HR Insights September 2024 | Proposed Employment Relations Act changes

September 2024 Update

Proposed Employment Relations Act changes

Workplace Relations and Safety Minister Brooke van Velden has announced upcoming changes to the Employment Relations Act that she says will provide greater certainty for contractors and businesses.

The Coalition Government has agreed to amend the Employment Relations Act to provide a ‘gateway test’ that businesses can use when responding to a claim that a person is an employee and not a contractor If the working arrangement in question meets the four factors set out in the test. The person is considered to be a contractor. If one or more of these factors are not met, then the existing test around employee versus contractor will apply, as considered in the recent case. This case involved the Court of Appeal upholding a previous Employment Court decision classifying four individual Uber drivers as employees in Rasier Operations BV v E TŪ INC [2024] NZCA 403.

The criteria for the gateway test are:

• a written agreement with the worker specifying they are an independent contractor, and
• the business does not restrict the worker from working for another business (including competitors), and
  • the business does not require the worker to be available to work on specific times of day or days, or for a minimum number of hours OR the worker can subcontract the work, and
  • the business does not terminate the contract if the worker does not accept an additional task or engagement.

These proposed changes are part of a plan to reduce the cost of going to the Employment Relations Authority to determine whether a worker is an employee or an independent contractor.

An amendment to the Employment Relations Act to give effect to this change is planned for 2025. In the interim, the criteria above will continue to apply. You can read more on the MBIE site.

With the current labour market pressures, businesses need practical tools with innovative approaches to attract and retain talent. Business Canterbury have created a 1-day workshop: HR Essentials, which covers crucial areas such as recruitment and onboarding. Each session is tailored to your business. It's worth a look.

For specialist advice in this area or any HR/ER related matters, please contact me at michaelp@cecc.org.nz.