(Bloomberg) -- New Zealand is changing the law to protect businesses when contractors claim they are employees and therefore entitled to more benefits.
”The current process for workers challenging their employment status through the courts can be costly for businesses, and can increase business uncertainty in general,” Employment Relations Minister Brooke van Velden said in a statement. “These changes to legislation are necessary to ensure businesses and workers have more clarity from the start of their contracting arrangement.”
Last month, Uber Technologies lost a legal appeal against an Employment Court decision that four drivers were employees for the purposes of the Employment Relations Act, rather than being contractors.
Van Velden said the amendment will provide a “gateway test” that businesses can use when responding to a claim that a person is an employee. If the working arrangement in question meets the four factors set out in the test, then the person is considered to be a contractor.
The new test criteria are:
- A written agreement with the worker specifying they are an independent contractor
- The business does not restrict the worker from working for another business
- The business does not require the worker to be available to work on specific times of day or days, or for a minimum number of hours
- The business does not terminate the contract if the worker does not accept an additional task
Van Velden said the new approach will provide businesses with more certainty to proceed with innovative business models involving contractors where this is appropriate, and also enable businesses to offer better terms and conditions to their contractors with less concern that it might impact the contractor’s status.
Unions are opposing the change, saying it will allow companies to deny workers rights to leave, holiday pay and other benefits.
“Uber has lost in court and the Government is going to legislate so that they, and companies like them, don’t lose again,” Richard Wagstaff, president of the NZ Council of Trade Unions, said in a statement.
The government expects to take the legislation to parliament next year.
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