The Employment Relations Act 2000 (ERA) and Immigration Act 2009 (the Act) provides requirements for both construction operators and its workers. Unfortunately, many of these important provisions are overlooked. The construction sector is notorious for breaching key requirements necessitating investigations by Immigration New Zealand (INZ) and the Labour Inspector who have, at various times, deemed construction to be a “high risk” sector.
These bodies have made several “busts” and have taken numerous steps to ensure compliance with the law. So what are common breaches and issues relating to employment and immigration?
One of the fundamental issues that recurs not only within the building industry, but across the board, is whether a worker has been employed as an employee or contracted for services as an independent contractor. The Employment Relations Authority, Employment Court, High Court, Court of Appeal and even the Supreme Court have made confusing precedents in determining whether a worker is in fact an employee or not. An employee has all the basic rights and entitlements under the ERA, including annual leave, sick leave, bereavement leave, parental leave, public holidays, obligations of good faith, obligations of due process, protection from unjustified dismissal and general protection over their job. A contractor is obliged to pay its own ACC, tax, expenses and generally has no protection over future work.
The courts have made contradicting decisions on this issue determining that what the parties call each other is not necessarily decisive. Each case is said to be “intensely factual” and each court has looked at the intention of the parties, the amount of control the operator has over the worker, who pays the tax, the importance of the worker to the business operation and so on. Operators must therefore be careful that they do not simply hire workers as “contractors” with circumstances reflecting an employment arrangement, to avoid having to pay the worker leave and other guaranteed entitlements. The operator could risk the worker raising a personal grievance claim in the Employment Relations Authority regardless of its contract.
Having a written employment agreement is vital. If the employer does not have a signed employment agreement with the employee, the employer can be fined up to $20,000.00 by a Labour Inspector (for companies or corporates) or up to $10,000.00 for individuals.
Other common issues:
All workers must be eligible to work in New Zealand. Whether this means they are a citizen, permanent resident or on a work visa (open or specified) they must have a valid visa. Employers should always check the eligibility of their workers and ensure all workers are compliant with their visa conditions. The operator should take steps to monitor the visa expiry and get the employee/ subcontractor to confirm that they are eligible to work in New Zealand, or face the consequences.
An employer can commit an offence if it “allows or continues to allow any person to work…knowing that the person is not entitled…” or exploits unlawful employees. Penalties for such offences can include a fine of up to $50,000.00 or up to seven year’s imprisonment.
We have taken care to ensure that the information given is accurate, however it is intended for general guidance only and it should not be relied upon in individual cases. Professional advice should always be sought before any decision or action is taken as Immigration New Zealand’s Instructions change on a regular basis.