Aly joined Franks Ogilvie in 2024 as a Senior Solicitor. After graduating from Victoria University and completing her professional studies, she worked in general private practice gaining experience across a wide range of matters.
In her first two years of practice Aly appeared in the Employment Relations Authority, District Court, High Court, Court of Appeal and the Court Martial of New Zealand. She was involved in numerous mediations and negotiations, and in multiple successful judicial review challenges to Government decisions.
Aly is particularly interested in Government decision making processes and the evolution of New Zealand’s uncodified constitution. She takes satisfaction in problem solving and in providing both legal and practical advice that is comprehensive, concise and easy to understand.
In her personal time she enjoys being out in nature, going tothe driving range or tennis court, and being creative.
The Government is shifting the employment law landscape to better balance employee protections with the needs of businesses.
This explainer addresses three legislative changes:
1. The Employment Relations Amendment Act (“ERAA”)which came into effect on 20 February 2026;
2. The Privacy Amendment Act 2025 (“PAA”),which creates a new information privacy principle that will apply to information collected after 1 May 2026; and
3. The Employment Relations (Termination of Employment by Agreement) Amendment Bill (“TBAB”),which is awaiting its second reading.
The ERAA
Employee vs Contractor Distinction
Recently, the Supreme Court in Rasier Operations BV v E Tū Inc (the ‘Uber’ case) confirmed the Court of Appeal’s decision that Uber drivers were employees, not contractors, despite the written agreements being framed as a Contract for Services.
The ERAA clarifies this, by clearly defining who a contractor is. If a worker meets the new definition of “specified contractor”, they will not be able to claim they are an employee and will not be able to pursue a claim for breach of employment obligations. The definition requires:
1. There to be a written agreement stating the worker is an independent contractor;
2. The worker to not be restricted from working for others, except while performing work for the contracting party;
3. The worker to not be required to be available to work certain times or days or for a minimum period, or the worker is allowed to sub-contract the work; and
4. The business to be unable to terminate the arrangement where the worker declines additional work.
These provisions now apply to existing arrangements that meet the new definition of a "specified contractor," unless legal proceedings were filed before the 20 February 2026. In such a case, the old law will apply.
Claims solely based on procedural deficiencies won’t succeed
An employee can raise a “personal grievance” claim againstan employer based on claims of (among other things) that their employment was affected to their disadvantage by an unjustifiable action of their employer (“Unjustified Disadvantage”), or that they were dismissed unjustifiably (“Unjustified Dismissal”).
The Employment Relations Act 2000 sets out a test of “justification” that requires employer’s actions to be what a fair and reasonable employer could have done at the time of the action or dismissal. An action or dismissal was not unjustified solely because of defects in the process the employer followed, if the defects were minor and did not result in the employee being treated unfairly.
The ERAA removes the reference to “minor”. The defects must be demonstrated to have resulted in the employee being treated unfairly, regardless of how big the defect was. This prioritises substance over process, giving employer’s more leeway to get the process wrong, so long as the employee is not treated unfairly.
Remedies discounted where employee contributes to problem
The Employment Relations Act allows for remedies such as reinstatement of an employee to their former position, reimbursement of lost wages, compensation for injury to feelings and more.
Previously, it was only in rare circumstances that discounts on remedies would be made where an employee was successful in the employment relations authority or employment court. A full deduction in remedies would only be available if an employee’s conduct was so “egregious” to justify no award. This was a high threshold to meet, enabling employees to seek and obtain remedies when they had contributed to the problem.
The ERAA has shifted the balance back in favour of employers, through the following changes:
90-Day Trial Periods for employees eligible to join collective agreements
Previously, employees who were eligible to join a union and be bound by a collective agreement had to be employed under terms consistent with that agreement for the first 30 days of employment. If an individual agreement was signed during this time, it could not contain less favourable terms than the collective agreement. This means that a 90-day trial period could not be included in an individual agreement unless it was permitted by the collective agreement (which was virtually unheard of).
The ERAA removed this requirement. Instead, an employee is now required to decide at the commencement of their employment whether they will join the union and be bound by the collective agreement or sign an individual employment agreement. This enables there to be 90-day trial periods for employees who opt for an individual agreement.
The ERAA also reduced information sharing obligations. At the time of entering into an individual employment agreement, an employer is (still) required to inform the employee that if they join the union they will be bound by the collective terms, and they must be given a copy of the terms. However, an employer no longer needs to pass on other information provided by a union. An employee is no longer required to complete a form, and an employer only needs to tell the union of the fact the employee has entered into an individual employment agreement if the employee consents.
Personal Grievances within trial periods
Previously, an employee could not raise a personal grievance for Unjustified Dismissal if they were given notice of termination before the end of a trial period.
The ERAA has extended this to prevent employees being able to raise Unjustified Disadvantage claims that “relate” to the dismissal, if that dismissal was before the end of a trial period.
Reduced protections for workers earning above $200,000
The ERAA removes the right to raise a personal grievance for unjustified dismissal for employees who earn over $200,000 per annum. This only applies to Unjustified Disadvantage or Unjustified Dismissal claims that relate to a dismissal, so there is still an ability to raise a personal grievance for other breaches of employment obligations, such as for breaches of good faith, discrimination or bullying and harassment.
