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employment
employment guidance from Lane Neave Lawyers
CONTRACTORS OR EMPLOYEES?
LANE NEAVE LAWYERS’ HANNAH MARTIN LOOKS AT THE PROS AND CONS OF EMPLOYEES VERSUS CONTRACTORS.
Section 6 of the Employment Relations Act 2000 de nes “employee” as any person employed by an employer to do any work for hire or reward under a contract of service. Contractors, on the other hand, are engaged to carry out work for a principal under a contract for service. Surprisingly, arguments as to whether someone is an employee or a contractor are not uncommon.
e distinction is important because employees and contractors have di erent rights under New Zealand’s employment and tax laws. Because of these implications, it is important that employers have a clear understanding as to whether they are employing an employee or engaging a contractor.
While each inquiry in the Employment Relations Authority (Authority) or the Employment Court (Court) will be highly fact- speci c, we have outlined below some factors which the Authority and the Court will consider relevant when determining the true nature of the relationship of a worker providing services to a business.
e factors below are a helpful guide and have been created as a result of the judicial tests of intention, control versus independence, integration, and the economic reality tests that have been developed in this area. However they are not determinative of the nature of the relationship when looked at in isolation. e Authority/Court will look at the relationship as a whole, alongside the intention of the parties (if this can be ascertained) to determine the status of the worker. Ultimately, the Authority/Court will be required to estab- lish the “true nature” of the relationship.
Evidently, the distinction between whether someone is an
employee or contractor is an important one; particularly if an employer thinks they have engaged a contractor but the true nature of the relationship is found to be one of employment. It is important to keep in mind that employees have access to the personal griev- ance provisions of the Employment Relations Act 2000, whereas contractors can only enforce their rights through the ordinary civil courts.
e relationship between an employer and a worker can evolve over time. It is therefore important for a business to regularly evaluate the status of its workers.
■ The Lane Neave team provides free expert advisory services to BCA
members on employment law, health and safety matters, ACC, and immigration. Contact Lane Neave: Phone 0800 Neave1 (0800 632 831)
FACTORS FOR EMPLOYEES
The worker is paid on a salary
There is an employment agreement between the parties
The company can control the work the worker does and how it is done
The company handles the worker PAYE and KiwiSaver
The worker is entitled to leave (such as annual leave, sick leave, bereavement leave, etc).
The company provides equipment (such as tools, uniforms, etc.)
The worker is integral or has been integrated in to the company
FACTORS FOR CONTRACTORS
The parties are in business together
The worker may be offering their services through a company
The company has no control over the work the worker does
The worker pays their own taxes The worker sets their own hours
The worker provides their own equipment
The worker takes financial risk
NEUTRAL FACTORS
The fact that a worker’s email signature states they are an employee of the company
The fact that an employment agreement states the worker is an employee or a contractor
28 CIRCULAR SEPTEMBER 2018
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