After a worker at a store was dismissed, a dispute arose between her and her employer about whether she was a contractor or an employee, and whether the employer was justified in unilaterally terminating the employment relationship.

When the worker was hired the type of working relationship was not discussed and the worker assumed she was an employee, while the employer argued she was a contractor.

In examining the nature of the relationship, the Employment Relations Authority looks at the following factors:

  •          What was the intention of the parties?
  •          Was there an element of control or supervision over the worker?
  •          Were tools of trade supplied to the worker?
  •          How was the worker paid?
  •          Was the worker GST registered?
  •          Would customers of the business regard the worker as an employee or contractor?
  •          Did the worker have a separate business?
  •          Could the worker substitute another person to perform their work?
  •          Did the worker have an ability to profit or obtain reward from the relationship?
  •          Did the worker take on any business risk?
  •          Did the worker exercise autonomy over their work, remuneration, or holidays?
  •          Did the worker receive holiday pay?

Here, the ERA found that the worker was controlled and supervised by the employer when it came to her daily tasks, and how each task was to be performed.

The worker was not acting independently, she carried out her work on the employer’s premises, using the tools supplied by the employer.

The worker was paid weekly, and did not invoice the employer for her services.

The worker was not GST registered, did not have her own business, nor did she take on any business risk.

The worker was only paid for the hours she worked, and therefore had no ability to profit or obtain reward. The employer set the hours and days of work for the worker, and the worker had to seek the employer’s approval for time off.

In consideration of these factors, the ERA found it was more likely the worker was an employee, and not a contractor.

The worker was dismissed by text message after not agreeing to her employer’s suggestion that she reduce her hours of work, and take unpaid leave because the business needed to restructure.

The ERA held that while it is completely open for an employer to make such suggestions, it is not a dismissible offence for an employee to refuse a variation in hours or leave.

Furthermore, the employer breached her duty of good faith by not providing information about the restructure beyond the text messages, nor conducting a consultation with the worker.

The claim that the worker was dismissed on the basis of redundancy was undermined by a job advertisement posted by the employer, two days after the dismissal, for a very similar role to the one the worker was undertaking. The ERA stated that if there had been a genuine redundancy situation, then this could have been a redeployment opportunity for the worker.

The employer was ordered to pay the worker $3450 for lost remuneration, $970 for holiday pay, $12,000 for compensation for distress, and $3000 towards legal costs.


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