Narrow view for once the correct view
THE DOMINION POST - MONDAY, 22 NOVEMBER 2010
The Government passed a special law, with The Hobbit in mind, to say that if film production workers are called "contractors" in their employment agreement then that is what they are. They cannot claim they are really "employees".
Two recent cases in the hospitality sector make plain why the Government was wise in targeting just the film industry and not making the law one of universal application. In these cases, the hospitality workers claimed minimum entitlements based on the fact that they were "employees".
Even if their employment agreements had said they were "contractors", the courts could have looked behind the written documents and determined whether that truly was the case. It is unlikely that the workers would have been found to be contractors.
The right to receive the minimum wage is one of our most fundamental employment law protections for employees and cannot be contracted out of, only improved on, by negotiations between the employee and employer. The national minimum wage is currently $12.75 an hour.
While most of us take the minimum wage for granted, some employers still flout the law.
In the first case, a Japanese student was underpaid by her employer, a fast-food outlet called the Valley of the Kings. Maiko Natsume worked at Valley of the Kings restaurant and was paid just $30 for each shift lasting anywhere between three and six hours.
Although Ms Natsume had asked about the pay rate in the interview, she did not receive an immediate answer. Ms Natusme's work was organised in half-day shifts; the first lasted four hours from 11am to 3pm and the second was from 3pm until 9pm. Ms Natsume was paid $60 if she worked a full day (up to 10 hours).
All payments to Ms Natsume were made in cash, and no tax was paid on her earnings. As a foreign student, Ms Natsume was unaware of her legal entitlements and only raised the issue with her employer three months later, after a friend had alerted her to her right to be paid the minimum wage.
When Ms Natsume raised the issue with her employer, he reacted angrily and told her that because she had accepted the money without complaint, she was deemed to have accepted the rate.
Ms Natsume took the case to the Employment Relations Authority. Mr Koura, a director and shareholder of the employer company, claimed he was unable to attend because he was busy and had a medical issue.
The authority decided there was no evidence that the medical issue precluded Mr Koura's attendance at the investigation meeting and so the meeting went ahead.
Indeed, the authority commented that Mr Koura's claim that he was too busy to attend suggested "a cavalier attitude to the claims against him". Mr Koura never did attend the investigation meeting.
The authority ordered the employer to pay Ms Natsume $3248 in wage and holiday arrears, interest of $92.56 and costs of $1073. The awards are not high but the case highlights the practice of underpaying vulnerable workers.
In another recent case, Boon Chwee Tan worked as a chef at Asha Restaurant. For eight years Ms Tan did not receive paid holidays, was not paid time and a half for working public holidays and worked considerable overtime without pay.
Mr Wong was Ms Tan's employer until August 2003 when he incorporated a company called Asha Co and became a shareholder in that company with his brother.
At the authority Mr Wong was ordered to pay Ms Tan $27,733 for hours worked and time and a half for working public holidays. He was also ordered to pay Ms Tan $10,428 (plus interest) for alternative days in lieu for eight years of employment. Mr Wong's company, Asha Co, was ordered to pay Ms Tan $30,656 (plus interest) for hours worked and time and a half for working public holidays. The company also had to pay Ms Tan $18,486 (plus interest) for holiday pay.
Minimum employment entitlements are an important tenet of our employment law protection. This protection is especially important for vulnerable employees with weak bargaining powers, such as those seeking low-skilled work.
Employers who try to avoid providing statutory minimum entitlements to their employees could find themselves later paying what is owed plus costs.
When the national awards system was abolished some years ago, the understanding was that employees would have a minimum code that gave them protection. That code included minimum wage, holidays, sick leave and the like. People who are contractors do not have these basic rights.
The current test applied by the courts for determining whether someone is an employee looks at the real nature of the relationship between the parties, not merely the terms used in the employment agreement.
The "real nature of relationship" test does not apply to film production workers, real estate agents or sharemilkers, but for others the test provides an important safeguard where businesses attempt to call people who are really employees "contractors" rather than "employees".
If the Government had removed the "real nature of relationship" test, instead of just making an exception for those working in film production, then the courts would be unable to look behind the terms used to describe workers at the real nature of the relationship.