The Select Committee has reported back on the Employment Relations Amendment Bill, recommending that the Bill be passed. Their report includes fine tuning recommendations of a couple of the proposals.
Minister for Workplace Relations and Safety Brooke van Velden has indicated a desire to see the Bill progress through Parliament in early 2026.
For employers, many of the proposals in the Bill are favourable. They are intended to increase certainty, reduce procedural and litigation risk, and provide greater flexibility in managing employment relationships. However, there are also important watch-outs, and the Bill continues to attract significant opposition from unions and opposition parties.
Below is a practical summary of the key outcomes from the Select Committee report, together with the broader reforms contained in the Bill.
Contractor classification – “gateway test”
One of the most significant proposals in the Bill is the introduction of a statutory set of criteria that must be met for a person to be treated as a contractor rather than an employee. This has been described as a “gateway test”.
The Select Committee recommended a number of refinements to this proposal, including amending the Bill so that the gateway test can be met where a written agreement specifies that a person is either an “independent contractor” or “not an employee”.
What this provides
- Greater certainty when engaging genuine contractors, particularly in areas such as catering services, specialist roles, or externally provided services.
- Flexibility for written agreements to state that a worker is “not an employee”, rather than requiring specific contractor terminology.
- Confirmation that:
- Working close to full-time hours does not, by itself, prevent contractor status.
- Contractors may subcontract work.
- Reduced risk of relationships being retrospectively reclassified as employment arrangements years later.
This represents a shift away from reliance solely on the subjective “real nature of the relationship” test developed by the courts.
Watch-outs
- All elements of the gateway test must be met. If they are not, the arrangement will fall back to the existing legal test for employment status.
- The Bill requires that the contractor had a reasonable opportunity to seek independent advice before entering into the arrangement.
- The changes are designed to support genuine contracting models and do not legitimise the use of contractors as a substitute for employees.
High-income threshold for unjustified dismissal
The Select Committee also recommended lifting the income threshold above which employees cannot bring a personal grievance for unjustified dismissal from $180,000 to $200,000.
The Committee further recommended that the threshold be assessed on the basis of total remuneration, rather than base salary alone. This means bonuses, incentive payments, and similar remuneration may be included when determining whether the threshold is met.
Practical reality for hospitality
- This change is expected to affect only a very small number of roles in the hospitality sector.
- Transitional provisions mean the threshold will not apply immediately to existing employees unless and until the relevant conditions are met.
Other key changes in the Bill (unchanged by the Select Committee)
While the Select Committee focused on refining specific proposals, it did not materially alter a number of other significant reforms already contained in the Bill, including:
Removal of the 30-day rule
The Bill removes the rule that can require new employees to become bound by a collective agreement after 30 days if they are not union members. This represents a substantial change to current collective bargaining settings.
Collective bargaining and good-faith framework
The Bill makes broader changes to the collective bargaining framework, including adjustments to good-faith obligations and how bargaining outcomes are applied. These changes remain controversial and were not reversed by the Committee.
Personal grievance risk allocation
Beyond the high-income threshold, the Bill continues the Government’s broader approach to reallocating personal grievance risk, particularly in relation to contracting arrangements and high-earning employees.
Political context and submissions
The Select Committee received several thousand submissions on the Bill, reflecting the level of interest and concern across the employment relations landscape.
While employer and business groups generally supported the direction of the reforms, unions and opposition parties strongly opposed many aspects of the Bill, arguing that it weakens employee protections and collective bargaining rights. Minority views were expressed by non-Government members of the Committee.
What happens next
It is important to emphasise that this is a Select Committee report, not the final legislation. The Bill must still progress through the remaining parliamentary stages, including:
- Second Reading
- Committee of the Whole House
- Third Reading
Further amendments remain possible.
This process provides time for:
- Further consultation
- Sector-specific feedback
- Clarification of how the proposals will operate in practice
We will continue to monitor developments closely and keep members informed as the Bill progresses.
Important note – This summary is for general information only and does not constitute legal advice. The final legal position will depend on the wording of the legislation as enacted. Employers should review the final Act and seek professional advice before making changes to employment arrangements.
Further information