Labour Inspectorate cracking down on courier companies mislabelling employees as contractors

Labour Inspectorate cracking down on courier companies mislabelling employees as contractors
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Courier drivers who are worried they may be misclassified as contractors rather than employees are urged to come forward amid a crackdown on mislabelling among businesses.

The Labour Inspectorate is launching a campaign focusing on the employment status of courier drivers after concerns some may be missing out on their rights at work if they're incorrectly classed as contractors.

It comes after the Employment Court ruled last year that a courier driver at Parcel Express who was considered a contractor of the company was actually its employee.

An employee is someone employed to do any work for hire under an employment agreement. Employees have all minimum rights under employment laws, including at least the minimum wage, holiday and leave entitlements, and a written employment agreement.

Whereas a contractor is engaged by a principal to perform particular services under an independent contractor agreement. They are self-employed and earn their income by invoicing the principal for their services. They also pay their own tax and ACC levies.

Contractors aren't covered by most employment-related laws, meaning they don't get annual or sick leave, they can't bring personal grievances, they have to pay their own tax, and general civil law determines most of their rights and responsibilities. Businesses also don't have to hold contractor records, whereas they do for employees.

Labour Inspectorate central manager Callum McMillan says any drivers with concerns about their employment status are asked to come forward. Any information they get will help them judge the size of the issue and figure out if any further action is needed.

"While the majority of businesses in New Zealand meet their obligations, some workers are misclassified as contractors even though they are, in substance, employees. For example, they may be expected to arrive at work at certain times, work under close supervision, or be prevented from working for other employers," he says.

McMillan says misclassified workers miss out on basic employment rights and protections, such as payment of at least the minimum wage, paid annual and public holidays, paid sick and bereavement leave, and the right to a proper process if they're fired or made redundant.

"Businesses may mistakenly misclassify employees as contractors because they see that is what others in the industry do, while some may do this deliberately to avoid their responsibility to provide employee entitlements," he says.

"Some courier drivers are genuine contractors, while others more closely fit the legal definition of an employee. There isn't a fixed rule that courier drivers should exclusively be employees or contractors. Employment status depends on each individual's situation."

Courier drivers with concerns about their employment classification, or their minimum employment entitlements, can visit Employment New Zealand's website.

The Labour Inspectorate also encourages any employers wanting to discuss misclassification concerns to contact them through their website.