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Ministry of Business, Innovation and Employment Discussion Document - Better Protections for Contractors

Ministry of Business, Innovation and Employment Discussion Document - Better Protections for Contractors

Written by:
Craig Andrews

The Ministry of Business, Innovation and Employment (MBIE) has released a discussion document late last year, inviting public consultation on an important subject affecting a large sector of New Zealand's working public: self-employed 'independent contractors', and companies and people who engage the services of such independent contractors, not just in the course of business, but even in some cases individual consumers utilising those services, for example ordinary member of the public using a 'ride sharing' platform. The deadline for members of the public to provide their feedback to MBIE expires at 5.00 pm on 14 February 2020.

Employees are entitled to various minimum employment rights under New Zealand law, including the right to a minimum wage, the right to various types of paid leave, the right to bargain collectively for wages and working conditions, the right to be treated fairly, and the right not to be unjustifiably dismissed. These 'rights' are only available to workers who are legally classified as 'employees', and not to 'independent contractors'.

Many workers prefer to operate as independent contractors for various reasons. Indeed, many services are legitimately best performed by independent contractors rather than as employees. Nonetheless, a significant number of contractors, who are in substance employees, participate in economic activities outside the realm of minimum employment rights simply because they are misclassified as independent contractors.

Similarly, some contractors may operate their own business and use their own equipment, but their income is heavily dependent on one client/firm who often decides what will be done, when, and how. These contractors fall in to the 'grey zone' between employee and contractor status. Often, it is difficult to determine the question of whether a particular worker should be classified as a contractor or an employee under the current law.

In reality, many contractors are left vulnerable to poor outcomes largely because misclassifications are often hidden or unknown to the contractor, and seeking a judicial or official determination on the true nature of their relationships can prove costly. Reportedly, many vulnerable contractors in the trucking, telecommunications and courier industries continue to experience limited bargaining power when dealing with powerful companies or business people engaging their services.

Furthermore, technology is prompting changes in the landscape of our labour market, including the expansion of the 'gig' economy. Increasingly, many workers are engaging in economic activities through apps or online platforms. There is little consensus on these workers' correct status, yet it is expected that the numbers of these workers will continue to grow.

The present Government considers that existing measures devised to protect vulnerable contractors need to be reinforced. While any changes are yet to be made, MBIE has identified 11 options for change, grouped into four main approaches:

(a) Deter misclassification of employees as contractors;

(b) Make it easier for workers to access a determination of their employment status;

(c) Change who is an employee under New Zealand law; and

(d) Enhance protections for contractors without making them employees.

The Government is calling for submissions from the members of the public, including workers, unions, employers and businesses, to share their views on the benefits, costs and risks of different options, and how different options might work in practice. What is clear from the discussion document is that change in this area is coming - probably soon. If you want a chance to have a say, submissions can be made to MBIE anonymously and in any format, closing at 5.00 pm on 14 February 2020.

For more information on the details of the options identified, and on how to make a submission, please follow the link to the MBIE's Discussion Document - Better Protections for Contractors.

If you need advice or have any questions concerning your employment status, employment agreement or any other matters regarding your employment, please contact us for professional assistance.

Please direct any enquiries to:

Craig Andrews on (09) 306 6745 (candrews@mcveaghfleming.co.nz)

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© McVeagh Fleming 2020

This article is published for general information purposes only. Legal content in this article is necessarily of a general nature and should not be relied    upon as legal advice. If you require specific legal advice in respect of any legal issue, you should always engage a lawyer to provide that advice.

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