EMPLOYMENT LAW – CASE REVIEW DAVID BURTON
Independent contractor or employee? There have recently been some interesting and potentially far-reaching Employment Court cases on the question of whether a worker is an independent contractor or an employee. David Burton, from Cullen Law, talks us through the details.
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ection 6 of the Employment Relations Act 2000 says that the “real nature of the relationship” determines whether a worker is an employee. In considering what the “real nature of the relationship” is, the Court must consider all relevant matters, including any matters that indicate the intention of the person. This section has had a good workout in recent times, including a finding in July that a builder taken on as a contractor was in fact an employee. In a significant case last year, the Employment Court found that a courier driver had been an employee and was not, as claimed by his employer, Parcel Express, his “own boss”.
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HUMAN RESOURCES
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Head and Others v Inland Revenue and Madison Recruitment
Another recent Employment Court case has put a further twist on this. Mr Head and seven others challenged their working relationship at Inland Revenue after being placed there by their employer – Madison Recruitment Ltd. For about the past 12 years, Inland Revenue has used labour hire companies to engage workers on a temporary basis. Such workers are used to manage workflow and customer demand peaks through Inland Revenue’s annual tax cycles. Inland Revenue awarded a contract to Madison to provide temporary workers for a new business group that would help customers with their tax arrangements and compliance issues. Several documents were relevant to the arrangement. Madison’s Terms of Engagement with Inland Revenue were approved by the Ministry of Business, Innovation and Employment (MBIE) through the All of Government tendering system. A Master Service Agreement (MSA) was signed between Inland Revenue and Madison. Statements of Work (SoWs) were produced by Inland Revenue that outlined
the scope of assignments to be performed by workers engaged by Madison for Inland Revenue work. Other documents described the way in which people introduced by Madison to Inland Revenue would be managed: Standard Operating Procedures and Managing Madison Employees. In the course of an engagement, each person would be provided with a proposed individual employment agreement (IEA) where the parties were Madison and the worker, a job brief on Madison letterhead that described the nature of the relationship between the parties and the terms and conditions under which the worker would be employed, a job description prepared by Inland Revenue, and a copy of Inland Revenue’s Code of Conduct.
Triangular arrangements
The Employment Court concluded that, on the face of the documents, there were triangular arrangements between these parties. There was an overarching commercial agreement between Inland Revenue and Madison. Separately, the workers signed documents that acknowledged Madison as their employer. On the basis of the documents, the Court said Madison was the workers’ employer and not Inland Revenue.
