The Employment Court has ordered an employer to pay 4 workers almost $80,000 of arrears and entitlements after they were found to be employees not contractors.

The employees worked as drivers for the employer without signing employment agreements, and were paid on a commission basis.

The company paid all costs to do with maintenance of the vehicles, and handled worker taxes, but did not pay employees any holiday or sick pay. The workers worked on a roster basis, and due to the use of company vehicles and contracted hours, could not work for other employers.

The Court looked at the level of control and how integrated the workers were into the business. It held the workers were a core part of the business, carrying out the main work for the employer.

The employer had extensive control over the workers. The employees were required to wear a uniform, record all shift times and breaks in a log book, and by radio to the dispatcher, and were rostered hours long enough to prevent them working for another company.

The Court held that the true nature of the relationship was as employees and the employer must pay their minimum entitlements as employees. The employer was ordered to pay $42,205 of wage arrears, $24,373 for unpaid holiday entitlements, and $2,568 for unpaid rest breaks.

It is important that employers understand the difference between contractors and employees, or face having to pay potentially significant sums for unpaid entitlements. This will be so even if the employer has already built those factors in to the rate paid as if the workers were contractors (e.g. 8% extra for holiday pay etc).

Sometimes employers continue with arrangements they know are potentially subject to challenge because for the time being all workers appear happy with the arrangements.

In various examples we have seen one or more workers becomes dissatisfied with the arrangements a considerable time after they were set up, and raises an issue that ends up being very expensive, and disruptive, for the employer.

If there are concerns about the status of staff, or you think you are being wrongly classed as a contractor, it pays to speak with 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.

Alan Knowsley
Employment Lawyer