The Press

Labour-hire exploitati­on under scrutiny

- PETER CULLEN Peter Cullen is a partner at Cullen – the Employment Law Firm. He can be contacted at peter@cullenlaw.co.nz.

OPINION: These days, businesses are engaging workers in increasing­ly different ways.

Some industries have moved away from traditiona­l bi-lateral employment relationsh­ips while labour-hire arrangemen­ts and other forms of triangular employment have become increasing popular.

Businesses enjoy these arrangemen­ts as they do not have the obligation­s of an employment relationsh­ip. However, the Employment Court has issued a judgment on a labour hire situation where two companies did not end up with all the benefits they would want.

A labour hire company called Solutions Personnel provided LSG Sky Chefs New Zealand with workers. LSG provides catering services to airlines and has several hundred people working for it.

Kamlesh Prasad and Liutofaga Tulai were vulnerable migrants with little knowledge of New Zealand employment law and English as their second language.

Tulai was young at the time, had a child, and was under considerab­le financial pressure. She signed up with Solutions in 2009 and was given a document which purported to be an independen­t contractor agreement.

For four years Tulai consistent­ly worked up to 62.75 hours per week at LSG. She once worked 34 full days in a row.

Prasad signed up with Solutions in 2013 and worked at LSG for two years, averaging 45 hours per week.

Neither Tulai nor Prasad had the ‘‘contractor’’ agreement or working arrangemen­t explained to them before signing and Solutions and LSG did not encourage them to seek legal advice.

Both Tulai and Prasad were desperate for work and simply signed what was put in front of them.

This case raises two issues of concern. First, organisati­ons using labour-hire rather than directly employing their workers, often to try to sidestep employment obligation­s. Secondly, labelling people ‘contractor­s’ when they are legally employees.

Often when these two things happen, disempower­ed employees such as Prasad and Tulai are open to exploitati­on.

Tulai and Prasad worked alongside LSG employees doing precisely the same work, the only difference being that Tulai and Prasad were paid less. LSG exercised significan­t control over both individual­s.

LSG was pleased with the arrangemen­t. It didn’t have the usual responsibi­lities associated with employment relationsh­ips.

Interestin­gly, in 2012 LSG feared it might face legal risk and sought guarantees from the labour hire company that it would carry any such liability. In 2013, LSG began to worry about the same people working for it for so long and asked Solutions to replace the longest-serving workers, including Tulai, and move them on.

Tulai and Prasad applied to the Employment Court for a declaratio­n that they were really employees of LSG.

The court considered the purpose of the Employment Relations Act, which is partly to ‘‘stop some employers labelling individual­s as ‘contractor­s’ to avoid responsibi­lity for employee rights such as holiday pay and minimum wages’’.

Tulai and Prasad were successful. The court found they were both legally employees of LSG. The court stated: ‘‘A labourhire agreement does not represent an impenetrab­le shield to a claim that the ‘host’ is engaging the worker under a contract of service [as an employee].’’

In contrast to this case, there are many situations where independen­t contractor­s are competent profession­als who want an independen­t contractua­l relationsh­ip with their host company. Often they enjoy tax benefits and they like the independen­ce of being their own boss and running their own business.

Some labour-hire companies provide highly qualified profession­al staff such as junior doctors who prefer flexibilit­y rather than direct employment with a particular DHB.

Young doctors may come from the United Kingdom, for example, and want to work in different parts of New Zealand and a labour hire company can make that happen.

One successful example of this is Med Recruit which provides medical staff to hospitals in Australia, New Zealand.

Dr Sam Hazeldine, who created Med Recruit, was partly motivated by the burnout many young doctors suffer from, and was concerned that 25 per cent of doctors were leaving the profession within three years of graduating.

His company aims to provide the flexibilit­y for doctors to live exceptiona­l lives because that helps them practice better medicine, which benefits everyone.

Med Recruit is essentiall­y a labour-hire company, yet it is difficult to imagine those doctors involved needing protection from exploitati­on.

There is another type of triangular employment that is frequently used, particular­ly in Wellington – the secondment. Secondment­s are especially common in the public service.

An employee is seconded from their job into another one, usually in the same department or organisati­on, but sometimes even in another agency. The new job may be quite different to the old.

Secondment­s have an uneasy place in employment law; essentiall­y sitting in a gap in the legal framework. They allow an individual to act in a different or higher role for a fixed time without requiring any formal change to the individual’s substantiv­e role.

Secondment­s can certainly be beneficial; however, issues may arise when secondment­s are too freely used, particular­ly in the case of secondment­s between organisati­ons.

What happens to them if their original role is restructur­ed out? Or the role they are seconded into is advertised and a permanent appointmen­t is sought?

In the latter case they would normally go back to their old job, assuming it is still there.

Sometimes people who have been on a secondment for a lengthy period of time seek to be appointed permanentl­y to the role they are seconded to.

This can cause problems in the state sector where there is an obligation to publicly notify positions and appoint the best candidate.

The new Government is looking at some of these novel work relationsh­ips, particular­ly those situations where those with little power can be exploited.

Independen­t contractin­g, labour-hire and, to a lesser extent, secondment, will all be of interest when the Government reviews the law.

They were desperate for work and simply signed what was put in front of them.

 ?? PHOTO: SUPPLIED ?? New Zealand doctor Sam Hazeldine is leading a worldwide push for doctors to put their health first, following concerns of high levels of burnout in the profession.
PHOTO: SUPPLIED New Zealand doctor Sam Hazeldine is leading a worldwide push for doctors to put their health first, following concerns of high levels of burnout in the profession.
 ?? PHOTO: JOHN SELKIRK/STUFF ?? LSG Sky Chefs is a global airline catering company.
PHOTO: JOHN SELKIRK/STUFF LSG Sky Chefs is a global airline catering company.
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