He signed a contractor handbook, moonlighted as a DJ, and never signed the employment agreement
He helped build the business from the ground up, landed most of its early clients, and held the title of chief operating officer. He also owned 12.5% of the company.
None of that made him an employee.
New Zealand's Employment Relations Authority has dismissed an application by a marketing professional who argued his engagement with a nationwide marketing firm was, in substance, an employment relationship entitling him to unpaid wages and holiday pay. The determination, issued on October 13, 2026, found the worker was a business partner and independent contractor - not an employee - and that the Authority had no jurisdiction to hear his other claims.
How it started
The worker was made redundant from a previous role in April 2020. Through mutual connections in the marketing industry, he began discussions with the founder of Orbit Marketing Limited about joining the business. Orbit was a startup at the time - according to the founder's evidence, it had no money and no clients.
The two signed a memorandum of understanding in May 2020. The terms were clear: if a viable business relationship developed, the worker would become a partner and co-owner, issued shares in the company. Pay would be an hourly rate based on charge-out rates to clients, plus a profit share, with at least 50% of profits retained for reinvestment. The memorandum did not provide for employment.
The worker said he began full-time work as COO from November 2020. In December 2021, in line with the memorandum, he became a director and 12.5% shareholder. A shareholders agreement followed. It carried over many of the memorandum's terms and described the arrangement as "a partnership and co-owner arrangement." Again, no employment relationship was contemplated.
The grey zone
On top of his COO work, the worker also had a separate contracting arrangement with Orbit as a brand ambassador - one he signed as an independent contractor in February 2023. On the same day, he signed an independent contractor handbook.
He also worked as a DJ throughout his time with Orbit, which he said provided "additional income that was necessary in order to keep working for Orbit."
The worker was paid regular weekly amounts at an hourly rate, sometimes described as a "salary" on bank statements. But the tax treatment told a different story. Deductions were consistently coded as withholding tax at 20% - a rate used for contractors, not employees - matching a tax form the worker himself signed in February 2023. He was also responsible for his own ACC levies.
Then there were three lump-sum payments: $30,000 in April 2021, $14,700 in March 2022, and $5,500 in December 2022. Orbit said these were profit share payments under the shareholders agreement. The worker was given the chance to offer a different explanation. He did not.
The unsigned agreement
By mid-2023, the working relationship had soured. The worker raised a formal bullying complaint. The parties tried private mediation. It did not resolve things.
In October 2023, Orbit offered the worker an individual employment agreement. The covering letter stated he had "been employed with Orbit Marketing Limited since 1 November 2020."
He never signed it.
Orbit said that was because the worker wanted to retain full autonomy in the Wellington region. The worker said there were unresolved terms around hours, pay and leave, and he asked for an updated version. It never came. Correspondence between the parties as late as February 2025 showed the terms were still being negotiated. The worker himself described them as "ongoing discussions."
Despite that impasse, he kept working with Orbit for another two and a half years.
The Authority found the unsigned agreement could not simply be treated as establishing an employment relationship. Under the Employment Relations Act, an unsigned intended agreement does not count as an employee's terms and conditions of employment. Had the worker signed it - even under protest - the outcome may have been different.
What the evidence showed
The Authority worked through three well-established tests to determine the real nature of the relationship.
On control - who decides what work gets done and how - the worker said Orbit directed him daily through emails, Teams messages, texts and phone calls. But the Authority found the evidence fell short. What was shown amounted to reasonable business check-ins, the kind that happen with contractors too. The worker acknowledged having significant experience and autonomy.
On integration - how embedded was he in the business - both sides agreed the worker was deeply involved. But the Authority found that came from his role as a director and co-owner, not from being on the payroll.
The clearest picture came from the economic reality of the arrangement. The worker did not submit invoices. But he received contractor-coded tax treatment, three profit share payments that were not typical of employment, and performed DJ work on the side throughout. He was responsible for his own ACC levies. And when Orbit could not pay him for a month in 2024 due to financial difficulty, he kept working anyway. The Authority was blunt: "it's one of the most fundamental aspects of employment that employees are not required to work if they are not getting paid."
The result
The worker was removed as a director in October 2025 despite his objections and stopped working with Orbit in May 2026. He still holds his 12.5% shareholding.
The Authority found that, standing back and weighing all the evidence, the worker "appears to have operated more as a part owner-operator in the business rather than as an employee." His application was dismissed.
Because the employment relationship was not established, the Authority had no jurisdiction to investigate the worker's claims for unpaid wages, holiday pay, or unjustifiable disadvantage. Costs were reserved.
One procedural detail worth noting: the worker filed his claim in December 2025, before the February 2026 amendments to the Employment Relations Act that introduced the "specified contractor" definition. Under the transitional provisions, his application was assessed under the pre-amendment law.
For HR teams navigating contractor arrangements - particularly in startups where founders, co-owners and key operators wear multiple hats - the case is a practical reminder that the paperwork trail, the tax treatment, and the economic reality of the arrangement will carry more weight than any job title.
