Better protections for vulnerable contractors

The government is taking another step to ensure our economy is inclusive, and works for all New Zealanders. We are seeking feedback on options to better protect workers in vulnerable contracting situations, Workplace Relations and Safety Minister Iain Lees-Galloway says.

“All New Zealanders deserve good jobs, decent work conditions and fair remuneration, yet some of our most vulnerable workers are being left behind. To protect vulnerable contractors, we’re consulting on changes to improve contractors’ rights, and want to hear the public’s views.”

In New Zealand, workers can be hired as employees or contractors. Employees receive minimum standards laid out in employment law, while contractors often have greater flexibility and independence. Over five per cent of New Zealand workers are contractors and with the changing nature of work and the expansion of the ‘gig’ economy, contracting arrangements are likely to become more common.

“While contracting works well for many people, we are hearing increasing reports about vulnerable workers in contracting situations where they are working long hours, earning less than the minimum wage per hour, are dependent on one business for all their income, or have no power to negotiate better arrangements,” says Iain Lees-Galloway.

“There are two particular situations that we are concerned about; workers who have been misclassified as contractors rather than employees so are missing out on their rightful employment entitlements, and workers who are in the ‘grey zone’ between contractor and employee status.”

Misclassified workers are those hired as contractors when they are, in substance, employees, either by mistake or to keep costs down. Workers in the ‘grey zone’ share some characteristics with self-employed workers, for example running their own business. They also share some characteristics with employees, for example being highly dependent on one firm for most of their income, or having limited control over their work.

The Government is seeking feedback on four groups of possible options for change, which aim to:

• deter employers from misclassifying workers as contractors and not employees,
• make it easier for workers to access a determination of their employment status,
• change who is an employee under New Zealand law, and
• enhance protections for contractors without making them employees.

“These changes are focused on providing a fair balance between protecting vulnerable contractors, while keeping the flexibility, independence, and other benefits of contracting in arrangements where it works,” says Iain Lees-Galloway.

“I encourage anyone who may be impacted by the changes to share their views.”

To read the discussion document, find out more about the proposals, or take a 10-minute survey on your experience working as a contractor, visit www.mbie.govt.nz/ContractorsConsultation.