Getting your contractor arrangements right just became even more important

If your business engages independent contractors, whether it’s for specialist projects, seasonal work or ongoing support, now is the perfect time to review those arrangements.

One of the most significant changes introduced under the Employment Relations Amendment Act 2026 earlier this year is a new “gateway test” designed to provide greater certainty about whether a worker is genuinely a contractor or should legally be treated as an employee.

Getting this wrong can be expensive. Misclassifying a worker can lead to disputes, backdated employment entitlements, holiday pay, KiwiSaver obligations and other unexpected costs. The good news is that the new gateway test gives businesses a clearer framework to work with.

The five-part gateway test
For a worker to qualify as a contractor, all five of the following criteria must be met:

  • There is a written agreement confirming the worker is an independent contractor (or not an employee)
  • The worker is free to work for others (other than any temporary restrictions relating to a particular engagement)
  • The worker has genuine flexibility over when the work is performed or can subcontract the work
  • The worker cannot be terminated simply because they decline additional work
  • The worker had a reasonable opportunity to obtain independent advice before entering into the arrangement.

What does this mean for employers?
If all five criteria are satisfied, the worker will generally be recognised as a contractor under the new legislation.
If any one of these criteria is missing, the arrangement doesn’t automatically fail. Instead, the Courts will continue to apply the existing common law test to determine whether the person is really an employee.

Our recommendation
Now is a great time to pull out your contractor agreements and make sure they reflect both the new legislation and the reality of the working relationship.

A well-written contractor agreement is important, but it’s only part of the picture. The way the relationship operates in practice also matters.

If you’re unsure whether your contractor arrangements meet the new requirements, we’d be happy to review them with you. Simply give us a call on 07 823 3250 – a quick check now could help avoid a much bigger issue later.

Please note:
This information is offered as a guide only and for any situation you may be facing we recommend that you obtain independent professional advice. Of course People in Mind can provide that advice – just call us or email us and we will be in touch.