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Employment Relations Act 2000 amendments
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Employment Relations Act 2000 amendments
The Employment Relations Act 2000 will be amended to provide a gateway test that businesses can use when responding to a claim that a person is an employee and not a contractor
On this page
This means that working arrangements which meet a new smaller set of criteria will be considered to be contracting arrangements (i.e. the workers would not be considered to be employees), and will not need to apply the full test in section 6 of the Employment Relations Act 2000.
Section 6 – Employment Relations Act 2000 (external link) — New Zealand Legislation
The criteria that must all be met are:
- there is a written agreement that specifies the worker is an independent contractor; and
- the worker is not restricted from working for others; and
- the worker is:
- not required to be available to work certain times, days or for a minimum period; OR
- able to sub-contract the work, and
- the business does not terminate the agreement for not accepting an additional task.
Working arrangements that do not meet the exclusion criteria will continue to be assessed using the current full test in section 6 of the Employment Relations Act 2000.
The graphic below explains how this will work.
New gateway test that businesses can use
The gateway test, once in place, can be used by the Employment Relations Authority when responding to a claim that a person is an employee and not a contractor. If the working arrangement in question meets the 4 factors set out in the test, then the person is considered to be a contractor. If the 4 factors are not met, the claim would then proceed to being considered under the existing full test.
Read image transcript: New gateway test that businesses can use
The 4 factors are:
- there is a written agreement that specifies the worker is an independent contractor, and
- the worker is not restricted from working for others, and
- the worker is not required to be available to work certain times, days or for a minimum period OR the worker is able to sub-contract the work, and
- the business does not terminate the agreement for not accepting an additional task.
If the working arrangement meets all 4 criteria, the worker is a contractor.
If the working arrangement does not meet the criteria, then the claim would be considered under the full test. The full test considers the ‘real nature of the relationship’ under section 6 of the Employment Relations Act 2000.
The Employment Relations Authority/Court may determine that the real nature of the relationship is a contracting arrangement.
The Employment Relations Authority/Court could otherwise determine that the real nature of the relationship means that the worker is an employee.
This will not impact existing employment agreements, which will continue to operate as normal.
Taking Cabinet decisions on legislative amendments to clarify the employment status of contractors is in the Government’s Q3 Action Plan.
These amendments are part of the National-ACT coalition agreement commitment to give greater weight to the intention of contracting parties, where 2 parties enter a contract for services.
Read the Minister’s announcement:
Increased certainty for contractors coming(external link) — Beehive.govt.nz
Next steps
The Government aims to introduce an Amendment Bill in 2025 to progress these changes.