Controversial employment law that could make thousands of workers contractors passes
Tuesday, 17 February 2026
A highly-controversial new law which makes it far easier for workers to be classified as contractors has passed into law.
The law’s passage comes following a Supreme Court case which classified Uber drivers as employees, not contractors.
The Employment Relations Amendment Bill creates a new “gateway test” for whether a worker is a contractor or an employee, which would likely lead to rideshare drivers being classified as contractors once more, and losing the protections that employment status would give them.
The new gateway test means that if a worker is not restricted from working for others and is not penalised for not accepting a specified task they are classified as a contractor. These “contractors” can still be required to work specific peak hours.
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While the law is not retrospective and the impact of the court case on prior working arrangements stands, a change introduced not long before passage means that workers currently classified as employees could be reclassified as contractors under the test.
Officials at the Ministry of Business, Innovation and Employment recommended against the gateway test as they believed the risk of lowering worker rights was not worth the gains in flexibility.
Employment Relations Minister Brooke van Velden said the law was crucial to allowing businesses to hire and thrive, including “modern platform-based arrangements”.
“Rebalancing the employment relations settings, as this law does, brings more choice for businesses and workers to create and enter working arrangements that suit their individual needs,” van Velden said.
“Businesses and workers have faced uncertainty about who is an employee and who is a contractor, which has prevented workers from accessing flexible contracting opportunities that stifle innovation and growth. This bill introduces a gateway test that creates an exclusion from the definition of employee, consisting of criteria that represent characteristics of clear-cut contracting arrangements. This provides businesses with a clearer and more efficient test to determine whether a worker is a contractor or an employee.
“This test gives legal weight to the intention of contracting parties; protects genuine contracting arrangements, including modern platform-based arrangements; and allows businesses and workers to move forward with confidence knowing where they stand.”
Van Velden rejected any notion that the law was retrospective or would overrule the Supreme Court.
The law was slammed by Labour, the Green Party, and the union movement, and faced overwhelming opposition at select committee.
Council of Trade Unions President Sandra Gray said it was a “dark day” for Kiwis.
“Employers will now be empowered to misclassify employees as contractors, stripping from them key entitlements including the minimum wage, sick pay, and Kiwisaver. This threatens entire workforces, particularly in industries where work is already low-paid and precarious,” Gray said.
“With this change, National, ACT, and New Zealand First are once again prioritising profit over people. The National-led Government is shamelessly giving in to Uber and other multinational companies whose business models rely on insecure work.
BusinessNZ’s Catherine Beard, writing in The Post, said platforms offered workers real flexibilty.
“While the unions seemingly remain keen to shoehorn all workers into fulltime employment, the platform work opportunities that exist now wouldn’t have come about if the platform operators had to shoulder all the costs and commitments associated with fulltime employees. The trade-off for platform workers is flexibility - in when and how often they work, how many platforms they work with, and in some cases adding it as a ‘side hustle’ to a fulltime job.“