Failure to clarify nature of relationship costs employer

The Employment Relations Authority has upheld a personal grievance claim for unjustified dismissal after a painter was told there was no more work for him.

An issue arose whether the painter was an employee or independent contractor.  This had not been discussed between them.  The employer considered him to be a contractor.  The employee considered himself to be an employee but neither discussed their understanding with the other.

After looking at all the relevant factors (control, integration in the business, written documentation, tax situation, payment provisions, nature of the relationship, ability to work for others, ability to subcontract, provision of tools of trade, own business and the parties’ intentions) the ERA concluded that almost all factors pointed to him being an employee.

As the employer had not followed any proper process in the dismissal it followed the dismissal as unjustified.

The employee was awarded lost wages ($2,200) and compensation for distress ($3,500) plus costs.

It pays to clearly communicate and document what sort of relationship is being entered into to avoid acquiring employees when that was not the intention.

Alan Knowsley
Employment Lawyer
Wellington