Government looking for 'certainty' on employer-contractor relationships

Workplace Relations and Safety Minister Brooke van Velden is seeking "advice on policy options" to ensure certainty in employment relationships between employers and contractors.

"This government wishes to ensure businesses and workers who explicitly agree to a contracting arrangement have certainty about the nature of that relationship," van Velden told an audience of businesses this week.

Her remarks came following a ruling from the Employment Court in 2022 that declared four Uber drivers as employees.

Contractors' ability to challenge their employment status in court has created uncertainty for contractors and businesses, according to the minister.

"This uncertainty might also discourage businesses from offering contractors added benefits that are normally reserved for employees such as sick leave and parental leave," she said.

Costly for businesses, contractors

She added that this could also be costly for both businesses and contractors, who don't want to be classified as employees.

"So, I have asked my officials for advice on policy options to increase certainty in contracting relationships," van Velden said.

"I want to achieve certainty for contracting parties, so that their intent when entering into a contract for services is upheld."

The Employment Relations Act would play a role in delivering this certainty, as the minister noted it should strike the right balance between "labour market and regulatory flexibility, certainty of obligations and outcomes, and protection for workers."

"There are parts of the Employment Relations Act that could do better at lifting New Zealand's productivity and economic growth," she said.

Businesses, union react to ERA comments

Businesses welcomed the van Velden's remarks on the Employment Relations Act, stressing that the legislation should remain fit for purpose in the modern employment market.

"The way we are working is changing, and our employment legislation needs to reflect this. That is why we back any moves that improve the flexibility of the employment market," said EMA head of advocacy Alan McDonald in a statement.

"We know that flexible employment markets are critical to supporting a more productive economy, and this is good news for everyone because productive economies deliver more higher paying jobs."

In a separate statement, Business NZ also welcomed the minister's plans.

"The minister wants to clarify the boundary between contractors and employees," Business NZ chief executive Kirk Hope said. "It's positive to hear that the gig economy will still be a flexible part of doing business in New Zealand and valued by both employers and contractors."

The New Zealand Council of Trade Unions (NZCTU), however, accused the government of wanting to strip individuals of their power to prove they are employees in court.

"Right now, workers can go to court to show that they are employees – which is what Uber workers did. The minister and the National/ACT coalition agreement appears to want to take away that right," said Rachel Mackintosh, acting NZCTU president, in a statement.

"This would strip essential protections such as leave, sickness, ACC, and more from thousands of the most vulnerable workers."