EMPLOYMENT LAW NEWS

July 2005 Issue No: 2

Well, the Three Foot Six v Bryson judgment is out and as anticipated the Supreme Court has allowed the appeal and reinstated the Employment Court’s decision that Bryson was at all times an employee, despite him signing a contractor’s agreement and operating as a person in business.
You will have read in the paper the effects that this judgment may have on the film industry. We suspect that there will be much wider ramifications and we urge any business who engages what they think are contractors to contact us for a consultation over the risks.
The Employment Court made it clear that the Bryson judgment stands on its own and is not to be seen as any sort of general precedent. However, the fact is that the contract that Bryson signed was a generic document that was used widely in the film industry. Viewing the contract is viewing the label. For this reason it is our view that the Bryson judgment will be used as a precedent for other claimants in the film industry who operate in a similar way to Bryson.
What we also think has been revealed is that the disapproval by the current Government of the TNT v Cunningham Court of Appeal (COA) judgment of the early 90s resulted in the enactment of Section 6 (2) & (3) of the Employment Relations Act 2000 (ERA) which effectively rules that the written or verbal statements made by the parties are no longer decisive as they were under the Employment Contracts Act 1991 (ECA) regime (the label test). Under the ECA if the parties labeled their relationship as one of an independent contractor then this is what the Court viewed the relationship to be. This is no longer the case. The Employment Court in TNT had previously ruled that Cunningham was an employee and not an independent contractor despite his written contract that described him as a contractor. The COA had a different view and found that where the intention is clear in the contract it was not their role to change the relationship to one that the parties never intended. The Employment Court in TNT applied 3 main tests. The control test, the integration test and the fundamental test. These same tests were all applied in the Bryson judgment.
It is our view that the TNT Employment Court judgment is again the applicable law and so the question as to whether a disgruntled owner/driver of a courier company may after all be an employee is ripe for the picking. This is because there is almost total control over the functions of a courier by the company, the entire business of the courier is integrated into the company with restraint of trade provisions and the amount of money that the courier receives is decided wholly by the company. So integrated are they that it could be said that the courier has only one client, the company that it contracts to. This was the rational behind the Employment Court’s decision in Cunningham and we suspect that the same outcome would arise if tested under Section 6 (2) & (3) of the ERA. Courier companies and owner drivers should be forgiven for shaking in their boots over this judgment. It is significant in our view that the only two categories excluded from the ERA tests are sharemilkers and real estate salespeople, both of whom have their own statute. No other category of work is exempt from the tests.
These rules will apply to any business engaging independent contractors that are not exempt so be careful about whether your ‘label’ properly describes ‘the real nature of the relationship’ (Section 6). If it does not then businesses may find themselves paying out sick leave, holiday pay etc as well as being exposed to the personal grievance procedures in the ERA following a period of time where the contractor having enjoyed all of the tax advantages from being in business that are not available to employees (something the Court gave little weight to in Bryson) belatedly decides that he or she really was an employee at all times.