Contractor vs Employee NZ: How the Gateway Test Changes the Check

“Are they really a contractor?” is one of the most important questions a New Zealand business can ask. Labels, invoices and tax treatment matter, but they do not tell the whole story on their own.

The Specified Contractor Gateway Test gives a clearer first check. If every criterion is met, the person is a specified contractor for that arrangement. If one is missed, that does not automatically make the person an employee. It means the usual common law assessment still applies.

Start with the five Gateway Test criteria

Section 6(7) of the Employment Relations Act sets out five things that need to be present. Employment New Zealand summarises them as:

1. A written agreement says the person is an independent contractor or is not an employee.
2. The person is not restricted from working for others, except while doing the work under the arrangement.
3. The person can choose when to work, or can subcontract subject only to limited, relevant vetting.
4. The arrangement cannot be ended simply because they decline additional work.
5. They had a reasonable opportunity to seek independent advice before entering the arrangement.

Read the official Employment New Zealand employee-or-contractor guidance alongside the agreement. The precise statutory wording is in section 6 of the Employment Relations Act.

What if one criterion is not met?

Do not jump straight to “employee”. When the Gateway Test is not satisfied, the common law test is used to assess the real nature of the relationship. This considers several factors, including the parties’ intention, the degree of control, how integrated the person is in the business, and the economic reality of the relationship.

Questions worth asking before you rely on contractor status

• Does the agreement clearly state the intended contractor status?
• Can the person genuinely take work from other clients?
• Are minimum hours, roster expectations or job refusals handled in a way that matches the agreement?
• Is subcontracting permitted, with only the limited vetting the law allows?
• Was independent advice a real option before the agreement was signed?

Why the distinction matters

Getting the status wrong can create uncertainty around employment rights and obligations. The Gateway Test is designed to provide more certainty where its criteria are genuinely met, but it is not a substitute for a fact-specific assessment or legal advice.

For a deeper agreement-focused checklist, read our guide to independent contractor agreements in NZ. You can also see how the Gateway Test works for specified contractors.