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Contract 2

Misclassification of Employment Status

What It Is

Misclassification happens when a worker is treated as an independent contractor rather than an employee — even though the reality of the working relationship is one of employment. This practice, often called sham contracting, allows employers to avoid legal obligations such as holiday pay, KiwiSaver, PAYE, and minimum-wage protections.

You may be misclassified if your “contractor” role actually involves:

  • Fixed hours or rosters set by the company.
  • Company-supplied tools, uniforms, or vehicles.
  • No real right to subcontract or refuse work.
  • Continuous, dependent work for one organisation.

Under the ERA 2000 s 6, the test of employment status depends on the real nature of the relationship, not the label used in the contract.

Your Rights and the Law

  • ERA 2000 s 6(1)(a)–(2) — Defines “employee” and directs the Authority or Court to determine the real nature of the relationship.
  • ERA 2000 s 6(3) — Labels, descriptions, or statements in the written agreement are not determinative.
  • Employment Relations (Triangular Employment) Amendment Act 2019 — Enables employees to raise grievances against controlling third parties.
  • Minimum Wage Act 1983 s 6, Holidays Act 2003, KiwiSaver Act 2006, and Wages Protection Act 1983 — Apply automatically if a person is found to be an employee.
  • Leota v Parcel Express Ltd [2020] NZEmpC 61 — Confirmed that a courier driver labelled as a “contractor” was in reality an employee.
  • Rasier Operations v E Tū Inc  [2022] NZEmpC 230 — Found Uber drivers were employees under New Zealand law.

Process (How a Case Generally Proceeds)

  1. Identify Indicators of Control and Dependency — Who sets hours, provides tools, supervises, and takes business risk?
  2. Gather Evidence — Emails, rosters, payment records, uniforms, and contracts.
  3. Seek Legal Advice or Advocacy Review — Determine if you meet employee tests.
  4. Raise a Personal Grievance — Within 90 days
  5. Mediation – The Ministry of Business, Innovation & Employment (MBIE) provides free mediation to seek early resolution. The process is voluntary and both parties must agree to attend. Most cases reach resolution at Mediation.
  6. Employment Relations Authority Investigation – If unresolved, a Statement of Problem is filed; the Authority investigates and issues a written determination.
  7. Employment Court Appeal – Possible for errors of law or procedure.

Potential Outcomes / Remedies

  • Declaration that you are an employee under ERA s 6.
  • Back-pay for minimum wage, leave, and KiwiSaver contributions.
  • Reimbursement of unpaid PAYE or ACC entitlements.
  • Compensation for disadvantage or loss of dignity (ERA s 123).
  • Penalties for deliberate misrepresentation (ERA s 4A).
  • Reinstatement if dismissed while misclassified.

Take Action Today

If you’ve been treated as a “contractor” but work like an employee, you may be missing out on significant legal entitlements. Get in touch with us to arrange a no-obligation consultation about your situation. We’ll assess your case, explain your options, help gather evidence, request your employment file, and help you pursue the justice and compensation you deserve. Our advocates will analyse your agreement, working conditions, and evidence to determine your true status and recover any unpaid wages, leave, and entitlements owed.