From 21 February 2026, four key changes under the Employment Relations Amendment Act 2026 (ERA) came into force. Below is a general explanation of each change and who it may impact.
Contractor vs employee status: the Gateway Test
The Gateway Test (Test) works as an “all or nothing” test to determine whether a worker is an independent contractor or an employee. This aims to provide early clarification of roles for both parties.
The Test has five elements:
1. A written agreement stating that the individual is an independent contractor (or not an employee);
2. An individual is not restricted from performing work for any other person, except while conducting work for the person they have contracted work to (or facilitated by said contracted person);
3. Either:
a) An individual is not required to work fixed hours/days facilitated by the contracted person; or
b) The contracted person is allowed to subcontract the work to another person, and this person does not need to undergo a procedural overview/test (unless to ensure compliance with the law i.e. criminal check) or reasonable by the nature of the work;
4. The arrangement cannot be terminated solely because the individual declines work; and
5. The individual has a reasonable opportunity to seek independent advice before entering into the agreement.
The individual will be deemed an independent contractor if all five elements are satisfied.
If any element is not met, the individual’s employment status will be assessed under the existing common law test of determining the “real nature” of the relationship between the two parties.
Dismissal protections threshold: high-income employees
If an employee’s salary package is $200,000.00 or more per annum they may not bring a personal grievance for unjustified dismissal or unjustified disadvantage (relating to dismissal).
The remuneration threshold will be reviewed on 1 July each year and continues to have effect until the threshold is increased.
Both parties may mutually agree to opt back into the dismissal protections pursuant to section 67J of the ERA. This agreement must be in writing and recorded as a term of the employee’s employment, that both parties wish to opt back into the dismissal protections.
Otherwise, an employee with a salary package exceeding $200,000.00 per annum who has not opted back into the dismissal protections may only bring a personal grievance pursuant to certain provisions under the ERA. The personal grievance must not relate to dismissal. Instead, on grounds specified in section 103(1)(c) to (k), i.e. discrimination, harassment, sexual harassment etc.
Employers and employees on existing employment agreements will have up to 12 months to re-negotiate their agreement. However, this provision will automatically apply to any new employment agreement entered from 21 February 2026. However, the threshold will automatically apply to existing agreements from 21 February 2027 (if no new terms of employment have been re-negotiated).
Reduced remedies where an employee contributed to the personal grievance
The Authority or the court must not provide for any remedy if it determines that the employee’s action (or controlling third party) contributed to the situation that gave rise to the personal grievance which amounts to serious misconduct.
The Authority or the court must not provide for reinstatement (being the primary remedy prior to the amendment) and/or compensation to the employee if it determines that the employee’s action contributed to the situation that gave rise to the personal grievance.
The Authority or the court must now consider the nature and the extent of the remedies available when assessing a personal grievance. This will consider the employee’s contribution to the personal grievance, and reduce the remedies that would otherwise have been awarded accordingly by up to 100%.
Prior to this amendment, an employer would be exposed to a risk of financial implications where an employee brought a personal grievance against them for improper process. An employer would be required to pay a settlement sum if one minor process was identified, even if seriousness of the employee’s conduct arguably outweighed the minor fault of the employer’s process. This process would be weighed up against what a “fair and reasonable employer could have done in all the circumstances at the time” which criticised the investigation, implementation of paid suspension, or omitting to give a reasonable opportunity for the employee to comment on the suspension or dismissal from the workplace.
This significant change to the ERA now places less burden on an employer’s procedural defects which would (previously) expose them to risk even when their actions would be justified of what a “fair and reasonable” employer would have done in the circumstances, if the employee’s contribution to the personal grievance outweighs the minor process defect.
This aims to re-balance the dynamics between an employer and employee where an employee’s contribution to the personal grievance claim is notable.
Collective agreements: 30-day rule removed
Employees can now enter an individual employment agreement from day one if a collective agreement is in place for the workplace. Employers no longer need to apply collective terms for the first 30 days or pass new employee details to unions.
Looking towards the future
Employers and employees should take this opportunity to consider how these amendments may impact their current terms of employment.
Please note this general commenting on the changes to the ERA, should not be taken as definitive, legal advice, on your Employer/Employee relationship.
If you have any questions or concerns about the changes to the Employment Relations Amendment Act, please do not hesitate to contact Jeff McCall, Principal ([email protected] /03 925 7951) or Ariana Kim, Solicitor ([email protected]/03 925 7956).
