Changes in contract law: simplification or complication?

A major union and a large business group are at odds over whether planned changes to labour laws will make things simpler or more complicated.

The government is introducing new tests to define whether workers are employees or contractors. This comes after an appeals court ruled that four Uber drivers were employees and should receive benefits such as holiday pay.

Labor Relations Minister Brooke Van Velden says the new requirements will provide clarity for workers and businesses.

She declined to be interviewed by Morning Report on the issue, but on Sunday said that if four criteria were met, then a worker would be classified as a contractor, and without the benefits that come with being an employee.

The criteria are:

• A written agreement with the worker, specifying that he or she is an independent contractor.
• The company does not prevent the employee from working for another company (including competitors).
• The company does not require the worker to be available to work at specific times of the day or days, or for a minimum number of hours OR the worker may subcontract the work
• The company does not terminate the contract if the employee does not accept an additional task or commitment.

The Court of Appeal concluded that the true nature of the relationship between Uber drivers and the company was that the drivers were employees while logged into the Uber app and “were not carrying on their own independent transportation service businesses.”

Council of Trade Unions president Richard Wagstaff said the tribunals (appeal and employment) “tested the relationship and asked: ‘What is the true nature of this relationship? Are these workers really self-employed or are they working for someone else?'”

Van Velden’s changes, he said Morning Report“would create more confusion.”

“The very idea that you can simplify things by taking away people’s rights is a poor justification.”

Business New Zealand’s advocacy director Catherine Beard disagreed, saying if workers did not want to be contractors, they should look for full-time employment.

“This court case has a potential impact on any work platform, and that is a really valuable part of a modern society and economy.

“Contracting has been around since Greek and Roman times. It’s a well-known way of working. This just makes it clear to both the contractor and the company exactly what they’re getting into.”

Wagstaff said the years spanning the ancient Greek and Roman civilizations “were not very good times for working people.”

“They had no rights and that is not what we want here.”

In addition to indenture, both the ancient Greek and Roman economies used slavery; some estimates put the number of people working without rights as high as 20 percent.

“Of course there is a place for contracting out, as there always has been, and no one denies that,” Wagstaff said. “What we are complaining about here is that we are in a situation where the criteria have changed. The rules have changed because the Employment Tribunal and the Court of Appeal applied our existing legislation, which has been satisfactory for a long time.

“And they didn’t like the result and they have deep pockets and they have a minister that they can just push around, and that’s what they’ve done and this is the result.”

Beard said the proposed changes would preserve the status quo before the Uber ruling, adding that employers would not try to turn more of their staff into contractors, rather than full-time employees.

“Employers who have a full-time workforce want stability and predictability. They know the workforce is going to show up. They know they’re solely committed to their employer. There are a lot of benefits for employers and for full-time workers, so absolutely not.”

Van Velden admitted in June that he had met with Uber at the company’s request.

On Sunday, he said the changes would provide greater certainty for contractors and businesses, which could use the test when responding to claims that workers were employees.

“The current process that workers use to challenge their employment status through the courts can be costly for businesses and may increase business uncertainty overall.

“While employment status cases are handled on a case-by-case basis, if a worker is found to be a contractor in a sector or for an occupation, this can quickly increase uncertainty for similar businesses that hire these types of workers.

“There are a variety of workers and businesses across the country who are engaged in contractual relationships and who will benefit from the greater clarity on worker status that this government will provide.”