Ministry of Business, Innovation and Employment — Public Consultation 2026
Submitted: 07 July 2026
About this submission
The New Zealand Chambers of Commerce and Industry (NZCCI) represents regional chambers and their business members across New Zealand. This submission responds to MBIE’s public consultation on the employment dispute resolution system, open from 5 May to 31 July 2026.
This submission draws on feedback gathered from Chamber members across multiple regions, including business owners, HR professionals, and employment lawyers with direct experience of the dispute resolution system. It also draws on the experience of those who have drafted and reviewed submissions on behalf of regional chambers.
NZCCI supports the Government’s objective of a dispute resolution system that is fast, fair, and accessible. Our submission identifies five areas where the current system is falling materially short of that objective: early practical resolution as the default, mediation timeliness and quality, the conduct of unregulated employment advocates, the disproportionate burden on small employers, and the absence of adequate front-end education and support. We make targeted recommendations for reform in each area.
Executive Summary
From the perspective of NZCCI member businesses, the central problem with the current employment dispute resolution system is that too many disputes become more adversarial, more expensive, and more entrenched than they need to be. This is damaging for employers, employees, and regional economies alike.
The system is technically available but practically slow. Mediation, intended as the first and most accessible step, is frequently unavailable within a useful timeframe, has shifted almost entirely to video conferencing without adequate consultation, and is inconsistent in quality. Unregulated employment advocates can and do drive escalation for tactical reasons, with little accountability. Small employers in particular face disproportionate exposure that deters hiring and penalises good-faith mistakes.
NZCCI’s core recommendations are:
• Establish early practical resolution as the default design principle of the system.
• Restore mediation as a genuine early intervention tool, with published service standards, increased capacity, and better regional access.
• Introduce proportionate regulation of paid employment advocates, with minimum competence and conduct standards.
• Improve front-end support and education so that disputes are less likely to reach formal processes unnecessarily.
• Address the disproportionate impact of the system on small employers, including consideration of a tiered framework based on employer size.
These changes should be designed to preserve access to justice for employees and small employers. NZCCI does not support reforms that simply price vulnerable parties out of the system. However, a system that is easy to enter but slow, inconsistent, and vulnerable to poor-quality representation does not serve employees, employers, or the public interest.
Section 1: The system should establish early practical resolution as the default
Employment disputes impose real costs before any legal fees are paid. For many regional employers, especially small businesses, a personal grievance or employment relationship problem is not a routine legal event. It can absorb owner time, destabilise teams, damage reputation, and discourage future hiring. For employees, delay means prolonged uncertainty, financial pressure, and reduced confidence in the fairness of the process.
MBIE recognises that early resolution reduces negative impacts and lowers the risk of escalation. NZCCI agrees. The system should be judged less by whether it provides multiple formal pathways, and more by whether it helps parties resolve disputes early, fairly, and proportionately. A dispute resolution system that is technically available but practically slow will often fail both sides.
NZCCI position: The employment dispute system should be designed around early practical resolution as the default. Formal escalation should remain available, but it should not become the ordinary route because earlier steps are too slow, unclear, or ineffective.
Section 2: MBIE mediation is not functioning as early intervention
Timeliness
MBIE mediation is almost always too slow to function as genuine early intervention. Members across multiple regions report minimum waiting times of six weeks, and frequently nine weeks or more. By the time parties receive a mediation date, positions have hardened, legal costs have increased, and employment relationships that could have been saved by early mediation are too damaged to repair.
This is especially harmful where an employee remains employed during the dispute, where a small employer is managing operational disruption, or where the matter could realistically have been resolved if addressed promptly. Delay changes bargaining power. It pressures parties into settlements driven by fatigue, cashflow, or uncertainty rather than the merits of the case.
This is an access to justice issue, not merely an administrative one. During the delay, parties are often bearing significant costs: an employer paying for special leave, or an employee stood down without pay. Those costs accumulate before mediation even begins.
The shift to video conferencing
Since 2020, MBIE has moved almost all mediations to online video platforms, without adequate consultation with the profession. While this is workable in some cases, members and practitioners report that it is not suitable for the majority of disputes, where parties need to face each other directly to work through the underlying issues.
In practice, remote mediation has made it easier for parties to disengage, avoid core issues, or adopt positional stances they might not take in person. Poor behaviour by some practitioners and advocates is also harder to manage in an online environment. The result is that meaningful resolution is less likely to be achieved, and all parties bear additional costs as disputes continue.
