EMPLOYMENT LAW UPDATE
OVERVIEW
This article explores the distinction between employees and independent contractors. This is an evolving area of employment law, which can be seen in the recent Supreme Court decision on the legal status of four Uber drivers, as well as changes contained in the Employment Relations Amendment Act, which took effect on 21 February 2026. These developments, together with their implications, are discussed below.
What is the difference between an employee and a contractor?
There has long been confusion on the difference between an employee and an independent contractor. It is important to differentiate between the two as independent contractors are not covered by the same laws, rights and obligations as employees.
An employee is a person employed to do any work for wages or a salary under an employment agreement.
On the other hand, an independent contractor is engaged to perform services under a contract for services. Contractors usually earn income by invoicing for their services.
Contractors are not covered by the Employment Relations Act 2000 or the Holidays Act 2003. As such, they are not entitled to the usual employee leave entitlements (like sick leave or annual leave) nor to employment protections like the right to bring a personal grievance for unjustified dismissal.
The legal tests for deciding whether a worker is an employee or a contractor have been difficult to apply in practice. This has resulted in many workers engaged as independent contractors bringing personal grievances to the Employment Relations Authority on the basis that their true legal statuses are employees.
However, there have been significant legal developments in this area which will impact workers and businesses moving forward. The long-awaited Supreme Court judgment for Rasier Operations BV v E Tu Incorporated [2025] NZSC 162 (“the Uber decision”) was issued in November 2025. Further, the Employment Relations Amendment Act came into force on 21 February 2026.
What was the Uber decision about?
Uber unsuccessfully appealed against a decision of the Court of Appeal, which had upheld an Employment Court finding that Uber drivers were employees in terms of section 6 of the Employment Relations Act 2000.
Uber’s main argument was that it did not hire drivers to work for hire or work at all – rather, it supplies digital services to drivers and riders via its ridesharing platform, and these services enable drivers and riders to connect and form their own business relationships.
What is the relevant law?
Section 6 of the Employment Relations Act provides that in deciding whether a person is an employee or a contractor, the court must determine the “real nature of the relationship” between the person and the business. This involves considering “all relevant matters”.
The Court considered Bryson v Three Foot Six Ltd [2005] NZSC 34, which held that “all relevant matters” includes:
The written and oral terms of the contract;
Any divergences from or supplementation to those terms which were apparent in how the parties actually behaved in practice; and
Features of control and integration, and whether the person had effectively been working on their own account (which was the fundamental test).
What did the Supreme Court decide?
The Court noted that Uber’s legal documents used language which were “take it or leave it” in nature. Notably, these legal documents included a statement that “This Agreement is not an employment agreement, and does not create an employment, independent contractor or worker relationship”.
However, the Court held that no weight needed to be given to this language because it actively disguised the reality of the parties’ relationship (as discussed below).
The Supreme Court analysed the operation of the Uber platform in practice. In particular, it noted that although drivers are free to decide where and when they work (which is suggestive of a contractor relationship) Uber demonstrates tight control over drivers’ work via its rating system for drivers and drivers being unable to compete with one another for services. Further, Uber is able to discipline drivers by restricting or terminating their access to the Uber platform for reasons such as customer complaints, poor customer reviews, high trip cancellation rates or accepting cash from customers. These features of control were more suggestive of an employment relationship.
Overall, the Court found that the strict control Uber exercised meant that Uber does engage drivers as employees, and so the Court of Appeal finding was upheld.
What are the changes to employees vs contractors under the Employment Relations Amendment Act 2025?
The Employment Relations Amendment Act amends the definition of an “employee” in section 6 of the Employment Relations Act 2000 to exclude “specified contractors”.
Further, the Act includes a new ‘gateway test’ to help determine whether a worker is an employee or a contractor.
Under the ‘gateway test’, the worker is a specified contractor if they meet all of the following criteria:
The worker has a written agreement that says they are an independent contractor, or they are not an employee.
The worker is allowed to work for another person, but not at the same time as working for the original organisation.
The worker can choose when to work; OR they can subcontract work to a third party:
Without the organisation needing to vet the third party; or
With the organisation needing to vet the third party, but only to check that the third party has the qualifications required by law, or to check other qualifications needed because of what the work involves or a criminal record, or both.
The worker can decline an additional offer of work without the arrangement ending.
