A key change introduced by the Employment Relations Amendment Act 2026 is a new “gateway test” for determining whether a worker is an employee or a contractor. The test is intended to reduce uncertainty under the previous legal frameworks. The new test applies from 21 February 2026 when the Amendment came into force and applies to all existing or new agreements.
Section 6(7) of the Employment Relations Act 2000
Under the new “gateway test” in section 6(7), a worker is a specified contractor for the purposes of the Employment Relations Act 2000 (the Act) if all the following criteria are met:
- A written agreement states that the worker is a contractor;
- The worker is free to work for another person or business;
- The worker is not required to be available at specified times, days, or for a minimum period, OR they can subcontract the work to another person;
- The business will not terminate the agreement if the worker refuses an additional task; and
- The worker is not required to obtain legal advice but must have had a reasonable opportunity to do so before signing.
If all these criteria are met, the worker will generally be treated as a specified contractor under the Act. If one or more criteria are not met, the Employment Relations Authority or Employment Court can still look to the “real nature of the relationship” by considering the common law tests and the parties’ intentions. These tests include control, integration, and economic reality.
What does this mean for businesses?
If a business engages a worker to provide services but the agreement does not identify the worker as a contractor, the worker may be treated as an employee and become entitled to the protections under the Act. Businesses should review their agreements to avoid uncertainty. Godfrey’s Law can review existing agreements and prepare contracting or employment agreements tailored to your business, reducing the risk of worker misclassification.
What does this mean for workers?
Although the new test provides clear guidance on whether a worker is an employee or a contractor, it can reduce protections available under the Act. Businesses may structure genuine contracting agreements to satisfy the statutory criteria in section 6(7) which places workers outside the Act’s protections. A worker classified as a contractor cannot bring personal grievance claims normally available to employees, which may have serious consequences where grounds for this type of claim exist. Godfreys Law can review your agreement, advise whether it classifies you as an employee or contractor, and explain the advantages and disadvantages of each classification.
Whether you are starting a new job, hiring employees, or reviewing current employment contracts under the new law, our experienced employment and commercial team at Godfreys Law can provide comprehensive legal advice and support wherever needed.
