In January, a courier driver was killed in Taranaki, and many of his workmates went public saying that the industry is so squeezed the drivers have no choice but to work long hours and take risks on the roads. Even some owners of the industry agree that the lack of standards in their industry and dog-eat-dog competitive tendering make the industry unsafe and unsustainable.
Many companies are using contracting to avoid labour rights and it’s worth it to them. They have few obligations to the worker, the contractors can’t associate together and collectively bargain without flouting NZ competition law, they get no paid holidays, sick leave, public holiday pay or minimum wage. If the job is lost, the worker takes all the risk and consequences.
The most recent examples are the Pike River Mine contractors, whose families faced not only the loss of their loved one, but also the loss of all money owed to the contractor and his employees – and the workers in the film and video production industries, who, thanks to the government’s panic over the Hobbit, now don’t even have the right to contest whether they are contractors or employees under the law.
One courier driver I talked with told me that he started the process of going to Court to argue he and his workmates were employees, not contractors. Many thousands of lawyer’s fees later, he got an agreement in mediation to have an in-house disputes process and a representation clause in their contracts, which was soon shelved by the company. He couldn’t afford to take it further, even although the company dictates the runs which can require working up to seven days a week, badges their vans so they can’t be used for other work, impose 12 month contracts with no right of renewal and regularly changes or reduces the rates.
There was a very good article by lawyer Helen White last week in the NZ Herald, entitled “employers finding ways around job law”. She says that
Our society is failing to protect those who need it because it is not recognising the use of a particular breed of “contractor” – those who are not truly independent but who often contract to work exclusively for a single enterprise and finance their equipment through the company they are contracted to. In actually, suh contractors are far less “dependent” than employees because they stand to lose more if terminated.
Sure, many contractors are happily independent and don’t want it any other way. I’m not concerned about them.
But I am concerned that many companies and even government enterprises are increasingly contracting workers to avoid employment rights and ultimately, this undermines fundamental protections for all workers.
There are plenty of reasons to have contractors, and plenty of benefits of being a contractor as opposed to an employed member of staff.
I think your comment “many companies and even government enterprises are increasingly contracting workers to avoid employment rights”
is way off the mark – I worked happily as a contractor for 10 years before taking a ‘employed job’ – the benefits were great. Not once did I have an employer want to work this way simply to avoid ‘my rights’
in the UK the Inland Revenue do not accept that such workers are self-employed. If you only have one employer and that employer dictates your pay and conditions, they consider you an employee. They regard such arrangements as a scam to avoid taxes. As indeed they are.
I don’t remember the exact details, but I worked as a freelance journalist for the Sydney Morning Herald and the Australian Financial Review in Australia. In these cases ‘freelance’ is a posh way of saying contractor.
At the time under Australian employment law, you were automatically deemed to be an employee of a company if it accounted for more than 85% of total income. The AFR and SMH may have separate subsidiaries of Fairfax – but not in the eyes of the employment court.
This was a sensible ruling. 85% is such a huge proportion of anyone’s income, that it would be hard to argue they are truly a contractor and not an employee.
There is still time to write this into Labour policy before the election.
Snap to it!
Also – a lot the drivers are not contractors – but are franchise owners in their own right.
How come this wasn’t an issue during the nine years Labour was in charge and could have set a benchmark with the Courier Post couriers?
I remember this practise being used extensively during labours years in power by government departments. Maybe the effort could have to stop the practise and restore workers rights could have started when you had the opportunity?
in the UK the Inland Revenue do not accept that such workers are self-employed. If you only have one employer and that employer dictates your pay and conditions, they consider you an employee. They regard such arrangements as a scam to avoid taxes. As indeed they are.
IR35 (as this policy was referred to as) was largely introduced to try to get IT contractors to pay more tax.
There was indeed a loophole in that these contractors could set themselves up as companies, put themselves on a minimum wage salary and then pay the residue as dividends (sharing any tax relief with non-working or lower earning partners and even children). And as NI isn’t paid on dividends it also saved them a lot of ‘tax’ in that way as well.
The point that was missed, however, was that most of these people we genuinely contractors. They’d chosen to go freelance, and while they might at any period work 100% for a single employer and do what they we told like any other employee was concerned, the contracts were short term and had no further job security. The ideal situation when you need skilled resources but for a comparatively short time only.
“Unfortunately” many of these contractors were amongst the best in the industry (I know – I’ve managed mixed teams and often the contractors were the stars), so were often offered renewal after renewal. IR35 had the effect of driving these people away from the projects to which they were central as the contractor sought to prove he wasn’t really in ‘disguised employment’.
For several years it was very uncertain how Inland Revenue was going to rule over peoples’ status, and in exasperation many of these skilled people emigrated. Most of these, of course, were the pick of the bunch who were confident they’d be snapped up elsewhere. NZ’s IT industry (together with that of the US and Oz) has many people who are only (t)here because of the push IR35 gave them.
Proof, or it didn’t happen.
That courier should get a bunch of his mates together and start up a collectively owned courier business.
Proof, or it didn’t happen.
B/S.
I’ve worked in IT for over 25 years.
Not a single contractor I’ve worked with was forced into it.
“Proof, or it didn’t happen.”
I contracted for 10 years for this exact reason. It was a choice for all of us – I had a team of close to 60 contractors.
