Major incoming reforms to the Employment Relations Act 2000

The Government’s Employment Relations Amendment Bill, introduced on 17 June 2025, significantly reshapes how employee conduct affects remedies in personal grievance claims.

Under the proposed amendments as per sections 123B - 123C of the Employment Relations Act 2000, if an employee’s actions contributed to the grievance, even partially, their entitlement to remedies may now be reduced or removed entirely.

The most consequential change is that serious misconduct by an employee may result in automatic disqualification from any remedy, including wage compensation. Serious misconduct remains undefined in the Bill, making it critical that employment agreements and policies contain clear definitions. It is worth noting that case law has considered serious misconduct at a high threshold, with conduct involving violence, harassment, bullying, threats, or other serious offences.

Where less serious misconduct contributes to the grievance, the new section 123C applies. While employees in this category may still be reimbursed for lost wages, they are barred from seeking reinstatement or compensation for hurt, humiliation, or loss of benefit. Notably, these reforms formalise an existing discretion of the courts, which was rarely and cautiously used.

Further, section 124(2) now explicitly permits a full (100%) reduction in remedies where dismissals are considered justified, giving employers a potent tool when defending against grievances.

The Bill requires the courts to consider whether the employee’s conduct obstructed the employer’s ability to act fairly and reasonably. For example, refusal to participate in investigations or persistent underperformance may now materially affect the outcome of an employee’s claim. Conversely, procedural defects by an employer will no longer render a dismissal unjustified, unless the defect caused the employee to be treated unfairly.

The proposed changes to remedies for personal grievances accompany a larger shake-up to the personal grievance framework. These include:

• The “gateway test” : Following the Court of Appeal’s decision in the Uber case in 2024, the Bill proposes the introduction of a test to define a “specified contractor”, expressly excluding them from being able to claim employee rights if their circumstances meet the prescribed criteria.
• A salary threshold for claiming unjustified dismissal: It is proposed that individuals earning a base salary of $180,000 or more will no longer be able to bring a claim and seek remedies for unjustified dismissal. Employees may raise alternative claims instead, for example a claim for unjustified disadvantage or discrimination; and
• Removal of the 30-day rule for collective employment agreements: The proposed rules will allow new employees to be placed on individual employment agreements immediately, without the requirement of placing such employees on an existing collective agreement for the first 30 days.

Together, these changes mark a clear policy shift in favour of employer flexibility and risk management.

For employers, the message is clear: document employee behaviour, clarify definitions of misconduct in policies, and assess early whether employee actions contributed to a problem. For employees, the risk is equally plain - contributing behaviour can now cost them key remedies, even when the grievance is otherwise justified.

The Bill is currently at Select Committee stage and is expected to pass later this year. Parties should prepare for a new grievance landscape where conduct  and obstruction may carry significant consequences.

This article is for general informational purposes only and does not constitute legal advice. While every effort has been made to ensure the accuracy of the information, readers should not rely on this article as a substitute for professional legal advice.