As part of the Government’s drive to cut costs, it has made much of the large contract awarded to multi-national company Compass which leads a consortium to provide cheaper school lunches.
Likewise, multi-national company Uber has been allowed to appeal the Court of Appeal decision confirming an Employment Court declaration that Uber workers are employees. Whatever, the outcome of that appeal the law in New Zealand relating to contractors is likely to have a significant “shake-up”. It is on the National lead government’s agenda this year.
The cost savings made by the Government in the school lunch programme has come at a huge cost to the many vulnerable employees the programme has employed, particularly in smaller rural communities. New Zealand has recognised for years now that further legal protection is needed for particularly vulnerable workers. These workers are often employed in industries such as cleaning or catering where restructuring situations are frequent, usually with the intention of driving down costs and undermining workers terms and conditions.
These “vulnerable employees” are meant to have the right to elect to transfer to the new contract holder on their existing terms and conditions of employment (preventing the new contract holder cutting pay rates and other terms of employment). If the new contract holder then decides to make the “vulnerable employees” redundant it is obliged to honour the vulnerable employees contractual entitlements to their redundancy entitlements, such as notice. If there is no provision for redundancy compensation, the new contract holder is obliged to negotiate in good faith with vulnerable employees.
Until Associate Education Minister Seymour announced that Compass would take over much of the school lunch contract, existing suppliers to the programme were unaware that their contracts were up for tender and were not able to retender for their contracts or give their vulnerable workers advanced warning that their jobs would likely be lost. It is understood that approximately 2,000 employees have now lost their jobs.
Even worse, just prior to Christmas, members of the Compass consortium finally began consulting with the vulnerable employees, providing them with only a few working days notice (given public holidays and Christmas closures) before so called “final decisions” were made on whether they would have jobs when the new school terms commenced again. Most were made redundant.
It is also understood that despite the legal obligation to bargain in good faith for redundancy compensation in situations like this, the Ministry of Education has made no provision for redundancy entitlements for vulnerable workers in the contract awarded to the Compass consortium. It is understood that no redundancy compensation is being offered by Compass. Despite Official Information requests being made, the Ministry is still not providing details of the contract awarded to the Compass consortium.
The use of contractors has also been a common tool to drive down costs. Following the Court of Appeal decision last year that the Uber contractors were in fact employees Workplace Relations and Safety Minister Brooke van Velden last year outlined changes to the law she says will make it easier to clarify whether a worker is an employee or a contractor. She explained that the changes were part of the National and ACT coalition agreement where it agreed that the parties 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".
This approach harks back to the National government approach when the Employment Contracts Act was enacted in the 1990s. The leading case on the issue concerned the legal status of a courier driver whose contract gave the company extensive control over his operations; but he was obliged to provide a company branded vehicle, he was responsible for his insurances and other associated costs and he was remunerated on a “per trip” basis. The Court of Appeal concluded that the courier was a contractor because his contract said so.
Now the Employment Relations Act requires the Court to consider “the real nature of the relationship” in determining whether a worker is an employee or a contractor. In doing so, the Court must consider “all relevant matters, including any matters that indicate the intention of the persons” and “not to treat as a determining matter any statement by the persons that describes the nature of their relationship”. Put more simply, a statement that the worker is a contractor is not enough to determine the issue.
Until the Uber cases, our most notable court decision on the employee/contractor issue is Bryson v Three Foot Six. Mr Bryson was a model maker and was fully integrated into the workings of the film production. The Supreme Court finally concluded that Mr Bryson was an employee. Famously, the John Key lead National Government then changed the outcome of the Bryson decision for the film industry by enacting the so-called Hobbit law - effectively making workers in that industry contractors.
When the Employment Court determined that the Uber workers were employees in 2022, 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.
Last year changes to employment law in Australia came into effect that enable the Fair Work Commission to provide platform or gig economy drivers, food delivery riders and parcel couriers with minimum employment standards; including superannuation, personal injury insurance and a safety net on pay. Likewise, the UK provides protection to some minimum entitlements for a third class of worker – “dependent contractors”.
Unfortunately, the governments planned changes on the employee/contractor issue are likely to further close the gate on vulnerable workers and deny them access to minimum employment entitlements. The industries that employ workers that are vulnerable are likely, like Uber, to simply label their workers “contractors”. Read more....