A Labour Party Bill that would have ensured contractors are paid the minimum wage is facing defeat because United Future leader Peter Dunne has withdrawn his support for it.
Mr Dunne voted for the Bill on its first and second readings, which it passed by 61 votes to 60.
The Government and employer organisations oppose it.
Mr Dunne now says while the Bill’s intention is sound, he doesn’t think it’s “the appropriate mechanism” to protect vulnerable contractors.
He says he’s been talking to Workplace Relations Minister Michael Woodhouse, and has been given an undertaking that other “meaningful steps” will be taken to address problems contractors are facing.
Labour MP David Parker drafted the Bill.
He says people engaged as contractors have few of the protections given to employees under the Minimum Wage Act.
He uses pamphlet deliverers as an example, saying that when their work is broken down on an hourly basis they often earn less than the statutory $14.75 an hour.
Government MPs say the Bill is too prescriptive.
The Employers and Manufacturers Association, and BusinessNZ, say it would make many contracts unworkable.
I’m glad Peter Dunne saw sense. This bill would have ended up effectively turning contractors into employees.
He did the sensible thing and negotiated some stuff from the Government in exchange for deciding not to back the bill. His release says:
“While the intent of this Bill, to provide protection to vulnerable contractors who fall outside the usual bound of the employee/contractor relationship, is sound, in the end I did not consider it to be the appropriate mechanism to provide the necessary protections to vulnerable contractors.
“This is especially so as the Bill blurs the distinction between contractor and employee in such a way that it could result in an unintended consequence of confusing the interpretation of employment law in those sectors identified in the Bill to the extent of actually placing the contractor in a worse remunerative position.
“There is also a lack of clarity as to how pervasive the problem facing contractors is, as there is, on the face of it, little empirical evidence to suggest there is widespread exploitation of contractors.
“Vulnerable contractors do not win in that situation; the only ones who do are employment lawyers,” said Mr Dunne.In light of this, Mr Dunne sought and received an undertaking from the Hon Michael Woodhouse as the responsible Minister to take meaningful steps in addressing the problems that contractors may be facing.
“Minister Woodhouse has confirmed to me today that he has asked the Labour Inspectorate to provide an assessment of the extent of any contractor exploitation that they have investigated or suspect is happening within the workplace,” Mr Dunne said.
“Further, Minister Woodhouse has asked the Labour Inspectorate to identify any issues around resourcing for investigating breaches and has confirmed to me that should any issues be identified that these issues will be remedied through any necessary legislative, regulatory or other appropriate mechanism.
“Finally, the Minister has agreed to address the adequacy of existing definitions of what constitutes an employee and contractor in the modern working environment.
“On the basis of that assurance and in light of the concerns I have about the mechanisms in this Bill, I am no longer convinced that it is the answer to the problem it has set out to solve.
A good outcome.