2025 has been a huge year for those working in and around employment law, including significant reforms and decisions all the way up to the Supreme Court that will have far reaching impacts going forward. As the country heads into a well-earned break, here are some of the key highlights from the year.
Employment law reforms
The biggest ticket item of 2025 has to be the Government’s proposed employment law reform Bill which is likely to bring about a significant shift in employment relations in New Zealand.
The reform Bill has just been reported back from Select Committee this month with a number of refinements to the original Government proposals. As things currently stand, the proposed reform package includes:
- The introduction of a $200,000 threshold for unjustified dismissal claims: Employees whose remuneration is over $200,000 per annum will no longer automatically be able to raise a personal grievance for unjustified dismissal. This will be phased in over a 12 month transition period.
- The proposed Gateway test for whether a worker is truly an independent contractor. If this test is met, a worker will be a contractor. If it is not, the existing legal tests for determining whether a worker is a contractor or employee will apply.
- A shake up of remedies for personal grievance claims including:
- The removal of personal grievance remedies entirely where an employee has been found to have engaged in serious misconduct.
- Confirmation that remedies can be reduced up to 100% for contributory conduct.
- Raising the threshold for a ‘procedural error’ where an employer’s actions have been fair in all the circumstances.
- Removing an employee’s ability to file for reinstatement and compensation where their behaviour has contributed to the issue.
- Requiring the Employment Relations Authority and the Employment Court to consider if the employee’s behaviour obstructed the employer’s ability to meet certain obligations.
- Removal of the 30-day rule which currently requires non-union employees to be employed on the terms of an applicable collective agreement for their first 30 days of employment.
Also on the reform agenda is a separate Member’s Bill which allow employers and employees to enter into protected negotiations to mutually agree to end the employment relationship has gained traction. This Bill has also been approved by a Select Committee and while a number of changes have been written into the proposed law, the intent is broadly the same.
Both Bills are likely to be passed into law in early 2026.
These reforms follow changes that have already been implemented during 2025 including the banning of pay secrecy clauses in employment agreement, and the Government’s overhaul of the Equal Pay Act which has raised the threshold for establishing an equal pay claim, and stopped many existing claims in their tracks. The Equal Pay changes have proven highly contentious with Unions bringing a coordinated legal challenge which is likely to play out during the coming year.
Overhaul of the Holidays Act
After confirming that the previous Holidays Act review was being scrapped, Cabinet has agreed to repeal and replace the Holidays Act with the new Employment Leave Act.
The new Act is designed to simplify leave entitlements, and create a system that is easier for employers to comply with. The key changes include:
- Hours-based accrual of sick leave and annual leave, rather than weeks-based.
- Pro-rated sick leave.
- Introduction of a leave compensation payment of 12.5%, applicable to casual employees and employees working additional hours.
- Entitlement to family violence leave and bereavement leave from the outset of employment (rather than after 6 months).
- Full pay for annual leave upon return from parental leave.
- More flexibility in terms of cashing up annual leave, with an ability to cash up 25% of an employee’s total annual leave balance each year.
Workplace Relations and Safety Minister Brooke van Velden has indicated her ambition is to pass the new Act by the end of the current term. The next step is for the legislation to be drafted and introduced, then put to Select Committee for consideration. The Government’s intention is that there would be a 24-month transition period once the new Act is passed, so the new rules are unlikely to kick in before 2028 at the earliest.
Case highlights
Case highlights from 2025 include two significant Supreme Court decisions (a rarity in employment law!), and a number of eye watering compensation and costs awards which reinforce just how costly it can be for employers who get things wrong, or for employees who embark upon protracted litigation.
Rasier Operations BV & Ors v E Tū Incorporated (the Uber case)
The long-awaited Supreme Court decision in the Uber cases, confirming the Court of Appeal’s finding that the four Uber drivers involved were employees.
Although the case itself hasn’t changed the law in a significant way, it is likely to be impacted by the incoming Gateway Test in terms of framing what it means to be an independent contractor in New Zealand.
Fleming v Attorney General
The Fleming case marked a significant turning point by confirming that family carers providing full-time, funded support for their adult disabled children are employees. This landmark ruling extends minimum wage and leave entitlements into thousands of New Zealand homes, fundamentally reshaping how care work is valued.
Wiles v The Vice-Chancellor of the University of Auckland
Dr Siouxsie Wiles brought proceedings against the University of Auckland to the Employment Court after for failing to uphold its health and safety obligations amid sustained harassment linked to her COVID‑19 commentary. The substantive decision was issued in 2024 with Dr Wiles being awarded compensation of $20,000.
This year, the Court was called about to address the issue of costs. Dr Wiles costs for the proceeding were $551,838.22 inclusive of GST. Ultimately, the Court was prepared to reimburse her
$205,059.94 including $180,582.30 for costs and $24,477.64 for disbursements.
While this is a significant costs award, it is well below what Dr Wiles spent on the litigation and highlights the significant financial consequences that can come with protracted litigation.
Jennison v ACG Education Ltd
The Employment Relations Authority awarded Mr Jennison $648,582.42 after finding he was unfairly excluded from a process that led to his redundancy, breaching good faith obligations. The size and scope of the award, including lost wages, bonuses, compensation, and share entitlements, illustrates the significant financial exposure employers face when consultation and transparency obligations are ignored, particularly in cross-border restructures.
Bowen v Bank of New Zealand
The ERA found that BNZ unjustifiably dismissed and disadvantaged Melissa Bowen in retaliation for a protected disclosure complaint, awarding her more than $500,000 in compensation. This decision reinforces that redundancy cannot be used as a retaliatory tool and must be supported by genuine, and substantiated reasons.
High Performance Sport New Zealand v Athletes’ Cooperative Inc
The ERA held that a union representing the country’s athletes could initiate bargaining with HPSNZ for a collective agreement, despite those athletes not being employed by HPSNZ.
On challenge, the Court walked this decision back and emphasised that while the relationship between the athletes and HPSNZ was close, it was not an employment relationship, nor did HPSNZ intend for it to be. HPSNZ was not obligated to bargain with the union. The Court of Appeal declined leave to appeal, finalising the scope and limit on who can initiate bargaining.
Changes to Minimum Wage and KiwiSaver Contributions
Employers should be budgeting for remuneration increases that were announced this year and will take effect in 2026.
Minimum wage is set to increase by 45c to $23.95 per hour from the 1st April 2026. This continues an upward trend of growth following the increase this year to $23.50 in April.
KiwiSaver contributions are on the rise: from April 2026, both employer and employee minimum rates will lift from 3% to 3.5%, and 4% from April 2028 marking the first increase in over a decade and signalling a push to boost retirement savings.
Conclusion
2025 can be fairly described as a transformative year for employment law, with sweeping legislative reforms and landmark cases reshaping the landscape.
As we head into 2026, employers and employees will need to stay alert to these changes and make sure they are ready to adjust to what may prove to be a very different employment relations landscape going forward. As next year is also an election year, there will not doubt be a slew of announcements across the political spectrum that may further impact on employers and employees.
From all of us here, we wish you a safe and restful holiday season and look forward to keeping you updated in the new year.
Special thanks to Partner Alastair Espie, Associate Nikita Bartlett and Summer Clerk Tiaré Hansen for preparing this article.
Disclaimer: The content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.
