Company wins 'contractor or employee' appeal

By IRENE CHAPPLE

A company has won the first significant judgment on a topic that was controversial even before the Employment Relations Act.

In the Employment Court, Judge Graeme Colgan found Harvey Norman's relationship with Dean Curlew was not that of employee but contractor, and rejected his claim of unjustified dismissal.

In January, Attorney General Margaret Wilson criticised an Appeal Court decision for not following the "good faith" requirements of the Employment Relations Act.

A spokeswoman for Wilson said yesterday that she would not comment on Judge Colgan's decision.

But it has been welcomed by Business New Zealand, which says it gives certainty to employers.

The definitions of employee and contractor attracted many submissions when the Employment Relations Bill was at the select committee stage.

In its previous version, the bill included provisions to extend the rights of employees to some people classified as contractors.

The act's final form required the courts to consider all relevant factors, including the intentions of the parties, when determining the nature of the relationship.

That was a rejection of the Employment Contracts Act's reliance on titles, which grew out of case law.

Under the ECA, if an employment contract described a party as a contractor, for example, the courts would be likely to agree.

The ERA's final watered down form was still believed to contain risks for employers if contractors tried to claim employee status.

This was the situation tested by the Curlew case.

Harvey Norman stores are run as separate departments, each headed by "proprietors".

Curlew, one of the stores' proprietors, signed a consulting contract between his company and Harvey Norman.

He had control over many aspects of the business and in return received a retainer and a percentage of profits.

Curlew took a personal grievance claim when Harvey Norman terminated his contract, and the court had to decide whether he was an employee or contractor.

Curlew lost his case before the Employment Relations Authority, and appealed to the Employment Court.

Judge Colgan found Harvey Norman exercised less control over Curlew than it would over an employee.

"Although the relationship between Mr Curlew and Harvey Norman had some hallmarks of an employment relationship ... I am satisfied that it was substantially not such a relationship," he said.

Harvey Norman lawyer Jane Latimer said that because Curlew was employed by his company - which was a party to the contract - he was not a Norman employee.

The case would allow employers to employ people in business on their own, but still abide by the rules of the organisation, said Latimer.

Anne Knowles, executive director of Business New Zealand, said the decision would reassure businesses that contracts would not be disrupted by the passing of the Employment Relations Act.

Council of Trade Unions secretary Paul Goulter said he had no major concerns with the decision unless employers used it as a basis for entering into "sham contracts for service".