Contractor Gateway Test — Employment Relations Amendment Bill (2025)

Employment Law Updates, HR Best Practices

The government has introduced the Employment Relations Amendment Bill (June 17, 2025) to bring clarity and transparency to the question of who is, and isn’t, an employee.

The Bill follows several high-profile cases (such as Uber and Gloriavale) that blurred the line between employees and contractors.

If enacted, the Bill will introduce a “Contractor Gateway Test”, a clear, five-step test designed to confirm when an individual is legally a “specified contractor” rather than an employee.

Overview of the Gateway Test

If a working arrangement meets all five criteria below, the worker will be legally classified as a specified contractor.

This means they are explicitly excluded from being considered an employee under the Employment Relations Act, and their employment status cannot be challenged in the Employment Relations Authority or the courts.

If any one criterion is not met, the current “real nature of the relationship” test continues to apply.

The Five Criteria:

Written Agreement
The contract must clearly state that the individual is an independent contractor.
Freedom to Work for Others
The individual is free to provide services to other businesses — even competitors.
Flexibility or Subcontracting
The person is not required to work specific times or minimum hours, or is able to subcontract their work.
No Penalty for Declining Work
The business cannot end the contract or penalise the person for declining additional tasks.
Opportunity to Seek Independent Advice
The contractor must have had a genuine opportunity to obtain their own advice before signing.

If all five are met → “Specified Contractor” (cannot challenge status).
If not → current ERA test still applies.

Key Implications

The test creates certainty for businesses and contractors who genuinely want flexible, non-employee arrangements.
However, it raises the stakes for businesses that use contractors in roles that operate like employment, a mismatch could still be challenged under the existing “real nature” test.
Written contracts will carry greater legal weight, but only if the practical reality reflects what’s written.

Relationship with IRD Rules

The Contractor Gateway Test operates independently of Inland Revenue Department (IRD) classification rules.
Even if someone qualifies as a specified contractor under the ERA, the IRD will still apply its own test to determine whether that person is self-employed or an employee for tax purposes.

IRD’s Multi-Factor Test (still in use)

Control – Who controls how and when the work is done?
Integration – Is the worker an integral part of the business or an external provider?
Financial Reality – Who provides tools, bears costs, or risks profit/loss?

Important distinction:
A person could be a “specified contractor” under employment law and still be deemed an employee for tax purposes.

Practical Takeaways for Businesses

Written contracts matter, but conduct matters more.
The reality of the work must align with what the agreement says.
Review your contractor agreements now.
Make sure they reflect the five gateway test criteria clearly and accurately.
Be transparent and consistent.
Avoid arrangements where contractors function as de facto employees (set hours, supervision, exclusive work).
Document advice opportunities.
Keep evidence that contractors were given a fair chance to seek independent advice.
Monitor updates.
The Bill is still before Parliament; further refinements may occur before enactment (expected late 2025).

King&Co. Perspective

At King&Co, we support frameworks that clarify employment relationships and protect fair flexibility for both parties.
However, clarity must be matched with integrity, businesses should ensure that contractor arrangements reflect the real nature of work, not just what’s on paper.

We’ll continue to monitor the Bill’s progress and will update clients when it passes into law.

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