Workers are an integral part of delivering a business’s goods and/or services. However, whether those workers are employees or independent contractors will have a big impact on how they are managed and remunerated. If it’s not made clear between the parties at the outset of the arrangement, issues could arise further down the line. This has recently been the case for the taxi and Uber industry, with a number of recent decisions addressing the question of whether drivers are employees or independent contractors.
In the recent case of Labour Inspector v Southern Taxis Limited the Employment Relations Authority (ERA) found that a former taxi company breached the employment rights of four former drivers by treating them as independent contractors when they were in fact employees. In reaching this decision, the ERA considered the following points:
1) The degree of control over the drivers' activities;
2) Whether the drivers were an integral part of the organisation;
3) Whether the drivers were in business on their own account;
4) The intention of the parties; and
5) Relevant taxation issues.
Southern Taxis Limited (Southern) argued that it was industry practice that the relationship between driver and company was typically one of principal and contractor, not employer and employee. Also, there was no employment agreement between Southern and the drivers. However, a number of other factors altered this position. These factors included:
1) The drivers worked to a roster posted by Southern;
2) The drivers were prohibited from driving for other taxi companies;
3) The vehicles were supplied by Southern;
4) Southern deducted PAYE from the drivers' pay; and
5) Southern contributed to the drivers' Kiwisaver accounts.
As a result of the decision, Southern is required to pay over $97,000 in unpaid wages, holiday pay and other expenses to the drivers.
If you have any questions about the status of your workers, and how you can best protect yourself and your business please feel free to contact us.
Chris Steenstra is a Senior Associate in the Commercial Corporate Team at Norris Ward McKinnon. You can contact Chris at [email protected]
