A recent Employment Court decision confirms the importance of documenting whether the working relationship is one of employee or contractor. It also demonstrates that the coalition Government’s proposed changes to these laws will not necessarily make it easier to clarify whether a worker is an employee or a contractor. Workplace Relations and Safety Minister Brooke van Velden, last year when she outlined changes to the law, said it would "maintain the status quo that contractors who have explicitly signed up for a contracting arrangement cannot challenge their employment status in the Employment Court".

In the case, Craig Brown claimed that he was employed as Chief Financial Officer of The Clinician Holdings Ltd (TCHL) when the company no longer required his services.

TCHL first started contracting Mr Brown’s services through his consultancy company Surestart Consulting Ltd. Surestart had a regular stable of clients and its fee revenue averaged about $350,000 each year. Surestart also engaged a sub-contractor to assist with servicing Surestart’s clients, including TCHL. This arrangement was confirmed in writing with TCHL in an independent contractor agreement.

In late 2021 TCHL wanted Mr Brown to become its full-time CFO at a lower hourly rate than the rate he currently charged though his company Surestart. After a series of communications between Mr Brown and the CEO of TCHL (Ron Tenebaum) a verbal agreement was reached that Mr Brown would work for TCHL on a full-time basis from 1 June 2022. Mr Tenebaum and Mr Brown also discussed him owning shares in TCHL to complement his remuneration. This new arrangement was never documented, despite repeated references to this in emails.

From May 2022 Mr Brown began informing Surestart’s clients of his decision to move to new full-time employment at TCHL and that he would no longer be able to provide CFO services to them. And when the new arrangement started from 1 June 2022 Mr Brown was paid an hourly rate based on a salary of $200,000 (although still through invoices) and was able to take paid annual holidays and sick leave. There were also further discussions over the ensuing weeks regarding an offer of shares to Mr Brown.

In January 2023 TCHL made alternative arrangements with another CFO provider. Mr Tenenbaum then met with Mr Brown on 1 March 2023 to advise him that TCHL would be terminating their agreement at the end of the month. 

TCHL and Mr Brown agreed that Mr Brown would work for THCL on a full-time basis from 1 June 2022. However, they disputed the nature of the working relationship; Mr Brown contending he was an employee, with TCHL asserting that the independent contractor arrangement continued with Surestart with Mr Brown continuing as an independent contractor but on a full-time basis.

Judge King found that there was a clear break from the original contracting arrangement. From 1 June 2022 Mr Brown started his full-time role on new terms. The Judge referred to the original independent contractor agreement which had a typical clause providing that any variations to the agreement had to be in writing. She said that an oral variation would be a clear breach of that clause.

Having concluded that there was a new verbal agreement, the Judge then proceeded to apply the applicable common law tests (the control, the integration and the fundamental tests) to decide if Mr Brown was an employee or not. She also applied the new two stage approach set out in the latest Uber case judgment in the Court of Appeal on the employee/contractor issue. The Judge concluded that all those tests indicated that Mr Brown was in an employment relationship.

When the Employment Court determined in the Uber case in 2022 that the drivers of Uber workers were employees the Chief Judge commented that “employment status is the gate through which a worker must pass before they can access a suite of legislative minimum employment entitlements, such as the minimum wage, minimum hours of work, rest and meal breaks, holidays, parental leave, domestic violence leave, bereavement leave and the ability to pursue a personal grievance.” Contractors enjoy no such protections.

The use of contractors has been a common tool to drive down costs. In this case it has backfired badly. The agreement to work longer hours and the agreement to reduce the hourly rate all supported a new verbal agreement that was not documented in writing as required by the contractor agreement.

Fortunately for Mr Brown, either as an employee or contractor, he was earning a good hourly rate of $150 for his full-time work (but down from $300ph for his part-time work). Many workers do not enjoy that type of bargaining power.

