Coasties may soon see increased clarity in contracting arrangements, thanks to upcoming changes to the Employment Relations Act.

Workplace Relations and Safety Minister Brooke van Velden announced the adjustments, which aim to give both businesses and contractors greater certainty.

“These changes to legislation are necessary to ensure businesses and workers have more clarity from the start of their contracting arrangement," said Ms van Velden.

"It is an ACT-National coalition commitment and is another action completed in the Government’s Quarter 3 Action Plan.”

The coalition Government plans to introduce a gateway test as part of the updated Employment Relations Act.

This test will provide businesses with clear criteria to determine whether a person is a contractor or an employee, potentially reducing the legal disputes that have previously plagued the gig economy.

Gateway Test Criteria

Under the proposed changes, a contractor must meet the following four conditions:

• A written agreement confirming their status as an independent contractor.
• Freedom to work for other businesses, including competitors.
• No requirement to work specific hours or days, or the ability to subcontract the work.
• Protection from contract termination if they refuse additional tasks.

The new rules aim to allow businesses to adopt flexible, innovative models without the fear that contractor status might be challenged.

Ms van Velden hopes to introduce these changes through the Employment Relations Amendment Bill by 2025.

“Contractors play an important role in New Zealand’s economy and society.

This new approach will provide businesses with more certainty to proceed with innovative business models involving contractors,” she added.

The changes come as a relief for businesses in industries like the gig economy, which rely heavily on contractors.

By providing clear guidelines, the new legislation seeks to reduce the risk of misclassification and legal disputes.