LEGAL LINES – Employee or contractor?

5 MinutesBy NZ Trucking magazineAugust 5, 2020

A recent Employment Court ruling that a courier driver has been declared an employee is likely to have huge ramifications across the entire industry.

Courier drivers will be rejoicing thanks to the decision taken by chief Employment Court judge Christina Inglis in Leota v Parcel Express [2020] NZEmpC 61. Workers regularly sign agreements that class them as contractors, meaning that they have few of the rights of employees. This judgment is a timely reminder that just because a worker is labelled an independent contractor does not mean that they actually are.

Test case
Judge Inglis said that employee status is an important issue as it provides gateway access to a range of statutory entitlements. In Mike Leota‘s case, the judge was satisfied that the real nature of the relationship between him and Parcel Express (‘the company‘) was an employment relationship, even though Leota had signed an agreement that referred to him as an independent contractor. Although the judge has been clear that her decision relates specifically to Leota‘s circumstances, many lawyers are viewing it more broadly because it is hoped that the decision will make it easier for anyone who considers that they are being unfairly categorised as an independent contractor to seek legal redress.

What makes you an employee?
Section 6 of the Employment Relations Act 2000 (‘the Act‘) addresses the meaning of the word employee but the definitions of ‘contractor‘ and ‘employee‘ in relation to courier drivers had not been tested until now. Leota had to purchase his own van and pay to have it signwritten. He had to use a route determined by the company, take no more than 20 days holiday a year, and it was his responsibility to organise a relief driver if he wanted a holiday. At the hearing, Parcel Express argued that Leota signed an agreement as an independent contractor with ‘eyes wide open‘. The judge disagreed and noted that English was Leota‘s second language and she was left with little doubt that he did not have a grasp of the legal requirements relating to that status. In making her decision, the judge noted that this case does not mean all courier drivers in New Zealand are employees. Rather, that in this case there were aspects of the agreement between Parcel Express and Leota that more closely resembled the conditions of an employment contract, rather than a contracting arrangement. Furthermore, she determined that a high level of control was exerted by Parcel Express over Leota‘s work, and one of the fundamental questions to ask is whether the worker serves his or her own business or someone else‘s.

Vulnerable workers
Employee status is an important issue because employees have access to a range of statutory entitlements that contractors do not. These include minimum wage and holiday pay, redundancy, parental leave, KiwiSaver contributions by employers, and the personal grievance procedures and remedies under the Act. There is a danger that the boundaries between contractors and employees are deliberately being blurred in order to avoid employment obligations, which creates an underclass of workers labelled independent contractors, who
are paid poorly and exploited.

What‘s next
Leota had worked for the company for about a year before they put an end to his contract. It all came to an unhappy end after he was asked by the company director to pick up tyres as a ‘favour‘. The request continued to be repeated until Leota raised a concern about payment and his contract was terminated the following day. Now that judge Inglis has ruled in favour of Leota‘s application, it is open to him to pursue a dismissal case. He is seeking holiday pay and the resolution of his personal grievance as a result of being declared an employee.

Please note that this article is not a substitute for legal advice and if you have a particular matter that needs to be addressed, you should consult with a lawyer. Danielle Beston is a barrister who specialises in transport law and she can be contacted on (09) 377 1080 or 021 326 642.