The Workplace Relations and Safety Minister Brooke van Velden’s proposed changes to employee/contractor laws, she says, will make it easier to clarify whether a worker is an employee or a contractor. Judges and lawyers love to have agreements that are set out clearly in writing. Unfortunately, in practice this is not often the case. It seems unlikely that the proposed law changes are likely provide any more certainty. Read more...

Businesses like to control information, particularly if it is likely to negatively their business or reputation. Information, or lack of information, provides a means to control the narrative. Employers are willing to fight for the protection or control of that information in many forums. There have been some high profile examples in the media lately.

Food giant Talley’s is suing TVNZ for defamation over a series of 1News reports in 2021 based on information, including photographs, provided by whistleblowers on health and safety issues, which Talley’s strongly denies. As part of those proceedings Talley’s lawyers argued that to get a fair trial they needed to know who the whistleblowers were so they could test their credibility and whether it was responsible for 1News to rely on those sources. In his recent ruling, Justice Andrew said “I decline to require the defendants [TVNZ] to reconsider the claim of confidentiality, to order inspection for the Court, to set aside confidentiality, or to strike out the responsible publication defence.”

A recently published best-selling book by New Zealand author Sarah Wyn-Williams has been scathing about Facebook parent company Meta, where she used to work. Her claims include being sexually harassed by longtime company executive Joel Kaplan and Meta exploring the possibility of breaking into the lucrative Chinese market by appeasing government censors there. An arbitration court granted Meta's request to bar Wynn-Williams from promoting the book or making derogatory statements about the company based on a non-disparagement contract signed by Wynn-Williams when she worked with the company's global affairs team.

The Public Service watchdog says it is time to consider tougher penalties for government departments that break the rules laid out in the Official Information Act. Retiring Chief Ombudsman, Peter Boshier, has called the fines for breaches of the Act "laughable" and has suggested agency chief executives be held personally responsible for breaches.

In particular, the Chief Ombudsman publicly reprimanded Health NZ Te Whatu Ora. In his report he found Health NZ had created its own process "contrary to law", through its practice of telling information requesters it had made a decision - without saying what the decision was - at a point when an official information request was already overdue. The law gives government agencies 20 working days to respond unless they can justifiably claim one of several legislated-for reasons. He said a common reason given is that an agency needs to consult more or that the information sought will be released soon anyway (which the Ombudsman says in practice can actually take place months later when an issue is no longer in the public mind).

The Chief Ombudsman said these things needed to be done in a quick and timely manner, "people have the right to make those decision-makers that affect them accountable, they've also got the right to participate in democracy."

The provision of relevant information helps address the inherent power imbalance in employment relations. The duty of “good faith” is wide but it explicitly provides an obligation on an employer to provide relevant information to an employee when it is considering a decision that will, or is likely to, have an adverse effect on the continuation of employment of an employee. If that information is not provided, it enables an employee to claim that any decision is not justifiable.

What is “relevant” sometimes becomes an issue. Perhaps the most well-known case involved a restructure at Massey University. Two senior lecturers whose positions were disestablished applied for new positions at Massey. They were unsuccessful and sought access to documentation created during the selection process including, amongst other things, the selection panel’s notes (including scoring sheets) and information relating to other candidates. This created two fundamental problems for Massey. The first was that it had told the selection panel that it considered the process confidential so that they could be “open” with their opinions. The second was that a portion of the information requested had not been recorded in writing. Massey refused to provide the information on the basis that it simply did not exist, and/or that it was confidential.

The Employment Court rejected those arguments and commented “when a business is restructured, the employer will, in most cases, have almost total power over the outcome. To the extent that affected employees may influence the employer’s final decision, they can do so only if they have knowledge and understanding of the relevant issues and a real opportunity to express their thoughts about the issues… knowledge is the key to giving employees some measure of power to reduce the otherwise overwhelming inequality of power in favour of the employer”.

