Contractor or employee in New Zealand, why it matters and how to challenge it

Last updated 4 July 2026. Reflects the law after the February 2026 gateway test and the November 2025 Uber decision. This is general information, not legal advice.

Plenty of New Zealanders work under a contract that calls them an independent contractor while being treated, in every practical way, like an employee. The distinction is worth real money, and the law changed significantly over the past year, so this guide is written for the position as it stands in mid-2026. It covers the new gateway test, the older test that still applies underneath it, the Uber decision, and how to challenge a label you think is wrong.

Why the label matters

Employees and contractors live under completely different rules, which is why businesses sometimes prefer the contractor label whether or not it fits.

Employees get	Contractors get
Minimum wage, holiday pay, sick and bereavement leave	None of these, they set their own rates
KiwiSaver employer contributions	No employer contributions
The right to challenge an unjustified dismissal	Only their contract’s termination terms
PAYE deducted, ACC levies handled for them	Their own tax, GST and ACC to manage
Health and safety cover as a worker	More autonomy, and more financial risk

Genuine contracting suits many people, the freedom, the higher headline rate, being your own boss. The problem is the worker who carries all the contractor downsides while having none of the freedom, told when and how to work but denied holiday pay. That is the situation the law exists to catch.

The gateway test since February 2026

The starting point today is a new statutory gateway test, added to the Employment Relations Act by the Employment Relations Amendment Act 2026 and in force from 21 February 2026. If your working arrangement meets all five criteria, you are a specified contractor and cannot bring a claim that you are really an employee. The five, all of which must be true, are:

• there is a written agreement stating you are an independent contractor or not an employee
• you are not restricted from working for others, except while actually doing the work you were engaged for
• you are not required to be available at set times or days, or you can subcontract the work
• the business does not end the arrangement simply because you declined an additional task
• you had a reasonable opportunity to get independent advice before signing.

Read that list as a worker and the point becomes clear. Miss even one criterion and the gateway does not apply, which throws your status back to the older real-nature test below, exactly where most disputes are won. The gateway is not retrospective in the way people fear, it does not convert someone already found to be an employee into a contractor, and if you had employee-status proceedings on foot before it commenced, they continue.

The real nature test when the gateway is not met

Where the gateway criteria are not all met, section 6 of the Act asks the real question, what is the real nature of the relationship. The Act expressly says a statement in the contract describing you as a contractor is not to be treated as settling the matter. The Employment Relations Authority and the courts weigh everything, and over the years four threads have run through the cases, control, how much the business dictates when, where and how you work, integration, whether you are part of the business or genuinely running your own, economic reality, whether you truly bear business risk and profit, and intention, what both sides actually meant, which carries less weight than what happened in practice.

The leading older case is Bryson v Three Foot Six, where a model-maker on The Lord of the Rings, engaged on a contractor agreement, was held by the Supreme Court to be an employee because the reality of the relationship was employment. It is why a well-drafted contractor agreement, on its own, has never been enough.

The Uber decision and what it means

The most important recent decision is the Uber case. On 17 November 2025, in Rasier Operations BV v E Tū Incorporated, the Supreme Court unanimously dismissed Uber’s appeal and held that the drivers in the test case are employees under section 6, upholding the Court of Appeal and the Employment Court before it. The court pointed to the close control Uber exercises over every aspect of the work, the way drivers are integrated into and are the face of Uber’s business, and the co-dependency of the relationship.

Two things matter for you. First, Uber remains the leading authority on how the real-nature test is applied, so where the gateway is not met, this is the reasoning that governs. Second, the gateway test does not overturn it, the two sit side by side, the gateway deciding clear cases up front and the Uber reasoning deciding everything that falls through it. A worker in a genuinely Uber-like position, tightly controlled and fully integrated, has a strong argument regardless of the label.

The signs you are really an employee

If the gateway does not apply, these are the questions the real-nature test turns on. The more you answer like an employee, the stronger your case:

• Does the business control your hours, your location and how you do the work, rather than just the result.
• Do you use the business’s tools, systems, uniform and premises rather than your own.
• Are you unable to send a substitute or subcontract the work.
• Are you effectively unable to work for competitors, or expected to be available on demand.
• Are you integrated into the team, rostered, supervised, part of the furniture, rather than an outside supplier.
• Do you bear no real financial risk, no chance of a loss, no capital invested, just paid for time worked.

