Employer ordered to pay $11,000 after a finding that a worker was an employee, not a contractor...

The Employment Relations Authority have ordered an employer to pay $11,000 after deciding that one of their workers was an employee, and not a contractor as they had claimed. The employee brought a claim to recover unpaid wages and holiday pay after he was not properly compensated for the work he performed.

The employee worked for the employer for four months. During the course of this employment the employee was not paid the amount that was agreed upon. After his employment ended, he decided to bring a claim to the Authority to recover these wages.

The main issue in this case was whether the individual that was hired to do work was an employee, or an independent contractor, as only employees are entitled to bring a claim to the Authority.

The Authority looked firstly at the intention of the parties when entering into the contract. The employer had stated prior to the commencement of work that the employee would be given an employment agreement, and that he had been referred to as an employee. This showed that it was the intention of the employer to hire the worker as an employee, and not a mere contractor.

The employer also had a large amount of control over the employee’s day to day work, as he was an on-site manager directly overseeing his daily activities. It was also found that the employee had been integrated into the business, something that is less common in contractor relationships.

The employee did not dictate when he would start or finish work on any given day, nor did he have control over the amount he was to be paid.

These factors led the Authority to the conclusion that the individual was in fact an employee, and was therefore entitled to recover the wages that he should have been paid.

The Authority ordered the employer to pay $8,900 in unpaid wages, and $1,000 in unpaid holiday pay, and $385 as a contribution to the employees’ Kiwisaver.

If there is confusion around the difference between an employee and a contractor, it pays to seek advice from a professional with experience in the area.

Leading law firms committed to helping clients cost-effectively will have a range of fixed-price 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.

Alan Knowsley & Matthew Binnie

Litigation Team
Wellington