Christchurch rebuild companies are falling foul of employment law
New construction, painting and other trade related companies looking to make their fortune during the Christchurch rebuild are falling foul of employment law. Some are employing staff as contractors when the real nature of the relationships is that of an employee. Others have a thumbnail sketch of their obligations as employers and are making mistakes that are costing them thousands of dollars.
Can you take on an out of work unskilled worker receiving a benefit, with a promise that you will teach them to become a painter, and call them a contractor, an independent contractor? The short answer is No, the long answer is that by all means do it but budget on an employment lawyer sending you a letter telling you their client was an employee and you have unjustifiably dismissed them. Now if the person is a tradesman with his own paint splattered van, tools, overalls, brushes and twenty litres of undercoat in the back who has driven down from Whangarei in search of some contract work then by all means take him on as a Subbie. What if you and the person agree to him being a labour only contractor “working in the building industry” and you deducting what used to be called withholding tax? Well the law says he still may be an employee. To see how the law operates see Westwell v Wheeler and Keach v Brown & Son Construction Ltd. Both employers were told their labour only contractor was an employee and they were liable for holiday pay and unpaid public holidays.
If you are new business the first thing to do is to get yourself a good accountant, otherwise you are going to land with a thump when it comes time to pay provisional and terminal tax and you discover all that money you had and spent belonged to the taxman. If your accountant is good he/she will tell you to get yourself a good employment lawyer or advocate.
The one way you can tell whether your employment lawyer or advocate is likely to be good is to ask them a very simple question, “what should I include in our employment agreement?” If the lawyer does not reply with “tell me about your business, how do you run your crew, can they do private work, do you provide company vehicles and if so do you have any policies, do you provide PPE” and other similar questions then then thank them for their time and leave, otherwise do not be surprised when you receive an employment agreement that would best suit an office worker.
When you receive the draft employment agreement, read and check it. If you don’t understand it then how do you expect your employees to understand it? Also if the employment agreement is not measured and cut to fit your business you will run into problems as the Warkworth Golf Club found out. They entered into an employment agreement with Ms Cunliffe for her to be their Customer Services Supervisor. The hours of work clause said
“The employee shall be required to work a minimum of 40 hours per week, performed either on week days or weekends as rostered and agreed with the employer.”
However, they wanted her to work every or most Saturdays. She was prepared to work some but would not agree to work all. The Employment Relations Authority said, “Agreement is required and agreement was not forthcoming. If working every Saturday or most Saturdays was the Club’s bottom line or its requirement, then it should have said so in the agreement and it did not.”
The news was not all bad for the Club. Ms Cunliffe lost her claim she had been constructively dismissed. However, they lost their counter-claim for damages caused by the contended breach of contract in her not working the Saturdays. So ensure the terms and conditions in the agreement accurately fit your business.
Once you have a good team of professionals behind you, you will learn that before anyone starts work, they must have signed and returned the employment agreement. They should also tell you not to give the prospective employee the offer and agreement on Friday at 4.30pm with a view to starting them first thing Monday morning. The reason for this is that you are required to give them a reasonable opportunity to seek advice and, despite what most lawyers claim, they do not work seven days and more than a 100 hours per week, and by 4.30pm on a Friday you can connfidently reckon they will be on to their second Pinot Gris and certainly are not going to look at some poor swine’s employment agreement even though the person has been told by you they have to start work on Monday morning. There is of course one exception, the staff of PBEL might fit the employee in and certainly won’t be on their second Pinot Gris by 4.30pm on a Friday.
And if you don’t follow this advice, don’t be surprised if that very same lawyer that sent you a letter telling you their previous client was not a contractor, sends you another letter saying their latest client was not given a reasonable opportunity to get advice, the bargaining for the agreement was unfair, the trial period provision is of no effect and their client has been unjustifiably dismissed. Yes, that’s right, you terminated the person’s employment agreement during the trial period because they were to say the least not fitting in with the team and came to work only when it suited them. Finally if you want to know about the difficulties of Trial Periods then go to our blog 90 Day Trial Period is a Legal Minefield
Published on Wednesday, June 4th, 2014, under Blog