News and Publications

In New Zealand’s rapidly evolving workplace, staying informed about changes in employment practices is more crucial than ever for employers. Recent updates have introduced significant shifts in areas such as the Crimes (Theft by Employer) Amendment Bill, the 30-day union rule, and the Labour inspectorate compliance clampdown. This article outlines what these legislative updates mean for employers.

Equal Pay Amendment Act 2025

Recent legislative reforms have introduced a more rigorous framework for pay equity claims, replacing the previous low-threshold “arguable” standard with a requirement for claims to have demonstrable “merit.” Key changes include:

• Higher Threshold for Claims: Claims must now involve work that has been at least 70% female-dominated for a minimum of 10 years, with clear evidence of historical and ongoing undervaluation. Unions are also required to demonstrate that the work is the same as or substantially similar to comparator roles.
• Improved Comparator Framework: A new hierarchy prioritises the most relevant and proximate comparators. Employers may now challenge a claim on the basis that the work is not substantially similar, and can opt out of multi-employer claims without providing a reason.
• Revised Settlement Requirements: The obligation to include review clauses in settlement agreements has been removed. While this reduces unnecessary reviews triggered by short-term fluctuations, claims may still be re-raised after 10 years if they meet the updated criteria.
• Updated Dispute Resolution and Remuneration Process: The Employment Relations Authority (ERA) can no longer award backpay. If remuneration cannot be agreed upon, the ERA will phase in adjustments. Parties may still agree privately on backpay and phasing arrangements. These changes aim to encourage early resolution and reduce financial pressure on employers.
• Clarity on Existing and Settled Claims: All unresolved claims will be discontinued. Review clauses in existing settlements are now unenforceable, and no new claims can be made for 10 years concerning roles previously subject to a pay equity settlement.

Tougher Record-Keeping Requirements for Employment Agreements Now in Force

Effective 30 March 2025, the Regulatory Systems (Immigration and Workforce) Amendment Act 2025 introduced key changes to section 64 of the Employment Relations Act 2000, significantly increasing employer obligations regarding employment agreements.

Key Changes for Employers:

• Mandatory Retention: Employers are now expressly required to retain a copy of each employee’s employment agreement, intended employment terms, or agreed conditions of employment.
• Non-Delegable Duty: The responsibility to retain these records cannot be passed on to the employee under any circumstances.
• Accessible Records: Employers must ensure that copies of employment agreements are readily accessible, not simply stored away or difficult to retrieve.
• Enhanced Enforcement Powers: Labour Inspectors have stronger enforcement tools, including the ability to issue written notices for non-compliance. Employers will have seven working days to provide the required documentation before facing potential penalties.

 Kiwisaver Changes

Effective 1 April 2026, the default KiwiSaver contribution rates will increase:

• Employee and employer contributions will rise from 3% to 3.5%.
• A further increase to 4% will take effect on 1 April 2028.

Opt-Down Option for Employees

Employees who are unable or unwilling to contribute at the higher rates will have the ability to apply to Inland Revenue (IRD) for a reduced savings rate. Key details include:

• The opt-down option becomes available from 1 February 2026.
• Employees may apply to continue contributing at 3%, citing reasons such as affordability.
• If an opt-down is approved, the employer must also contribute at 3%.
• The opt-down approval is valid for up to 12 months, with annual reapplication permitted.

Employer Obligations

Employers must match the employee’s selected contribution rate. The obligations are:

• If an employee contributes at the new default rates (3.5% in 2026 or 4% in 2028), the employer must match that rate.
• If an employee opts down to 3%, the employer must also contribute at 3%.
• The IRD will notify employers directly of any approved opt-down requests.

Message for Employers

The Employment law space continues to change. Our team of specialists is ready to help with bespoke and practical advice and solutions on navigating the employment law landscape. Please do not hesitate to contact us if you need help.

Disclaimer: We remind you that while this article provides commentary on employment law, health and safety and immigration topics, it should not be used as a substitute for legal or professional advice for specific situations. Please seek legal advice from your lawyer for any questions specific to your workplace.