Parent company or subsidiary: Senior executive clarifies 'true employer'

The Employment Relations Authority recently dealt with a case involving a dispute between a worker and a company regarding the identity of the employer.

The case highlighted the complexities that can arise in employment relationships, particularly when multiple entities are involved.

The Authority conducted a thorough investigation, examining various aspects of the relationship between the parties to determine the true nature of the employment arrangement.

Company’s expansion into Singapore

The worker had more than 30 years of experience in developing and launching products for the telecommunications and financial sectors. He moved to New Zealand from the United Kingdom in 1989 and began working for the company's founder and CEO in 1990.

In 2007, the worker joined the company as its Chief Technical Officer (CTO), signing an individual employment agreement.

In 2015, the company decided to expand into Singapore, and the worker agreed to relocate to spearhead the Asia-based initiatives.

The company incorporated a subsidiary in Singapore, and the worker was made a director. To live and work in Singapore, the worker required an Employment Pass (ePass) from Singapore's Ministry of Manpower (MOM).

Disputed employment agreement

In October 2018, a written employment agreement between the worker and the Singapore subsidiary was entered into, apparently backdated to November 2015.

The worker claimed to have no recollection of signing the alleged document, while the company maintained that it was a valid contract.

The agreement contained several errors and inconsistencies, raising questions about its authenticity and the circumstances under which it was signed.

According to records, the Singapore subsidiary was heavily reliant on funding from the parent company to cover its expenses, including the worker's salary.

The worker regularly travelled to New Zealand and across Asia for business-related work that benefited the parent company. He was also held out as the parent company's CTO and a member of its management team, indicating his integral role within the organization.

The Authority's conclusion

“[He] travelled regularly to New Zealand and across Asia for business-related work that benefitted [the company]. He had been placed in Singapore to spearhead Youtap’s expansion into Singapore and the Asia region generally,” the Authority said.

“Although he had considerable autonomy and was responsible for local hires in Singapore, this is to be expected of a senior executive who was held out by [the employer] as its Chief Technical Officer and a member of its management,” it added.

After considering all the relevant factors, including the intention of the parties, the degree of control exercised, the economic reality of the relationship, and the worker's integration into the company, the Authority concluded that the real nature of the relationship was that the worker's employment was with the parent company, not the Singapore subsidiary.