What’s the big deal?
Employees’ rights and protections are enshrined in law; breach of which can lead to costly and time-consuming litigation. Amongst other rights, employees have the right to be paid at least the minimum wage, paid holidays and sick leave and, perhaps most importantly, the right to not be unjustifiably dismissed. The rights of independent contractors are governed by the terms of the contract between the parties. The contracts can be terminated for any reason, on notice.
There can be a number of advantages to being an independent contractor as opposed to an employee. Contractors are, typically, paid more than employees given the absence of rights. They are their own boss and, generally, have more flexibility as to when they work and who they work for.
In the courier case, the drivers don’t appear to be enjoying any of the benefits of being independent contractors. Amongst other things, they allege that they are being paid below minimum wage and are prohibited from working for other courier companies in order to earn more.
What will the Court consider?
The Employment Relations Act 2000 sets out the test for determining whether someone is an employee. The Court must look at the real nature of the relationship, regardless of the labels given by the parties. Determining whether someone is an employee or contractor is, therefore, a highly fact specific enquiry. Whilst the starting point will always be the terms of any contract between the parties, the Court will quickly move on to look at the reality of the relationship, taking into account three main tests; the control, integration and fundamental tests.
Factors the Court will likely consider are:
- Whether there was any flexibility as to when/where work was performed
- Whether the worker could work for anyone else
- Whether the worker provided their own equipment
- Whether the worker was required to wear a uniform
- Whether the worker was required to follow the company’s policies/ procedures and if they were ever disciplined
- Whether there was any scope for the worker to increase their earnings by working more/reducing costs
- Whether the worker supplied invoices and paid their own tax
- Any specialised skill or expertise the worker had
Without knowing all the facts, it is impossible to predict how the courier case will play out. Certainly, if couriers are genuinely prevented from working for others, supplied with all their equipment, required to wear a uniform and follow company policies and procedures, they have a good argument that they are employees.
A finding that the courier drivers are employees could have huge ramifications for other New Zealand businesses reliant on independent contractors and could open the door to claims from workers in other industries. In both the UK and California, Uber drivers have been found to be employees regardless of the independent contractor label given to them. There is nothing to stop such a claim from being pursued here in in New Zealand.
We will follow the case closely but, in the meantime, suggest that any businesses who engage independent contractors assess the true nature of the relationship with the above factors in mind.
Gwen Drewitt is a Senior Associate in the team and is experienced in both employment and health and safety law. Jackie Behrnes is a Partner in Anthony Harper’s national employment practice. She specialises in all employment-related issues including employee entitlement queries, personal grievances, employment agreements and disciplinary issues.
Anthony Harper is a leading award winning, internationally ranked, national law firm. We have expertise in a number of specialities including transport and logistics, employment and health and safety law. Find out more at www.anthonyharper.co.nz