The "Specified Contractor"

When a business engages a contractor to do some work, be it a company entity or a person directly, the Employment Relations Act 2000 does not apply to the relationship.
Even if the work undertaken, the duration of the relationship and many other aspects of the job mimic that of an employment relationship, if the parties have agreed that it is a commercial arrangement of a principal and contractor, then still the Employment Relations Act 2000 does not apply. Unless one party decides they no longer agree and decides to challenge it at the Employment Relations Authority (ERA).

Such challenges are commonplace at the ERA and Employment Court, the plaintiffs often being contractors who for many reasons have decided they were never legitimate contractors and should have been employees under the Employment Relations Act 2000 for the duration of the relationship despite the fact they may have signed a contractor's agreement. The largest case of note recently was of course the Uber challenge.

One aspect of the Employment Relations Amendment Act 2026 which took effect on Feb 21st 2026 sought to bring some certainty to this issue by introducing the "Specified Contractor" concept.

Gateway Test

Five basic checks form a gateway test to indicate as to whether a worker is a Specified Contractor or not, and if they are, cannot challenge such status.

1. The parties have a written agreement confirming the worker is an independent contractor (or at least not an employee);.
2. The worker is free to perform work for others unless that work is done at a time when work had been agreed with the principal;.
3. The worker is not required to work at specified times or days or is permitted to subcontract the work;.
4. The agreement cannot be terminated simply because the worker declines additional work;.
5. The worker has had a reasonable opportunity to obtain independent advice before signing.

If the circumstances of the engagement with the worker do not meet the 5 steps above, this does not automatically mean the person is an employee. They very well may be a contractor, just not a Specified Contractor, and potentially could challenge that status in the future if desired.

When a worker does challenge their status as a contractor the ERA (or court) goes through an extensive list of checks & balances which fall under the four common law tests to examine the relationship before making a binding determination.
Four common law tests include;

• Intention test
• Control vs independence test
• Integration test
• Fundamental/economic reality test

Such tests are examined in depth and are included in our eBook publication Independent Contractors. The eBook is also available in the Library of your Employers Toolbox.

This new legislation is in effect now, and it is applicable to working arrangements already in place even if they were started prior to Feb 21st. However, such challenges can only be brought for the period prior to Feb 21st if the arrangement meets the new gateway test.

There is however, much speculation as to how effective this new gateway test will be when challenged at the ERA or Employment Court. If the outcome of the five checks above are arguable in a case it's likely a challenge will stand.