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Employee or Contractor ? A new case.

Earlier this month the Employment Court decided a Courier Driver operating as an Independent Contractor was in fact an employee. This is not a new issue, and there is well established case law setting out the criteria used to determine whether a person is genuinely a contractor. Although this decision made headlines, it was not a surprising decision when considering the relevant facts.

The implications of getting this wrong are significant for an employer. Annual holidays, sick leave, PAYE and KiwiSvaer obligations and minimum wage are just some of the implications, noting wage claims go back 6 years. Getting this wrong can be an expensive mistake.

In this case Mr Leota was a Courier Driver for Parcel Express. He was engaged as an independent contractor and after one year his contract for services was terminated. Mr Leota applied to the Court to be declared an employee and therefore enabling him to raise a personal grievance in relation to the termination.

The essential question the Court considers in a case such as this is “whether the worker serves their own business or someone else’s business”. In this case the Court concluded Mr Leota did not exercise any real autonomy over his work , Parcel Express exercised significant control over his work including what, when, where, how, why and by whom his work could be done. The company looked after Mr Leota’s tax obligations, time off required advance notice and was limited to 20 days per year, and required a relief worker approved by the company.

Mr Leota had limited ability to grow his business, and although the written agreement signed at the beginning of the relationship was clear the relationship was that of a contractor, that was not the day to day reality.

If you have any concerns regarding contractors you engage, please contact us and we can discuss your circumstances and how the Court may view the relationship.

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