Legislation likely to address contractors later this year

A leading employment lawyer has warned that there is likely to be legislative changes on the horizon as the government seeks to better protect contractors in the workplace.

“The government has certainly signaled the intention to make changes,” says Susan Rowe, a partner with Buddle Findlay. “They have said their aim is to improve fairness in the workplace and they stated in their election policy that they would look at statutory support for the legal rights of what they termed ‘dependent contractors’.”

While the term ‘dependent contractors’ isn’t a common one in New Zealand at the moment, Rowe predicts the government could take steps to clearly define the group and boost their protections.

“’Dependent contractors’ refers to situations where a person works for reward and is defined as self-employed but, in reality, would have very little or none of the autonomy that you would expect of an independent contractor,” she explains.

“You’re talking about people who are traditionally termed as independent contractors but they’re actually heavily controlled by a company, have to work certain hours, don’t get the freedom you might expect – they’re people who might theoretically meet some of the criteria for an independent contractor but they sit in a grey area.”

According to Rowe, the previous two governments have both looked at dependent contractors but have never undertaken major reforms like she suspects the current government plans to.

“They increased a few protections for specific types of dependent contracts, like home workers, but they didn’t make the wide sweeping change which the Labour government is probably thinking of doing,” she tells HRD.

The government’s first round of legislative changes came in January, addressing meal breaks, 90-day trials and unions – issues which Rowe says were relatively easy to amend as they were either restoring or reversing previous legislation. However, overhauling or even updating legislation around contractors is a little trickier.

“It’s a lot easier to undo something than to take a topic that hasn’t been the subject of legislative change before,” she says. “To deal with dependent contractors, I think you’d have to have quite a high level of consultation with the industry sectors that use these dependent contractors before you can make the changes so I think they’ll take some time first I’d say before they make a change which wasn’t a reversal of something else.”

While nothing can be confirmed until the government officially addresses the issue, Rowe did make some predictions around the changes employers can expect.

“I think they’ll specify a category of dependent contractor, they might choose certain industries that they might look at, and consider if those people need protection the same way that they looked at home workers in the past,” she says.

“I think they’ll bring them around the termination provisions and personal grievance provisions, I think they’ll look to bring them within those provisions of the employment relations act and give them protection – however, it’s quite hard to know what they’ve got in mind because they haven’t actually said a lot on how they might define the term ‘dependent contractor.’”