Sasha Borissenko: Cases test contracting landscape

Could lack of employee benefits for contractors soon be about to change? Photo / 123RF

COMMENT:

Millennials are increasingly opting for portfolio or freelancing careers - it means they can shy away from presenteeism, the evil open-plan work environment, and relish in their freedom, autonomy, and genuine flexible working conditions.

But for those who have decided to stick it to the man and pursue contracting, often bear the brunt of being chased by the IRD, and don't enjoy the annual leave, parental leave, holiday pay, and other benefits of working within an organisation. And host organisations benefit too, as they don't have the obligations, liabilities, or responsibilities associated with a typical employment relationship.

The lack of employee benefits may change as a result of a case that is being heard before the Employment Court. In the case of Leota v Parcel Express Ltd, a courier driver has taken his employer to court to test his classification as a "contractor", arguing that he has performed the duties of a permanent employee.

It means for those who have regular work, or for industries that are arbitrarily contractor-heavy, contractors could possibly enjoy the fruits of permanent employee status - and without the insecurity.

This isn't the first case to test the contracting landscape, but it is the most substantial since the introduction of the Employment Relations (Triangular Employment) Amendment Act 2019, which means it may have widespread effects on many industries.

Let's look back in time for a bit of context. Prior to the Bilbo of Rights - I mean, the Employment Relations (Film Production Work) Amendment Bill (dubbed the 'Hobbit Law'), there was the 2005 Supreme Court decision Bryson v Three Foot Six Limited. The case involved James Bryson, a model-maker hired as a contractor by the company, Three Foot Six Limited, for The Lord of the Rings. The models unit downsized, and he lost his job as a result.

Bryson claimed he was an employee rather than a contractor, meaning he could claim for unjustified dismissal on the following grounds: that he received training; he worked fixed hours; his pay increased; and Three Foot Six controlled how and when Bryson did the work.

The Supreme Court upheld Bryson's claim, which went against industry practice at the time. The judgment stressed that this was a case that would not change the contracting landscape, and was decided specifically on the facts.

Cue the Hobbit Law's introduction in 2010, which saw contractors screaming bloody murder. It was a dark time for the creative industry, where film workers were barred from collective bargaining. Fast forward seven years to the 2017 case Prasad v LSG Sky Chefs, which could be seen as a win for disgruntled contractors.

Two "independent contractors" of labour-hire company Solutions Personnel Limited/Blue Collar Limited were held to be employees of LSG Sky Chefs Limited. The usual employment law protections and minimum standards were held to apply, despite being engaged and paid as "independent contractors".

In this case LSG managed rostering and performance issues, and required the contractors to wear an LSG uniform. The court found that the plaintiffs had no control over the way or where they did their work; they were under strict direction and control of LSG supervisors (despite being paid less than permanent employees); the contractors had no input in the decision-making process; they were given training and were integrated into the wider LSG business; and they had no other real source of work.

Contractors rejoiced, and the case gave rise to the Employment Relations (Triangular Employment) Amendment Act 2019, which was introduced by Labour MP Kieran McAnulty.

The purpose was to ensure that employees employed by one employer but working under the control and direction of another would not be deprived of the right to the coverage of a collective agreement, and could issue personal grievances.

The Act has "pulled the brakes" on companies trying to contract out of their legal employment obligations by engaging labour hire workers. And the Act's wording is broad insofar as short-term or temporary contracts could be included.

For now, it will be interesting to see whether Leota will come out on top, and whether the case might prompt me to join the avocado-on-toast-generation and enter the "gig economy".