Court examines true employment relationships in multi-entity structure despite paperwork
The Employment Court of New Zealand recently dealt with a case that questioned who the true employer was in a multi-layered organisational structure.
The workers argued that despite working across different business entities, they remained under the control of a single leadership position that directed all their work activities throughout their time with the organisation.
The case raised important questions about how courts identify true employers in situations where workers move between different entities but remain under centralised control.
The organisation operated various commercial ventures including dairy farms, factories, and other business operations. Workers started their duties at age six, with a servant responsible for work placements "at the behest of the [overseer]." They performed tasks across different business entities within the organisation.
From ages 12 to 14, another manager made decisions about work assignments. The court found that "[the manager] undertook the work assignment role at the behest of the [overseer]." This manager allocated workers based on where labour was needed across different businesses.
The leadership structure determined all work assignments, as noted in the decision: "It was the leadership, operating through [two managers], which decided what labour resources were required, where each [worker's] labour would be applied, the quantities of child labour that would be utilised, and when."
The organisation's governing document set out clear expectations about work obligations. All members were required to "obey the leaders of the Church in all matters including his faith and his involvement in the practical life and work of this Community."
When workers turned 16, they became "associate partners." This involved signing a document that bound them to a partnership agreement. The partnership provided labour hire services to various businesses under service agreements, with workers recording their hours on timesheets.
The businesses operated as separate legal entities, including limited liability companies and trusts, though profits were returned to the organisation.
The evidence showed workers were "fully integrated into the workplaces they were directed to work in" and worked under local management's daily direction while remaining under the overseer's ultimate control.
One example given in the decision involved a food manufacturing company where "[the worker] was assigned to work at the [company] factory." While this company was legally separate from the organisation, all operational decisions came from the central leadership.
The court examined extensive evidence about how work was allocated and controlled across the various business entities.
The court determined the employment relationship based on evidence that "[the overseer] exercised ultimate control, and had the final say, on all decisions relating to business life within [the community]."
The decision acknowledged: "It is possible, as all counsel agreed, that an employee can have joint or multiple employers." However, due to organisational structure complexity and limited documentation, the court could not make definitive rulings on additional employer relationships at this stage.
The court concluded by emphasising: "While it is true that [the managers] play an important role, including in relation to work undertaken within [the community], by whom and when, they are not the ones who ultimately pull the strings. The ultimate string-pulling function... sits firmly with [the overseer]."