If they agree, employers and employees can contract back into the personal grievance provisions or include terms for dispute resolution in employment agreements.
The threshold for unjustified dismissal personal grievances will apply to employees on new employment agreements made after 20 February 2026.
For pre-existing employment agreements, there will be a 12-month transitional period (to 20 February 2027). During the transitional period, employees on existing employment agreements will retain the ability to raise an Unjustified Dismissal personal grievance, unless they agree with their employer to vary their employment agreement and have the wages and salary threshold apply early.
PAA
The PAA introduced a new information privacy principle, IPP 3A.
IPP 3A requires agencies (which encompasses public or private sector agencies (ie businesses) as well as individuals) when collecting personal information about an individual other than from that individual, to take “reasonable steps” to ensure the individual is aware of:
Reasonable steps must be taken as soon as is reasonably practicable after the information has been collected. There are exceptions to this, including (among other things) where an individual has previously been made aware of the matters listed above, if the agency believes that non-compliance would not prejudice the interests of the individual or if it believes the information is publicly available.
Employers who collect personal information about employees through indirect means (such as from former employers, recruiters, or social media), will need to ensure they understand the application of IPP 3A.
IPP 3A will apply to information collected after 1 May 2026.
TBAB
The TBAB will allow an employer to ask an employee to enter negotiations to terminate their employment for a sum, without needing to establish a reason.
Employment law does not currently allow for employer instigated exit negotiations to take place outside of an employment relationship problem, and where the employee agrees to a discussion being made on a without prejudice basis (a confidential conversation that cannot be referred to in legal proceedings).
The TBAB seeks to change this. If it passes, employers will be able to ask an employee to begin “pre-termination negotiations” without there needing to be an employment relationship problem, and without this being grounds for a personal grievance (in and of itself). As currently drafted , the request must:
A request will not be able to be made more than once in any 6-month period, unless there is a genuine reason based on reasonable grounds to make another request in that period. Both employers and employees will therefore want to consider a request carefully. The employer is required to record requests and responses.
If negotiations are entered into and a termination agreement is reached, to be a protected and valid termination agreement, it must:
Prior to confirming the agreement, the employer must again inform the employee that they are entitled to seek independent advice and give the employee a reasonable opportunity to obtain that advice.
Employers will still be required to comply with employment obligations such as acting in good faith. There is also a proposed obligation on an employer to not enter into “unfair pre-termination negotiations”, which are defined in the Bill, and will allow an employee to take a personal grievance in such situations, seeking usual remedies of reinstatement, reimbursement of lost wages, or compensation. A penalty against the employer can also be imposed.
Termination agreements can also be cancelled if an employee is found to have been treated unfairly because of a defect in the process, or a failure to include necessary information in the agreement.
Evidence of pre-termination negotiations will be inadmissible in any proceeding before the Employment Relations Authority or Court, except in some circumstances, such as a claim that there were unfair pre-termination negotiations.
We note that this change is proposed, but not confirmed.
Employers and employees should ensure they understand these changes now. For further information regarding this or similar issues please contactDirector, Brigitte Morten.
Summary
The Supreme Court unanimously dismissed Uber’s appeal, upholding the Court of Appeal’s decision that the true nature of the relationship between Uber and its drivers, was one of employment.
Background
The distinction between employer and contractor is significant due to the protections and benefits afforded to employees and, conversely, the obligations (or lack thereof) for businesses when engaging workers.
Section 6 of the Employment Relations Act 2000 provides that an employee is “employed by an employer to do any work for hire or reward under a contract of service”. A Court is required to look at the “real nature of the relationship” when determining whether an employment relationship exists.
The Employment Court determined that the Uber drivers were not contractors, as their written agreement specified, but were actually employees.
Court of Appeal
The CA agreed with the Employment Court that the drivers were employees but considered the Employment Court had misdirected itself on the interpretation of section 6 (the meaning of “employee”).
The CA found the reasoning of the Supreme Court in Bryson v Three Foot Six Ltd should be applied. In asking what the “real nature of the relationship” is, a Court is required to consider all relevant matters. This includes considering; the written terms of agreement, what the arrangements were in practice, the intention of the parties, and the common law tests of:
Application of Test
Real Nature of Relationship
The CA’s starting point was the substantive rights and obligations contained in the agreement and other contractual obligations of the parties. The CA first looked at the agreements as written (“in theory”), and then the agreement (“in practice”).
The documents were complex and sophisticated, and reflective of Uber’s preferred view of the relationship. This was that it would provide services to drivers, with drivers paying Uber for those services via a service fee, and that drivers are not paid by Uber, but provide transportation services to riders who pay the driver for those services with Uber acting as a payment intermediary.
In practice, the CA found that “although the driver agreement [had] been crafted to avoid the appearance of an employment relationship, many of the provisions designed to point away from employee status [were] window-dressing”. For instance, control over when, where and how drivers carry out work, was found to be exercised by Uber through its incentive schemes.
