You need someone for a few days a week. Not quite enough for a full-time hire, too much for ad hoc casual help. The person in front of you is happy to invoice you, handle their own tax, and ‘keep things flexible’. You write ‘independent contractor’ at the top of the agreement, shake hands, and move on. It feels simple. The problem is that employment law does not care how tidy it feels on paper.
The label is not the decision
Here, the label you put on a contract is not what determines the relationship. Section 6 of the Employment Relations Act requires a look at the real nature of the arrangement, not just what the document says. Courts and the Employment Relations Authority are directed to consider how the work actually operates in practice. Employment NZ guidance breaks this down into four overlapping factors: intention, control, integration, and economic reality. None of them alone decides the outcome. The question is always the overall picture.
• Who controls how, when, and where the work is done?
• Is the person operating as part of your business, or running their own?
• Can they genuinely take on other clients?
• Do they carry real financial risk, or are they effectively on a steady wage?
Why this matters more than most owners think
If a contractor is later found to be an employee, the cost is not limited to paperwork correction. It can include unpaid leave entitlements, holiday pay, sick leave, public holiday entitlements, KiwiSaver employer contributions, and other minimum rights that should have been provided all along.
Those liabilities can reach back across the entire relationship. In a small business, that is often enough to turn a ‘simple arrangement’ into a serious financial shock.
The courts here have repeatedly reinforced the same principle: substance beats form. If someone looks and works like an employee, calling them a contractor does not change the reality.
The gateway check
A more recent ‘gateway test’ offers a shortcut in some cases. If the arrangement clearly meets defined conditions — genuine independence, ability to work for others, flexibility over hours, and freedom to decline work — it can be treated as contracting from the outset.
But the gateway is not a loophole. If even one condition is not met, the arrangement falls back to the full common-law assessment of the relationship.
A simple pre-check before you sign
Before you agree to anything, ask five blunt questions.
1. Can they work for competitors without restriction?
2. Can they set their own hours or send someone else to do the work?
3. Do you control how the work is performed, or just the outcome?
4. Can they decline work without consequences?
5. Does the relationship still make sense if you remove ongoing dependency?
If those answers feel uncomfortable, you are probably not describing a contractor. You are describing an employee without the protections.
What to do instead
There are only two clean options: design a genuine contracting arrangement, or hire the role properly. The risky middle ground is the one that looks convenient today and becomes expensive later. Because when things go wrong, the question won’t be what you called it. It will be what it actually was.
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