COVID-19 – Employee Vs. Contractor

May 14th, 2020

14 May 2020 – COVID-19 Employee or Contractor?

Employers versus independent contractors case (Parcel express and Mr Leota) opens the floodgates.

A well-timed Employment Court decision confirms that courier drivers are employees and not independent contractors.

Whilst the Court said the case was confined to the facts the case will have serious consequences for the courier/transport industry as the facts are generally transportable to all drivers employed within that industry as the industry uses similar contract and similar arrangements throughout.

Indeed, Freightways, one of the biggest courier operators sought leave to appear as an opposing party to the case on the basis that it ran business in a similar way to Parcel Express.

Mr Leota was the little guy who took on the giants of the courier industry. His challenge came as the result of Parcel Express terminating his agreement with them because he challenged something that did not seem right. He believed he was being exploited by being asked to do something that was not in the arrangement.

What is interesting is that Mr Leota had signed a contract in which he accepted he was a contractor. However, the reality confirmed otherwise, and the Court was prepared to look beyond the signed contract to look at the reality and true nature of the arrangement.

Mr Leota succeeded in his claim. He was declared to have been an employee on the basis that Parcel Express had a high degree of control over him and that control went well beyond what was mutually necessary or beneficial to the business and the contractor’s business interests. The Court found a high degree of exploitation. The benefits flowed in one decisive direction towards Parcel Express.

The Court found that Mr Leota had no real autonomy over his work. Parcel Express controlled every aspect of the work. The Court described the essential issue being “whether the worker serves their own business or someone else’s business”.

This decision will have serious implications for Parcel Express and benefits for Leota.

Possible financial implications for Parcel express mean retrospective liability for PAYE (with attendant penalties and interest for non-payment), holiday pay and ACC levies. There may be minimum wage issues.

For Mr Leota he will be entitled to claim all benefits he ought to have had as an employee such as holiday pay together with reimbursement of monies he paid wrongly as a contractor. He can now claim a personal grievance for unjust dismissal and seek compensation and wage losses.

The consequences for Parcel Express and the wider industry will not be small. Watch this space.

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