It is important to be clear about whether your employment relationship is an "employment relationship" or some other form of relationship. This is because the law for employer-employee relationships is different from the law for other types of relationships.
Here we cover the main rights and obligations of employers and employees who are in an employment relationship. We do NOT cover rights and obligations relating to other types of relationships, such as those between principal and contractor or contractor and sub-contractor.
An employee is...
An employee is anyone who has agreed to be employed, under a contract of service, to work for some form of payment. This can include wages, salary, commission and piece rates.
An employee is not...
Indications of being an “employee”
If all or most of these features are present in a work relationship, it is likely to be an employment relationship between employer and employee:
Indications of being a “self-employed contractor”
If all or most of the following features are present in a work relationship, it is likely to be a contract for services involving a self-employed contractor:
Unsure if you are an employee or contractor?
Sometimes it is not clear whether someone is an employee or a self-employed contractor. This can be the case where:
Homeworkers are employees
Anyone who works for somebody else in a private home (other than work on the house or its fittings or furniture) continues to be classed as an employee under the Employment Relations Act 2000.
This might be so even if the arrangement does not look like an employment relationship. For example, a person who works at home and buys in material to make a product that is sold back to the provider could be considered a homeworker.
People intending to work are employees
The Employment Relations Act 2000 says that people who have been offered and have accepted employment are employees from the date of acceptance. They have the rights of employees. This applies even if the employees have not actually started to do the work.
Fixed-term and seasonal employees
Sometimes employers and employees agree that employment will be for a set period of time (e.g. for six months) or until a certain event occurs (e.g. until a particular project ends) or until work is completed (e.g. until the fruit is picked).
The basic rights and obligations of employees and employers apply to fixed-term and seasonal employment, except that the employment relationship ends at the end of the fixed term. The way in which provisions for annual holidays, sick and bereavement leave are applied can vary for these employees.
Note, however, that employers must have genuine reasons for the fixed term. An employee cannot have a fixed-term arrangement when the job is really a permanent one. Also, employers have some special obligations when employing employees on a fixed term. They must set out in writing, in the employment agreement, the reasons for the fixed term ans how the employment will end.
Casual or part-time employees
Sometimes employment is on a “casual” basis. In other words, the employer and employee agree that the employer will offer the employee work when work is available. Temping agencies often employ people on this basis.
At other times, employers employ employees on a “part-time” basis (e.g. 7am to 10am on Tuesdays and Thursdays).
The basic rights of full-time employees apply equally to part-time employees. These rights also apply to casual employees, but the way in which provisions for annual holidays, sick and bereavement leave are applied can vary for these employees.
Employers and employees may agree to an initial probationary period or trial period. This must be recorded in writing in the employment agreement. The basic rights and obligations of employees and employers apply to probationary employment.
Employers have some special obligations when employing employees on probationary or trial periods.
Changing employment status
Sometimes a person will move between being an employee in some work situations and a self-employed contractor in others.
You need to be an employee to have employee rights under the Employment Relations Act and other employment laws, but if you become injured you have the right to weekly compensation from ACC whether you are an employee or a self-employed person. However, the amount of that compensation may be limited if you frequently move between being an employee and being self-employed.
This is because if you're an employee when you're injured, your compensation is calculated on your previous earnings as an employee. Similarly, if you're self-employed when you're injured, your compensation is calculated on your previous earnings as a self-employed person.
It's an important factor to consider when you weigh up the advantages and disadvantages of changing employment status.
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