Duck, duck, goose - Are your Contractors actually Employees?

Although, we do not intend on boring you with the details, a recent Employment Court case Leota v Parcel Express Ltd determined that a Courier driver, was not in fact a Contractor as engaged by the company (Parcel Express), but rather an Employee of the company.  

When testing the true nature of a Contractor relationship, it is important to consider the intention of the parties, the economic reality of the relationship, the level of control that the company has, and the level of integration that the Contractor has within the company.  

In the above case, the Court noted that the courier driver was not a Contractor because of the facts applying to him. The court was clear that the judgment did not mean that all courier drivers in New Zealand were Employees, it simply applied to this particular person, Mr Leota.  

There were several factors which weighted in favour of Mr Leota being an Employee, most importantly the significant control that Parcel Express had over him, including the fact that the company assigned his run and boundaries, the company determined the type and color of his vehicle, audited his mileage, restricted the amount of leave he could take and if he wanted a holiday he was required to organise his own cover at the company’s request.  

What was also noteworthy was the contract prevented Mr Leota from seeking employment with any competitor for a period of six months and within 100km of the Auckland CBD, following the conclusion of his contract for service.  

Not only does this case provide important new guidance in determining whether someone is truly a Contractor, it also creates some serious complications for those in the courier driver or similar industries, whereby they have always relied on labelling their workers as Contractors.  

We have created an easy to use test for our clients, to test the true nature of their Contractor relationships. Be prepared to be asked several questions, and once completed, one of our team will be in contact to discuss the results and undertake a review of your contracts if required.  

Paige Hellier

ER & Legal Consultant