Independent Contractors cannot enter into an employment Record of Settlement

A dispute arose between a company and an independent contractor that was providing services to the company.  The company took steps to terminate the contract for services in accordance with the agreement between the parties. 

The company was then faced with a personal grievance claim on the basis that the ‘employee’ had been unfairly dismissed.

The company maintained that the person was an independent contractor and not an employee, because the person was required to meet their own tax obligations and was paid following receipt of invoices by the company.

The person sought that the company enter into an employment Record of Settlement to resolve the dispute.

A Record of Settlement can be a useful way to resolve an employment problem between an employer and an employee. However, it is important to understand that such agreements can only apply to employment relationships. 

Where a company has engaged an independent contractor, the parties cannot enter into an employment Record of Settlement (as that is covered by New Zealand’s employment law).

However, parties to a contract for services (a contractor relationship) can enter into an agreement on how to bring the relationship to an end and to settle any claim between them. It cannot be signed off by Employment New Zealand’s Mediation Service.

Where it is not clear whether a person is an independent contractor or an employee, it is a good idea to seek advice from a professional experienced in the area.

Leading law firms committed to helping clients cost-effectively will have a range of fixed-priced Initial Consultations to suit most people’s needs in quickly learning what their options are.  At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.