Principals would be allowed to run more than one school and schools would find it easier to change their opening hours under a proposed law change.
The government said the Education Legislation Bill, which was introduced today, was about giving schools more flexibility.
However, the primary teachers' union warned it could fundamentally change the way schools operated.
Principals' Federation president Denise Torrey said the bill was mostly about "tidying up" legislation to catch up with what was already happening.
Sharing a principal could work for some schools, she said.
"The children's needs need to be at the centre of any decision. We would much rather the children stay on a site than close a whole pile of schools and put them on one site, if that's possible."
In a written statement, Education Minister Hekia Parata said the changes would give schools more flexibility to cater to the needs of their students.
However, the New Zealand Educational Institute, which represents primary school teachers, feared major changes were being pushed through with little consultation.
The union's president Louise Green said there were already exemptions in special cases with permission from the ministry - but she was worried about such arrangements becoming the norm.
"Principals work hard to lead the school they are the principal of, and it's not a part time job. The other thing is, parents don't like it when a principal is out of their school."
A proposal to allow the State Services Commission to approve conditions of employment outside a collective contract is also included in the bill.
Ms Green said all terms and conditions "should be negotiated in an open and transparent way in good faith".
She said the provision allowed for "side deals that could effectively undermine the collective agreement but equally change the way schools are operated in New Zealand".
The bill included major changes, which should be more properly addressed in the current review of the Education Act, she said.
In a written response to questions, Education Ministry deputy secretary for strategy, planning and governance Ellen Macgregor-Reid said any additional employment conditions would not clash with the collective.
For instance, some boards already gave principals extra remuneration in recognition of additional responsibilities, like managing a large number of international students or operating a hostel.
The omnibus bill, which involves amendments to eight different statutes, is now waiting for its first reading in Parliament.
Meanwhile, public submissions on the separate proposals to update the Education Act close on 14 December.