ACT unveils contract worker policy, proposes amending law so 'gig economy' staff can't challenge employment status

The ACT Party has unveiled its latest policy, which would see contractors unable to challenge their working status in the Employment Court.

ACT said the policy, called 'Worker choice and freedom to contract', is aimed at giving "businesses the confidence to offer better benefits to contractors".

The party said it believes the internet has allowed non-standard forms of work to emerge in a range of industries in response to the needs of employers, workers and consumers. 

It comes after Uber was granted the right to appeal a landmark Employment Court ruling in October four of its drivers should have been treated as employees, rather than as independent contractors, which could open the door for "gig economy" workers to claim employment status.

The ruling could allow those workers to lodge claims for backdated holiday pay and meal breaks.

Contract work is particularly useful for people who can't commit to standard hours like students or parents with young children and can be a stopgap between roles or a way to re-enter the job market or to top up earnings from a first job.

According to Stats NZ, about one in 20 New Zealanders are contractors - with almost 80 percent saying they had a lot of control over how their work was organised and how their tasks were done. On top of this, 90 percent said they were satisfied or very satisfied with their jobs and would prefer to continue being self-employed rather than have a paid job working for someone else.

But ACT said the issue is the legal status quo has created uncertainty for companies who use contractors, which the party believes is down to contractors being able to challenge their employment status in the Employment Court.

ACT believes the Employment Court has become increasingly unpredictable and tends to rule in favour of employees. 

"Not only can this be costly for businesses who genuinely believe they have a contractor business model, but it increases business uncertainty in general," ACT said.

To fix this, ACT said it'll amend the Employment Relations Act so contractors who've explicitly signed up for a contracting arrangement can't challenge their employment status in the Employment Court. The contract must meet certain minimum standards that protect workers' freedom to contract.

"Our policy would explicitly exclude independent contractors from the definition of employee, as long as the contracting relationship meets certain criteria," ACT said. 

"This would give greater certainty to workers and businesses that they are entering a contracting relationship, and will impose minimum conditions for the contract framework."

ACT said the following criteria must be satisfied: 

  • A written agreement where the person is specified as an independent contractor and will not have access to full employee rights; 
  • the person was given sufficient information and an adequate opportunity to seek advice before entering into a contract; 
  • the agreement does not restrict the person from performing services or work for other businesses or undertakings, including competitors, or engaging in any other lawful occupation or work, except during the time from which the person commences a specified task provided by the business or undertaking until that task is completed; 
  • the business or undertaking does not terminate the contract of the person for not accepting a specific task; and 
  • the business or undertaking has kept records in sufficient detail to demonstrate that the employer has complied with minimum entitlement provisions. 

ACT said any contractor who believes the terms and conditions of their contracts are unfair has recourse under the Fair Trading Act which deals with unfair contract terms. 

"If the engager has not satisfied the above terms, the worker may challenge their employment status under the Employment Relations Act."

ACT said the current employee/contractor boundary discourages businesses from offering contractors added benefits that are normally reserved for employees, such as sick leave and parental leave. 

"Our policy would give businesses the confidence to offer better benefits to contractors.

"We need an enduring solution to the issue of people who willingly enter contracting relationships being able to challenge their employment status."