Government to revise contractor classification framework

Construction firms that engage contractors could soon benefit from greater legal clarity under proposed changes to employment law 

The Education and Workforce select committee has reported back on the Employment Relations Amendment Bill, recommending refinements to the contractor vs employee gateway test criteria. 

The gateway test is designed to clarify when a worker is legally considered a contractor rather than an employee. 

The proposed refinements include: 

• Specifying whether businesses can still access the gateway test if they state in the contract that the worker is ‘not an employee’. 

• Clarifying that working full-time hours does not, by itself, prevent a contractor from meeting the test. 

• Confirming that businesses may require subcontractors to hold specific qualifications or undergo criminal record checks, if justified by the nature of the work. 

These changes are likely to be relevant for businesses in the construction and landscaping sectors, where subcontracting is common. The gateway test, if passed, would provide a clear legal pathway to classify a person as a contractor, reducing the risk of costly misclassification disputes. 

In addition to the gateway test changes, the Committee also endorsed recent Cabinet decisions on the income threshold for raising an unjustified dismissal personal grievance. The definition of income will be expanded to include bonuses and share schemes, and the annual threshold will increase from $180,000 to $200,000. 

Government welcomes recommendations 

Workplace Relations and Safety Minister Brooke van Velden has welcomed the Select Committees report, saying the recommended changes provide “additional certainty” while keeping the Bill’s core objectives intact. 

“I have considered the submissions, and I am persuaded by some proposals to refine the Bill to further enhance labour market flexibility and reduce compliance costs,” she said.  

The Bill is expected to progress in early 2026.