The Law Changed in February. Your Contracts Didn't.

Employment law? Isn't that something that happens to other people? It actually happened to all of us back in February, and almost nobody noticed.

I was sitting across from Craig a few weeks ago, going through his onboarding pack because he wanted my opinion on a new hire. The candidate was a good fit. I flipped through the contract template while he talked. It was dated 2019.

"When did you last update this?" I asked.

He shrugged. "Not sure…why would I? Nothing's changed?"

Sorry mate, everything's changed. The Employment Relations Amendment Act came into force on the 19th of February this year, and it rewired four things that matter to almost every owner reading this. Craig hadn't read a word of it. Neither, I'd bet, have most of you.

Here's what he was carrying around without knowing it. His business runs on a mix of staff and subcontractors, tradies he calls in for bigger jobs, paid on invoice, treated like contractors in every conversation but never actually tested against the law. Under the old rules, that was a grey area you could live in for years without anyone asking hard questions. Under the new gateway test, it isn't grey any more. There's a written agreement requirement now, a genuine freedom to work elsewhere, no set availability demanded of them. Fail those and IRD or a disgruntled ex-contractor can argue they were an employee the whole time, backdated, with everything that comes with it. Craig's paperwork didn't mention any of it, because his paperwork was six years old and had never been asked to.

Then there's the 30-day rule, gone now, which used to force you to apply collective agreement terms to any new hire for their first month whether you wanted to or not. That's freedom Craig didn't know he had. He could have been negotiating real terms with his new hire from day one instead of defaulting to whatever the union agreement said, and he had no idea the option existed.

And then the part that should worry every owner who's ever had a bad hire go sideways on them: personal grievance remedies are limited now if the employee's own conduct contributed to the mess, and gone entirely if it was serious misconduct. For years the standard advice to owners managing someone out was pay them to go away quietly, because the system was built to make a fight expensive regardless of who was right. That calculation changed in February. It's not open season, and you still need to do the process properly, but the floor shifted under a decision a lot of owners make on gut instinct and fear of cost.

None of this is complicated once you've read it. That's the part that annoys me. This isn't dense legislation that needs a lawyer to translate. It's four clear, practical changes that directly affect how you write contracts, who you call a contractor, and how you handle a dismissal. And six months on, I'd guess fewer than one in five small businesses in this country have actually updated a single template to reflect it.

I get why: Owners are running the business, not reading the Employment Relations Amendment Act in their spare time, and I'm not going to pretend that's a moral failing. But there's a difference between not knowing something exists and knowing it exists and still not doing anything about it. Craig knew, vaguely, that "something changed in employment law this year." He'd heard it on the radio. He just filed it under things that happen to other people, the way most owners file most regulatory change, right up until it happens to them specifically, at the worst possible time, usually during a dispute they didn't see coming.

We spent forty minutes going through his onboarding pack line by line. Reclassified two of his regular subcontractors properly, in writing, so there's no ambiguity if either of them ever decides to test it. Rewrote his new-hire terms so he's not defaulting to collective conditions he never agreed to. It cost him an afternoon. The alternative was finding out the hard way, in front of the Employment Relations Authority, that his 2019 paperwork wasn't just outdated, it was actively wrong.

This is the unglamorous end of running a business well. Nobody builds a growth strategy around updating their contractor agreements. But the owners who last, the ones I've coached for nine, ten, fifteen years, they treat this stuff the same way they treat their financials: boring until it isn't, and by the time it isn't, it's expensive.

So here's the actual ask. Go and find your standard employment agreement. Check the date on it. If it says anything before February this year, you're not up to date, you're exposed, and you should fix it before your next hire, not after your next dispute. You're welcome.