It is vital that the business owner is clear whether they are dealing with an employee or a contractor, from the outset. The worker cannot be both.
Sometimes the arrangement between the business and the worker is informal, and the parties don’t actually discuss this. Lack of clarity can have major tax complications, and could open to the door to an employment dispute.
There are always cases being brought before the Employment Relations Authority where the relationship between the parties has not been clear and the relationship has then broken down because of some dispute. The ‘worker’ may then claim they have been an employee all along.
If it can be argued the worker was always an employee as opposed to a contractor, substantial tax payments may then have to be paid and compensation to the employee for breaking their employment rights.
Specifically the court can look at all relevant matters, and will not treat the statement that the parties use to describe their relationship as conclusive.
In other words, just because you and the worker decide to label them a contractor, doesn’t mean that the Courts, (and the IRD) will agree that they are one.
Having a signed off Contractors Agreement in place goes a long way to protect the business, and following the new 'Gateway Test' with the advent of the Employment Relations Amendment Act 2026 is a requirement to achieve the protection of being a 'Specified Contractor'.
The contents of the guide Independent Contractors follow;
Introduction
Three basic options
Tax Implications
Tests to establish whether a person is an employee or contractor
Control Test Checklist
Integration Test Checklist
Independent Test Checklist
Intention Test Checklist
Economic Test Checklist
Pre-Employment Checks
Credit Check
Restraint of Trade Clauses
Explanation
Formidable Opposition
An alternative
Confidentiality Agreement
Breach of a Statutory Declaration
Perception is Reality
Model Statutory Declaration
Model Confidentiality Agreement
Model Independent Contractors Agreements
Contractors Agreement for Labour
Contractors Agreement for Services
These two types of Contractor Agreement provided with the guide are in MS Word format (docx) for your own editing as required.
Recently reviewed in March 2026 following the Employment Relations Amendment Act 2026 and the introduction of the 'Specified Contractor', ensure your business uses the latest compliant contracts to protect your business interests.
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