A rostered stylist fails New Zealand's new contractor test on line three. Here is what one wrongly labelled chair costs

If you pay a stylist as a contractor and they work the days and hours you set, they do not pass New Zealand's new contractor gateway test. That is the short answer, and it has been the law since 21 February 2026. The test is five written lines. A genuine rent-a-chair stylist, who pays you rent, keeps their own book and comes in when they choose, passes all five without trying. A commission stylist on your roster fails at least one, and once the test is failed you are back in the old argument about the real nature of the relationship, with four weeks of holiday pay, KiwiSaver and up to six years of back pay riding on the answer. This page runs one chair through the test, prices the fail, and explains what 21 February did to the clock.

The five lines, in plain words

The Employment Relations Amendment Act 2026 was signed on 20 February 2026 and came into force the next day. It adds a new category to the Employment Relations Act 2000 called a "specified contractor", and a specified contractor is excluded from being an employee. To be one, the arrangement has to tick every line below. Not most of them. All of them.

• Line one: it is written down, and the document says the person is an independent contractor or is not an employee. A chair rental agreed over coffee and never typed up fails here before anything else is looked at.
• Line two: they are free to work for anyone else, except while they are actually working for you. The Act adds a catch in the next subsection: if the hours you take up have the effect of stopping them working for others, line two is failed as well.
• Line three: you do not require them to work, or to be available to work, at a set time, on a set day, or for a minimum period. There is one other way to pass this line: they are allowed to send someone else to do the work, and you only vet that person for legal requirements, a qualification the work genuinely needs, or a criminal record.
• Line four: you cannot end the arrangement because they turned down extra work on top of what they agreed to do.
• Line five: they had a reasonable opportunity to get independent advice before they signed.

Pass all five and the person is a contractor under employment law, full stop. Miss one and the test simply falls away. Employment New Zealand's guidance is careful on this point: failing the gateway does not make someone an employee. It means the old common law test (intention, control, integration and economic reality) decides, the way it did before February.

Line three is where salons fail

Think about how most "contractor" stylists in a salon actually work. They are on the roster. They are expected in for walk-ins on Saturday. They do a minimum of four days. They cannot take a Tuesday off without clearing it with you. Every one of those is a requirement to be available at a set time, on a set day or for a minimum period, which is exactly what line three rules out. The subcontracting route does not rescue you, because almost no salon lets a stylist send a replacement it has never met to work on its clients.

Then line two comes back around. A five-day roster plus every Saturday is the kind of hours that, in the Act's own words, have "the effect of restricting" the person's ability to work for anyone else.

Now the genuine renter. They pay a fixed weekly or daily rent for the chair. They book their own clients, decide which days they come in, take holidays when they like, and could put a locum in their chair if they broke a wrist. Lines two to five are passed on the facts. The only line a real renter commonly fails is line one, because a lot of chair rentals were agreed verbally years ago and never written down. That one is a free fix. Write it up.

The uncomfortable middle is the commission "contractor" on a roster. That is the chair this page prices.

Price one chair, honestly

The figures below are an illustration, not your numbers. Swap in your own.

A stylist is on 45% commission under a contractor agreement, rostered Tuesday to Saturday, about 40 hours a week, and averages $1,200 a week before their own tax, so $62,400 a year. The roster fails line three. Suppose the Employment Relations Authority then decides, under the common law test, that this person was your employee all along. Here is what an employee on that pay is owed:

• Four weeks' paid annual holidays. Four weeks of their usual pay is about $4,800 a year. The 8% pay-as-you-go alternative is only lawful where work is genuinely irregular or a fixed term under twelve months, and a Tuesday-to-Saturday roster is neither.
• Employer KiwiSaver. The compulsory employer rate has been 3.5% since the first payday on or after 1 April 2026 (3% before that). If the stylist is a KiwiSaver member, that is about $2,184 a year.
• Ten days' paid sick leave a year after six months, with up to 20 days banked. At $240 a day that is up to $2,400 a year if it is all used.
• Public holidays. At least time and a half for hours worked on a public holiday that falls on a rostered day, plus a paid alternative day off. Not priced here; it depends on how many Mondays you open.

