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12 October 20222 minute read

Better Protections for Contractors on the Horizon

Workplace Relations and Safety Minister Michael Wood has announced an imminent change to the definition of an "employee" in New Zealand.

This stems from the report presented in December 2021 prepared by the Tripartite Working Group on Better Protections for Contractors, a joint industry/union/government group tasked with making recommended policy changes to improve how regulatory protections apply to working arrangements at the intersection of “employment” (employment law) and “contracting” (commercial law).

The upshot is that it is likely we will see legislation that includes some independent contractors included within the definition of employee if they are not genuinely in business for themselves.  If the key recommendations from the report are adopted, in order to truly qualify as an independent contractor a worker must be making business decisions for themselves and be free to contract to others.  Conversely, if an organisation has extensive control over what work is done, the worker is forced to wear a company uniform, or they are an apprentice, they are not operating a business on their own account, the Tripartite report says.

These changes could have significant implications for a number of businesses, particularly those that heavily rely on a principal/contactor model, including those in the transport sector.  

The changes could also negatively impact many workers that prefer to be classed as independent contractors, for tax and other commercial reasons.

Business New Zealand (who participated in the Tripartite Working Group) have raised concerns that the Government could be overreaching by making business decisions for employers when categorising workers.

We expect to see draft legislation shortly.