This week, the Employment Court ruled that Mika Leota, who worked as a courier driver at Parcel Express and was considered a contractor by the company, was in fact its employee.

This means Mr Leota would’ve been entitled to benefits such as leave and holiday pay, and protections such as the right to take a personal grievance, for example, if they believe they were unfairly dismissed.

Labour Inspectorate National Manager Stu Lumsden, says misclassifying employees as a contractors is not uncommon amongst New Zealand businesses.

“Employees and contractors have different rights and responsibilities and there are legal tests to help you tell the difference. For example, contractors typically have more control over when and how to do their work. However, businesses still get this wrong, either by accident or to intentionally avoid their responsibility for employee entitlements.

Difference between a contractor and an employee

“The judgement is a reflection on Mr Leota’s employment situation only, and doesn’t mean that all couriers would be classified as employees.

“The judge said that every worker in New Zealand has the statutory right to seek a declaration as to whether they are an employee. Unlawful characterisation of workers as contractors is also a focus for the Labour Inspectorate.

“Businesses should take a closer look at their arrangements with their workers and what their legal status should be. If unsure, businesses should seek legal advice, as getting this wrong could prove costly,” Mr Lumsden says.

Earlier this year, MBIE consulted on options to better protect workers in vulnerable contracting situations. The consultation closed in February and the Government will report back in due course.

Reference: https://www.employment.govt.nz/about/news-and-updates/contractors-who-believe-theyre-employees-employment-court/

Penny Varley

Payroll Administrator