The Coalition Government recently announced a proposal to enhance clarity when determining whether someone is a contractor or an employee.
The principle of providing certainty to employers, employees, and independent contractors as to how they are classified and the implications arising from their status is sound.
However, what we have seen to date appears too light on detail for such parties to be able to draw firm conclusions and alleviate status anxiety.
The proposed “gateway test” has four requirements:
- There must be a written contract stating the person is a contractor.
- The business must not restrict the worker from working for other companies, including competitors.
- The business must not require the worker to be available at specific times or for a minimum number of hours or it must allow them to subcontract their work.
- The contract must not be liable to be terminated if the worker declines additional tasks beyond the existing agreement.
The scope for unfair treatment Is a source of concern
While further detail will emerge in time, the gateway test as it stands has the potential for unintended consequences.
Just as there are opportunistic employees, there are also less scrupulous employers who may use such an approach to avoid the costs of actual employment and exploit workers who have less knowledge about their employment rights.
The potential for unfair treatment in this area is concerning, especially given the number of examples we already have of other forms of workplace exploitation, amid limited resourcing at MBIE to effectively enforce compliance with legislation.
As with most areas of workplace legislation, the devil and the angels are in the details. The hope is that the proposed legislation will crystalise the intent of these changes to provide clarity and support innovative ways of working, without giving unintended licence to those less scrupulous who seek to take advantage of others for their own benefit.
If you would like advice on ensuring your organisation’s employment policies are in line with current legislation, or HR support around employment agreements, please get in touch.