No single answer decides it, the Authority stands back and looks at the whole picture, but a pattern of employee-like answers is what wins reclassification.

What you can claim if you are reclassified

Being found to have been an employee all along unlocks the entitlements you should have had, and they reach back:

• Holiday and leave pay you never received, and unpaid minimum wage top-ups where your effective rate fell short, recoverable generally for up to six years.
• KiwiSaver employer contributions that were never made, as arrears.
• The right to raise a personal grievance, including for unjustified dismissal if the arrangement was ended unfairly, normally within 90 days of the problem.

One caveat from the 2026 law change, a new exemption removes unjustified-dismissal protection for very high earners, above a $200,000 total remuneration threshold, so a reclassified worker earning above that may not get the dismissal remedy even though the other entitlements still apply. For most workers this changes nothing, our guides to unfair dismissal, leave entitlements and unpaid wages cover the claims themselves.

How to challenge your status

1. Gather the evidence. Your contract, rosters, instructions, uniforms, who supplied the tools, whether you could say no to work or work elsewhere. The reality is what counts, so document how it actually worked.
2. Raise it with the business. Sometimes a well-put case, with the Uber decision behind it, produces a settlement without a fight.
3. Use free mediation. Employment New Zealand offers free mediation, which resolves many of these disputes without a hearing.
4. Apply to the Employment Relations Authority. The Authority can make a declaration of your true status, usually alongside your claims for the arrears above. For unjustified dismissal, mind the 90-day clock.
5. For unpaid minimum entitlements, the Labour Inspectorate. Employment New Zealand’s inspectors can pursue minimum wage and holiday pay breaches directly.

Setting up a genuine contracting relationship

If you run a business and use contractors, the gateway test is a genuine opportunity to get certainty, but only if the arrangement is real. Meet all five criteria honestly, a real written agreement, real freedom to work for others, no requirement to be always available, no punishment for declining work, and a real chance to take advice, and you have solid ground. Paper over an employment relationship with a contractor label and you have not.

Sham contracting is not a safe shortcut. A business that misclassifies employees can be ordered to pay all the back entitlements plus penalties, up to $10,000 for an individual and $20,000 for a company per breach under the Act, and the Labour Inspectorate does pursue it. The defence that everyone in the industry does it this way has never worked, because the test looks at your actual arrangement, not the industry norm. If you want the certainty the gateway offers, build a relationship that genuinely qualifies.

Common questions

Can my boss just call me a contractor

Not to escape employee entitlements if the reality is employment. Unless your arrangement meets all five gateway criteria, the law looks past the label to how the relationship actually works, and the Act says the contract wording is not decisive.

Am I entitled to holiday pay as a contractor

Not while you are genuinely a contractor. But if you are reclassified as an employee, you can claim the holiday pay you should have received, generally for up to six years back.

What is the difference between a contractor and an employee in NZ

Employees get minimum wage, holidays, sick leave, KiwiSaver contributions and dismissal protection, and have PAYE handled for them. Contractors set their own rates and manage their own tax, but get none of those minimum protections. The status is decided by the gateway test and, failing that, the real nature of the relationship, not the job title.

Can I be a contractor for one job and an employee for another

Yes. Status is assessed separately for each working relationship, so you can genuinely contract to one business while being an employee of another.

How do I prove I am really an employee

With evidence of how the work actually ran, control over your hours and methods, whose tools you used, whether you could refuse work or work for others, and how integrated you were. The Employment Relations Authority weighs the whole picture and can declare your status.

What is the new contractor gateway test

A law in force since 21 February 2026 under which a worker who meets all five set criteria is a specified contractor and cannot claim employee status. If any criterion is not met, the older real-nature test decides, so the gateway helps clear-cut cases rather than replacing the whole test.

Where to get free help

If your real problem is being underpaid or dismissed, our guides to unpaid wages and unfair dismissal cover the next steps once your status is sorted.

Have you been labelled a contractor while working like an employee, or sorted out a genuine contracting setup? What happened when you raised it? Share your experience in the comments.