Who is Actually The Employer?

Published on: 03 September 2014

With the government taking submissions on the vulnerable workers bill and the impending changes to the health and safety legislation you can expect the spotlight to be on employee, contractor and agency employment relationships.

If you are engaging staff from an agency or engaging a contractor it is paramount to fully understand the rules of engagement and have proof of due diligence around the actual relationship. To merely say “I just pay the bill I am given” or “they are not my employee” will not be a defence in the eyes of the law.

If people are working for a company (now called a PCBU Person Conducting a Business or Undertaking) there is a legal and moral obligation to ensure their safety and compliance with employment law. Every employee (an employee under the ERA Act is a person who is employed by an employer to do any work for hire or reward under an employment agreement) must be paid their minimum entitlements.

If the employee is in fact a contractor then greater management of the process is required. Contractor management needs to have firm policies in place that cover things like, insurance obligations (do they have public liability insurance), supply and replacement of tools, equipment, safety equipment, permits to work, disputes process, right to contract out the role. For example, in a standard employment contract an employee must undertake to do the duties personally, however a contractor is permitted to contract out their duties (that means anyone can undertake those duties, they do not have to do it personally) then where does the responsibility lay for the PCBU in regard to health, safety and liability?

At Shamrock Recruitment we have a quality management system and robust process in place that ensures compliance with all legal aspects and as such we provide evidence at the start of the relationship that allows a PCBU to be assured the person working for them is “our employee” and as such cannot contract out of their obligation.

If you’re using a recruitment agency for temporary or short term staffing please ensure that you know if they are contactors or employees of the recruitment agency. An honest recruitment agency will have no issue in giving you a copy of all the necessary paperwork that proves the candidates are being paid their entitlements (holiday pay, public holidays, sick pay, ACC levies, PAYE and provision of safety equipment) and this is not just a copy of pay slip. Pay slips will not show if the employee is being exploited and if they have to pay their own entitlements when they are not valid contractors.

Good risk management practices would dictate that PCBU’s as the end users of recruitment agencies should be in a position to have all the facts relating to the employment of all and any staff on their sites. In the event of a dishonest agency misrepresenting the employment relationship (hoping to make a higher margin by appearing to charge less), a contractor who is not up to standard (a person who is absent from work) or an accident or incident that causes injury (serious harm), damage or a product recall (quality breach) will be vital if there is any liability, media involvement or charges laid in court.