Link copied!

There’s major HR changes on the way for how Kiwi businesses manage contractors, and if you run a construction company, are a tradie, or work with subcontractors, this is something you need to pay attention to.

What’s changing?

The government is introducing a new “contractor certainty test,” a legal tool that will help determine whether someone is a true independent contractor or should legally be considered an employee.

Right now, it’s possible for someone to sign on as a contractor but later challenge that status in court, claiming they were really an employee (and are owed sick leave, holiday pay, etc). That’s led to uncertainty for business owners who thought they were doing the right thing.

This new test will make things clearer but also puts more responsibility on employers to get it right from the start.

What does the new test mean?

If your independent contractor agreement meets the criteria in the new law (expected later in 2025), the contractor won’t be able to challenge it in court. But if it doesn’t meet the bar, they can and that could open your business up to risk.

Until we know more about how the criteria will be applied and when the new law will take effect, the risk of claims remains.

However, the Government has signalled that one of the elements of the new test will be that a written independent contractor agreement must be in place.

That’s why we are urging businesses to review their contracts now.

What you should do now

1. Review all contractor agreements
   Make sure they’re up-to-date, clear, and reflect a true contractor relationship, ( and it’s not an employee contract in disguise).

2. Don’t DIY your contracts
   Vague or copy-paste contracts won’t cut it under the new test. Use reliable, legally backed tools.

3. Use smart tools like Employr
   Employr lets you build NZ compliant contractor agreements in minutes, tailored to your industry and are legally sound.
   
   
   “You can’t afford a dodgy contract anymore. We help businesses get it right from day one.” – Employr

Who’s affected?

• Tradies and builders

• Subcontractors and sole traders

• Any business hiring independent contractors

If you’re in construction or trades, you likely have a mix of employees and contractors on your books. Getting this wrong could mean fines, backpay claims, and a whole lot of hassle you don’t need.

Final thought

This new legislation isn’t about making life harder, it’s about giving both businesses and workers clarity. But it does mean you need to be proactive by documenting your working relationships.

We’ll keep you posted as we learn more about the law change before it comes into effect.

Got questions? Talk to your HR advisor or use a tool like Employr to sort your agreements.