The Employment Relations Authority recently determined that the status of a worker was an employee, despite the company claiming that they were an independent contractor.

The plaintiff was originally hired to assist with “general running around” jobs connected to the operation of the defendant’s bed and breakfast company. However, when the employer began a manufacturing company, the worker became involved with that company’s day-today operation.

While there was no written agreement between parties, it was alleged that there was an understanding between the parties that she was a contractor. The worker was given a template invoice by another staff member to fill in her hours and rates of pay for payment. This invoice has the words “Contractor/Freelancer” above the box marked “Name.”

There was confusion between the parties about what the role of the worker was in the company. She was given her own business card that named her as a “Sales Executive” for the company, a business phone number, and email address that was consistent with the format used by other employees.

However, the employer maintained that she was only meant to perform perfunctory tasks that were assigned to her and was not supposed to be actively involved in the growing of the business.

To terminate her contract the employer sent the worker a letter that claimed their business relationship was no longer tenable as they no longer had trust and confidence that the worker would be willing to accept instructions.

The wording “trust and confidence” was seen as evidence that indicated that there were fiduciary obligations on both parties.

The Authority used this evidence to analyse the relationship between these parties. Ultimately, it determined that the worker was not in business for the purpose of running her own enterprise, but to assist the operation of the company as an employee would.

The employer exercised significant control over the hours worked, the tasks the worker performed, and it supervised her closely. Further, the worker was fully integrated into the company, as indicated by the business cards, phone number, and email address that was used by her during work hours.

Cumulatively, this led to the ERA to hold that there was an employment relationship.

This case is one of many cases where the Authority has determined someone who was “on the paperwork” engaged as a contractor, was actually an employee.

If the Authority decides that the workers are employees, they will be entitled to all the benefits that come with employee status. These include the right to at least minimum wage, annual holidays, written employment agreements, and paid sick leave.

A contractor is not entitled to these benefits, as they are self-employed. A contractor is also not entitled to lodge a personal grievance or to refer matters to the Authority, as this right is reserved for employees.

If there is confusion around someone’s employment status, it pays to seek advice from a professional with experience in the area.

 

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Alan Knowsley & Charlotte Cameron