Regional access
The shift to remote mediation has compounded existing access problems in some regions. In areas such as Queenstown, MBIE does not provide in-person mediation at all. Where private mediation is the only practical option, costs range from $2,000 to $8,000 plus GST, with additional travel costs where mediators must come from Dunedin or Christchurch. A shortage of private mediators in some regions compounds this further. For many small businesses and employees, mediation becomes a prohibitively expensive option.
Mediator quality
Members and practitioners also report inconsistency in mediator quality and engagement. In some cases, mediators appear to be going through the motions rather than actively working toward resolution. Where mediators do not engage substantively with the issues, parties are effectively forced to bear the cost of a process that adds delay without adding value.
NZCCI acknowledges that MBIE mediation is currently free and taxpayer-funded, which supports accessibility and should not be lightly discarded. However, a free service that is unavailable within a useful timeframe creates hidden costs for both parties. In practice, delay can be more expensive than a modest, well-designed cost contribution.
NZCCI would support consideration of a two-track model, provided the free pathway is protected:
• A free standard MBIE mediation pathway for parties willing to wait longer.
• A faster paid or partly paid pathway where parties need faster resolution and are prepared to contribute to that cost.
• Targeted investment in additional mediator capacity, particularly in high-demand and regional areas.
• Published service standards including expected timeframes from application to first mediation date.
• A return to in-person mediation as the default, with remote options available where genuinely appropriate.
• Clearer standards for mediator conduct and engagement, with accountability where those standards are not met.
NZCCI position: MBIE should adopt published service standards for mediation timeliness, increase capacity (including in regional areas), restore in-person mediation as the default, and consider an optional paid fast-track pathway, provided access to the free pathway is preserved for employees and small employers.
Section 3: Unregulated employment advocates are undermining the system
Employment advocates are not subject to the same entry requirements, ethical obligations, complaints processes, or professional discipline as lawyers. Many advocates provide valuable assistance, and NZCCI’s concern is not with advocates as a category. The concern is with the absence of minimum standards for a role that can materially affect outcomes for both employees and employers.
This matters for employees as much as employers. Unregulated advocates can leave their own clients with poor advice, unexpected fees, or settlements that do not reflect their actual interests.
In practice, the lack of regulation creates an environment where advocates can apply significant pressure on employers by signalling that disputes will escalate unless a substantial financial settlement is reached. Advocates understand the system’s pressure points: the cost, time, stress, reputational risk, and management disruption involved in disputes going through mediation, the Employment Relations Authority, and potentially the Employment Court. This knowledge is used strategically to push for disproportionate outcomes, even in cases where the employer has acted in good faith.
Members and practitioners report the following as common problems with unregulated advocacy:
• Encouraging weak or inflated claims.
• Escalating disputes unnecessarily to mediation or the ERA.
• Using aggressive, intimidatory, or unprofessional tactics, including threats and breaches of privacy.
• Expanding the scope of disputes well beyond the original issue, forcing employers to respond on multiple fronts.
• Demanding extensive personal and organisational documents unrelated to the original issue, driving cost and delay for both parties.
• Driving settlements based on the cost of defending the process rather than the merits of the claim.
There is currently no recourse for complaint against advocates, yet opposing counsel must refrain from retaliation, which creates a significant asymmetry. Some practitioners report taking safety measures when dealing with certain advocates. This is not an acceptable state of affairs in a system intended to support fair and efficient resolution.
Unregulated representation does not make the system more accessible. It may make it cheaper to enter, but more costly to exit, for both parties.
NZCCI position: Paid employment advocates should be subject to a proportionate regulatory framework, including minimum competence requirements, conduct standards, a complaints process, and accountability for escalation that is not in the interests of their clients. The aim should be to improve competence, transparency, and accountability, not to reserve representation to lawyers or remove affordable support from the system.
Section 4: The system is disproportionate for small employers
Equal rules, unequal capacity
The current system applies the same rules, processes, and financial penalties to a sole operator with one employee as it does to a large corporate with a dedicated HR team. This is not proportionate and is not fair.
Small business owners typically operate without HR support, limited legal knowledge, and are personally managing every aspect of their business. They are not in an equivalent position to large employers when navigating a formal dispute process. The capability gap between intent and execution is frequently what creates exposure, not misconduct or bad faith.
The chilling effect on employment
The risk of personal grievance claims and significant financial liability is a genuine deterrent to small businesses taking on their first employee or growing their team. Members report that the fear of a personal grievance, and the cost of defending even a weak claim, shapes hiring decisions. A system that discourages employment is counterproductive to the Government's broader economic growth objectives.
