The plan includes beginning public consultation on reform of the Holidays Act and deciding, at a cabinet level, on legislative amendments to clarify the employment status of contractors.
Contractor Status
The proposed contractor law reform is driven by Act New Zealand.
Act is proposing to amend the Employment Relations Act to exclude independent contractors from the definition of ‘‘employee’’ so that contractors who have explicitly signed up for a contracting arrangement cannot challenge their employment status in the Employment Court.
Act proposed that contracts would have to meet certain minimum standards that protected workers’ freedom to contract.
These include:
• A written agreement specifying that the worker is an independent contractor without access to full employment rights.
• Workers must be given sufficient information and an adequate opportunity to seek advice before entering into the contract.
• Agreements must not restrict a worker from performing services or work for other businesses, including competitors except when the worker is engaged in a specified task for the business it is contracted to.
• The business cannot terminate the contract for not accepting a specified task.
• And the business must keep records and sufficient detail to demonstrate compliance with minimum entitlement provisions.
Act stated that if a contractor believed the terms and conditions of their contract were unfair then action would be taken under the Fair Trading Act.
Act has also stated that if the business had not satisfied the basic conditions, the worker could challenge their employment status under the Employment Relations Act.
This claim seems at odds with the intention to prevent contractors from challenging their employment status in the Employment Court.
In fact, if they are clearly contractors then the Employment Relations Authority will not have jurisdiction to determine whether or not there has been a breach of their basic conditions.
Act stated that it believed these reforms would give greater certainty to workers and businesses, that they entered a contracting relationship.
That it would give businesses the confidence to offer better benefits to contractors without risking the Court’s ruling that they are actually employees.
Ministry for Business, Innovation and Employment (MBIE) has called for feedback on potential changes, indicating that the Government wished to put more weight on the intention of the parties involved.
The Workplace Relations Minister Brooke van Velden plans to meet with Uber, which commentators noted was interesting timing.
Uber has recently taken a ruling of the Employment Court on appeal to the Court of Appeal.
The Court of Appeal is yet to deliver its decision.
In the Employment Court, the Chief Judge found that four drivers were Uber employees, not independent contractors.
First Union spokeswoman, Anita Rosentreter stated ‘‘I would hope that if the Minister was meeting with Uber that they would also extend an invitation to us as well, to speak to the Union that is representing Uber’s drivers to get that very crucial other perspective’’.
In summary, the Union’s perspective is that the Uber drivers are people who have been miscategorized as contractors and have been missing their fundamental rights.
Holidays Act
Again, Minister van Velden signalled the government’s commitment change the Holidays Act to increase certainty and reduce complexity.
Targeted consultation with MBIE and key stakeholders is scheduled for September this year to consult on the draft Bill.
Rather optimistically, it is hoped that by December this year there may be new legislation.
The key changes which have been signalled include:
• A move to a weeks-based accrual system. The entitlement to leave would accrue continuously during employment. This approach is used in other countries and is intended to improve payroll compliance. It will allow for one payment calculation for annual leave when employment ends.
• A new methodology for determining use of annual leave. This is to provide certainty for all working arrangements.
• A new ‘‘greater of three’’ methodology for annual leave calculations which provides greater clarity around what is included. The three methods are ‘‘ordinary weekly leave pay’’, ‘‘quarterly earnings’’ and ‘‘annual average weekly earnings’’.
• A new definition of ‘‘gross earnings’’ to provide clarity around what is included.
• Simplifying the framework for paying annual leave as a regular part of an employee’s pay ‘‘pay as you go’’. This framework will include objective criteria.
• Family violence, sick and bereavement leave to be accessible from the commencement of employment on a staged basis (two days on the first day of employment; a further four days after three months and a further four days at six months).
• Eligibility to take bereavement leave for three days to be expanded to more family members.
• The ability to take part-days of family violence, sick and bereavement leave, rather than whole days.
• FBAPS Leave (family violence, bereavement leave, alternative holidays, public holidays and sick leave) to be calculated by way of a base rate for wages/salary and fixed allowances, plus an average of productivity or incentive payments;
• A new prescriptive ‘‘otherwise working day’’ test for all leave types and working arrangements.
• A requirement to provide a pay statement in each pay period to provide greater transparency on leave and pay for employees.
The previous government formed a task force to review the Holidays Act. That task force made 22 recommendations jointly set by business leaders and unions.
It was anticipated that new legislation would come into force in early 2023 however, due to a change of government, that did not happen.
Minister van Velden stated that the advice she received led her to the conclusion that there were further opportunities to improve the simplicity and workability of the legislation.
‘‘As a consequence, we now have a commitment to make changes that increase certainty and reduce complexity.’’
Whether or not the proposed changes achieve this remained to be seen.
Even if the tight timeframe for legislative change is achieved, the vast majority of changes will have an 18-month implementation lead-in time.
By that time we may even have another change of government.
Given the state of the current legislation, there is a strong argument for a multi-party approach to remedying it.
• The opinions expressed in this article are those of the writer and do not purport to be specific legal or professional advice. John Farrow is a partner with Anderson Lloyd, specialising in employment law.