The worker had a reasonable chance to seek independent advice before entering into the arrangement.
If the criteria of the gateway test are met, then the worker is a contractor. If not, then the existing test under section 6 of the Employment Relations Act applies.
Conclusion
Overall, the incoming changes under the Employment Relations Amendment Act are likely to simplify legal tests and provide more clarity for workers and businesses moving forward.
For now, if you are a worker unsure of whether you are properly engaged as an independent contractor or if you are a business owner unsure of whether your worker is an employee or not, please contact us for further guidance.
UNDERSTANDING PROPERTY TITLES
A Guide to different forms of property titles for buyers
For anyone new to the property market, or those considering a different type of property to what they already own, wading through the property information provided by the agent for a prospective new home can be a daunting process.
In particular, making sense of the range of different forms a property title can take can be difficult, especially when these different title forms can have quite different legal implications, and can affect finance and insurance, as well as ongoing costs associated with the property.
It is then useful to briefly discuss the different forms of property title that buyers may come across in their property search, and consider their key elements and common pitfalls to be aware of.
Freehold or Fee Simple Titles
Freehold or Fee Simple titles are arguably the most common and straight forward form of property ownership in New Zealand. An owner of a freehold title owns all the land within the boundaries of the lots or sections included in the legal title.
Freehold ownership can be impacted by interests recorded on the title, such as land covenants restricting activities or imposing building restrictions on the property, and easements which grant others the right to use the property for access, or for conveying utilities.
Unless these title interests contain an expiry provision, they will impact on any future owner of the property indefinitely. Land covenants have penalty provisions which entitle the owners of land also affected by the covenant to enforce non-compliance by owners. Newly subdivided bare land sold by a developer will often have extensive building restrictions and require the developer’s consent to any building plans before construction begins.
Even with the most common form of property ownership, it is important to have the title reviewed before proceeding with a purchase offer to ensure that the title interests will not negatively impact on a purchaser’s plans for the property, and lead to disappointment after settlement.
High Density Freehold Developments with shared lots
In many of New Zealand’s main centres, high density freehold developments are becoming a popular alternative to other forms of high-density development such as cross leases and unit titles (discussed below). A high-density freehold development sits outside of the framework of the Unit Titles Act 2010, which some view as rigid and inflexible in terms of the restrictions imposed on owners by this legislation.
High Density Freehold Developments do come with their own set of restrictions. Further alteration or development to the freehold apartment is often restricted by the registration of party wall easements and land covenants, which will often require the adjoining landowner’s consent to the alterations.
Freehold Developments also often contain common areas used for access or landscape features, owned collectively between the owners of the lots containing the apartments or dwellings. Incorporated Societies or Residents Associations are often formed for the maintenance of these common areas, granting the society or association powers to raise levies for that purpose and impose rules on owners in the development. Many freehold developments of this nature will have a single collective insurance policy due to the apartments sharing building elements, the insurance premiums will be raised through Residents Association Levies also.
Residents Associations are granted rights to enforce rules and obligations against owners, as well as pursue debtors. Key decisions affecting owners are often voted as per the Association’s constitution, risking that a vote can go against a particular owner’s wish, and they are obligated to comply with that decision.
Cross Lease Titles
Cross Lease titles were created to allow for areas of separate ownership within a certain lot size where zoning restrictions at the time meant a subdivision into separate lots was prohibited.
Owning a Cross Lease title involves taking a share of the underlying land and leasing a dwelling (called a flat) situated on the underlying land. The other owner (or owners) of the underlying land has a lease of their flat on the same terms. The leases are typically for 999 years and for a nominal rental. Owners are subject to the terms of the lease registered against the title to their flat, often containing a requirement to obtain the other owners written permission to before undertaking structural alterations of the flat.
A common issue for a Cross Lease title is when the external dimensions of the flat are altered when compared to the registered flats plan on the title. For example, when a veranda under a flat is enclosed to create a conservatory.
Even if the alteration is minor, it technically creates a defective title which can be an issue for purchasers in terms of bank lending and insurance purposes. Updating a flats plan to show new alterations involves obtaining a new survey of the flat, and registering the new plan against the title, which can be a costly exercise with surveying and legal fees, and can be time consuming as it requires the cooperation and participation of all the other owners in the Cross Lease development.
