The Employment Relations Authority was asked to determine whether an independent contractual relationship or an employment relationship existed between an accounting company and the respondent. To do so the ERA looked at the overall underlying and true nature of their relationship.

The respondent merged his own accounting company with the applicant’s company. The two agreed that the respondent would serve clients from both companies and be paid to do so. At this time the respondent surrendered his GST status.

The ERA looked at the intention of the parties when they signed their sale and purchase agreement. The ERA noted that the respondent had amended the initial agreement to specify minimum hours of work and to say that he was going to be employed for wages. Additionally, the agreement included a restraint of trade clause against the respondent. The ERA saw these facts as indicating that the respondent was an employee despite there being no reference to holiday or sick leave.

The ERA found that in practice the respondent recorded his hours on a timesheet and was paid a wage from which PAYE was deducted. His wages also included amounts for Kiwisaver and ACC which an employer is obligated to pay. Furthermore, the respondent filled in a tax code declaration between an employer and an employee, and was listed as one of the company’s employees on their employer monthly schedule with the IRD.

The ERA noted that the respondent was integrated into the company and worked within the company’s office and used company resources. The respondent also received a reimbursement for using his personal mobile phone and car.

The ERA held that the company exerted control over the respondent’s work and instructed him through staff meetings and emails. The respondent likewise did not receive a profit from client invoices that were transferred from his previous company.

The ERA held that this was an employment relationship and therefore the company could pursue claims against the respondent for breaching terms of their employment relationship.