The Employment Relations Act 2000

What the Act does

• The Employment Relations Act 2000 (ERA) is the law governing the relationship between employers and employees in New Zealand.
• Its central idea is good faith: employers, employees and unions must deal with each other honestly, openly, and without misleading each other, and must be responsive and communicative.
• It is a legal influence — external, because Parliament decides its content and businesses must comply whatever they think of it.

The obligations that matter most to a business

Written employment agreements.

• Every employee must have a written employment agreement, and the employer must keep a copy.
• It must cover the parties, a description of the work, the place and hours of work, the wages or salary, and how employment relationship problems will be resolved.
• The employer must give the employee a reasonable opportunity to seek independent advice before signing.

Good faith.

• Applies to everyday dealings, not only bargaining: consulting before decisions that affect jobs, providing relevant information, and not acting in a way that misleads.
• Restructuring or making a role redundant without genuine consultation is a breach — which is where many personal grievances come from.

Collective bargaining and unions.

• Employees may join a union, and the employer must recognise a registered union representing them.
• The parties must bargain in good faith for a collective agreement, and must meet and consider each other's proposals.

Personal grievances.

• An employee may raise a personal grievance for unjustified dismissal, unjustified disadvantage, discrimination, harassment or duress.
• The test applied is whether the employer's actions, and how the employer acted, were what a fair and reasonable employer could have done in the circumstances — so a fair outcome reached by an unfair process can still fail.
• Grievances are usually resolved through mediation, provided free by MBIE, before going to the Employment Relations Authority.

Trial periods.

• An employment agreement may contain a trial period of up to 90 days for a new employee, available to employers of any size since December 2023.
• It must be agreed in writing before the employee starts work, and the employee cannot raise a personal grievance for unjustified dismissal during the trial — but good faith still applies.

The ERA has been amended many times, most recently by the Employment Relations Amendment Act 2026. Fair Pay Agreements were repealed in December 2023 and no longer exist — do not refer to them in an exam answer.

How the Act affects a business

Costs and constraints	Benefits
Administrative work: agreements, records, consultation processes	Clear rules mean fewer disputes and less improvisation
Restructuring and dismissal must follow a proper process, which takes time	A documented process protects the business if a decision is challenged
Breaches can lead to compensation, legal costs and management time	Employees who are treated fairly stay longer, cutting recruitment costs
Bargaining with a union can raise wage costs	Good faith obligations apply to the union too

How businesses respond

• Use compliant templates for agreements, usually supplied by an employer association or lawyer.
• Train managers in process, because most grievances are lost on procedure rather than on the merits.
• Document everything — meetings, warnings, consultation, the reasons for a decision.
• Consult genuinely and early where jobs or conditions will change.
• Use free mediation at the first sign of a dispute, before positions harden.