaders are emphasising not just pay but also improved working conditions, particularly in sectors like education and healthcare, where staff shortages have led to increased workloads and burnout.

Increased activism and its possible impact

Union activism is on the rise. Workers in healthcare, education, and even private sectors like retail and logistics have increasingly turned to strikes and other industrial actions to demand better deals.

Challenges for workers and unions

Workers in sectors hit hard by economic slowdowns may find it challenging to negotiate meaningful wage growth. While unions can point to rising living costs and past inflationary impacts, employers are likely to counter with economic realities, such as declining revenues, reduced project pipelines and increasing number of layoffs.

Public sector workers may face particularly tough negotiations, as the government pushes agencies to reduce spending. Nurses, for instance, have reportedly been offered just 0.5% increases in recent collective bargaining, sparking dissatisfaction and a planned strike action on 3 December with further rolling strikes after this across the country.

Here’s how we think wage increases in collective bargaining could shape up in 2025:

Final thoughts: 2025 – A tough year ahead for wage growth

The outlook for pay rate increases in 2025 is more restrained than in previous years. While workers in essential or highly skilled industries might still secure modest increases, most sectors are likely to see smaller gains, reflecting a cooling economy, easing labour shortages, and tight public and private sector budgets.

For workers, this means keeping expectations realistic while pushing for additional benefits where possible, such as flexible working arrangements or training opportunities. For employers, transparent communication about financial constraints will be critical to maintaining trust during negotiations.

If your organisation would like advice around collective bargaining in New Zealand, please get in touch.

Senior Associate Maureen Glassey writes about the responsibility of employers to conduct workplace investigations into issues that affect their employees’ wellbeing.

Hard on the heels of the COVID-19 pandemic is a widespread malaise which is affecting the New Zealand employment landscape, and one for which so far, there is no 100% effective vaccine.

The malady is genuine and the impact on the organisation and its employees real. The symptoms fall under the broad umbrella of “wellbeing issues”. Affected employees may complain about non-specific anxiety, stress, and mental health issues which they attribute to the workplace. 

Although the presenting symptoms seem exacerbated wherever there is an increased pressure to return to work in the office, conversely, working from home is not a cure.

Fortunately, most mature organisations have teamed up with such independent counselling providers as EAP, Raise, or the free government “Need to Talk” 1737 service, and are able to offer their staff the professional support they need. 

With best practice, employers are usually able to support staff with sick leave and special leave. However, at some stage, after a period of recovery, the employee will need to be reintegrated safely back into the workplace. Unless the original issue has been addressed, the employee is likely to relapse swiftly.

There have been a couple of cases recently in the Employment Relations Authority, such as Perry and The Warehouse Group Ltd [2023] NZERA 773, where large sums of compensation have been awarded to employees whose wellbeing had been impacted because of their work environment. These outcomes should serve as a salutary warning to employers to listen carefully whenever employees complain of work-related stress and anxiety. But what to do?

At its heart, a complaint of workplace stress and mental anguish is a complaint no different to others. The complainant needs to be heard, they need to be acknowledged, and they need their employer to follow a robust process in the same way they would respond to an allegation of bullying or harassment in the workplace.

It is likely that complainants in such cases will have heightened vulnerability. As vulnerable complainants, they may also struggle to clearly articulate the exact nature of their complaint, the alleged behaviours, and the persons responsible for their experience. 

However, the Health and Safety at Work Act 2015 sets out the obligations for employers to provide safe and legally compliant workplaces. This includes engaging meaningfully with vulnerable complainants, even when at first assessment, their complaint appears vague and far-reaching. 

The employer still needs to establish the facts by way of a workplace investigation. Having established the facts, they will then need to take such reasonable action as to ensure they are confident they are providing a healthy, safe workplace and meeting their obligations as a good employer.

If your organisation requires support around workplace investigations to identify and address claims of work-related stress and anxiety by employees, please get in touch.

Many businesses in New Zealand have staff out on the road or in safety-sensitive workplaces on a daily basis. With the Coalition Government’s proposed legislation to allow roadside drug testing, this often complicated issue has become a focal point again after a long period of relative quiet, with potential implications for drug and alcohol policies.  

