If I engage someone on a casual or contractor basis, am I exposed under the new gateway test?

What to watch for

Six things that change whether your contractor arrangements actually hold up.

1. Five criteria, all of them. Miss one and the gateway closes. The new section 6(7) sets out five things every specified-contractor arrangement has to have:³

• A written agreement saying the worker is an independent contractor, or that they're not an employee.
• The worker is not restricted from working for others (except while actually performing work for you).
• Either the worker isn't required to be available at set times or for a minimum period, or they can subcontract the work to someone else.
• The arrangement doesn't end solely because the worker declines additional work.
• The worker had a reasonable opportunity to seek independent advice before entering the arrangement.

All five. Not four. Different commercial sources still cite four because the original 2024 announcement had four — the enacted Act has five. Independent advice is a separate criterion, not part of the written-agreement criterion.

A note on the subcontract limb: "can subcontract" means the worker can bring in someone of their own choosing. You're allowed to check the substitute meets a requirement the work genuinely carries — a licence or registration the law requires, or, where the nature of the work justifies it, a check for a relevant qualification or criminal record. What you can't keep is a broad right to approve or veto who they send. A general "subject to our approval" over the substitute takes this limb away. The right to subcontract has to be real, not on-paper.

2. Written agreement is non-negotiable. Verbal "you're a contractor" arrangements fail the gateway full-stop. This is the single most common SMB exposure. If you're paying someone regularly without a signed contractor agreement, you don't have a specified-contractor relationship — you have an arrangement that's about to be tested under the old common-law rules, which look at what the relationship actually is, not what you've called it.

3. Your standard non-compete clause may kill the gateway. This is counter-intuitive for owners who default to non-competes from employee-template thinking. If you've copied a clause across saying "you can't work for our competitors during this engagement," you've potentially knocked out the gateway protection. The criterion does allow exclusivity while the contractor is actually performing work for you — but a blanket non-compete across the engagement period likely doesn't pass.

What doesn't fail this criterion: a heavy workload. If you keep a contractor so busy they've little time for other clients, that's not a restriction — section 6(8) says being engaged for long or even full-time hours doesn't, by itself, breach this criterion. What counts is whether the agreement contractually stops them working for others, not how much work you happen to give them. A demanding workload is a criterion-three question (availability), not this one.

4. The gateway doesn't fix what was already broken. Arrangements that pre-date 21 February 2026 get specified-contractor status from the commencement date if they meet the criteria — but only if no proceedings to determine employment status had been brought against the arrangement before commencement. The change isn't retrospective in the protective sense — it doesn't bless arrangements that were already messy. If you've got a long-running contractor relationship that doesn't meet the five criteria, the gateway doesn't fix it; you're still where you were.

5. The common-law fallback bites if the gateway is missed. If the arrangement fails any one criterion, the test from before the reform — the one the Supreme Court applied to Uber — kicks back in. That test looks at the real nature of the relationship: control, integration into your business, whether the worker takes economic risk, whether they actually look like an independent business. The kinds of arrangements that fail that test are exactly the kinds that lose at ERA: long-term casuals working only for you, "contractors" wearing your uniform, people you've engaged for years with no written agreement, anyone you've effectively absorbed into the business. None of that has changed.

6. The independent-advice criterion is a paperwork discipline, not a formality. The fifth criterion — "reasonable opportunity to seek independent advice" — sounds like the trial-period equivalent, and it probably gets read the same way in practice. Sliding a contract across the desk for same-day signing without flagging the right to take advice is a classic gateway-failing pattern. Tell the contractor in writing that they're welcome to take legal advice on the arrangement, give them time to do so before they start, and document that you've done so. The case law on what "reasonable opportunity" means is going to develop over the next year or two; until then, do it deliberately rather than trying to read the line.

A separate point on what this whole reform actually does. The press framing is "employers can now safely engage contractors." That's half the story. What the gateway does is create a clean doorway for arrangements that are genuinely contractor-shaped — five clear boxes to tick, and if you tick them all, the worker can't later turn around and claim they were an employee. What it doesn't do is bless the messy arrangements most SMBs are actually carrying. If your three regular casuals have been working four days a week for two years on no contract, the gateway doesn't help them or you. The honest reading: this is a tool for new, deliberate, written contractor relationships. It's not a tool for cleaning up the past. The pre-21-February relationships get tested under the rules that already exist.

The two ways to get this wrong don't cost the same. Treat someone as a contractor when they're really an employee, and once that's tested the arrangement is treated as employment from the start: you're liable for the wages and holiday pay they should have had — a claim that can reach back up to six years⁷ — penalties can follow, and they can bring a personal grievance for unjustified dismissal. Treat a genuine contractor as an employee and the worst case is you've paid out leave and entitlements you didn't strictly owe — a cost, not a liability. The cheaper-looking call, they're a contractor, is the one that bites hardest when it's wrong. That's why the question is worth settling before you rely on the arrangement, not after someone else forces it.

Tick all five boxes on a genuinely contractor-shaped arrangement and you've bought certainty — no later reclassification, no back holiday pay / KiwiSaver / PG. For an operator engaging contractors repeatedly, the checklist is a reusable doorway: set it up right once, every genuine engagement runs through clean. Skip the discipline and every engagement is a fresh reclassification risk on the books.

Where this entry stops

This entry covers the gateway test and what it means for typical SMB contractor arrangements. It doesn't cover:

• Tax-side classification. IR330C, schedular payments, withholding tax — different rules, different framework, IRD's territory. The tax classification test is not the same as the employment classification test. An arrangement can be a specified contractor for employment purposes and still trigger withholding obligations on the tax side. Talk to an accountant.
• ACC-side classification. ACC has its own framework for contractor-vs-employee that affects levies. Connected but separate. Out of scope here.
• Existing-contractor remediation. If you're sitting on long-term casual or contractor arrangements without written agreements, this entry doesn't tell you how to fix them — only that the gateway doesn't fix them for you. The right move is usually a structured cleanup with employment-law advice, not a scramble to retrofit contracts.
• Sector-specific arrangements. Construction sub-contracting, platform/gig work, healthcare locums, real-estate agent contracting — each has industry conventions and sometimes specific rules. Specialist territory.
• Disputed arrangements where ERA proceedings have started. If you're already in an employment-status proceeding, stop reading and call an employment lawyer. The decisions inside an active dispute compound costs fast.

If you've got casuals, contractors, or "it just works" arrangements that have been running for more than a few months, the right next move is a 30-minute conversation with an employment lawyer about which of them meet the gateway and which need to be either fixed or reclassified. The cost of that call is significantly less than the cost of getting it wrong.

Last verified 9 June 2026 against the Employment Relations Amendment Act 2026 (Royal Assent 20 February 2026, in force 21 February 2026), Employment Relations Act 2000 section 6 as amended, and the Rasier Operations BV v E Tū Inc Supreme Court decision of November 2025. Full source list: references. Note: the gateway test is roughly 10 weeks old. No ERA case law has been issued under the new provisions yet. The contract-centric vs real-nature-of-relationship question, the meaning of "reasonable opportunity for independent advice", and the operational shape of the common-law fallback will all develop as cases land.