Workplace Relations and Safety Minister, Brooke van Vendel recently announced that she intends to introduce a Bill in January 2025 to amend the Employment Relations Act to provide greater certainty for businesses on the status of workers, whether they are classified as independent contractors or employees.

Clarity around worker status is crucial for businesses to be able ensure that they are complying with employment laws and regulations in relation to their workers including in relation to tax and holiday pay. The Government proposes to introduce a 'four factor' gateway test that businesses can use to determine whether a person is a contractor or an employee if a worker challenges their status.  If all the following factors are met, the person will be classed as a contractor:

• There is a written agreement specifying that the worker is 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 the day or days or for a minimum number of hours OR the worker can sub-contract the work;
• The business does not terminate the contract if the worker does not accept an additional task or engagement.

If one or more of the factors above are not met, the worker's status will need to be determined using the current worker status criteria which involves a factual analysis of criteria including factors such as the level of control and integration of the worker in the workplace and the economic reality test whether they are in business on their own account. New laws to provide businesses with more certainty around worker status formed part of the coalition agreement between Act and National. The necessity of such laws has been highlighted by lengthy and costly litigation involving the status of film workers and, more recently, Uber drivers.

For more information and to stay updated, reach out to our employment law specialists Anne Wilson and Harriet France.