Holidays and KiwiSaver alone come to about $7,000 a year for one chair. A claim for money owed under an employment agreement, as opposed to a personal grievance, can reach back six years under section 142 of the Act. Six years on one chair is about $42,000, before sick leave and before anyone has mentioned PAYE.

Then the penalties. The Authority can order a penalty of up to $20,000 against a company ($10,000 against an individual) for a breach, and several penalties can be claimed in the same action. The Act also lets a director be treated as a "person involved" in a breach of employment standards. An owner who wrote the roster knew the essential facts.

One more thing about the arithmetic. The stylist keeps every dollar of commission they were paid. Nothing comes back the other way. The Holidays Act says so for pay-as-you-go payments in terms, and in practice the same is true of the rest.

Commission has a floor under it

Once someone is your employee, the minimum wage applies to every hour they work, whatever the commission says. The adult rate has been $23.95 an hour since 1 April 2026, which is $958 for a 40-hour week.

Run a quiet week. Your stylist sits at the chair for 40 rostered hours and 45% commission comes to $820. You owe a $138 top-up. One week is nothing. A January and February of them, across three chairs, is the kind of number a Labour Inspector adds up for you. If you re-employ a commission stylist, the floor check goes into every pay run, not just the year end.

What 21 February did to the clock

The transitional rule in the Act is worth reading twice. A person whose arrangement already met all five lines on 21 February 2026 has been a specified contractor from that date, even if a case later finds they were an employee for the years before, unless proceedings were already before the Authority on that date. Employment New Zealand spells out the three possible rulings on an arrangement that started before the change: employee throughout, contractor throughout, or employee up to 21 February and contractor after.

For your genuine renter, that is good news. The clock stopped on 21 February, and if they ever argue about the years before, the years after are closed.

For the rostered stylist, nothing stopped. The clock is running on both sides of 21 February. There are two ways to stop it, and both are decisions about how the chair actually works, not about paperwork:

• Make them a real renter. Hand the roster back. Charge a fixed rent for the chair. Let them refuse extra work and send a locum. Write it down, give them a week to take advice, and sign. From the day the arrangement genuinely meets all five lines, the Act treats them as a specified contractor going forward.
• Employ them. Put them on an employment agreement, pay the holidays, KiwiSaver and sick leave, and price the services on that column so the chair still makes money.

Neither route fixes the past. The six years before the fix stay open for six years. And a new agreement on its own fixes nothing in the present either, because lines two, three and four are about what you actually require of the person, not what the document says you require.

Passing the test does not settle your tax

Section 3 of the Amendment Act says it amends the Employment Relations Act 2000. That is the whole list. Nothing in it touches the Income Tax Act or the KiwiSaver Act, so whether a stylist is your employee for PAYE is still a separate question under tax law, answered on its own tests. Passing the gateway test is a good sign, not a ruling. Ask your accountant the two questions separately, and do not let a clean answer on one stand in for the other.

The agreement a buyer reads first

When a salon changes hands, the buyer's lawyer asks for every contractor agreement on day one. Before February that produced a vague conversation about risk. Now it produces a five-line checklist the lawyer can run in ten minutes, and a fail is a contingent liability with a six-year tail. It comes off the price, or it sits in a warranty or a retention until the tail runs out.

The model you choose also changes what the buyer is paying for. Chair rent is steady and simple, but the clients belong to the stylist and can walk out the door with them, so a buyer discounts it. Employed stylists generate revenue the salon owns, and that revenue transfers with the business, but only if the employment is real and the entitlements have been paid. Either model can sell well. A salon that is half one and half the other, with the paperwork saying one thing and the roster saying another, is the one that gets marked down in due diligence.

The vote on 7 November

The general election is on Saturday 7 November 2026, with advance voting from 26 October. Labour opposed the Bill as it went through Parliament and has not published what it would do with the gateway test if it forms the next government. If the test went, the common law test would be all that is left, and that is the test the rostered stylist was already failing. The decision this page asks you to make is the same whoever wins.