John McKeefry, Employment Relations Specialist & Partnership Lead, shares Three60 Consult’s Wellington office opening and how our new location supports Public Sector Employers.

 

Our new office at 95 Customhouse Quay, Wellington, gives public sector organisations, ministries, councils and government agencies across the region easier access to face-to-face, specialist employment relations support. 

Employment Relations Advice That Understands the Public Sector

Public sector employment relations rarely involve a single issue in isolation. Agencies need a partner who understands how workplace decisions must balance legal obligations, public accountability, union relationships, stakeholder expectations, organisational reputation, and workforce trust.

As an All-of-Government supplier, we are pre-qualified to help New Zealand employers navigate sensitive, high-stakes workplace issues. Our specialists bring more than 30 years of experience delivering calm, practical, and solutions-focused advice to public sector workplaces.

How Our Wellington Team Can Help

Whether you are preparing for organisational change, managing a sensitive people issue, or planning collective bargaining, we provide tailored support:
  • HR & ER Training: Practical capability development for leaders and HR practitioners.

Experienced Support, Closer to Your Team

Our Wellington base allows us to collaborate in person while backed by the capability of our wider national team.

If your agency needs specialist ER support, an independent perspective, or extra capacity, reach out to me for a confidential conversation.

John McKeefry

Employment Relations Specialist & Partnership Lead

john@three60consult.co.nz | 021 429 537

Todd Tower, 95 Customhouse Quay, Wellington 6011

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.

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:

• The near-term economic outlook is tougher than expected earlier in the year.
• Inflation is expected to rise to around 4.0%–4.3% in mid to late 2026 before easing back towards the Reserve Bank’s 2% midpoint in 2027.
• Labour market pressure is easing overall, although shortages remain in some specialist roles.
• Recent collective settlements still point more towards restraint than any major acceleration in wage outcomes.
• The current environment looks more like a temporary cost shock than a structural wage growth cycle.
 

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:

• CPI was 3.1% to the end of March 2026.
• The Labour Cost Index showed 2.0% annual movement in the year to March 2026, including 2.0% in the public sector and 1.7% in the private sector
• Average ordinary time hourly earnings reached $44.12 in March 2026, up 3.1% year-on-year.
• Household Living-Costs Price Index growth was 2.1% for the 12 months to March 2026.
• Some costs remain particularly visible. Electricity prices were up 12.2% year-on-year, and local authority rates and payments were up 8.8%.

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:

• longer terms;
• staged increases;
• lump sum payments; and/or
• formula-based approaches such as the greater of 2% or CPI.

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:

• focus on forward-looking conditions
• anchor settlements to sustainability and productivity;
• avoid embedding permanent cost increases based on short-term inflation spikes; and
• recognise where labour shortages are genuine, but avoid assuming they exist everywhere.

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:

• Public sector: 1.0%–2.5%, with progression or step movement included within the headline percentage where relevant.
• Private sector – entry-level roles: 2.0%–3.0%.
• Private sector – skilled trades: 2.0%–3.0%.
• High-demand areas such as specialist healthcare, IT and electrical roles: 2.5%–3.5%+where shortages persist.

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.

Last December the Fair Pay Agreements Act come into force. This Act enables unions to negotiate the employment terms and conditions for whole industries or roles across multiple industries at once.

Many businesses across New Zealand don’t realise the wide reaching implications this will have for them. Businesses that have little or no union involvement, or consider they are paying their staff well above minimum rates often think an FPA will have little effect on them. This is unlikely to be true and if you are a business owner, manager, or HR professional, it’s probably time to reconsider and prepare.

Why should you care?

FPAs are not just about wage rates – they cover multiple aspects of pay. There are minimum conditions that are required to be discussed during bargaining and conditions that must be included in an agreement. Mandatory conditions are:

The only parties at the negotiating table will be the unions and any employer associations that seek to be part of the negotiations. No individual employers will have a seat at the table, but the outcome of the negotiations will become the minimum requirements that apply to every employer across New Zealand who has an employee covered.

Many employers will not even know if they have employees covered because the coverage clauses are likely to be broad and the system of notification is full of holes. Nevertheless, you will be in breach of legislation if you’re found not to be complying. There is a risk that Labour Inspectors will come knocking and once you’re found in breach, the backpay and fines will likely roll in.

The FPA process is likely to be difficult because it is essentially forcing competitors to work together. All employers that fall within the relevant industry or occupations will, as a minimum, have the same terms and conditions applied to them, regardless of size, location, and demographics.

Moreover, if you are not involved in any of the FPA process, you won’t have a say in what these rates are.

It’s time to be preparing. There are decisions to be made about the level of involvement you want in the process and how your interests will be best looked after as you don’t get a direct seat at the table. Without doing this, larger businesses or competitors could be effectively making decisions that you will have to live with.

Four applications have currently been made, covering industries such as hospitality, bus/coach transport, and supermarkets. These applications can cover many different roles. One of the difficulties with FPAs is the definition of what is included within a particular industry. For example, receptionists are part of the coverage claimed under the hospitality FPA application. The definition of receptionist broadly refers to someone who meets and greets guests. Do you have a receptionist? You may just be covered! Staying aware of what roles in your organisation may be covered is important so you can consider your next move.