The scale of this effect should not be underestimated. If even a fraction of small businesses felt confident enough to take on one additional employee, the impact on regional employment would be substantial.
Disproportionate financial penalties
Where a small employer has made a genuine mistake without malicious intent, the focus of any resolution process should be on education and preventing recurrence, not financial punishment. Members report settling weak claims because the cost of defending them, even successfully, exceeds the settlement amount. Hurt and humiliation awards in particular are seen as excessive relative to the conduct involved, and can be business-ending for a micro-employer.
Members describe a system in which even employers who have acted carefully and in good faith find themselves on the back foot from the outset. The process itself, the formality, the cost, the timeline, and the information demands, creates pressure that is structurally weighted against smaller operators, regardless of the merits of the claim.
The system also provides no meaningful disincentive for weak or vexatious claims. Where the cost of defending a claim exceeds the cost of settling it, some parties are able to use the process itself as leverage, regardless of the underlying merits.
Differing views on the right remedy
NZCCI members hold differing views on how best to address disproportionate outcomes for small employers, and we record both positions.
One view, held by a number of member businesses, is that a tiered framework based on employer size should be introduced, similar to how other regulatory regimes such as health and safety, tax compliance, and financial reporting apply proportionate obligations based on scale. Under this approach, small employers (suggested threshold: five or fewer employees) acting in good faith should face reduced or capped financial exposure for personal grievances, with the focus shifted to education and structured guidance rather than financial remedy. Carve-outs for unpaid wages or entitlements would remain.
A second view, held by other members, is that a size-based tiered system risks adding complexity without addressing the underlying problem. The issue, on this view, is not the scale of legal obligation but the capability of smaller operators to meet it. Introducing different rules by size may create perverse incentives and does not build the capability that would prevent disputes from arising in the first place. This view draws a parallel with the health and safety framework, which does not reduce duties for small businesses but recognises what is “reasonably practicable” in the circumstances.
Both views support the same underlying objective: a system that does not punish good-faith mistakes by employers who lack the resources to navigate complex processes. NZCCI invites MBIE to consider both approaches and welcomes further engagement on the evidence for each.
NZCCI position: The disproportionate impact of the system on small employers should be addressed. NZCCI members hold differing views on whether a size-based tiered framework or improved capability support is the right mechanism. Both positions are presented for MBIE’s consideration. Either approach should prioritise education and early resolution over financial penalty where a small employer has acted in good faith.
Section 5: Front-end support and education
Across the feedback received by NZCCI, a consistent theme is that many disputes arise not from intent or misconduct, but from capability gaps: small employers who did not know what good employment practice looks like, received inconsistent advice, or made poor early decisions that created avoidable exposure.
The market for employment advice is itself inconsistent. Small employers often cannot readily assess the quality of advice they receive, and poor or conflicting guidance from different providers is itself a driver of disputes reaching formal processes.
Better front-end support would reduce the number of disputes reaching formal processes and improve outcomes for both employers and employees. NZCCI recommends:
• Clearer, practical guidance on what good employment practice looks like in common scenarios, including performance management, restructuring, and dismissal.
• Accessible early-stage support for small employers to sense-check decisions before issues escalate, analogous to early neutral evaluation or pre-dispute guidance services in other jurisdictions.
• Greater consistency in the advice provided across different providers, both public and private.
• Stronger emphasis on early resolution and education at the triage stage, rather than defaulting to escalation.
The parallel with health and safety is instructive. The legislation does not reduce duties for small businesses, but the system has invested significantly in guidance, toolkits, and accessible support to help smaller operators understand what good looks like and apply it consistently. A similar investment in employment relations would reduce the burden on the formal dispute resolution system.
NZCCI position: MBIE should invest in practical, accessible front-end support and education for small employers, including clearer guidance on common scenarios, early-stage check-in support, and greater consistency of advice across providers. Better capability at the front end reduces the number of disputes that reach formal processes.
Conclusion
Most employers are genuinely trying to do the right thing, comply with their legal obligations, and manage people fairly. The current dispute resolution system too often penalises those efforts and rewards escalation.
NZCCI's submission calls for targeted reform in five areas: establishing early practical resolution as the default design principle of the system; restoring mediation as a genuine early intervention tool; introducing proportionate regulation of paid employment advocates; improving front-end support so that disputes are less likely to reach formal processes in the first place; and addressing the disproportionate impact of the system on small employers. On the question of small employers, we present differing views from within the business community and invite MBIE to engage seriously with both.
NZCCI welcomes the opportunity to provide further input and would be pleased to discuss any aspect of this submission with MBIE officials.