New Gateway Test Proposed to Determine Contractor Status
- Business Central
- Oct 26, 2024
- 2 min read
Updated: Nov 5, 2024
In September, Workplace Relations and Safety Minister Brooke van Velden announced that the government has agreed to amend the Employment Relations Act 2000 to provide a “gateway test” for determining contractor status. The test is intended to be used on businesses facing claims from contractors that they are employees and should have the same rights and benefits that come with employment status.
The timely announcement follows the Court Appeal’s recent judgment upholding an appeal that four Uber drivers worked as employees and not as contractors. During their pre-election campaign, the Act Party voiced concern about the uncertainty that the current legal status quo has created for businesses and contractors alike. It would seem the coalition government is now following through with policy on protecting workers’ choice and freedom to contract.
The proposed criteria for the gateway test are:
A written contract for services with the worker stating they are an independent contractor.
The worker can work for other businesses without restrictions, including competitors.
The worker is not required to be available to work specific days or times, or for a minimum number of hours at the request of the business (ie, the worker can set their own schedule), or the worker can sub- contract the work.
The business does not terminate the contract for the worker not accepting an additional task or engagement.
If the above four factors are met, then the worker will be considered a contractor. If not, then a claim could proceed under the existing full test to determine the “real nature” of the relationship using the parties’ intention, control, integration and economic reality.
The proposed changes aim to reduce unpredictability and costs, and increase efficiency by removing, as a first resort, the Authority or Court analysing highly fact- specific scenarios to settle disputes about employment status. Rather, the intention of the parties will be given more weight from the outset when there is a challenge to determine the nature of the relationship.
The government aims to introduce an amendment bill in 2025 to progress these changes. We will certainly keep you informed of any updates as they come in.