A recent landmark Employment Court decision which ruled three Gloriavale leavers were in fact employees and not volunteers, is a good reminder for businesses to assess the definition of an “employee”, the types of working relationships in place, and whether these are documented correctly.
An employee is a person who has agreed to be employed to work for some form of payment under a contract for service. In the case of the three Gloriavale leavers, the Court held that the “chores” undertaken between the ages of 6 and 14 were regular in nature and directly contributed to the commercial operations of the business. They were therefore employees and were required to be paid.
This then raises the question about workers who are not employees – such as volunteers, prospective employees on a work trial, work experience or interns. One of the key considerations here is whether the business receives an economic benefit from the work done and whether the work is integral to the business. Another key distinction is that a volunteer does not expect nor receive payment.
With employees it is also important that permanent, fixed-term and casual not only have the correct documentation to reflect those arrangements, but also those titles reflect the real nature of the relationship. Casual employees are engaged on an “as required” basis. There is no obligation on the employer to offer work, nor any on the casual employee to accept offers of work. Permanent employees, either full-time or part-time, are contracted to work agreed hours and have ongoing employment obligations. Fixed-term employees are only employed for a finite period of time or for completion of a specific project. It is critical that the reasons for the fixed-term are included in the employment agreement.
Contractors are not employees and are therefore not covered by employment related laws. A contractor is engaged by another party to perform services under a contract for services. Contractors are self-employed and invoice for work completed.
While having the right employment documentation will not in itself be enough to define the working relationship, it will go a long way in demonstrating the true intentions of the parties – whether it be contractor, employee or an unpaid working relationship.
The specialist employment law team at DTI Lawyers can assist you in relation to all employment matters. For any further information on employment law queries, please contact Jaime Lomas – jaime@dtilawyers.co.nz
