Gig economy lacks protections
There are two broad categories of workers in New Zealand – employees and independent contractors. Employees have minimum employment rights under the Employment Relations Act and related legislation, but independent contractors do not.
This means that employees are entitled to be paid the minimum wage, receive leave entitlements and take a personal grievance against their employer, whereas independent contractors have no such protections.
Instead, their rights and responsibilities are generally determined by the agreement they negotiate.
This distinction has long been the subject of debate. Many independent contractors claim that they are in fact employees and should receive the benefits and protections afforded under employment legislation.
With the rise of the so-called gig economy, the line between contractors and employees is becoming even more blurred.
A good example is Uber, which puts freelance drivers in touch directly with customers who want a ride. This lets the company pass the costs of running its business on to its drivers, whilst scooping up a share of the profits.
However, the success of Uber depends on a potentially unstable premise – that it does not employ the drivers. This premise is increasingly being tested by courts around the world, with mixed results.
In London, the Employment Appeal Tribunal has ruled that Uber drivers fall into a middle category between employees and independent contractors but are entitled to a minimum wage and holiday pay. But in Australia, the Fair Work Commission recently ruled that the arrangement lacked the ‘‘work-wages bargain’’ that was essential to establish an employment relationship.
It may not be long before we see a similar case brought in New Zealand.
Under New Zealand law, establishing whether someone is an employee or contractor is not always straightforward.
Jessica Clifford, a former exotic dancer at Calendar Girls, has started proceedings in the Employment Relations Authority, claiming that she was an employee, not a contractor. Among other claims, Clifford says the club docks dancers’ pay for various ‘‘offences’’.
This is another area in which being an employee not a contractor makes a big difference.
Under the Employment Relations Act, employers can deduct pay only where the employee has agreed in writing and the deductions are for a reasonable and lawful purpose.
In this case, Calendar Girls has argued that dancers are independent contractors and therefore not subject to the act. The authority must first determine whether Clifford is an employee or contractor, before it can hear her claim that she was unjustifiably dismissed.
Calendar Girls’ strict rules indicate a level of control over its dancers which may be inconsistent with a true contractor relationship.
These cases show that the status of independent contractor allows for freedom and flexibility, but also leaves people open to exploitation.
These inequities are reflected in the Labour Party’s pre-election workplace relations policy which pledges to extend the right to organise and bargain collectively to a group of workers which termed ‘‘dependent contractors’’.
The Government is yet to announce if and when legislation to effect these changes will be introduced. But given the increase in non-traditional employment type arrangements, and the current inequity between employees and contractors, it is an area that requires urgent attention.
This is an area that requires urgent attention.