The Employment Court comment is widely applicable. Information, or misinformation, affects ordinary people, and their ability to influence decisions that will affect them and their families. Read more...

Is the National Party jumping on another conservative right-wing bandwagon, like its stance on the Treaty Principles Bill? Last week the Prime Minister, Christopher Luxon,  said he was open to considering NZ First's ideas in its “anti-woke” agenda.

NZ First last week proposed new legislation which it said would end "woke left-wing social engineering and diversity targets" in the public sector. Leader Winston Peters said the bill was needed because “New Zealand is a country founded on meritocracy, not on some mind-numbingly stupid ideology.”

New Zealand does not have to look too far back in its proud history of promoting equality for women to see far how far we have come. In a world first in 1893 adult women were given the right to vote. In other democracies, women did not begin to gain the right to vote until after the First World War.

New Zealand women still had a long way to go to achieve political equality. Women were not able to stand for Parliament until 1919, but it still took a while before the first woman was elected a Member of Parliament in 1933. There have been many other firsts for women in Parliament, including Iriaka Rātana becoming the first wāhine Māori MP in 1949, Jenny Shipley becoming New Zealand’s first woman Prime Minister in 1997, and Georgina Beyer became the first openly transgender MP in the world in 1999. Surely NZ First, and maybe Mr Luxon, are not saying that those women were in Parliament because of enabling legislation and not on merit?

New Zealand also does not have to look too far back in its history of supporting equality in the LGBT+ community to recognise how far we have come. Takatāpui or same-sex relationships and activities were largely accepted amongst pre-colonial Māori society. European attitudes at that time viewed sex between men as 'unnatural' and a breach of moral and Christian codes. Even as recently as the 1940’s and 1950’s men found guilty of sodomy could still be flogged or whipped, and serve their term of imprisonment with hard labour. The Crimes Act 1961 removed the potential term of life imprisonment for sodomy, but all legal sanctions against homosexual activity remained.

The Homosexual Law Reform Act was passed in 1986 and finally decriminalised sexual relations between men aged over 16 and it was not until the Human Rights Act was passed in 1993 that it became illegal in New Zealand to discriminate on the grounds of sexual orientation. The Human Rights Act also makes it unlawful to discriminate on the grounds of sex, marital status, religious belief, ethical belief, colour, race, ethnic or national origin, disability, age, political opinion, employment status, family status and sexual orientation. Most New Zealanders would have no problem with the protections and support that this provides some of our more vulnerable communities.

NZ First is proposing through its Public Works Act (Repeal of Diversity and Inclusiveness Requirements) Bill to scrap what it says are the requirement that public service employers ensure their workforces reflect societal diversity, remove mandates promoting diversity and inclusiveness in public service workplaces, and end the public service’s consideration of “workforce diversity and inclusiveness”.

It is hard to understand what NZ First is trying to achieve. Section 72 of the Public Works Act clearly requires public service employers to give preference to the person who is best suited to the position. This is reinforced in section 73 which provides that a “good employer” is an employer who operates an employment policy containing provisions generally accepted as necessary for the fair and proper treatment of employees in all aspects of their employment, “including for the impartial selection of suitably qualified people for appointment (except in the case of ministerial staff)”.

Perhaps Mr Peters takes issue with section 75 of the Act, which provides that a public service employer must be guided by the principle that public service employers should reflect the makeup of society; and have employment policies and practices that foster a workplace that is inclusive of all groups? Which groups does Mr Peters think are not worthy of being included?

The Labour Leader, Chris Hipkins, quickly came out and said NZ First’s idea was “ridiculous, frankly”. “We have a Public Service Act that requires the public service to reflect New Zealand and New Zealanders. I passed that, and I am very proud of it. I think Winston Peters is just basically trying to take a leaf out of Donald Trump’s book.” He said Trump’s values are not consistent with those of most New Zealanders.

