To be or not to be. That is the question

  • Employment

The question of whether a worker is an employee, or an independent contractor is notoriously difficult. What the worker’s contract says is only one factor in the law deciding how to categorise that person.

The Government recently revealed its plan for clarifying when a contractor on paper will be a contractor in law.

The proposed changes to the Employment Relations Act 2000 would involve a new “gateway” test. If all four of the below criteria are satisfied, then the arrangement would legally be a contracting arrangement:

  1. A written agreement specifying that the worker is an independent contractor.

  2. The business does not restrict the worker from working for another business (including competitors).

  3. Either:
    1. 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
    2. the worker can sub-contract the work.
  4. The business does not terminate the contract if the worker does not accept an additional task or engagement.

If one or more of these criteria are not met, then the “real nature” of the arrangement could be challenged and potentially found to be an employment relationship.

Minister van Velden has indicated she intends to introduce a bill into Parliament in 2025 to implement this change.

The Minister is currently consulting selected stakeholders on a bill that would simplify leave calculations.

The Holidays Act is another bugbear for many employers. Even payroll providers can have difficulty calculating holiday pay, particularly for workers with irregular shifts, and mistakes can be expensive. The final bill is also likely to be introduced in 2025.

If you have any queries about how any of the above applies to your business operation, get in touch with one of our employment law team.