It seems that small business owners are being promised another dose of employment law reform if the National Party are re-elected in November 2026, and the National Party does not trade away its policies in negotiating a coalition government.
National's recently announced 47-point Small Business Plan (yes count them, in a plan proposing to reduce complexity and compliance costs) is aimed at reducing compliance costs and promising to make it easier for small businesses to invest, grow and employ people. That is an attractive proposition, particularly for the thousands of small businesses where the owner is also the manager, accountant, IT person, HR department, and compliance manager.
After several years of substantial changes to New Zealand's employment laws, do small businesses really need more changes to deal with? And why create even more confusion over employment rights and processes for businesses?
Trial periods have been a political football for many years now, switching between all businesses and small businesses (less than 20 employees, which in effect meant that those small businesses needed to check their head count – how many full-timers, part-timers/casuals on the books).
The National Party says small businesses make up around 97 per cent of New Zealand enterprises and employ approximately 680,000 people. So what are some of those plans?
Point 7 - Develop a fast-track for suitable employment disputes, through a simplified Employment Relations Authority pathway, with clear eligibility, proportionate procedures, firm decision timeframes and fair-hearing standards.
Those working in this space know that both employers and employees would love to have a speedy, simplified system for most cases. When the current system was implemented 26 years ago it offered the promise of a “quick and dirty” resolution process. Unfortunately, it has never lived up to this promise - it is neither quick and it certainly is bogged down in procedure. Like all justice processes in New Zealand, it simply needs resourcing and funding to enable this to happen.
Point 8 – Make better use of mediation to resolve minor disputes early, including requiring mediator recommendations and available binding options to be clearly explained and offered in suitable cases.
Those working in this space know that both employers and employees would love for this to be promoted. Two key objectives are already set out in the Employment Relations Act and clearly provide that:
· mediation is the primary problem-solving mechanism; and that
· the objective is to reduce the need for judicial intervention.
Again, the mediation process simply requires more funding and resourcing. Every communication with the Employment Relations Authority or Mediation Services (which is run by the Ministry of Business, Innovation and Employment) comes with a warning of prolonged delays.
The big question is why limit it to “small business operators” and create a further complication in the system?
One of the strongest messages coming from the business community in recent years has been the need for stability and certainty in employment law. In July, the Employers and Manufacturers Association head of advocacy Alan McDonald made the point particularly clearly. In setting out the EMA's election priorities, he said reforms in areas including employment law needed time to “settle and stick”.
Retail NZ has previously made an even more explicit connection between frequent employment-law changes and the problems faced by employers. It has said retailers need “stable, predictable employment laws” that are easy for business owners to navigate and comply with. It has also warned that the complexity of, and frequent changes to, employment legislation create uncertainty and costs for recruitment.
BusinessNZ has made a similar argument. Its recent survey work found that 47.1 per cent of businesses surveyed said regulatory changes over the previous three years had increased their cost of doing business. BusinessNZ chief executive Katherine Rich has also repeatedly argued for greater policy certainty for businesses.
The Employment Relations Act was amended substantially in 2026 creating so many legal questions that will take years to work through the system to provide employers with some certainty. The Holidays Act has also been replaced by the new Employment Leave Act after years of debate and uncertainty. No doubt this new system will be litigated for years before questions are resolved.
Every change has a cost. Employment agreements have to be reviewed. Payroll systems need to be changed. Managers need to understand new obligations. Staff need to be informed. Policies and procedures have to be rewritten. Sometimes lawyers and consultants need to be engaged.
Is it not in New Zealand’s best interests to have settled, well understood employment laws that employers and employees can navigate swiftly and without unnecessary complication? Providing adequate resourcing funding to a well-established and understood dispute resolution system will provide the productivity gains that political parties love talking about, but unfortunately provide very few answers to. Read more.....
Reflecting on the current government’s track record on employment matters over the past term, it appears that the “tail has truly wagged the dog”. The ACT Party has decimated long established employment laws that have been largely been settled and agreed to for many years by both the two main parties, the National Party and the Labour Party.
National came to power on a platform of Blame, Blame, Blame and tiny tax cuts that are costing $14.6 billion over four years. “Our plan is carefully targeted to ensure that those who will benefit the most are working New Zealanders. It’s about time they got some relief from Labour’s cost-of-living crisis and National will deliver that to them”, Mr Luxon said.
The following budget, the government clawed back some of these tax cut costs with its retrograde steps to addressing pay equity issues that had previously been agreed to between the Labour Party and the National Party. The cost to addressing those inequities was significant. The previous budget had allocated some $17 billion over four years, suggesting that in the government funded sector the costs of settling pay equity claims could be considerable. The Prime Minister has admitted that those changes to pay equity laws are going to save the government “billions of dollars”, he now says that this was not the motivation for changing the legislation. David Seymour, the Deputy Prime Minister, was more forthright at the time - "I actually think that Brooke van Velden has saved the taxpayer billions”.
The ACT party has put the minimum wage firmly on the election agenda with a proposal to freeze the adult minimum wage at $23.95 an hour for three years and introduce a new training wage for workers under 20 at 60 per cent of the adult rate for their first 12 months with an employer. At today’s rate, that would be $14.37 an hour.
The proposal is based on ACT’s argument that mandated wage increases have outpaced productivity and that lower employment costs will encourage businesses to employ more people, particularly young people. The party says higher wages ultimately depend upon businesses becoming more productive and profitable.
