Govt steps in to protect contractors

The line between contractors and employees is becoming blurred as often contractors do the same work as employees, and work alongside them. Pic Getty.

Having one of the highest employment rates in the OECD comes with problems, says Workplace Relations and Safety Minister Iain Lees-Galloway.

"Changes made to our labour market in the 1990s in the name of market flexibility have resulted in structural problems and left too many hard-working New Zealanders struggling to make ends meet," he writes in the Ministry of Business, Innovation and Employment (MBIE) discussion document Better protections for contractors. MBIE is asking for feedback from contractors by February 14.

Any submissions and survey responses — which can be sent in anonymously — will be used to inform MBIE's policy development process, including advice to the minister for final options for change. The minister may then seek Cabinet's agreement to his preferred options.

Employees are entitled to be paid the minimum wage, receive leave entitlements and are able to take a personal grievance against their employer, but independent contractors have no such protections, with most contractors only governed by their employment contract. As the gig economy ramps up, the line between contractors and employees is becoming blurred. Many contractors do the same work as employees — often working alongside them without any of the rights or benefits afforded their colleagues.

The discussion document, released last November, follows the announcement of a new employment model for screenworkers by the minister back in June (that will take effect mid-2020).

Lees-Galloway believes though some of the employment changes have been useful for GDP growth, they also increased inequality by removing the checks and balances that were needed to ensure all workers had the tools to support their wellbeing in the labour market.

"Some contractors, particularly dependent contractors, are vulnerable in the workplace," he says.

"For example, employees who are labelled as 'independent contractors' by their employers miss out on their basic employment rights. Workers who are caught in the grey zone between employee and contractor status are also vulnerable."

The minister has heard of stories of contractors who work long hours, in some cases 80 hours a week, and others who receive an income which works out to be less than the minimum wage once their hours are taken into account. Further, some workers are finding themselves dependent on one employer for all their income, with no flexibility or power to negotiate better conditions.

"In some cases, workers are completely unaware they have been engaged as contractors and not employees. These workers are surprised with tax and ACC bills at the end of the financial year, which they cannot afford. This Government is committed to taking action to ensure that businesses treat contractors fairly."

He says that countries around the world are taking bold steps to ensure the benefits of innovation and growth do not come at the expense of workers' pay and conditions.

The CTU welcome the discussion document but believes any change should ensure working people who are employees are not incorrectly engaged as contractors — and that genuine contractors have the ability to collectively bargain through unions and include contractors in the coverage of Fair Pay Agreements. They also oppose any moves to create a new legal category between contractor and employer.

"Contractors must not be treated as the poor cousin of employees," says CTU secretary Melissa Ansell-Bridges.

She says dependent contracting is now common in the cleaning, fast food, transport and IT industries.

Contractors can have their contract cancelled with little or no notice (unlike employees) and many find it harder to ask for better conditions.

"Working people are pleased that the Government is taking active steps to address how independent contractors are protected.

"We encourage anyone who has worked, is currently working as a contractor, or who has a close personal connection to someone working as a contractor, to share their experiences with the decision makers. We know that people working as contractors are often extremely vulnerable to the whim of their employer. All working people need to have some stability, some certainty to plan their lives."

The road to fairness

Government seeks feedback from contractors by February 14

Aim is to improve the rights of contractors

Info on how to make submissions can be found at https://www.mbie.govt.nz/have-your-say/better-protections-for-contractors/