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The contractor trap: More flexibility, no rights

Worker caution

By Darien Fenton

There’s an old Kiwi maxim: A fair day’s pay for a fair day’s work, but that doesn’t ring true for many thousands of Kiwi workers.

For the past three decades there has been a steady growth in what is described internationally as non-standard work, including temporary workers, casual and labour hire workers and a substantial increase in the use of independent and dependent contracting.

Some contractors are highly skilled, entrepreneurial individuals, who are able to extract a significant premium for the efforts outside traditional employment.

However, for many, the opportunities of earning a secure and stable income are remote. Their classification as contractors effectively gives them no rights to the minimum protections provided for those classified as employees under New Zealand Law.

For these workers the employment relationship, with its rights and obligations, under current law has become meaningless.

Look around you. Many fast food delivery workers, truck drivers, couriers, construction workers, caregivers, security guards, cleaners, telemarketing workers, forestry workers, even actors and musicians, will be contractors.

While Labour is pushing for the minimum wage to be $15 an hour, these workers have no guaranteed minimum wage.

While we enjoy our Christmas breaks, these workers have no paid holidays.

If we are treated unfairly at work, we can challenge our treatment under the law, but contractors have no such right.

If we want to join a union and bargain for a collective agreement, we are guaranteed that right, but that’s prohibited under competition laws for contractors.

Over the past few years many contractors have been in touch with me to talk about their situation. When Telecom announced that its two biggest network Engineering contractors, Transfield and Downer EDI had lost their contracts for the Northland and Auckland network to a new company, Visionstream, 700 skilled lines engineers were told if they wanted work they would have to move from being employees to contractors.

These workers were powerless. If they wanted a job they had to give up secure income and employee protections, buy their own vans and equipment and take all of the risks of the job on themselves.

Many did. And they’re now struggling...

Some horrific stories about some of the truck drivers hit the headlines. They had mortgaged their houses to buy the rig, and then the companies they were contracted to slashed hundred of dollars off their weekly pay claiming the drivers were overpaid. They showed me the figures; many are earning below minimum wage.

Every week sometimes dies on the road through a truck related injury. We respond with ever stricter safety laws, but does anyone ever think that the drivers are speeding, cutting maintenance, working over legal hours because that’s the only way they can make a living as owner drivers?

Courier drivers are in a similar situation. As vehicle drivers have been converted from employees to contractors, courier drivers have been required to provide their own vehicle, pay for vehicle maintenance, insurance registration, and other running costs.

New Zealand is not alone in this phenomena. Government studies are taking place around the world, some governments have implemented new legislation to regulate dependent and independent contracting.

In this dog-eat-dog world of increasing competition, firms often turn to contracting as a means of avoiding the costs of employing someone directly. Others do it in a cynical attempt to avoid labour laws.

The International Labour Organisation has dedicated many conference discussions to finding a solution, saying that the protection of (all) workers “is at the heart of the ILO’s mandate and all workers, regardless of employment status, should work in conditions of decency and dignity.

While Labour accepts there are advantages for businesses in different contracting arrangements and for that matter, advantages for some highly skilled workers, these must be balanced against the fundamental rights of fairness and equality.

There is a lot of discussion and thought required on this topic. But in the end, Labour doesn’t believe that it is the Kiwi way for a “law of the jungle” to prevail.

If we fail to regulate the growing incidences of independent and dependent contracting, we expose growing legions of workers to having no rights at all.

And in doing so, we make every other job that relies on the foundations of the employment relationship vulnerable to unacceptable competition.

Darien Fenton is Labour MP and spokesperson

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