Can contractors turn into employees?

Employees have numerous rights under New Zealand employment legislation. For example, employees have mandatory annual leave, sick leave, parental leave on top of public holidays. Furthermore, employer cannot dismiss employees without a good cause.

However, all of these rights are only available to employees. This means contractors are not entitled to any of the benefits and remedies available under employment law. For example, contractors can be dismissed at will by the company. Therefore, it is important to know whether a worker is an employee or a contractor.

Some companies may try to define the relationship by describing it explicitly in the contract. However, just because an agreement states that the worker is hired as a contractor, this is not definitive. The courts will look at the real nature of the relationship, and not just the “label” written in the contract.

A true contractor is like someone who is running a small business that provides services to the company who has hired them. A contractor is generally entitled to take on other customers and has a high level of autonomy.

On the other hand, if a worker has a business card with the employer’s logo, wears the company uniform, uses equipment supplied by the company, works under the control of the employee and is tightly integrated into the company, then this worker is most likely an employee.

Even if the agreement refers to the worker as a contractor, the nature of the work demonstrates that the worker is more likely to be an employee. The company can get into a lot of trouble if it treats a worker as a contractor, but later finding out in Court that the worker is actually an employee.

If you have any questions about New Zealand employment law, speak to us at Capstone Law, and we would be happy to assist you.