Add to the mix the introduction of the Medicinal Cannabis Scheme in 2020, and drug and alcohol policies are in a changing space. Senior Associate Raymond Wheeler writes about what employers should be considering to prepare for the changes.

Update: Legislation to allow roadside drug testing has passed its third and final reading as of March 2025, with changes due to take effect in December 2025.

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Medicinal cannabis in the workplace in New Zealand 

Cannabis in New Zealand is synonymous with recreational drug use and remains a Class C drug, illegal to possess or consume. 

However, the Medicinal Cannabis Scheme has legalised a platform for people to access and legitimately use cannabis when appropriately prescribed. 

This can then create uncertainty if a non-negative result is returned during testing for cannabis: is the result due to recreational or prescribed use?

Ensure your drug and alcohol policies are up to date and fit for purpose

For any employer, a good place to start in being prepared for this situation is to review its current drug and alcohol policies. Look to update these if necessary to consider the legal status of medicinal cannabis, and consider whether saliva or swipe testing (vs urine) is accurate enough to survive third-party scrutiny.  

Employees are normally required in drug and alcohol policies to disclose what medications they are taking, and this should be encouraged. For staff working in safety-sensitive roles, this requirement is vital so that employers are aware when an employee has been prescribed medicinal cannabis, what – if any – side effects it may have, and what the impact may be on their ability to safely perform the work they are employed to do.

What to do if an employee has tested positive for medical cannabis

If this situation arises, it would be critical for an organisation to work with its employees and medical professionals to ensure the balance of the parties’ obligations to the Health and Safety at Work Act and the NZS/AS standards of its drug and alcohol policies are not breached.

There is also the added complexity of the employee rights under the Human Rights Act (which protects employees from discrimination based on disability, for which medical cannabis may now be prescribed under the Medicinal Cannabis Scheme). 

What to look out for around medicinal cannabis in the workplace

A trend being observed is that when an employee has tested non-negative under a drug and alcohol policy, the employee subsequently presents a prescribed medicinal cannabis medical certificate, and the contentious and complex debate continues.

If you would like support to ensure your drug and alcohol policies are fit for purpose to manage changing legislation, and the implications of medicinal cannabis use in the workplace, please get in touch. 

Working from home – and the extent and ways it might be addressed in employment policies – has become a discussion point recently due to the Coalition Government’s position that working from home is not an entitlement.

Senior Associate Raymond Wheeler outlines what employers and employees should be aware of.

 

The Coalition Government’s position on public sector employees working from home has created considerable conversations, with some agreeing that working in offices increases productivity, promotes collaboration, is better for employees’ mental health, and can help create a vibrant culture within an organisation. There has also been added commentary relating to increased foot traffic around offices bolstering retail and hospitality businesses.

Others in the conversation have said there is no evidence there are productivity increases while working in the office. Mention has been made, too, of additional costs for employees related to parking, fuel and transport costs, and additional childcare costs. There is also potential loss of productivity while waiting in infrastructure congestion due to the increase of people moving around, and concern that the public transport system is viewed as unreliable. 

So, how do employers and employees navigate differing views around working from home, and what does the law say?

For Employers

An employer and employee should have a fully signed, clear employment agreement that details the location/s where work will be performed. 

Employers should take the opportunity to review their employment agreements and policies to make sure there has been no variation to a location of work – or, if it has changed, that this change has been agreed to. 

At this time, employers may want to think about: would WFH (flexible working arrangements) provide the benefits and outcomes the business requires to meet its values and goals?

For Employees

Employees should be aware that there’s no statutory right to work from home. If the wording in their employment agreement clearly states a location of work, there is an obligation that the employee complies with the agreed terms and conditions of the employment agreement. Any change to their employment agreements must be mutually agreed, confirmed, and recorded in writing.

What Does The Law Say Around Working From Home?

Employees do have a statutory right to request a variation of their working under Part 6AA Flexible Working of the Employment Relations Act 2000. Employers must respond no later than one month, and an employer may refuse a request only if it cannot be accommodated on certain grounds. 

Due to the extent of current publicity surrounding this topic, employers should be aware that they may experience an uptake of requests to vary their employment agreements.  

If you would like support to ensure your employment policies are being complied with, or to manage any employment relationship matters that may arise around working from home, please get in touch.