Contractor Relationships in New Zealand

Working out if someone is an employee or contractor

Overview - Contractor Relationships

Contractor relationships are not covered by employment law (if they are a genuine contractor relationship), and are governed by general civil law. They are required to abide by the Health and Safety at Work Act 2015.

For different employment relationships (permanent vs fixed term vs casual) see our knowledgebase article here.

Working Out if Someone is an Employee or Contractor

There are two steps to work this out.

If the contract of service has been entered into since 21 February 2026, you first check the arrangement against the Gateway Test. If it passes, the worker is a contractor and can't later challenge that status.

If the arrangement doesn't pass, or the contract of service predates 21 February 2026, you fall back to the Common Law Test to work out the true nature of the relationship.

The Gateway Test

The Gateway Test was introduced on 21 February 2026 as the way to work out if someone is genuinely a contractor. If the contract of service predates 21 February, the Common Law Test applies instead.

If the arrangement meets all five criteria below, the worker is a "specified contractor" and can't later challenge this status with the Employment Relations Authority.

To pass the test, the arrangement needs:

A written agreement that says the worker is an independent contractor, or not an employee.
Freedom for the worker to work for others. This only needs to hold while they're doing work for you. For example, they can take on other clients or jobs outside of the hours you have engaged them to work, they just can't be tied up working for someone else at the same time you need them.
Either no requirement for the worker to be available at set times or for a minimum number of hours, or the ability for the worker to subcontract the work out.
No right for you to end the arrangement just because the worker turns down extra work.
The worker had a reasonable opportunity to get independent advice before they signed.

If even one of these isn't met, the arrangement doesn't pass the gateway test. You then need to look at the Common Law Test below to work out the true nature of the relationship.

The Common Law Test

There are four legal tests applied to help determine whether a relationship is truly that of a contractor. No one thing will make the relationship a contractor, or one of employment. It's looking at it as a whole.

Intention

What the relationship intended to be, this is often taken from the agreement that is in place.

Control vs independence Test

The greater the control the company has over the worker, the more likely they are to be an employee. The opposite is true of a contractor. This takes into account: when they work, where they work, what they work on, how they work, level of supervision required.

Alongside this, ask yourself:

Will the worker have the choice of when, how and where they do the work required?
Is the work you require to be completed normally completed by a contractor?
Is the worker not supervised or do they have very little supervision?
Can the worker wear what they want?

Integration Test

Is the work required by the worker fundamental to the business, if yes, it is normally aligned with an employment relationship.

This looks at the type of work the employee does – is it work that is normally done by employees, is it continuous, is it of benefit to the business, how integrated is the employee in the business itself (uniform, social events, and organisation updates).

Alongside this, ask yourself if the following is true:

The worker does not attend social events or team / company updates.
The worker can have others do the work for them.

Fundamental / Economic Reality Test

What is the economic reality of the relationship – who pays the worker's taxes, how does the worker receive payment, does the worker mainly work for one entity, advertise for work, carry financial risk etc.

Alongside this, ask yourself:

Will the worker provide their own tools and cover their own business expenses?
Does the worker provide an invoice for the work they do?

If the answers to these questions are mostly yes, then it sounds like a genuine contractor relationship.

Keep in mind that if you have any requirements that restrict the worker greatly, then it may be best to capture the relationship under an employment agreement.

To run through a more in depth checklist, check out the Employment New Zealand website.

Support Options

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