Employment lawyer decries ACT policy on contractors

The party’s leader David Seymour says recent court decisions will only erode contracting, and make it unviable – though the lawyer, who has taken cases to court over the nature of contractors’ work, also disputes that.

Seymour announced the policy on Thursday morning, saying changes to the definition of “employee” were needed so businesses could continue to hire contractors without needing to provide the same rights and protections as employees.

It followed a case in the Employment Court last year that found Uber drivers were employees, not contractors, and should get protections including minimum wage, sick leave and holiday pay.

Seymour told RNZ the findings were not consistent with a modern economy.

“We understand what the court’s saying, but we also understand that they are obliterating the possibility of being an independent contractor with the flexibility – and, usually, greater pay – that comes with that in return for not having the security and benefits of employment,” he said.

“It will erode and make unviable that option that, you know, 90 percent of people according to Statistic New Zealand are very happy with their contracting arrangements.

“We believe that distinction should continue to exist and should evolve for a modern economy.”

However, Workplace Relations and Safety Minister Carmel Sepuloni – who was thrust into the job just the day prior after the resignation of Michael Wood – said the policy was really an attempt to undermine the rights of workers.

“It’s pretty typical of ACT, another opportunity to undermine the rights of workers. It would put vulnerable workers in a more vulnerable position. Of course we don’t support that, but it is so typical of the ACT Party,” she said.

“I think they’re trying to undermine the rights of workers which they have done over a long period of time and they continue to do.”

Seymour, however, argued ACT’s policy did put safeguards around contractors, such as banning clauses which would not allow contractors to work for competitors outside of the period of the contract, and guaranteeing compliance with minimum entitlements – with associated record-keeping.

“The contracting that we envisage does have to be authentic,” he said. “But it certainly can’t be struck off and turned into an employment relationship on the kinds of grounds that the courts have used in the Uber case – such as, quoting the court – ‘the wider social purpose of employment’. That, frankly, is a nonsense.”

Employment lawyer Garry Pollak – who has fought cases on behalf of disgruntled workers seeking a finding they are in fact employees – argued that such cases would not affect the ability to hire contractors.

“Any business can contract with any other business – it’s always been provided for,” he said. “The cases that are coming to court are where the workers are not conducting any sort of business, they’re just providing their labour, and in those circumstances New Zealand – like any other jurisdiction – determines that they are in fact employees.”

“In recent years the number of these contractors has exploded exponentially, but the reason for that is because businesses want to avoid employment obligations.

“The employers fight so strenuously over them because they’ve created a fiction that commercially suits them and they don’t want to give it up. It’s all about avoiding employment rights and unions, that’s what it is. That’s the sole reason for it.”

The section of the law ACT wanted to amend was merely a safeguard provision aimed at ensuring courts had the power to determine whether a worker was a contractor or an employee, regardless of whatever label the business employing their services was, he said.

“It still doesn’t stop a business properly contracting to another business – the law has always provided for that – but the other business must be a genuine business rather than just a creation, a legal creation, a legal fiction.”

If ACT’s policy was enacted, those businesses relying on so-called contractors would only become emboldened to further exploitation, Pollak said.

“That is a completely predictable outcome, what it means is that employers will suddenly say ‘well if I agree to this person signing this bit of paper will call themselves a contractor, and then there’s no holiday pay … don’t have to consider maternity leave, there’s no redundancy and if I’m not happy with them I just terminate the contract.

“It will result in a considerable injustice to a large number of workers in New Zealand and I don’t think the ACT policy has been thought out, and certainly there’s been no real discussion about the consideration of what a policy like this would do.

ACT’s proposal also ignored the government’s joint working paper developed with Business New Zealand and the Council of Trade Unions which aimed to give effect to the court decisions and provide equity and fairness for those workers caught out, Pollak said.

However, the government put that idea on hold as part of its ‘policy bonfire’ to refocus the government’s efforts on the cost of living. Prime Minister Chris Hipkins at the time said he wanted to wait until all the related cases had been heard.

Business NZ in a statement on Thursday also threw its support behind ACT’s plan with advocacy director Catherine Beard saying the matter was a significant concern for the business community.

“Changes in employment practice resulting from flexible working routines and new technologies including app-based contracting mean a better legislative distinction between contracting and employing is needed,” she said.

“This is an area where employment law is significantly lagging behind employment practice.”

Seymour argued it would be up to the voters to decide.

“We understand the government’s respect for the courts and we respect the courts too – we also note that there’s an election coming on and I think voters have some rights to choose some options as well. We’re not going to suspend the democratic process because there’s a case before the courts.”