Unit Titles
Unit Title’s are a common form of ownership for apartment buildings and high-density developments. It involves taking ownership of a principal unit (containing the apartment or dwelling), and accessory units such as carparks, balconies and yard areas. In addition to ownership of the principal unit, the owner becomes a member of the Body Corporate formed of all other owners.
The Body Corporate is responsible for maintaining the exterior of the apartment building and all common areas within the development. The Body Corporate raises levies from owners for the purposes of funding maintenance and insurance costs.
The levy apportioned to each unit is determined by the “Utility Interest” registered on the Unit Plan. Each unit’s Utility Interest can be fixed by a registered valuer (at the time the unit plan is submitted to LINZ), or determined by a special resolution of the Body Corporate (75% of members voting in favour). Ownership Interest takes in to account each owner’s use of the overall property, to ensure a fair allocation and recovery by the Body Corporate of its operating costs and building a long term maintenance fund and contingency fund. The “use” factors taken in to account are such things as occupation of retail vs occupation of residential, use of amenities such as lifts, foyer spaces and sometime common property.
However, not every unit plan has Utility Interests registered on it, or are determined by the Body Corporate. If there are no such Utility Interests, the levy apportioned to each unit is determined by the “Ownership Interest” registered on the unit plan. Every unit plan has a schedule of Ownership Interests, also fixed by a registered valuer at the time the unit plan is submitted in LINZ. The Ownership Interest of a particular unit is essentially the relative market value of that unit compared with all other units. The value might be determined by the size of each unit, the location of the unit in the property (ground floor vs penthouse) etc.
The Ownership Interest is used for determining levies for a capital improvement fund (irrespective of any Utility Interest), voting rights at Body Corporate meetings and each unit owner’s share in the underlying land if the Body Corporate is ever collapsed by the cancellation of the unit plan.
Body Corporate governance and unit owner’s rights and responsibilities are largely governed by the Unit Titles Act 2010. Key decisions are voted on at Body Corporate meetings. A unit owner’s Ownership Interest can impact on certain voting rights with respects to these decisions. If a Body Corporate lacks the funds to pay for work such as earthquake strengthening or weathertightness remediation (a common occurrence for apartment complexes), the Body Corporate can resolve to raise the funds required from the owners through special levies. Any owner that finds themselves unable to pay the special levy raised risks being pursued as a debtor by the Body Corporate. Further, even an owner that is able to pay may find themselves paying a portion of a defaulting owner’s portion of the levy.
Company Share Apartments
Company Share Apartments are less common since the first version of the Unit Titles Act came in to play, but some older apartments are still owned in this format. A freehold title containing an apartment building is owned by a single company. Owners of each apartment purchase shares in the company that correspond to a certain apartment and enter into an occupation licence with the Company for that apartment.
Some company share apartments include a registered lease on the title in the name of the owner, but this is not always the case. Similar to Resident’s Associations, the Company will impose restrictions on owners through the Company Constitution and any rules that the owners resolve to impose.
A key issue of a Company Share Apartment is that when there is no interest in land being taken by an owner, it is not possible to register a mortgage which means buyers are often unable to obtain bank lending for the purchase. It can be possible to register a security over the shares held by the owner, but this is not always acceptable to a bank. Further, due to the lack of land interest it is not possible to make a Kiwisaver First Home Withdrawal. Both these factors make a Company Share Apartment difficult to pursue for many buyers.
Leasehold Interests and Ground Leases
Finally, it is also possible to have a Cross Lease or Unit Title development registered on land leased long term rather than owned by the Cross Lease owners or the Body Corporate. This adds an additional layer of complexity as the lease should be reviewed with respect to the current term, rights of renewal and the landlord’s right to review and increase the rental. Owners in a development containing a ground lease may find an increasingly larger portion of their annual costs going toward ground rental. And if the lease is nearing the end of its term, buyers may struggle to find lending approval for the purchase.
Summary
The above discussion will hopefully highlight to buyers that each different form of property ownership they may come across in their search will have it own set of risks and pitfalls to be aware of. A property with an attractively low asking price could come with a layer of complexity that when reviewed carefully looks much less appealing. When considering making an offer on a property, it is accordingly essential to seek legal advice on the title before proceeding to help avoid these common pitfalls.
