Find your subject
in our database of
Spark your creativity...
an impressive essay!
Distinguishing between a contract of service (employee) and a contract for services (independent contractor) is vital in determining workers rights, and the obligations owed by their employers. Sometimes it is not clear whether a person is an employee or an independent contractor, which can lead to disputes between workers and employers. This essay discusses how to distinguish between a contract of service and a contract for services by looking at the intention of the parties then, by using 4 tests established by the Courts. It also looks at the reasons it is important to distinguish between an employee and an individual contractor because of the differing rights obtained by employees and independent contractors. First the history about how the employer and worker agreement was previously decided, by looking at the Employment Contracts Act, changed to looking at the Employment Relations Act to distinguish.
Previously the Employment Contracts Act 1991 clearly expressed "contractual intentions of the parties prevailed over all other considerations" (http://www.bzone.co.nz/employment/0,,1836-981618,00.html) so if the contract was entirely in writing, that was the end of the inquiry. But now, under the new law, section 6(2), of the Employment Relations Act 2000, states that "the Court or the Authority must determine the real nature of the relationship between them" (Butterworths, 2002, pg. 86). To do this it "must consider all relevant matters, including any matters that indicate the intention of the persons and is not to treat as a determining matter any statement by the persons that describes the nature of their relationship" (Butterworths, 2002, pg. 86). The case TNT (Worldwide) Express (NZ) Ltd v Cunningham  3 NZLR 681 made it clear that labels or statements regarding a person's employment status are not determinative of determining the real nature of the relationship, although they will be relevant (http://www.findlaw.co.nz/articles/default.asp?task= read& id =1360&site=LE).
The case that determined these changes in the legal tests for determining the real nature of the work relationship was that of Kioa v Carolyn Holdings Ltd on the 20 August 2001, this was the first time that the Employment Relations Act 2000 was used to decide the nature of the work relationship. In this Kioa case, the Plaintiff tried to argue that although the original intention was that of an independent contractor, the parties had not achieved that, and therefore he was claiming he was now an employee and sued the company for unjustifiable dismissal in the Employment Relations Authority. The Authority held that the nature of the relationship was that of an independent contractor and therefore had no personal grievance rights. Mr. Kioa challenged this decision in the Employment Court and once again it was held that he was a independent contractor as he had ventured into business on his own and contributed goodwill which is not something that an employee does so therefore Mr. Kioa's personal grievance claim was once again dismissed (http://www.payroll-serv.co.nz/EmploymentLaw/hiring/contractualintention.htm).
The court held that section 6 of the Employment Relations Act changed the law regarding the employment status. "Intention is still relevant but is no longer decisive. It is only one of the relevant matters the Court
must consider. Such matters include control of working or evidence of carrying on business on one's own account and other factors ...Thus, it mus
Quotes talked about in this paper
Terminology mentioned in this research paper
Real Estate agents,
Names talked about in this research material
O’Sullivan, Mr. Kioa, Butterworths, Thomas, Cunningham, Carolyn Holdings, Barry Travis, Elsie, p.g., Dorris Waters,
Organizations included in this paper
Employment Relations Act, Employment Court, Employment Relations Authority, Employment Court and Authority, Court of Appeal, Educational Institute,
Locations referenced in this essay
Health Conditions included in this term paper
Companies included in this essay
Keywords mentioned in this essay
independent contractor, employment relations, employer, employee, Employment Relations Act 2000, employment contracts, Integration test, worker, business, first step, vicarious liability, minimum wage, wage, sick leave, contractors, Employment Tribunal, employment law, individual, New Zealand Educational Institute, Kioa, accident, workers rights, contractual, matters, plaintiff, legal tests, NZLR, work content, All ER, Inland Revenue, taxes, annual leave, August 2001, business organisation, first time, disputes, Real Estate, accident insurance, a question, statutory holidays, artists, Butterworths, grievance, determinative, code, defendants, salary, fees, main, procedures,