Employee vs Contractor – Working Group Recommendations

4 Aug 22

The employee vs contractor debate continues.  The Tripartite Working Group of unions, employers and government has recommended law reform to address the employee/ contractor boundary issue.

Public consultation took place in late 2019 and early 2020 seeking feedback on improving outcomes for:

  • workers who have been misclassified as independent contractors, so have missed out on basic employment rights and protections; and
  • workers who are in the ‘grey zone’ between employee and contractor status, who would be unlikely to be employees if their status were considered by courts, but who are vulnerable to poor working conditions.

The Tripartite Working Group on Better Protections for Contractors (the Working Group) was established following this consultation, and it comprised of representatives from government, BusinessNZ, and the New Zealand Council of Trade Unions.

The Tripartite Working Group was asked to recommend a set of policy changes to improve how regulatory protections apply to working arrangements at the intersection of “employment” and “contracting”.  Its recommendations focus on delineating a clearer boundary between employment relationships and contractor relationships, both in the legislation itself and by making supportive changes to regulatory systems.

The Working Group reported back to the Minister for Workplace Relations and Safety, Michael Wood, in December. It characterised the problem as employers using contracting arrangements to undermine the government’s core labour-market objectives, and made 8 recommendations.

The Working Group Recommendations

  1. Revise the legislative definition of “employee” to include a contradistinction to someone who is genuinely in business on their own account.
  2. Construct more detailed, objective and prescriptive legislative requirements for worker classification.
  3. Prioritise further policy work and consultation to understand the impacts, and manage the risk of unintended consequences.
  4. Consider how business models could transition away from unlawful classification practices in a way that is fair for the people involved.
  5. Provide guidance and support services to support better classification practices by firms in the first instance, reducing reliance on the dispute resolution system.
  6. Allow judicial determinations on employment status to cover other workers performing similar work for the same hiring entity under similar contractual terms.
  7. Explore options that would allow for regulators to intervene without relying on an individual complainant wanting to pursue the matter.
  8. Align the definition of “employee” across employment and tax legislation, allowing for appropriate two-way information sharing between IRD and the employment regulator.

The Working Group propose that as a next step, the Government develop and publicly consult on a policy proposal that is based on those recommendations.  The Anderson Lloyd employment team will provide an update as things progress.

Want to know more?

If you have any questions about the Working Group recommendations, please contact our specialist Employment team.

PDF version: here.

For more information contact:

John Farrow