Under previous legislation, if someone claimed they were an employee when you had been treating them as a contractor, the courts would examine the tests of justification and may deem them an employee. You could become liable for backdated holiday pay, PAYE and other liabilities. Unfortunately, the tests of justification are so broad that I could just about justify I was an employee of your company simply by having a conversation with you (I’m being slightly cheeky here, but they are very broad!).

However, the Employment Relations Amendment Act came into force on 20 February 2026, changing this, largely for the better.

What are the new rules?

The new rules create a category of worker who cannot challenge their status as a contractor. To be covered by the new ‘Gateway’ test, the following rules apply:

• There is a written agreement that specifies the worker is an independent contractor.
• The worker is not restricted from working for others.
• The worker is EITHER
  • Not required to be available to work certain times or days or for a minimum period OR
  • Able to sub-contract the work; and
• The business does not terminate the arrangement for not accepting additional tasks.
  
  

The business has the option to vet subcontractors, but only to ensure compliance with any relevant statutory requirements or, if justified by the nature of the work, to check for relevant qualification or criminal record. This means they can’t just send Auntie Nellie in to cover their shift as an optometrist, unless Auntie Nellie is a qualified optometrist. The contractor must also have reasonable opportunity to seek independent advice before entering into the arrangement.

What does this mean in practice?

Until we have case law in place, we can’t say exactly how this will be interpreted by the courts. However, to minimise your risk, the things to do now are:

1. Have a written independent contractor agreement in place. If you don’t have one already, you should do this anyway as it is required under current legislation. Please note that an independent contractor agreement is quite different from an employment agreement. So if you have tried to take a shortcut, by editing an existing employment agreement, it will not cut the mustard. There is a template contractor agreement on the HRtoolkit website at https://www.hrtoolkit.co.nz/hr-document-library/employment/contractors/independent-contractor-agreement/
   
   
2. Check restrictions on working for others. This is one that may cause an issue for some, so you will need to look carefully at any restrictions you have in place and determine if they really are valid and necessary. For example, if you are restricting a contractor from working for another practice because you don’t want them to steal your clients, this would not be valid. However, you can restrict them from stealing your clients. You can also restrict on the basis of health and safety concerns. For example, if they are working 40 hours a week for you, plus 20 hours a week for another practice, this would become a valid health and safety concern to discuss with them.
   
   
3. Understand contractors’ availability rights. You cannot say that they must be available to do work for you when you want them but then only give them work when it actually suits you. However, once they have accepted a shift/assignment, they are expected to fulfil that shift (unless sick or in an emergency situation). In practical terms, since most contractors may work for a couple of practices and are happy to take work wherever offered, they don’t want to bite the hand that feeds them. And, if you do have someone who is never available when you need them, you will probably stop offering them shifts anyway.
   
   
4. Assess termination restrictions. This restriction is on refusing additional work. So, if they have agreed to work eight hours on Monday and Tuesday but you want them to also work Wednesday, they can’t be terminated for refusing the extra hours.
   
   

Lisa Mackay is the founder and managing director of HRtoolkit. Contact Lisa for any staff queries on 021 741 544 or 0800 HRtool (0800 47 8665).