There is every reason to protect hard won reforms that enable and support an inclusive society where discrimination in its many forms is not tolerated, particularly in employment. It is clear that New Zealand’s public service is required to appoint a person on merit. A workplace should not be a place where discrimination is politically supported. Read more....

Workers should feel threatened. The National led government is planning to continue its programme of reducing employment protections for workers this year. It follows a direction by the government last year of requiring public service departments to identify savings of between 6.5 to 7.5 percent. Workers bore the brunt of those cuts.

It would seem that the new Trump administration is following a similar approach. On becoming President, Donald Trump set up a new advisory body creatively named the Department of Government Efficiency (DOGE) tasked with cutting US government jobs and other spending. It seems to be fronted by the world's richest man, Elon Musk, as he seeks to weed out what he considers to be taxpayers' money being wasted.

It is understood that almost all federal employees were offered a “deferred resignation” proposal in exchange for financial incentives, such as months of paid leave, for employees who chose to leave their jobs in February. Although this was then stopped by a federal judge, the Office of Personnel Management confirmed that about 75,000 federal employees had already accepted the offer.

There have also been wide-ranging layoffs of almost all probationary employees (those generally in their job for less than a year). According to the Office of Personnel Management about 220,000 federal employees had been in their job less than a year.

More recently, federal government employees have been receiving emails, sent from the Office of Personnel Management asking employees to send approximately five bullet points listing what they accomplished during the week, and to copy in their managers. The email requested that employees not send any classified information, links or attachments and to respond by a deadline.

On social media platform X owned by Musk, he wrote “Consistent with President @realDonaldTrump’s instructions, all federal employees will shortly receive an email requesting to understand what they got done last week. Failure to respond will be taken as a resignation.” Finally, a few hours before the midnight deadline, the Office of Personnel Management confirmed that federal workers would not be fired if they did not respond.

RNZ calculates that 9520 roles have been cut from the New Zealand public service (based on figures from statement released by Ministries and the PSA). Some of those job cuts have been from roles that had not been filled.

In addition to those job cuts, last year the government reintroduced a trial period for all employers enabling them to dismiss a worker within 90 days for no reason, without the worker being able to challenge that dismissal. It also proposed a new “gateway” test which will enable employers to classify workers as “contractors” more easily. Those “contractors” will not be able to exercise minimum entitlements such as the minimum wage, holiday pay and employment protections such the ability to bring personal grievance claims and the labour inspectorate.

So what are workers in New Zealand likely to face this year? Just before Christmas the Minister for Workplace Relations and Safety, Brooke van Velden, announced that more major announcements were likely and that she expects to progress an Employment Relations Amendment Bill early this year. The Minister revealed some of the changes we should expect to be included in this Bill, including:

• Removing the unjustified dismissal protections for employees with a yearly salary exceeding $180,000. Although “high income” earners will now be able to be dismissed “at will” (for no reason) they will be pleased to know that this figure excludes benefits (such as a car or health insurance) or incentives (such as bonuses). Maybe they should negotiate mortgage protection insurance as part of their benefits package should they lose their job for no reason.
• Changes to how the Employment Relations Authority assesses contribution (how much the employee may have contributed to their dismissal). These include removing eligibility for any remedies where an employee’s behaviour amounts to serious misconduct; removing the remedies of reinstatement and compensation for hurt and humiliation where the employee has contributed to the grievance; and requiring an assessment on whether an employee’s behaviour obstructed the employers ability to meet their obligations (whatever that may mean).

The reality is that the Employment Relations Authority already does a pretty good job of assessing any contribution an employee may have made to their dismissal in assessing appropriate remedies.

One could argue that the government’s attack on workers rights and protections is largely symbolic and designed to please their voter base. Or one could argue that it is an attack on those most vulnerable in New Zealand’s workforce, and designed to please the government’s voter base. Oh dear, business likes certainty! What is certain is that like Trump the Minister is creating uncertainty, and like Trump lawsuits will follow. Read more....