ERA Says Lap Dancers are Contractors

Earlier this year, we wrote this article about taxi drivers winning an Employment Relations Authority (ERA) hearing to be classified as employees not contractors. At the time the Labour Inspectorate National Manager said this case was clear evidence of sham contracting and that employers needed to be very clear about the difference between contractors and employees.

Currently, First Union is taking legal action on behalf of courier drivers and will argue they are essentially employees rather than independent contractors.

However, two lap dancers who recently took a claim to be recognised as employees have been confirmed by the Authority as independent contractors and not employees of the Calendar Girls club.

So, how did the taxi drivers differ from the lap dancers?

A key factor that led to the authority's conclusion that the dancers were not employees, was that they were able to choose their own look and choreograph their performance. In this sense they were their own "product".

"On standing back, it is striking that the dancers will earn nothing if they are not favoured by a customer with a tip or a sale. The dancers have to decide what kind of look and performance are likely to earn them the most money," the determination says.

Every dancer has her own set of unique charms which will attract some customers and not others. A dancer may choose to refuse to give a lap dance to a customer, or go with him to the penthouse, or on an outcall. She can also refuse to allow a customer to touch her, and can stipulate where he can and cannot touch her. It is her personal choice with no interference from management. This is the nature of the entertainment and is quite unlike a shop assistant, or a member of restaurant waiting staff, whose job is to sell the goods or services of their employer.

The business model operated by the Calendar Girls club provides an attractive and safe venue in which dancers can ply their profession. This model is not unlike the hairdresser who rents a chair in a hair salon.

The ERA concluded that while the dancers did not consider themselves "businesspeople", the real nature of the relationship is one of independent contractors.

Interestingly, the Authority noted that it had to make a "binary" choice between finding that the women were either contractors or employees, and there was nothing in between.

This highlights the current legal situation in New Zealand whereby employees have significant legal rights, and contractors have very few. Workers who are regarded as employees are entitled to all of the protections set out in the Employment Relations Act 2000, including minimum entitlements such as annual holidays and sick leave, and protection against unjustified termination.

In the case of independent contractors, their rights and entitlements are dependent on what they have agreed with the other party. There are benefits to being a contractor, and often it is financially lucrative with the lap dancers often earning up to $5,000 per week.

This categorical distinction between contractors and employees is being reviewed by the Government who are looking at the situation of workers who fall into a third category – somewhere between contractor and employee.

This group has been described as "dependent contractors" and are typically people who work under the control of a single person or organisation, and who have very little or none of the autonomy enjoyed by an independent contractor.

If you engage contractors, please take the following quick test to check whether those workers are likely to be employees or contractors and feel free to give us a call if you have any queries.