Key update for employers - What matters now

Several developments since our last newsletter are worth noting for employers. Minister Brooke van Velden is seeking public feedback on the employment dispute resolution process, the Modern Slavery Bill has progressed to Select Committee stage, and a Member's Bill has been drawn that would extend the class of people with a criminal record who are eligible for the clean slate scheme.

The headline unemployment figure edged down slightly to 5.3% for the March 2026 quarter, but the underlying picture is less encouraging. Job numbers remain well below where they were a year ago, real wages are falling, and the Middle East conflict is adding fresh uncertainty. The Reserve Bank held the OCR at its May Monetary Policy Statement but flagged that inflation is likely to rise this year as fuel costs flow through the economy. When alternative employment is harder to find and economic pressures are mounting, employees have more at stake and are more likely to contest decisions that affect their jobs. Employers who invest in sound process and early advice, particularly around change and disciplinary processes, are better positioned to avoid disputes, and to resolve them quickly when they do occur.

Here’s what employers need to know.

Trends we’re watching - On the horizon

Feedback sought on employment dispute resolution process

Minister for Workplace Relations and Safety Brooke van Velden is seeking public feedback on experiences with employment advocates, how disputes are handled in practice, and where improvements can be made. The Minister acknowledges that disputes can be costly and time-intensive, and that issues with the behaviour of employment advocates are common. Feedback can be submitted via MBIE's website.

Modern Slavery Bill progresses to Select Committee

The Modern Slavery Bill has reached Select Committee stage. The Bill would require organisations with $100m+ annual revenue to report on how they identify, address, mitigate, and remediate incidents of modern slavery within their operations and supply chains, with an offence for failing to meet reporting requirements. Read more.

Bill to extend the scope of the clean slate scheme

The Criminal Records (Clean Slate) (Additional Eligibility) Amendment Bill would broaden eligibility for the clean slate scheme by allowing individuals who have had a custodial sentence of up to 12 months, and individuals who have been subject to mandatory disqualification from driving for repeat offences, to benefit from the clean slate scheme provided they have completed a 10-year “rehabilitation” period. Read more.

Lessons from recent decisions

Medical incapacity - greater obligations where injury occurred at work

The Employment Court found an employer acted unjustifiably in dismissing an employee for medical incapacity where her PTSD had been caused by a workplace incident, the ACC return-to-work process was still underway, and the employer had failed to engage with rehabilitation or adequately explore alternatives to dismissal. Read the case.

Employer takeaway: Where illness or injury has a workplace cause, the bar for medical incapacity dismissal is higher. Allow sufficient time for recovery, engage actively with any ACC process, and do not proceed while relevant medical information is pending.

Applying updated legislation on remedies - interim reinstatement still available where serious misconduct alleged

In a recent decision, the Authority granted interim reinstatement to an employee dismissed for serious misconduct. The Authority held that whether the conduct constituted serious or ordinary misconduct could not be determined on untested evidence at a preliminary stage. The Authority also found that the new law applied even though the conduct in question occurred before the law changes came into force on 21 February 2026, because the dismissal occurred after 21 February 2026. Read the case.

Employer takeaway: Employers should not assume that alleging serious misconduct will defeat an interim reinstatement application. Until the serious  misconduct finding is tested on the evidence, the new restrictions may not apply.

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