The changes are part of the coalition agreement between National and Act New Zealand, 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”.
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.
If all four criteria were met, then the worker was a contractor, Workplace Relations and Safety Minister Brooke van Velden said.
If one or more factors were not met, then the existing test in the legislation would apply.
Van Velden said the changes would provide greater certainty for contractors and businesses.
Businesses could use the test when responding to claims that workers were employees, she said.
“The current process for workers challenging their employment status through the courts can be costly for businesses, and can increase business uncertainty in general.
“Although employment status cases are treated on a case-by-case basis, if a worker is found to be a contractor in one sector or for one occupation, this can rapidly increase uncertainty for similar businesses who hire these types of workers.
“There are a range of workers and businesses across the country who are involved in contracting relationships, and who will benefit from increased clarity of worker status, which this government will deliver.”
Van Velden hoped the changes would be introduced in 2025.
The Employers and Manufacturers Association said greater certainty around contractors’ status would be welcome news for businesses and workers alike.
“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.”
But the Green Party said the move was “the latest episode in a series of assaults on workers’ rights”.
The government was “laying a brick wall between the most vulnerable workers and the rights that belong to them”, the party’s workplace relations spokesperson Teanau Tuiono said.
“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.
“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.
“This slapdash approach goes against the recent Court of Appeal ruling on the Uber case which carefully considered the nature of the working arrangement on the facts, and confirmed the legal status quo that if it looks like an employment arrangement and works like an employment arrangement, it’s an employment arrangement.”