How can we help?

We are across all the FPA details and are assisting our clients to understand the potential impacts for them, build strategies to best protect their interests in this process, and representing their views to an appropriate Employer Association. We have a team of highly experienced and skilled negotiators who regularly bargain and engage with unions.

If you would like to know more or seek advice on your particular situation, give us a call.

Although the COVID restrictions in NZ have been removed, many people are still working from home some, if not most, days of the week. Remote/hybrid working has become the new normal for many roles and may even be an expectation from employees. 

 

A recent Remote Work Report from Employment Hero has shown that 48% of employees would consider quitting their jobs if their employers forced them back into the office full-time. A large motivator for kiwis wanting to work remotely is that it reduces some of the pressures of travel cost and time, which are increasingly on the rise. Remote working seems to have shifted from a precautionary response to COVID, to something that alleviates the anxiety or stress around finances and living costs. 

 

So, we know that remote working has a great appeal and is something many employers may need to keep in attracting and retaining workers. But what about for those who are required or choose to work on site? 

 

Something I have seen a bit of talk about recently is the question around whether remote workers should be paid less than their city colleagues, and whether this could be considered fair compensation. Some organisations are starting to pay higher salaries for workers in certain regions to recognise the cost of living. 

 

That begs the question: Should organisations base an employee’s remuneration on the value an employee brings to the business or should an employee’s remuneration differ from others based on the employee’s work preference (i.e. WFH) or location/homebase? 

 

Benefits

When approached and applied well, setting different wage and salary levels dependent on work preference/location can benefit organisations. 

 

Economists in the USA have argued that offering remote working opportunities as a substitute for pay rises has lowered wage-growth pressures, slowing this wage-price spiral of increasing inflation. It has potential to lower costs for businesses and provide incentive for people to come into the office, taking some of the pressure off travel costs. 

In effect, with people feeling less of the financial pressures of traveling into work most days, this raises collegiality, social capital, and knowledge management within organisations. 

 

It also promotes employee retention and employer branding. 

 

Risks

However, Employers should consider this pay strategy with caution as it is not without criticism.

 

When Google announced to employees their intent to implement pay according to proximity to the office, employees expressed dissatisfaction. 

 

As the pandemic has shown us, remote working is just as productive as working from the office, if not more. Looking at remote working as a ‘substitute’ for pay rises creates an image of remote work becoming less of a perk and more of something we pay or have a trade-off for.

 

However productive remote working can be, this is assuming that workers already have the developed skills and little training is required. 

 

Questions then to consider are why we are doing this, what will it achieve (pros and cons), and what are the outcomes we are aiming to achieve? Consideration should be given to the consequences of disrupting an equal and inclusive environment.

 

Granted that a lot of this application and talk is based on America and other larger countries who base their pay around more expensive cities and commutability from those cities, it still raises a good question and thought to turn our minds to, especially when it comes to bargaining and remuneration strategy. So, does it make sense to apply this logic and thinking in NZ? In the end, it does come down to a company’s individual circumstances. They should be looking a location vs value-based compensation strategies, and at local market rates and cost of living vs industry and competitive market rates.

 

To avoid disadvantaging remote workers, employers could factor in compensation like utility subsidies or allowances for use of their home office space. 

 

Should Employers be evaluating their remuneration strategy to accommodate for this?

This topic raises the question of what is fair and reasonable, especially in relation to these new forms of work.  This is a controversial topic and one that seems to have different answers and opinions depending on the way you look at it. 

 

Three60 Consult created a poll asking people whether they thought it would be fair to pay less for remote work. Surely enough, 80% of people voted ‘no’. This included a range of responses from both employers and employees. 

 

We then reframed the question and asked whether people thought it was reasonable to expect to be compensated for travelling into work and living in an expensive city. Interestingly, many people (70%) voted ‘yes’. The question then becoming, ‘are we paying less for remote workers or are we compensating their counterpart for travel and living costs’?

 

Of course, this matter is more complex than framing it into these two simple questions, but this gives us a good idea and indication of where people’s minds lie.

 

The question ‘if remote workers are more productive and make more money for the business then why should they be paid less?’ often comes up. And that they may be reducing business expenses by not being in the office. So then there becomes the argument that remote workers should be compensated for their at-home setup and expenses. Also, that because a remote employee can reduce the costs to a business, that profits should be distributed out to them. Although, this argument currently lacks a focus on the growth and developments of knowledge and skills that can come from working with others. 

 

 

Employers need to think, ‘are we paying less for remote workers, or are we compensating those who come into the workplace for travel expenses? What kind of expenses do our remote workers have and what compensation could they reasonably expect?’

 

At the end of the day, it becomes a pay strategy/remuneration structure application of location vs value-based, and for what expenses or components are we ’compensating’ for. These are all important things for employers to consider especially coming into bargaining and with FPA’s coming into force. 

 

If you need assistance with your bargaining and pay strategies, get in touch with one of our associates today. 

 

 By Kayla Neems