Discussion document released by MBIE for the better protection of contractors

The Ministry for Business, Immigration and Employment has released a discussion document for public feedback aimed at better protecting contractors. Central to the document is the issue of vulnerable workers. The document sets out the issue under two main heads: 1) employees who are mislabeled as ‘independent contractors’ and miss out on minimum employment entitlements, and 2) contractors who are so reliant on one contract for service (‘dependent contractors’) that they miss out on the benefits and freedoms of self-employment.

The document identifies a range of options to address these two issues. The options are aimed at deterring misclassification of employees as contractors, making it easier for workers to access a determination of their employment status, changing who is an employee under New Zealand law, and enhancing protections for contractors. There are 11 proposed options that include introducing penalties for misclassification of workers, placing the burden of proving a worker is a contractor on the principal to the contract for service, and extending collective bargaining rights to some contractors.

Submissions on the discussion document may be made anonymously and can be made online. All submissions are due by 5pm 14 February 2020.

Understanding the difference between employment and contractor relationships will be key for employers/principals to avoid any penalties and costs associated with the proposed options. Employers/principals should obtain legal advice if they are concerned their contractors may in fact be employees. This is certainly a developing area of law that demands close attention.

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