Why classification matters
If a worker is treated as a contractor but is legally an employee, your business faces real consequences. These include claims for holiday pay and minimum entitlements, KiwiSaver remediation, and penalties.
Relationship and reputation damage can follow too. We help you get the structure right from the start.
We review your contractor arrangements and advise on classification risk before it becomes a dispute.
Reality matters more than the label
Courts and the Employment Relations Authority look at the real nature of the relationship. A well-drafted agreement helps, but it must match how things actually work.
Questions we help you answer:
- Who controls how and when the work is done?
- Who provides tools and bears commercial risk?
- Can the person genuinely work for others?
- Is the person integrated into your business like staff?
- Is there genuine independence in practice?
The gateway test for specified contractors
New legislation provides a statutory gateway test. If all criteria are met, the worker is treated as a specified contractor. This gives both parties upfront certainty.
If any criterion is not met, the usual common-law tests apply instead.
Gateway test criteria:
- 1 Written agreement. A written contract that clearly states contractor status.
- 2 Freedom to work for others. The worker can take on other clients, with limited exceptions.
- 3 No forced hours or minimum periods. Or the worker can genuinely subcontract the work instead.
- 4 No penalty for declining work. The worker is not penalised for turning down extra work.
- 5 Independent advice opportunity. The worker must have a real chance to get advice before signing.
Important
The gateway test is a powerful tool. But copying template wording without understanding how it works is a common mistake. We help you apply it correctly.
Practical risk controls we recommend
- 1 Treat engagement as a process. We help you build an internal checklist: why a contractor is appropriate, what independence looks like, and who approves engagements.
- 2 Align operations with the contract. Common mismatches include managing contractors like employees, rostering them like staff, or preventing them from taking other work.
- 3 Plan for future challenges. Status challenges often arise when the relationship ends, after an accident, when a business is sold, or when a contractor compares their position with employees.
Questions?
Our employment team reviews contractor arrangements and helps you reduce classification risk.
Get in TouchContractor risk in Hawke's Bay
Contractor arrangements are common in trades, professional services, transport, and seasonal work across the region. Project-based roles also carry higher risk.
We understand these industries and help local employers structure arrangements that reflect how the work actually operates.
Get advice from us if
These situations need early advice to reduce risk.
- Your workforce model relies heavily on contractors
- You are moving someone from employee to contractor
- You need documentation updated for the gateway test
- A contractor is integrated into operations like an employee
We review your contractor model and help you get the structure right. Call us on 06 835 7394 or email mailbox@cardow.co.nz .
What we do at this stage
We review contractor models, align documentation with the gateway test, advise on employee-to-contractor transitions, and support you if status is challenged.
