Workplace Relations and Safety Minister Brooke van Velden outlined upcoming changes to the Employment Relations Act and said it will provide greater certainty for contractors and businesses.

The changes are part of the coalition agreement between National and ACT (the National party and the ACT party), which states they would “maintain the status quo that contractors who have explicitly signed up for a contracting arrangement can’t challenge their employment status in the Employment Court”, according to Radio New Zealand.

The amendment to the Employment Relations Act will add in a test with four criteria:

• a written agreement with the worker, specifying they are 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 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.

Van Velden hoped the changes would be introduced in 2025.

“These changes to legislation are necessary to ensure businesses and workers have more clarity from the start of their contracting arrangement,” Van Velden said in a press release. “It is an ACT-National coalition commitment and is another action completed in the government’s Quarter 3 Action Plan.”

Van Velden said, “The coalition government has agreed to amending the Employment Relations Act to provide a gateway test that businesses can use when responding to a claim that a person is an employee and not a contractor. If the working arrangement in question meets the four factors set out in the test, then the person is considered to be a contractor. If one or more of these factors are not met, then the existing test will apply.”

“This new approach will provide businesses with more certainty to proceed with innovative business models involving contractors where this is appropriate, and also enable businesses to offer better terms and conditions to their contractors with less concern that it might impact the contractor’s status,” Van Velden added.

The Employers and Manufacturers Association said greater certainty around contractors’ status would be welcome news for businesses and workers alike, according to Radio New Zealand.

“Innovative business models utilising contracting are contributing to lifts in productivity as they enable employers to employ specialist skills in a short-term manner,” head of advocacy Alan McDonald said. “Clarifying the contractor status gives employers certainty without having to test it through the employment courts.”

BusinessNZ also welcomed the move, saying a recent Appeal Court finding that four Uber drivers were employees - but only when they were logged into the Uber app - had created “a high degree of uncertainty” for businesses.

“The government’s decision to clarify those relationships in law will be particularly welcomed by all businesses that use digital platforms to contract with workers, and all businesses currently concerned that their contractors could be re-categorised to be employees in the future should they decide to take a court case,” it stated.

Green Party workplace relations spokesperson Teanau Tuiono said, “This is the latest episode in a series of assaults on workers’ rights.”

Tuiono said, “The coalition’s proposed amendments to the Employment Relations Act will insert another barrier for people who are classed as contractors being able to have the reality of their working arrangements be recognised as an employee.”

“This is something that quite clearly plays directly into the hands of companies looking to cut corners and boost profit margins at the expense of our workers - by denying people sick pay, holiday pay, and job security. It’s yet another example of this government legislating over hard-won rights in the favour of the corporate interests,” Tuiono continued. “These changes would also allow companies to limit the number of people they employ on full-time contracts and instead rely on flimsy working arrangements that have less protections and less accountability.”