Contractor or Employee? ERA Guidance in Zhang v New Concept Consulting (2025)

 Contractor or Employee? How the ERA Applied the “Real Nature” Test in Zhang v New Concept Consulting (2025) 

A recent case of Zhang v New Concept Consulting Company Limited [[2025] NZERA 785; 04/12/25 is an instructive case in applying the relevant tests to determine the ‘real nature’ of a work relationship and how it operates in practice to assess if a worker is a contractor or an employee in light of recent legislative changes and the introduction of the ‘gateway’ test.

Background

New Concept Consulting Company Limited (NCCC) engaged Ms Zhang as an art design assistant teacher in November 2023 with no formal written agreement was provided, NCCC treated her as a contractor and provided her with invoice templates. Ms Zhang, however, considered herself an employee. Following the termination of the work arrangement, she raised a personal grievance alleging unjustified dismissal and unjustified disadvantage

The common law provides established factors to determine employment status. These include the written and oral terms, any variations to those terms, how the relationship operated and parties behave in practice, the degree of control and integration, and whether the individual is working on their own account.

Ms Zhang had concerns about not being paid for time spent preparing and reviewing student work, but she did not raise this with NCCC. In January 2024, Ms Zhang and Ms Liu discussed NCCC supporting a work visa application. Both parties signed an employment agreement for the purpose of the AEWV. However, in August 2024, NCCC withdrew its application for Ms Zhang and ended the working relationship.

The Employment Relations Authority (ERA) assessed the true nature of Ms Zhang’s relationship with NCCC. The job advertisement was generic and did not specify whether the role was a contracting arrangement or employment relationship. Ms Zhang believed she had accepted a “long-term stable job” whereas Ms Liu believed she was engaging another contractor tutor.

Neither party asked if the work was part-time, casual, or a contract for service. Both parties formed the working relationship without confirming its true status

.Ms Zhang was paid for hours worked and submitted 21 invoices, and no entitlements or accrual were included in this. She completed 21 invoices in the time she was at NCCC. If she had concerns, they were not raised by her.

There was no indication that NCCC was in control of Ms Zhang’s work or limited her work elsewhere. She had the ability to give her lessons without input from NCCC and did not have regular hours or a regular work pattern. With other contractor tutors at NCCC giving statements on the independent, flexible nature of the work, these facts pointed towards Ms Zhang being a contractor.

The ERA examined the intent of the parties. When NCCC chose not to continue sponsoring the visa, the employment relationship had not formed

Decision

The ERA concluded the relationship was one of a contractor, so the claims against NCCC as an employee were unsuccessful.

Penalties

Nil.

Key takeaways

1.    An assessment of the overall or  ‘real nature’ of the relationship is the definitive way to determine if a worker is a contractor or an employee

2.    The intention of the parties rather than how the work relationship operated in practice is not sufficient by itself for a worker to be regarded as a contractor or employee

3.    Employer’s must apply the following gateways tests since February 21, 2026, to assess if a worker is a contractor or employee.

a. A written agreement stating the worker is

I. an independent contractor or
II. is not an employee

b. Freedom to work for others (unless temporarily restricted while performing specific work)

c. Flexibility around time requirements or the ability to subcontract

d. No termination for declining additional work; and

e. A reasonable opportunity to seek independent advice before entering the arrangement.

 Support

 For specialist advice in this area, please contact me at hradvice@cecc.org.nz.