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Over recent weeks a number of businesses in Queenstown have been receiving visits from the Labour Inspectors (Ministry of Business, Innovation and Employment), Immigration New Zealand and Inland Revenue Department. Some or all of the above departments are targeting business owners to ensure they are meeting their employment, immigration and tax obligations.

Labour Inspector Visits in Queenstown

If the Labour Inspector pays you a surprise visit, under the Employment Relations Act 2000 they have the following powers:

to enter a place of work at any reasonable hour;
to interview any person at any premises in order to investigate alleged breaches of legislation about minimum employment standards;
to require and copy any wages, time and holiday records or any other documents which records remuneration; and
to question any employer about compliance with legislation.

It seems that the Labour Inspector’s main focus is on whether business owners have correctly determined the relationship with their workers. In particular, the labour inspector is looking at the nature of the relationship between the business owner and the worker to determine whether it is one of an independent contractor or employee. It is important to ensure that business owners are aware of the distinction and that there is an agreement in place that captures the true nature of the relationship.

As an employer you are legally obligated to have a written and signed employment agreement in place for all of your current employees. The Labour Inspector will most likely ask to sight all employment agreements to ensure these are in place.

The other main focus area is statutory minimum entitlements. This includes ensuring breaks are taken, public holidays worked are being remunerated correctly, annual leave is accruing and that the employee is being paid at least the minimum wage.

The Difference – Contract for Service or Contract of Service?

A “contract of service” or an  employment agreement signifies an employment relationship. Under a contract of service, the employer must deduct PAYE and provide the employee with minimum statutory entitlements such as annual leave, sick leave, statutory holidays, break entitlements etc.

In general terms an independent contractor is someone who is in business on their own account, they are engaged pursuant to a “contract for services” to provide services to the other party. A contractor is someone that has a large amount of skill in their particular role and doesn’t require training or supervision. Under such a work arrangement, there is no employment relationship, and therefore the Employment Relations Act and Holidays Act do not apply and the contractor has no right to leave entitlements and grievance remedies.

We can’t emphasis enough the importance of ensuring that all of your employees are on the correct employment agreement that captures the true nature of the relationship. There can be a fine line between whether a worker is an employee or a contractor and if in doubt make sure that you seek legal advice on the matter.

If you are worried that you might be falling short on meeting your legal obligations, i.e., no agreement in place or you are a bit worried that your public holiday calculations are not correct, we would be happy to assist you.

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. We recommend that you obtain legal advice specific to your situation before proceeding and would be happy to help in this regard.