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Contractor or employee? Cameras roll on touchy issue


The current public argument between actors and Hollywood film companies through Peter Jackson, in relation to the upcoming Hobbit film, contains age-old themes.

The themes debated include the benefits and difficulties associated with unionism. They include the fact that we live in an international marketplace, and they include the issue of whether people who are paid for their labour should be classified as employees or contractors.

Industrialisation brought with it trade unionism. To get a fair share of the proceeds of an industry, workers negotiated collectively rather than individually to balance their relative impotence against the power of the employer. Those whose skills are in demand internationally, such as highly paid actors, will probably not need the benefits of collectivisation. However, many film extras, for example, are not in that position, and are more likely to benefit from a collective approach. The Lord of the Rings Trilogy seemed by all accounts to produce significant profits for film studios involved.

Peter Jackson himself litigated against film studios to get a bigger share of the pie for himself.

We are told films are made in an international market. We are also told that if those engaged in New Zealand are paid too much or negotiate restrictive practices, films like The Hobbit will be made, say, in Eastern Europe.

The argument about whether people should be employees or contractors has also been raised in the Hobbit context. The law has been that whatever people say in their contract is what the court should respect. This appeared to be the approach of our Court of Appeal in a case involving T&T and Cunningham. However, the Labour Government rebalanced the law by saying that what the parties declare is only one of the factors that the courts have to look at. The wording in the contract is not determinative. Rather, the real nature of the relationship is what is important.

A case involving the Peter Jackson operation at Miramar looked at this issue. James Bryson was laid off by Three Foot Six Ltd, a company associated with Weta Workshop. They said there was no work for him. He was described as a contractor in his written contract. Contractors can't take personal grievances. Mr Bryson said he was really an employee and won the case.

I predict that this issue will come before the courts again, possibly in connection with Hobbit contractors arguing they are employees.

Industry practice was one consideration for the courts in Mr Bryson. Karen Soich, a barrister specialising in entertainment and employment law and a recent president of the Screen Producers and Directors Association of New Zealand at the time, was one witness.

She said the film industry is unusual in the extent to which it comprises independent contractors. The intermittent nature of the work involved in films and the transferable nature of industry practitioners' skills means that engagements can be for one day or for many months.

Ms Soich said the imposition of employment status on contractors or freelancers could have an unduly onerous and debilitating effect on the commercial viability of productions and production companies.

Mr Osborne, producer of the Lord of the Rings Trilogy, agreed there was a need for flexibility and the absence of procedural requirements for independent contractors in the industry. He said one of the features that attract international film-makers to New Zealand is that the employment status of workers (as independent contractors) is predictable and certain.

If that changed, New Zealand might become less attractive as a location for lucrative film deals.

Overall the Employment Court found that the expression of industry concerns, while relevant to the parties' intentions, were "overstated" in Mr Bryson's situation.

His work was distinct from normal industry practice. He had not been working on other projects for several producers. He had no investment in plant or equipment and had not operated as a sole trader.

The court found that Mr Bryson was not an independent contractor. Rather he was an employee. There was no evidence to say he had been acting as a separate business entity. He did not tender for his position. He was in a long-term position and entered the job with no relevant experience for the new position. He cannot have been said to be contracting his skills to Three Foot Six.

The fact that the contract said he was an independent contractor did not mean that he was. The contract read as though Mr Bryson was an employee despite its statement otherwise. Indeed there was a significant amount of company control.

Mr Bryson's situation is interesting in the context of the current Hobbit negotiations. Much of the current debate focuses on industry practice. The court in Mr Bryson found that industry practice is not always going to be determinative; the workers individual circumstances will determine the outcome. Once again, it is the wider industry context that has captured the media's attention. Currently the issue is whether the actors can be unionised. Under the Employment Relations Act contractors cannot be unionised, only employees can

The competing forces are trying to win the public over.

I think that there are some underlying pressures that will probably be determinative. In the first case, Peter Jackson and those working with him are very much loved by Wellingtonians and New Zealanders. He gets the local vote. The fact that the union appears to be Australia-based will encourage it being marginalised.

Finally, there will be great pressure on Peter Jackson to keep the work for The Hobbit in Wellington because of his strong links with this city and the negative impact that shifting it to Eastern Europe would cause. Readers may be tiring of the debate. Some of the arguments are impossible for an outsider to determine such as whether or not the studios are really considering shifting the film into Eastern Europe or whether this is just posturing. One thing that is certain is that the arguments will be in our papers for quite some time to come.

Cullen - The Employment Law Firm was one of the first eleven law firms in New Zealand approved to provide employment law services to Government and the public sector.

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