General / 25 October 2016

A private member Amendment Bill proposing to extend the minimum wage rate to independent contractors is being reviewed by New Zealand Parliament. The Bill was introduced to Parliament on Wednesday 22nd July 2015 by Labour MP David Parker and was scheduled to have its first reading later this evening.

This Bill proposes to extend the Minimum Wage Rate Act 1983 to include independent contractors which would allow them to get paid a rate equal to the current minimum wage.

Currently, Independent Contractors negotiate their own wage rates with the organisation/s they are working with.

“If passed the Bill will help people like contract cleaners who are currently falling through the cracks. Couriers, telemarketers and others who are contracted to do a large amount of works in limited time will also be protected.” Mr Parker said in a press conference.

Other examples of workers that Mr Parker included in the Bill were pamphlet and newspaper deliverers, security guards, telemarketers, truck drivers, fast food delivery people and those who provide personal home-care support. These types of workers usually get paid under a contract for service (for a full list of potential industries affected please see end of the article).

Interestingly, New Zealand was the first country in the world to implement the minimum wage on a national level. This occurred in 1894 when the New Zealand government introduced the Industrial Conciliation and Arbitration Act 1894.

“Those currently at risk are not employees, are not in unions, and are often the least powerful in society” the author of the bill went on to say.

Previously in 2007, NZ Parliament passed the Minimum Wage (New Entrants) Amendment Act 2007 which dictated that remuneration for employees in training as well as those aged 16-17 years old could not be lower than 80% of the adult minimum wage.

Sam Huggard, Secretary of the New Zealand Council of Trade Unions (CTU), said that the Bill, if passed, would guarantee that contractors were paid at a rate at least equivalent to the minimum wage.

“Far too many workers find themselves in situations where contracting arrangements are used to get around statutory minimum pay. This kind of sub-contracted work is seeing more and more New Zealanders with contracts where they cannot possibly earn a living wage in the number of hours required to complete the job. This Bill would close that loophole” Mr Huggard said.

Schedule 2 of the bill outlines the following services that may be affected (i.e. provided under a contract for service):

building and construction services
cleaning services
courier services
food catering services
fast-food delivery services
newspaper or pamphlet delivery services to letterboxes:
personal home-care support to an individual in the individual’s house
public entertainment services as an actor, musician, or singer
the manufacture of clothing, footwear, or textiles
telemarketing services
market research services
licensed security guard services under the Private Security Personnel and Private Investigators Act 2010
services in the forestry industry related to planting, pruning, or felling
truck-driving services delivering goods
Other Proposed Changes

The Bill also proposes that:

An independent Contractor, or a Labour Inspector may be able to commence an action in the Employment Relations Authority if the Independent Contractor is not receiving a rate equivalent to the minimum wage rate provided.  Currently, an Independent Contractor has limited legal options and would need to take their issue to the Disputes Tribunal.
The Organisation will need to keep a remuneration record for the Independent Contractor, which they are not currently required to do.
The Bill proposes to rename the Minimum Wage Act 1983 to “Minimum Wage and Remuneration Act 1983”. It remains to be seen how Parliament votes on this proposed amendment.  We’ll make sure to keep you up to date on how the debate pans out.

If your organisation has independent contractors working with you and you are concerned about how the proposed Bill may affect you,  please do not hesitate to contact us.
Disclaimer: We remind you that while this article provides commentary on employment law topics, it should not be used as a substitute for legal or professional advice for specific situations. Please seek guidance from your employment lawyer for any questions specific to your workplace.

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