A Brave New World of Contracting
The New Zealand Initiative in a document Prescriptions for Prosperity 2026 has provided a helpful list (or more cynically a list of instructions) for a conservative government to further shift employment costs on to workers. Amongst other things these include slashing the minimum wage for under 20s – or in the NZI’s positive spin “Establish a Training Wage at 60 percent of adult minimum wage for workers under 20, available for their first 12 months with any employer”. Presumably it takes that long to wash dishes or restock shelves in a supermarket. This is justified as young workers “may be sharing in household expenses with other earners, either family or flatmates.” This theme was followed up in a recent opinion piece in the Post.
But is the solution already there?
Fortunately the solution to this, and other problems of worker protection, are already able to be solved by the Coalitions Government’s Brave New World of Contracting enabled by section 6(7) of the ER Act which defines a specified contractor.
A contractor of course receives virtually none of the benefits or protections provided to an employee – no minimum wage, no holidays, no collective rights, no employment security. And for an employer less costs and administration.
A new world of “flexible” labour markets and “freedom of contract” at the flick of an amendment. What isn’t there to like about this if you are using labour!
Of course section 6(7) does provide a few formal prerequisites if a worker is to be a specified contractor.
But in law form may be located at a considerable from substance. Indeed it was this distance that led to the UK Supreme Court, in the leading Autoclenz case (2011), disregarding contractual clauses not dissimilar to those in s 6(7) and preferring to consider the reality of the work relationship. This was until recently the case in New Zealand. Now form will displace reality.
So what might this brave new world look like?
Masie has just received an offer of work from MegaSupermarkets.
Offer of employment as an independent contractor.
Kia ora Masie,
Following consideration of your application we are pleased to advise you that you will be added you to our list of approved independent contractors once you have signified your agreement to the following terms and conditions:
(i) Before becoming eligible to be offered work you must attend a two-day familiarisation course to ensure that you are aware of our policies relating to operating procedures, health and safety and other matters. Attendance at this course is not paid;
(ii) You must also confirm that had a reasonable opportunity to seek independent advice before entering into this arrangement.
(iii) Work will be offered to you and must be accepted via the MegaSuper App. This will be downloaded as part of your familiarisation course;
(iv) Each offer of work is only for the work and time period specified in that offer;
(v) All work will be paid for at an hourly rate of $20/hour. Schedular tax payments or other amounts may be deducted from that amount to comply with IR requirements;
(vi) You are not restricted from performing work for any other person, except while performing work for MegaSupermarkets;
(vii) You are not required to perform, or be available to perform, work for MegaSupermarkets.at a specified time or on a specified day or for a minimum period;
(viii) This arrangement may not be terminated for the reason that you decline any work offered to by MegaSupermarkets that is additional to the work that you agreed to perform under this arrangement.
The reality
Having signed up to this offer and completed the familiarisation course Masie finds that:
(a) About thirty per cent of her workmates are employees but the rest are also contractors.
(b) Work is offered on a reasonably regular basis although often on very short notice. She also finds that after turning down offers further offers are not made for several days except in unusual circumstances. Her workmates confirm this is common practice and mention a number of cases where multiple refusals seem to result in offers declining to zero or to sporadic offers on very short notice.
(c) Offers are always made for work on public holidays when it seems virtually all workers are contractors.
(d) Her flatmates who work in hospitality have also become contractors on a “revenue-share” basis, that is their remuneration varies with the number of customers on any given night.
The future
One suspects that many major employers or employer organisations will be well aware of the opportunities offered by section 6(7) but are likely to be bidding their time before taking advantage of the opportunities offered until after this year’s election.
Employers are unlikely to turn away from employees completely, particularly where there is a preference for workforce stability, worker expertise and because valuable and productive employees are likely to prefer a standard employment relationship. The Court of Appeal’s attempt in the 1990s to introduce rolling employment-at-will through the back door was not taken up.
However many industries, such as construction, have already moved to a contractor model and this is likely to be a model that will be attractive to employers of casualised labour and more precarious forms of labour. Algorithmic management of workers employed on an at-will basis will make the model more attractive and encourage its take-up.
A postscript
In my last post I referred to a piece in the New Daily commenting on shifting political allegiances in Australia. A piece on the same theme by David Peetz has been published in The Conversation. The opening line: “Class has always mattered, and now social democratic parties that sprung from a working class — including the Australian Labor Party – are finding out why…”