So it did happen.
That’s your experience, not proof that “They’d chosen to go freelance”.
Do you have some figures that backup the claim, or not?
If you can’t provide proof, I’m happy to accept ‘It is my belief, based on personal experience, that they’d chosen to go freelance’
Of course, I could say I know people in the industry, and even they would have preffered not to, they had to be contractors to get work.
See how that works?
No figures, no proof. So, as you say, clearly didn’t happen. Happy for you to beat your drum on this basis.
Just drop us a line when you’re ready to reconnect with reality…
I guess the people who choose to be contractors and prefer it over employment are those who make a lot of money. So you could set a cut-off amount of money earned by a contractor, below this amount you’d have laws like “85% income from one source = employee” while leaving high-earning professionals alone – I’m happy to believe that someone earning 100k per year as a contractor is not being hurt and will have the resources to go to court if needed.
This Taranaki driver, he probably was a franchisee? Franchising is the standard in the courier business. When it is a franchise, some practices you mention like marking the van in company colours are normal, the way Mcdonalds restaurants are owned by different owners but they don’t have the freedom to change the signs or do the burgers their way, this is in exchange for the guarantee of having customers. Of course the unrealistic time demands are another issue and I know someone who left the industry here in Auckland exactly for this reason.
I wonder when someone sues one of these companies for false advertising, because when you look at the courier franchises for sale (some are on TradeMe) they usually misrepresent the hours compared to reality.
Being a contractor has many benefits one of which is the ability to write taxes off expenses – something that employees don’t get (Which is one reason why I’m starting to think that employees are actually double taxed in many areas – they pay tax on their income and then they pay tax on the expenses incurred in going to work). They also have a degree of freedom that employees don’t have. Skills in demand are probably better off as contractors.
The flip side is that they also have a lot more uncertainty.
If they don’t have work for a week it could be the loss of their house. My nephew, a builder in Auckland where all building work is contract, has been having difficulties since the recession and getting WINZ support is problematical. Firstly, they don’t seem to understand that there’s a recession on, secondly they don’t understand that construction work is piecemeal and so the job you get isn’t permanent and thirdly they don’t understand that it’s not worth it to take a job that pays less than it costs to go there. What this means is that they expect you to take any work and will cut you off if you don’t and that if the builder does get a job they then have to reapply for the benefit 3 weeks later when the job ends (they do have the possibility of putting the benefit on hold but some of the people in WINZ don’t seem to understand that either).
Then there’s the contracting agencies that actually have clauses in them preventing you from working for anyone else – specifically their customers (the clauses all have significant financial penalties). It gives them cheap labour available (their rates are never as high as directly contracting) as well as locks the “contractor” into working only for them. I know of at least one person who has lost their house trying to work through these contracting agencies. I tell anybody I know who has to contract (some industries there’s no choice given) to just not sign those contracts but, unfortunately, some people feel forced to sign to try and get a more secure income.
I’m actually in favour of contracting over employees but we need a few things first:
1.) A Universal Income
2.) A IRD cloud based accounting software that’s available free to use (may have to improve privacy standards at net cafes or give out free PCs)
3.) All financial transactions tied to the corresponding IRD numbers
4.) A financial transactions tax
5.) A change in law that prevents companies from putting in clauses that prevent the contractors from working anywhere else (why this isn’t law already I don’t know)
Newsflash, Lenin. Your universal income is never, ever, ever, ever going to happen. Unless by some fluke Alliance or the new extremist left party wins a majority in parliament.
Sure, just as soon as you’re ready to connect with honesty.
@Chris : Read the post : “Sure, many contractors are happily independent and don’t want it any other way. I’m not concerned about them.” If you want to work that way, fine with me, but don’t be selfish about the others who don’t want to work unreasonable hours for unreasonable pay with absolutely no rights. And yes, the Taranaki workers were franchisees – just another form of independent contracting with no rights.
@Colonial Viper : Not the answer sorry. I’ve met courier companies who did just what you suggest. Doesn’t even up the playing field because while there are companies who don’t care about standards, rights, pay and reasonable hours, it’s difficult to compete with the lowest bidder.
I worked for a company that did away with employee drivers and employed “contractors.” They had to work 12 hours a day and routinely break the speed limits just to survive. Not only that but they were frequently getting boned big bucks for new equipment that enhanced the company’s bottom line. The company concerned is owned by the government.
@ Darien. I did read the post. I also read that you were talking about contractors. Now you change the story to say they are franchise owners.
” And yes, the Taranaki workers were franchisees – just another form of independent contracting with no rights.”
You are joking right? There is a night and day difference.
Chris is right, there is a huge difference between contracting and a franchise. There are problems with franchises and I think they need to be addressed – many countries recognize franchise as a special situation, not the regular business contract and have specific laws that protect franchisees (USA, Australia, Brazil…), in NZ there’s no special laws and it falls under commercial law when it is a situation of very unequal power (in many cases much more unequal than in regular employment). But talking about franchising and contracting as one and the same shows lack of knowledge.
@Chris & Melusina – I think we are arguing semantics here : both groups of workers have no employment rights and are subject to commercial law. I repeat – my concern is not for those who are happily independent contractors and doing alright for themselves – it’s for those who are vulnerable.