Gateway test refinements: what employers and contractors need to know
The Employment Relations Amendment Bill introduces a new gateway test to determine when a person is a contractor rather than an employee. The test will provide clear upfront rules and if satisfied, the worker will be a contractor and cannot challenge their status.
What the Bill does
To meet the gateway test, agreements must include all four criteria:
• State that the worker is an independent contractor.
• The worker is not restricted from working for others.
• The worker is either not required to be available at certain times/days or for a minimum number of hours; OR can subcontract work.
• The business does not terminate the contract if the worker does not accept an additional task or engagement.
Businesses must also give contractors a reasonable opportunity to seek advice before signing.
Select Committee recommendations now released
Three changes have been proposed to refine the criteria in the gateway test, to provide clarity on which contracting arrangements are covered and how the test applies in practice.
• Businesses that do not categorise workers as ‘independent contractors’, such as platform-based arrangements, can still access the gateway test as long as they specify that the worker is ‘not an employee’.
• Contracting someone to work full-time hours will not in itself constitute a restriction on working for others.
• Businesses will be allowed to vet subcontractors for qualifications or require criminal checks if justified by the nature of the work.
Why this matters for you
For employers, this will mean fewer grey areas, but only if contracts meet the new criteria.
Misclassification can still lead to costly disputes. For contractors, the gateway test will provide more flexibility and certainty. The big shift is that status will be decided by what’s in the contract, not by a court after the fact. This means that clear, accurate agreements will be more important than ever.
The Bill is expected to pass in early 2026. If you need help updating agreements or understanding these changes, our team is here to guide you.
Disclaimer: The content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.
