Why calling workers ‘volunteers’ won't protect you from employment obligations
The Employment Relations Authority (ERA) recently dealt with a case where a worker claimed that she had been employed and were entitled to wages, holiday pay, and other benefits under New Zealand employment law.
The worker argued she had signed an employment agreement and performed work as directed, but had never received any payment.
The employer rejected these claims, arguing that no employment relationship existed and that the worker was merely a volunteer participating in community activities for their own benefit.
They denied that any contract had been signed and maintained that their operation was simply a free "community platform" rather than a business.
With both sides presenting contradictory accounts about their relationship, the ERA needed to determine whether an employment relationship existed, what terms governed that relationship, and what remedies might be appropriate if the worker's claims were upheld.
The case involved a young Pasifika woman who attended a free modelling workshop run by the employer at the Otahuhu Youth Space in August 2022. At the conclusion of the workshop, the worker signed a document which stated she "will be employed under a casual contract" with EBM Models.
The agreement outlined expectations including that models must not work with other brands without consulting the agency.
The employer claimed she operated merely a "community platform" to connect individuals interested in modelling with designers. She denied running a modelling agency and suggested the worker was a volunteer who received opportunities to build a portfolio.
Multiple witnesses confirmed seeing the worker complete the document at the workshop. Other models who attended the same workshop corroborated that nearly everyone present had signed the agreement.
Despite several requests from the worker for a copy of what she had signed, the employer initially promised to provide it but later denied any agreement existed.
The document the worker signed contained language that pointed to an employment relationship. It referred to the worker being "employed under a casual contract" and stated that "$50.00 per hour minimum will be charged to any client for our experienced models."
The agreement described the document's provider as an "employer/agency" who would be "responsible for" providing travel expenses, guaranteed bookings, and negotiating payment. It required models to be "100% committed and dedicated to building your career with EBM Models."
Text messages between the parties further supported the employment relationship. The employer had told the worker: "Especially with my brand... it's super important, with my brand my models get something. They don't work for free…" The ERA found this clearly showed an expectation of payment for models' work.
The ERA determined that the worker had worked 137 hours between August 2022 and April 2023, for which she received no payment. Based on the minimum wage rates applicable during this period, the ERA calculated she was owed $2,915.65 in wage arrears.
The employer had failed to keep wage and time records or holiday pay records as required by law. She also did not provide the worker with a copy of her employment agreement, which is a breach of section 64 of the Employment Relations Act 2000.
The worker was dismissed without warning through a "Letter of Exit" that stated EBM Models would "no longer need you on our EBM Models books." No reasons were provided despite the worker's requests for clarification. The ERA found this dismissal was unjustified.
The ERA ordered the employer to pay a total of $28,782.60 to the worker, consisting of wage arrears, holiday pay, KiwiSaver contributions, lost remuneration, compensation for humiliation and distress, and part of the penalty imposed.
The ERA emphasised the vulnerability of the worker, stating: "There has been a breach of employment standards, and of minimum code legislation which involved the exploitation of a young, vulnerable member of the Pasifika community. These breaches also occurred within the context of a distinct power imbalance."
The ERA applied the test from the Court of Appeal in Rasier Operations BV & Ors v E Tu Inc (2024) to determine whether an employment relationship existed. This involved "examining the terms and conditions and analysing those in accordance with the common law tests" of control, integration, and fundamental/economic reality.
This case highlights that the "real nature of the relationship" between parties determines employment status, not labels.
The ERA stated: "A party cannot contract out of the Act, so applying an inaccurate label to describe the parties' relationship did not avoid minimum code obligations if the real nature of the relationship was one of employment."
The ERA noted: "[The worker] impressed the Authority as a polite and conscientious individual who had reacted calmly and with grace in the face of [the employer's] inappropriate and unnecessarily aggressive conduct towards her."
The worker was awarded $20,000 compensation for humiliation, loss of dignity and injury to feelings, in addition to her unpaid wages and other entitlements.
The ERA demonstrated that even when parties describe an arrangement as voluntary or use other labels to characterise their relationship, authorities will examine how the relationship actually operated in practice to determine whether employment law applies and what entitlements might be due.
