New Zealand Update: Big Changes Coming for Contractors

The Government has announced changes to the Employment Relations Act 2000 to introduce a new gateway test for determining whether workers are contractors. If the worker meets the new gateway test, then they will be considered an independent contractor and cannot challenge that status in Court.
 
The criteria for the gateway test are:

• a written agreement with the worker, specifying they are an independent contractor;
• the business does not restrict the worker from working for another business (including competitors);
• the business does not require the worker to be available to work on specific times of day or days, or for a minimum number of hours OR the worker can sub-contract the work; and
• the business does not terminate the contract if the worker does not accept an additional task or engagement.

If the working arrangement in question meets the four factors set out in the gateway test, then the person is considered to be a contractor. If one or more of these factors are not met, then the existing test, which looks at the real nature of the relationship, would apply, and the employee can challenge their contracting status in the usual manner.
 
The Government has stated that work is underway to progress this change through the Employment Relations Amendment Bill which the Government hopes to introduce in 2025.
 
This change follows the Court of Appeal’s decision last month which found that some Uber drivers were employees. Uber drivers would likely meet the proposed new gateway test and be considered contractors.
 
This new gateway test would be a significant change to the Employment Relations Act 2000 and the test for determining whether or not a worker is an employee. The new gateway test significantly increases the hurdles a worker has to get over to show that they are an employee. Even once they have met this gateway test, the worker would then need to show that the ‘real nature of the relationship’ is one of employment.
 
It’s not clear at this stage whether a worker will be assessed against the gateway test solely based on the wording of the relevant agreement, or whether the working arrangement (and how it has developed) will also be relevant. If the working arrangement is relevant, then this new gateway test may not give as much certainty as the Government is seeking.
 
We will keep a close eye on developments in this space and report on them further. If you have any queries at all about how this change may affect your business, or want to discuss any issues regarding independent contractors, please feel free to reach out.

By Quigg Partners, New Zealand, a Transatlantic Law International Affiliated Firm.

For further information or for any assistance please contact newzealand@transatlanticlaw.com

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