Unlawful use of contracting is an ongoing focus area for the Employment Relations Authority
Former Dunedin taxi company directors are personally liable for leaving former employees nearly $100,000 out of pocket by treating them as contractors, according to the Employment Relations Authority (ERA).
The former company directors Ronald and Maureen Grant claimed they didn’t know they were breaching the law when they failed to provide four taxi drivers with the correct employment entitlements.
Moreover, an earlier ERA determination ordered Southern Taxis Ltd to pay $97,753.05 in minimum wages and holiday pay arrears to four drivers who were found to be employees.
The company previously held Southern District Health Board and Dunedin Airport contracts for taxi services. However, company assets have been sold and Southern Taxis no longer has the ability to pay.
Labour Inspectorate Regional Manager Jeanie Borsboom said Mr and Ms Grant knew the difference between contractors and employees and this was a “clear case of mislabelling”.
“They provided the four drivers with vehicles, payslips, deducted PAYE and treated them differently from other contractor drivers employed by the business,” said Borsboom.
They also failed to keep accurate records, pay at least the minimum wage and holiday pay entitlements and made unlawful deductions.
“The Grants could have avoided the cost of defending and appealing legal action taken by the Labour Inspectorate by seeking advice early on about how to treat all of their drivers in accordance with the law,” said Borsboom.
“This decision shows that employers cannot claim lack of knowledge in circumstances where they should have turned their minds to potential breaches and that company directors cannot hide behind the corporate veil to reduce their liability.”
The ERA will now determine whether Southern Taxis Ltd and the Grants are liable for penalties.
“Unfortunately, the Inspectorate sees evidence of employees being unlawfully treated as contractors across a number of sectors, with examples in labour-on-hire, construction, and with courier, delivery and taxi drivers,” said Borsboom.
“Unlawful use of contracting is increasingly a focus area for the Inspectorate.”
Where breaches are identified the Inspectorate will be holding employers to account and seeking penalties for all of the shortcomings in minimum employment standards—including all leave entitlements—regardless of what remuneration the employer has paid under the contract.
The employment.govt.nz website clearly outlines the differences between contractors and employees, according to Borsboom.
“There are just no excuses for employers to get this wrong or, worse, intentionally rort employees of their rights,” she said.