Transport relies heavily on owner-drivers and contractor arrangements, and a meaningful proportion of them would be difficult to defend as genuine contracting if examined. The exposure sits with the operator engaging the driver.
The gateway test now applies
The Employment Relations Amendment Act 2026, in force from 21 February 2026, introduced a statutory gateway test. Where all five criteria are met, a worker is a “specified contractor” and cannot bring an employment status claim to the Employment Relations Authority:
- A written agreement specifying the worker is an independent contractor.
- The worker is not restricted from working for others, except while actually performing work for the contracting party.
- The worker is not required to be available at set times, or has the ability to subcontract.
- The arrangement does not end solely because the worker declines additional work.
- The worker had a reasonable opportunity to take independent advice before entering into it.
For transport this matters directly, because several features common in owner-driver arrangements sit awkwardly against criteria two, three and four. An arrangement requiring exclusivity, or requiring availability at set times without a right to subcontract, or where declining work ends the relationship, falls outside the gateway.
Where the gateway is not met, the traditional analysis below applies. And the gateway concerns employment status only — it does not change health and safety duties, tax treatment, or transport regulatory obligations.
The label does not decide it
The Employment Relations Act requires the real nature of the relationship to be determined. An agreement stating someone is an independent contractor is evidence, not a conclusion, and it carries little weight where the reality looks like employment.
The factors examined are control over how work is done, integration into the business, economic reality and whether the person bears genuine profit and loss risk, ability to work for others, who supplies equipment, and whether substitution is permitted.
Where transport arrangements sit uncomfortably
Several features common in owner-driver arrangements point toward employment:
- Exclusivity in practice, where the driver works full time for one operator and has no realistic capacity for other work.
- Livery and uniform presenting the driver as part of the operator’s business.
- Rates set unilaterally by the operator with no genuine negotiation.
- Runs allocated daily by the operator, with no ability to decline.
- Payment by the hour or by the day rather than against invoices for defined work.
- No genuine right of substitution.
Vehicle ownership by the driver is a factor pointing toward contracting, and it is not decisive on its own. A driver who owns a truck but is otherwise directed like an employee may still be one.
What it costs to get wrong
A finding of employment produces retrospective liability for PAYE, holiday pay calculated on gross earnings, sick leave and public holidays, KiwiSaver employer contributions, minimum wage shortfall in any period, and personal grievance exposure.
Calculated across a relationship of several years, the numbers are substantial.
Health and safety applies regardless
This is the point that most needs emphasis, because operators sometimes treat contracting as a way to transfer risk.
Health and safety duties do not turn on employment status. Where more than one PCBU has a duty over the same matter, each must consult, cooperate and coordinate so far as reasonably practicable. An operator who influences how work is done — through scheduling, rates, delivery windows and route allocation — holds duties toward the driver doing it.
After a serious incident, the inquiry looks at scheduling practice, whether the run could be completed legally within work time limits, whether payment structures created pressure, and whether the driver could realistically decline. None of that turns on the contract label.
Rates that make compliance possible
A rate that only works if the driver exceeds work time limits, skips breaks or defers maintenance is a rate that procures non-compliance.
Operators setting contractor rates should be satisfied the work can be done legally at that rate, including realistic allowance for loading, unloading, waiting and vehicle checks — all of which are work time.
Payment models that reward distance or delivery count create pressure toward speeding and work time breaches, and they are examined when something goes wrong.
Making a genuine contracting arrangement work
- Contract for defined work or outcomes rather than availability.
- Do not require exclusivity, and mean it.
- Allow the contractor to decline work.
- Permit substitution by another appropriately licensed driver.
- Have them hold their own transport service licence, insurances and compliance systems.
- Negotiate rates rather than imposing them.
- Invoice against work performed.
The driver’s side
Owner-drivers should understand what they are giving up: no holiday pay, no sick leave, no KiwiSaver employer contribution, no personal grievance rights, and responsibility for their own ACC as a self-employed person.
A rate that matches an employee’s hourly wage is substantially worse than employment once those are counted, before vehicle costs. Rate setting should include a proper wage plus full cost recovery including depreciation and replacement.
Platform-based work
The status of platform drivers has been contested in New Zealand and elsewhere, and the position has moved. Anyone structuring a business around contractor status, or working under it, should take current advice rather than relying on how the model has historically been described.
Employment New Zealand publishes guidance on employment status, NZTA publishes operator and licensing requirements, and WorkSafe publishes material on overlapping duties. All free.
General information only, not legal advice.