The parties’ intentions were then assessed, with the CA confirming that the labels a party places on the relationship is not determinative of intention of the relationship. The Employment Court’s consideration of evidence relating to the subjective intentions of the drivers was considered irrelevant, as the test is what would be “known to a reasonable person observing the parties’ dealings”. The key indicators of the parties’ intention were found in provisions that:
Common Law Tests
The second stage of the inquiry is to consider the common law tests, including:
After considering all relevant matters under the guidance of Bryson, the CA found the real nature of the relationship was one of employment. The factors in favour of the drivers being employees, outweighed those pointing away from employment (such as the considerations under the Integration test). Uber drivers were not carrying on their own independent transport service businesses.
Supreme Court
By a majority, the Supreme Court confirmed the CA’s interpretation of the test to be taken in determining whether a worker is an employee. Applying Bryson, section 6 is to be interpreted by determining the real nature of the relationship, which involves considering the common law tests of control, integration and the fundamental test.
A slight difference was presented in the Majority’s consideration of the Integration test, stating that "once it is accepted that Uber delivers passenger transport services to riders, drivers must be considered integrated in a more substantive sense. They are the face of Uber’s business, and the relationship between Uber and its drivers is one of co-dependency."
This contrasts with the CA’s view that this wasn’t a strong indicator of employment status.
In all other substantial aspects of applying the section 6 test, the Supreme Court majority agreed with and reinforced the CA's conclusions.
Justice Glazebrook and Justice Ellen France agreed that the drivers were employees but differed from the majority on a couple of points. They considered that the CA was wrong to disregard the parties’ actual common intention at contracting, which they considered was that the drivers were to
be independent contractors. They found the common intention should be a factor (but not determinative). The minority also considered the CA was wrong to limit its analysis to only when drivers were “logged on”. This meant consideration of factors such as freedom to work for others or providing their own equipment was restricted.
Result and Significance
The Supreme Court dismissed the appeal, upholding the CA’s decision.
The CA and Supreme Court decisions are important guidance for employers and business owners in understanding obligations owed to workers.
However, the Employment Relations Amendment Act 2026 aims to better clarify the distinction between employee and contractor by excluding “specified contractors” from the section 6 definition of employee. Specified Contractor is defined in the Act as (among other things) someone who is not restricted from performing work for any other person and who is either able to sub-contract work or is not required to be available to perform work at a specified time, on a specified day or for a minimum period.
For further information on this case or any employment issues, please contact Director Brigitte Morten.
Summary
The Court of Appeal addressed whether split shifts constitute a single "work period" under the Employment Relations Act 2000 when determining bus drivers' rest and meal break entitlements, finding that it depends on the specific facts and circumstances of the employment arrangement.
Background
Tranzurban Hutt Valley Ltd ("Tranzurban") operates bus services in the Hutt Valley under contract with the Greater Wellington Regional Council, utilizing "split shifts" where drivers work morning and afternoon periods separated by a midday break. The New Zealand Tramways and Public Passenger Transport Employees’ Union Wellington Branch Inc ("Union") challenged Tranzurban's practice of treating split shifts with breaks of two hours or more as two separate work periods for the purposes of s 69ZC of the Act, arguing that this reduced drivers' entitlement to rest and meal breaks. The Union contended that the entire split shift should be considered one continuous work period, resulting in more breaks for drivers. In practice, the difference between the two approaches was that the Union's approach would have resulted in three paid rest breaks and two unpaid meal breaks, while Tranzurban's resulted in two paid rest breaks and one unpaid meal break.
The Employment Relations Authority initially sided with the Union, finding that a split shift constituted a single work period from the beginning to the end of the driver's workday.
However, the Employment Court overturned this decision, holding that the Act did not prevent parties from agreeing to multiple work periods within a workday. The Employment Court determined that the classification of a split shift as one or more work periods was a factual question depending on the hours worked, the nature of breaks, and the agreed terms of employment.
The Court of Appeal Decision
The Court of Appeal upheld the Employment Court's interpretation of s 69ZC, finding that it was correct in its approach. It emphasized that the terms and conditions of employment, as reflected in the Collective Agreement, were a key factor. The Court found that the Collective Agreement was permissive, not prescriptive, and did not mandate that all split shifts be treated as single work periods.
The Court then assessed whether Tranzurban's approach was consistent with the purpose of the Act, which is to ensure employees have adequate time to rest and refresh. The Court considered that drivers were free to use the two-hour break as they wished, and there was no evidence Tranzurban was structuring shifts to avoid providing breaks. The Court acknowledged that a rested, refreshed, and nourished driver promotes a productive employment relationship. The fact that Tranzurban designed the shifts around bus routes and demand was also relevant.
Result
The Court of Appeal dismissed the Union's appeal, finding that Tranzurban's approach to split shifts was consistent with the Collective Agreement and the overall purpose of the Employment Relations Act 2000.
This case provides guidance on determining rest break entitlements in the context of split shifts. It highlights the importance of examining the specific terms and conditions of employment and the practical realities of the work arrangement on a case-by-case basis.
For further information on this case or similar issues, please contact Director Brigitte Morten.
