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Subcontractor or employee? Which one is best for your business?

It’s frustrating figuring out what to do with your recruitment strategy when there is so much uncertainty about the next 6-12 months. Have you considered engaging a contractor instead of an employee to minimise your risks?

It would be fair to consider the idea of hiring a contractor instead of an employee in this economic climate. But before you act on this thought, let me draw your attention to a recent case about a Parcel Express Courier driver who was engaged as an independent contractor despite the agreement being more like an employment agreement.

The outcome of this Case was in favour of the employee. After reading the case document, I can see why. The business owner had control over when and how the work was conducted. They were unable to demonstrate what ‘freedom and flexibility’ the driver really had when considering the terms of the agreement, and how the relationship operated practically.

Some of the restrictions placed on the driver were:

  • Was assigned a run, the boundaries of which were set by the company and in which he had no say (even as to changes in the run)
  • Performed the job full-time from Monday to Friday and had to be back at the depot at three specified times during the day
  • Worked where and when he was directed by the company and was required to work in Parcel Express’s best interests at all times
  • Had to wear a uniform specified by the company and observe its procedures and the commands of its managers
  • Had to attend in-house briefings
  • Had to maintain a telephone link at his home, and provide another vehicle if his own vehicle was not in good order and condition (required to carry the Parcel Express colours and insignia and to be otherwise free of all other information, even driver’s name)
  • Had to take out insurance with a company approved by Parcel Express, and for an amount and for such risks as it decided
  • Could not take more than 20 working days’ holiday in a year, without the prior approval of the company and had to organise a relief driver, who had to be approved by the company, during any period of leave
  • Was subject to a restraint of trade (for six months post termination and within a 100 km radius of Auckland’s CBD) and to confidentiality requirements.

Few of these elements could be said to be mutually beneficial, the Chief Judge considered.

The Court Judge specifically commented having reviewed the ‘economic realities’ that this arrangement didn’t allow the Driver to operate as a business in his own right. He had limited autonomy and freedoms.

The bottom line is – if you want to have control over what, when and how the work is done, then maybe you should be considering a temporary employee – you may have two options available to you – casual employee or a temporary fixed term employment relationship.

To find out more about an employee or contractor arrangement for your next vacancy book in a session with me and I can trial our new employee or subcontractor checklist with you.