Coming into the holiday season those independent contractors or on labour hire agreements will be feeling the pinch.
Independent contractors are not employees. As such they are not entitled to any of the same benefits offered to employees. Shine Lawyers are concerned about employers who use these arrangements as a way to undermine workers conditions and pay. In particular without any leave or holiday entitlements what happens to those families over Christmas?
In New Zealand, there is a growing prevalence of alternative employment arrangements. These commonly involve an intermediary between the employee and the employer. First Union has indicated that they represent over 2500 workers on Labour Hire contracts. A Labour Hire contract is where a person is paid by a labour-hire business to perform work or services directly for clients of that business, instead of performing work or services for the business itself.
However, these arrangements are not limited to the construction industry. Hayes, a white collar recruitment firm, says that 30% of New Zealand’s workforce is now a temp, contractor or freelancer. Many commentators have indicated that the move to the ‘gig economy’ will only increase the use of these type of agreements. So what does this mean for workers rights?
The Government has seen this trend and is trying to address it through the Employment Relations (Triangular Employment) Amendment Bill. This bill will attempt to allow employees an avenue of redress against a ‘primary’ and ‘secondary’ employer. Thus allowing them to pursue the end user employer as well as the party they are directly contracted to.
This bill appears to have been in the pipeline since 2007. In the intervening period both the use of temporary workers and the fundamental nature of the “employment relationship” has changed. We do not believe that the bill in its current form meets the needs of the changing workplace.
One of the major criticisms about the bill is that it does not do enough to address the underlying incentives for employers to exploit the current system. Our concern is that these type of arrangements keep workers in poverty. The 2018 University of Auckland study found that workers on temporary work arrangements became trapped. It found that once in this type of alternative employment the worker is unlikely to transition to full-time work.
Our courts have looked at this issue and determined in the worker's favour. In LSG Sky Chefs the court found that the workers, under a triangular arrangement, were not independent contractors and were in fact employees of the end-user LSG Sky Chefs (Prasad v LSG Sky Chefs New Zealand Ltd [2017] NZEmpC 150).
So we are left asking why are these arrangements still happening?
We believe that employers are deliberately disguising an employment relationship as an independent contracting agreement – so-called sham contracting.
Shine Lawyers in Australia has recently launched a class action, based on a sham contractor arrangement, against a company involved in the National Broadband Network. This has the potential to involve up to 4,000 employees and is claiming up to $400 million in unpaid wages.
The New Zealand Employment Relations Authority have stated they’re ready to take a firm stance on sham contracting and are willing to prosecute those employers in breach.
One of the effects of the change in government is that it has brought workers’ rights to public attention. We believe that this will be the catalyst in 2019 for a rapid increase in the scrutiny of labour hire and sham contractor agreements.