The above question is an important one, as the answer dictates your rights, obligations and duties towards your workers. If your worker is an employee, then their relationship with your business is governed by New Zealand employment law and their written agreement. However, if they are a contractor, then New Zealand employment laws do not apply to that relationship. If you get the relationship classification wrong, you may be exposing your business to significant liabilities.
Interestingly, our law states that any description of the relationship made by the parties is not determinative.
This means that despite the fact that a worker may have an employment agreement with your business, it does not necessarily mean that the worker is, in fact, an employee.
Determining contractor vs employee:
When determining whether or not a worker is an employee or a contractor, the law identifies that you need to think “about all relevant matters”. As this is a broad requirement, a few considerations are outlined below, to think about when determining whether your worker is an employee or a contractor.
It is important to remember that health and safety laws apply to both employees and contractors. As an employer, you must ensure that the workers who are associated with your business are given the highest of protection against harm to their health and safety. As you will all be aware by now, this includes taking proactive steps to protect your people.
You also need to keep in mind that worker relationships may evolve over time. Just because your worker is a contractor today, doesn’t necessarily mean that the law wouldn’t view them as an employee down the track, if aspects of that relationship were to change. You need to monitor your relationships with your workers to ensure that you don’t expose your business to further liabilities. Some of these liabilities may include:
What to do:
Regularly review worker relationships and classifications and obtain advice whether or not the business has a risk of exposure to liabilities.
Source: Davenports Harbour Lawyers
Contact Andrea McWilliam if you have any queries.