The Employment Court recently ruled an Independent Contractor to be an Employee, despite having signed an agreement to be a contractor. This long disputed issue, could serve to be another nail in the coffin for the industry.
This is the case of Parcel Express and a courier who worked for them for the best part of a year until the relationship fell apart.
Although the Court commented this is not precedent setting and only applies to this case it does and should send alarm bells across the industry as a whole.
This case once again demonstrates that the Courts will look at the true nature of an employment relationship and not just what is written on paper. As outlined by the Judge, 'standard industry practice' also doesn't make it right.
We have known for a long time there are tests to determine whether someone should be considered a contractor or an employee and just because it suits the company isn't one of them.
A major test in a relationship determination is the degree of control the principal may have over the contractor, and some major red flags prevail here:
The principal company mandates the type of vehicle to be used for the work, colour scheme of the vehicle, branding to be used, foot all costs thereof, audit the mileage, limiting the amount of leave contractors can take, insisting on exclusivity to them, restraint of trade of 100 kms of Auckland and non-solicitation of clients after the relationship.
While all these costs and restrictions fall at the feet of the contractor, it's often the case they struggle to achieve any more than the minimum wage and aren't afforded any benefits or protections from being an employee.
While this is currently industry standard, and the Court decision only pertains to this particular case, it's likely that things will need to change before we see many more of these cases being tested.
If you wish to engage a contractor, we strongly recommend to review our guide on Independent Contractors which covers the list of tests to consider plus appropriate agreements.
This is free to our members in the Library section of the Employers Toolbox, non members can purchase separately here: www.employers.co.nz/independent-contractors-agreement-product.aspx