There is an obvious counterargument. The minimum wage is intended to establish a floor below which employees cannot be paid. As the Employment Court has previously observed, the Minimum Wage Act is of fundamental importance because it is directed at preventing exploitation and recognises the diminished bargaining power of those in low-paid employment. What ACT is proposing most effects those minimum wage earners working multiple, often part-time jobs, to just pay their bills, to feed their families, to pay the rent. For ACT there would no longer be a “fair days pay for a fair days work”.
The current adult minimum wage of $23.95 was introduced in April this year, an increase of 45 cents an hour. The government's own policy analysis acknowledged the difficult balance between protecting the incomes of low-paid workers and minimising possible employment effects. That balance is lost when inflation is considered. The minimum wage has increased by about 5.5 per cent since 2023, while consumer prices increased by 15.5 per cent over the three years to March 2026. Since then, annual inflation has risen further, reaching 4.1 per cent in the June 2026 quarter.
A three-year freeze on the minimum wage the way inflation and prices continue to rise would increase the negative impact inflation has on those minimum wage workers. If prices continue to rise, the real value of the minimum wage will continue to fall. ACT's argument is that the trade-off may be greater employment opportunities, particularly for people currently struggling to get into the labour market. Under this government the unemployment rate has climbed to 5.6% in the three months to June — the highest in 11 years since September 2015.
While the ACT Party is only a minor party sitting on the so-called “right” wing of politics it certainly has not been a minor party in this government on employment matters. The CEO/Poobah of the National Party, Prime Minister Christopher Luxon, has not been very effective in negotiating and constraining the ACT Party on numerous contentious and divisive issues; employment law and treaty issues spring to mind. Should this current government be re-elected the cost of living appears set to be even more unmanageable for our most vulnerable workers on the minimum wage (or those close to it).
Employment rights may often be human rights. They are always human rights in a literal sense. There is a human involved, often with a family or dependents that may be reliant on them. Or the human is reliant on that worker for their support, providing them with the basics - a home, with food, hopefully affordable health care and an education. Those basics seem likely to become even more unaffordable if ACT has its way. As Nelson Mandela said "A nation should not be judged by how it treats its highest citizens, but its lowest ones." Read more...
Pay equity has taken a backward step in New Zealand under the current government. The law change in 2025 was rushed through Parliament under urgency and without Select Committee scrutiny with the object of freeing up “billions of dollars” for the 2025 Budget. The cost has been that some of our most valued occupations that have been historically dominated by women will continue to be underpaid for the work they do, compared to occupations that have historically been male dominated.
But pay equity should not be confused with pay equality. In a twist to the basic concept of “equal pay for equal work” last week in the United Kingdom the fashion and homeware retailer Next has managed to have a 2024 Employment Tribunal ruling overturned in the Employment Appeal Tribunal. That ruling had required Next to pay its shop staff the same higher basic pay rates as its warehouse workers under equal pay rules.
Next employs more than 20,000 store staff across 458 stores in the UK and Ireland. In the Next business, women made up almost 78% of retail sales jobs, while men made up about 53% of warehouse staff. Warehouse staff were able to earn up to £3.13 more an hour than retail sales workers.
The retailer argued that it had to pay a higher market rate to warehouse staff because of recruitment and retention pressures, which it said did not apply to the workforce in its stores. Next relied on several factors to explain the difference in pay:
· Market forces and market price (which the Employment Tribunal found to essentially mean “paying the going rate”)
· Recruiting and retaining sufficient warehouse labour
· Maintaining 24/7 work in the warehouse, including night shifts, overtime, Sundays and public holidays
· Incentivising high productivity within the warehouse, generally and during peak periods of demand
· Incentivising high attendance in the warehouse, in particular during peak periods of demand
The UK Employment Appeal Tribunal accepted that Next was entitled to pay its warehouse workers more because of the different labour-market conditions applying to those jobs. The original Tribunal decision had concluded that Next had not shown a legitimate justification in setting different rates of pay. The Appeal Tribunal overturned this and said that market forces and recruitment and retention difficulties could provide a legitimate justification for paying one group more than another, even where the work had been assessed as being of equal value.
Significantly, both the Employment Tribunal and the Appeal Tribunal found that there was no direct discrimination; “It was all about cost. Gender did not enter into the equation” when Next set pay rates.
New Zealand has a long history of trying to address the problem of women being paid less, particularly in occupations which have traditionally been dominated by women. Equal pay and pay equity are not the same thing, but it can sometimes be hard to distinguish between the concepts. Equal pay is about men and women receiving the same pay for the same work. Pay equity is concerned with different jobs which are nevertheless of equal value.
In New Zealand, until last year there was broad political agreement that this was a legitimate problem which should be addressed. The Equal Pay Amendment Act 2020 agreed to by both major political parties was intended to provide a clearer pathway for pay-equity claims. The current government's changes discontinued all unsettled or undetermined pay-equity claims as at 14 May 2025. New claims now face substantially more stringent requirements.
The effect was significant; 33 claims involving female-dominated workforces were cancelled overnight, including claims involving some of our most valued workers such as Plunket nurses, community midwives, hospice nurses, health-care assistants and nurses working in residential care.
Pay differences do not automatically prove discrimination. Equally, the existence of a market rate does not automatically prove that a historical gender-based undervaluation does not exist. A "going market rate" can itself reflect historical undervaluation.
But it is a difficult balance. Getting it right should not come at the cost of some of our most valued but underpaid women in New Zealand’s workforce.
