“ACT is proposing to change the Employment Relations Act to give greater certainty to workers and businesses who enter a contracting relationship,” says ACT Leader David Seymour.

“About one in 20 New Zealanders are contractors and 90 per cent say they’re satisfied with their jobs.

“Contracting offers autonomy and flexibility for people who can’t commit to standard hours. The gig economy in particular has created jobs that wouldn’t otherwise exist. People with work that needs doing can find the skills they’re looking for without making a permanent hire. Customers get lower prices and more choice.

“But the legal status quo is creating uncertainty for companies who use contractors because contractors are able to challenge their employment status in the Employment Court if they believe they should be classified as employees.

“The Productivity Commission has explained that ‘the courts can infer an employment relationship if workers are offered certain benefits and supports that in the past may have been offered primarily to employees. Hiring firms risk liability and disruption of their business if they offer contractors benefits’ and this can ‘discourage firms from offering contractors better working conditions.’

“The Employment Court’s recent judgment that Uber drivers are employees, not contractors, if upheld, will have knock-on effects for businesses that rely on contractors, like Air New Zealand, NZ Post, Chorus, as well as Uber. Some businesses will not be able to continue if they are required to hire employees, and the status quo is creating uncertainty.

“ACT is proposing to amend the Employment Relations Act to exclude independent contractors from the definition of employee so contractors who have explicitly signed up for a contracting arrangement cannot challenge their employment status in the Employment Court.

“Contracts will have to meet certain minimum standards that protect workers’ freedom to contract:

  • there must be a written agreement in which the worker is specified as an independent contractor who will not have access to full employee rights;
  • workers must be given sufficient information and an adequate opportunity to seek advice before entering into a contract;
  • agreements must not restrict a worker from performing services or work for other businesses, including competitors, or engaging in any other lawful occupation or work, except during the time from which the person commences a specified task provided by the business or undertaking until that task is completed;
  • the business cannot terminate the contract of the person for not accepting a specific task;
  • the business must keep records in sufficient detail to demonstrate that it has complied with minimum entitlement provisions.

“A contractor who believes the terms and conditions of their contract are unfair has recourse under the Fair Trading Act which deals with unfair contract terms. If the business has not satisfied these basic conditions, the worker can challenge their employment status under the Employment Relations Act.

“This change would give greater certainty to workers and businesses that they are entering a contracting relationship.

“It will give businesses the confidence to offer better benefits to contractors without risking the courts ruling that they are actually employees.

“Most importantly, this change will protect choice and the freedom to contract that should be the foundational principle of our employment relations law.”

ACT's Worker choice and freedom to contract paper is here.

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