New Zealand’s open economy, strong reputation for innovation, and broad trade networks make it an attractive place to do business, especially through alternatives to direct employment, such as engaging workers as independent contractors. However, like in many jurisdictions, the line between “employee” and “independent contractor” has not always been clear.

Currently, New Zealand authorities apply four overlapping tests when assessing misclassification. Perhaps recognizing the convolution, lawmakers have proposed the Employment Relations Amendment Bill 2025 (the “Bill”). The Bill, which is expected to pass later in 2025, may provide a “short-cut” or more streamlined analysis for correctly classifying a worker as a contractor in certain cases.

Quick Hits

• Currently, New Zealand authorities apply four overlapping tests when assessing misclassification.
• The Employment Relations Amendment Bill 2025, expected to pass later this year, would provide a preliminary filter, called the “Gateway Test,” that would apply when a company engages an individual contractor in the contractor’s personal capacity.
• If the five criteria of the Gateway Test are satisfied, the individual would conclusively be deemed a contractor without further inquiry.

The Status Quo: Four Overlapping Misclassification Tests

New Zealand courts and authorities currently rely on a holistic inquiry into the “real nature of the relationship” between the worker and the principal company. Generally, authorities apply four overlapping tests (the “Existing Tests”), none of which are dispositive alone:

• Intention Test—whether the parties’ words and conduct demonstrate a genuine intent to establish a contractor relationship.
• Control vs. Independence Test—the degree of control the principal exercises over how, when, and by whom the work is performed.
• Integration Test—whether the worker is embedded within the principal’s operations (e.g., uses company email, equipment, or internal systems, or performs tasks frequently performed by employees).
• Fundamental/Economic Reality Test—whether the worker is truly “in business on their own account,” bearing commercial risk and enjoying the opportunity for profit.

Under these tests, the practical implication is clear: well-drafted contracts alone are not enough. Day-to-day operations must reflect contractor autonomy, genuine entrepreneurial risk, and nonintegration with core staff and systems. Indeed, this has led many companies to engage contractors through a contractor’s registered entity in a business-to-business arrangement, with some authorities considering the added layer of corporate protection a factor in favor of a genuine contractor relationship. But the Gateway Test will not apply to such arrangements and will only help to streamline the misclassification analysis when a worker is engaged in their individual capacity.

The Employment Relations Amendment Bill 2025: Introducing a ‘Gateway Test’

The Bill—expected to secure Royal Assent (and become law) later this year—would add a preliminary filter that applies only when a principal company engages a worker in the worker’s personal capacity. This filter, known as the Gateway Test, applies only where a worker is engaged in their individual capacity (i.e., it will not apply to company-to-company engagements). Under the Gateway Test, if each of the following criteria is satisfied, the inquiry ends, and the worker is conclusively deemed a contractor:

• A written agreement between the worker and the principal company expressly designates the worker as an independent contractor.
• The engagement is nonexclusive and permits the worker to perform work for other entities besides the principal.
• The principal does not prescribe specific workdays or minimum hours for the worker, or—alternatively—the worker may subcontract the work at will.
• The principal cannot terminate the contract merely because the worker declines additional tasks outside the scope of the original agreement.
• The worker had a reasonable opportunity to obtain independent advice before signing the written agreement.

Failing any of the five criteria will lead a court to apply the existing overlapping tests above.

In short, the Gateway Test does not replace the existing judicial framework, and the Existing Tests will still govern the analysis when a contractor is engaged through their business, but it could provide a clearer method for establishing contractor status in certain cases.

Next Steps

Until the Bill (and the Gateway Test) receives Royal Assent, the Existing Tests remain the law of the land. In the meantime, companies should consider continuing to structure contractor engagements to safeguard genuine worker autonomy—ensuring the worker controls “the manner, method, and means,” expressly allowing nonexclusivity so the worker may serve other clients and/or delegate work where feasible, and incorporating a clear change-order mechanism, such as statements of work or work orders, to keep projects well-defined and mutually agreed. It remains to be seen whether engaging workers in a business-to-business arrangement will continue to be a best practice under the Gateway Test, and the clarity it aims to provide.