The Government is planning to clarify the definition of a contractor by amending the Employment Relations Act — a change welcomed by the business sector and criticised by unions.
The criteria for the proposed gateway test to be added to legislation include:
- a written agreement with the worker, specifying they are an independent contractor not an employee, and
- the business does not restrict the worker from working for another business (including competitors), except while they are completing paid work for that business, and
- 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 (beyond what they have already agreed to do under the existing contract).
Workplace Relations Minister Brooke van Velden said if the working arrangement meets the four factors set out in the test, then the person is a contractor.
“This new approach will provide businesses with more certainty to proceed with innovative business models involving contractors where this is appropriate, and also enable businesses to offer better terms and conditions to their contractors with less concern that it might impact the contractor’s status.”
She said the current process for workers challenging their employment status through the courts can be “costly for businesses and can increase business uncertainty in general”.
“I believe these changes could improve conditions for some contractors, reduce risk for firms, and help ensure businesses compete on quality, price and productivity.”
Business NZ welcomed the new criteria, saying it was “very happy” the Government would be stepping in.
The changes come as multi-billion dollar global rideshare company Uber lost a landmark appeal last month which ruled drivers should be treated as employees not contractors.
This gave drivers employee benefits such as leave entitlements, minimum wage and holiday pay.
Labour’s workplace relations spokesperson Camilla Belich said it appeared the Government was looking to limit the type of matters that could be considered when determining whether a worker is an employer or a contractor.
“We would be concerned if New Zealanders’ rights were being taken away by this change.”
First Union organiser Marie Aldcroft said she was “disgusted” by the change.
“I feel that the Government is rushing through legislation before allowing the New Zealand court system to actually finish its determination.”
Van Velden said she hopes to introduce the law in 2025.
