New test seeks to provide more clarity on employer-contractor relationships
The New Zealand government is proposing a new "gateway test" under the upcoming amendments to the Employment Relations Act to provide more certainty on who can be considered contractors in the workforce.
Workplace Relations and Safety Minister Brooke van Velden said the test will help determine if an individual is working as an employee or contractor of a business.
"If the working arrangement in question meets the four factors set out in the test, then the person is considered to be a contractor," van Velden said in a statement.
The following factors in the gateway test include:
- a written agreement with the worker, specifying they are an independent contractor, and
- the business does not restrict the worker from working for another business (including competitors), and
- the business does not require the worker to be available to work at specific times of day or days, or for a minimum number of hours [or] the worker can sub-contract the work, and
- the business does not terminate the contract if the worker does not accept an additional task or engagement.
"If one or more of these factors are not met, then the existing test will apply," the minister said.
Certainty on employer-contractor relationships
The proposed gateway test comes after Uber's lengthy dispute with four drivers who were recently ruled as employees by the courts.
According to van Velden, this process where workers challenge their employment status through the courts can be "costly for businesses" and may increase 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," she said.
The new approach will provide businesses with more certainty to proceed with innovative business models involving contractors, according to the minister.
"[It will] also enable businesses to offer better terms and conditions to their contractors with less concern that it might impact the contractor's status," she added.
Van Velden said that they plan to include the gateway test in the Employment Relations Amendment Bill, which she hopes to introduce next year.
Businesses welcome 'gateway test'
Meanwhile, businesses across New Zealand welcomed the government's new attempt to provide clarity on contractor-employer relationships.
"By providing four clear and succinct factors that will assess whether a person is considered to be a contractor, the Government has responded to a pressing issue for businesses," said Alan McDonald, head of advocacy at the Employers and Manufacturers Association, in a statement.
"We believe these changes will be workable, provide clarity and allow businesses to offer a variety of working models with confidence."
Catherine Beard, advocacy director at BusinessNZ, added that businesses using digital platforms to contract workers will welcome the gateway test.
"Having clarity around the distinctions will enable more businesses to use new, innovative business models involving contractors where appropriate," Beard said in a statement.
Legislations on the platform economy have been emerging across the world as of late due to its growing popularity among people and businesses.
In Singapore, the government there recently passed a new law recognising platform workers as a new labour class different from regular employees and freelancers.
