Employment Relations Amendment Bill – Committee Recommends Passage articles

31 October 2025

Employment Law Update

Overview

The Education and Workforce Committee has released its final report on the Employment Relations (Termination of Employment by Agreement) Amendment Bill, recommending by majority that the bill and proposed amendments be passed.

Introduced by ACT Party MP Laura McClure, the bill seeks to establish a framework for protected conversations between employers and employees to facilitate mutual agreement on the termination of employment.

If enacted, the bill would amend the Employment Relations Act 2000 to introduce “pre-termination negotiations”—confidential discussions that may occur even where no employment relationship problem exists. Where these negotiations result in agreement, the parties may enter into a termination agreement, preventing further employment-related claims once settlement is finalised.

Committee findings

The Committee acknowledged that certain provisions could reduce the bill’s workability, create uncertainty, and expose parties to potential legal challenge. It has therefore recommended amendments to align the bill more closely with the existing legislative framework and to reinforce procedural safeguards for both employers and employees.

Key recommendations

• Replace clause 4 with a new Part 8B (sections 100H–100R) to ensure alignment with the principal Act.
• Introduce enhanced procedural safeguards for both employers and employees.
• Require employers to inform employees of their rights and provide a reasonable opportunity for representation.
• Limit the duty of good faith during negotiations to prohibiting misleading or deceptive conduct, with penalties for breaches.
• Empower the Employment Relations Authority to cancel termination agreements where procedural defects or unfair conduct occur.
• Make communications from pre-termination negotiations inadmissible in proceedings, except where relevant to procedural fairness.
• Restrict repeated requests for negotiations to once every six months, unless genuine reasons exist.

Opposing views

Labour and Green Party members opposed the bill, contending that it would allow employers to dismiss employees without cause or fair process and undermine principles of good faith and equitable treatment. They argue that existing law already permits mutual termination through without-prejudice discussions with appropriate representation.

Our view

The proposed changes represent a potentially significant development in New Zealand’s employment relations framework, which would formalise a process for confidential termination discussions, arguably legitimising no-fault termination.

While the bill, if enacted, may offer greater flexibility in managing employment relationships, employers will need to ensure they comply with new procedural requirements and ensure fairness and transparency when initiating pre-termination negotiations.

Our Employment Law team will continue to monitor the bill’s progress and advise clients on its practical implications once enacted.

For further information or tailored advice, please contact:

Tim Jeffcott, Partner or reach out to Here to Help – Stace Hammond.