Although a contract for services with an allegedly self-employed contractor may clothe the relationship with all the characteristics of self employment, simply using one of these contracts will not necessarily avoid the relationship being viewed by the Employment Relations Authority or Employment Court as that of employer and employed. Both the Inland Revenue and any industrial tribunal will be entitled to look behind the agreement at the reality of the contract. Some of the questions they might ask are:

• Is this the contractor’s only work, or does he work for others too?

• Does the client/employer control how the work is done?
• Are the hours fixed by the client/employer or can the contractor choose when he works?
• Does the contractor use his own equipment?
• To what extent is the contractor at risk as a self-employed person (i.e. is he liable for any damage, loss)?
• Is self employment normal for this kind of work?
• Do customers see the contractor as an integral part of the client/employer’s business rather than a separate entity?

If your contractor challenges his legal status and is found to be an employee, the financial consequences for the client/employer can be costly. For advice on this issue, or any other employment contracts, ring me and have a no-charge chat.  You can be complaint in just a few hours.

​It seems unfair – an employer cannot dismiss an employee on the spot, even for serious misconduct, and yet an employee can abandon his employment or not give the required amount of notice, seemingly without any penalty.  It makes employers feel angry and helpless.   That is why clauses began to be written into employment contracts that allowed the employer to, in such an event, withhold some or all of the employee’s final wage or holiday pay.  It’s a good start.  However, in a case before it in 2013, the Employment Court determined that such a clause does not give an employer carte blanche to withhold a sum that is disproportionate to the inconvenience caused by the employee leaving before working the notice period specified (Livingston v G L Freeman Holdings Ltd).  In other words, the forfeiture clause cannot act as a penalty against the employee;  it must simply be a reflection of any actual costs that the employer incurs, e.g.  hiring a temporary worker to cover the position until a permanent replacement is found, having to pay overtime to existing employees, or losing work due to the employee leaving in an untimely fashion.  And, before you ask, no, an employer cannot claim that the stress caused by an employee leaving thus, is an actual cost.  Companies are not recognised as human, and it is most often a company which is the employer.
Of course, at law, there is nothing to stop an employer having a forfeiture clause that allows for a penalty as well as any costs incurred, but it would have to be proportionate to the loss.  Ms Livingston was penalised just $500 by the Court under secs. 134 and 135 of the Employment Relations Act for breach of contract, while the employer had to pay the nearly $2,000 it had withheld from her.  She had worked just two weeks of a required six weeks’ notice period.
So where does this leave an employer whose employee has breached their contract?  I would suggest, to save legal costs, filing a request for a penalty themselves.  It is a very straightforward process that is done through the Employment Relations Authority.  There is a cost of around $75 to do this, and the staff at the Authority are always more than happy to walk an employer through it.  It is not difficult.  For many employers, it’s not so much the inconvenience and stress of such an event, but the unfairness of it, especially when such employees often demand that their final wage and holiday pay be given to them.   I am all for both parties being held accountable for their obligations under their contracts, so I strongly recommend employers take this course of action. 
 
ABANDONMENT OF EMPLOYMENT
 
This is a different animal to an employee not working a required notice period.  This is when an employee fails to show for work and fails to contact the employer.  A good employment contract would have a clause that allows for that eventuality, stating that after a specified period of time, normally 2-3 days, the contract is deemed terminated by the employee, not the employer, due to his or her unnotified absence.  It is required of the employer that it make one or more attempts to contact the missing employee; after all, he/she may be lying in a hospital bed with broken limbs, unable to fulfil the obligation of ringing in, or some such other event that is not the employee’s fault.  Then the situation changes to perhaps allowing sick leave, annual leave, or even unpaid leave to give the employee time to recover from the event.  So it is an important point for an employer to remember if an employee goes AWOL.  However, in the absence of such a situation and the employer invokes the abandonment clause, and said clause also has a forfeiture clause, then all the above stated for failure to work out a notice period also applies to this form of termination of employment.

​Any discussion on disclosure of information to employees has to include the subject of good faith in the employment relationship.  That is because Part 1 section 4 of the Employment Relations Act 2000 (ERA) requires that both parties MUST         deal with each other in good faith and, further, in sec. (4) (e) of the same part, redundancy is specifically mentioned.  In sec. 1A (c) (i) of Part 1, which this blog is concerned with, the employer is required to provide an employee access to information relevant to the employee’s continuation of employment if the employer is considering making the employee redundant.  Therefore, the question arises, how much information is required to comply with this section of the ERA?  The answer to that is in the next clause of the Act, (1B), which states:
However, subsection (1A)(c) does not require an employer to provide access to confidential information--
(a) that is about an identifiable individual other than the affected employee if providing access to that information would involve the unwarranted disclosure of the affairs of that other individual:
(b) that is subject to a statutory requirement to maintain confidentiality:
(c) where it is necessary, for any other good reason, to maintain the confidentiality of the information (for example, to avoid unreasonable prejudice to the employer’s commercial position). 
Or, to put that in plain English, employers do not have to disclose confidential information if there is good reason to maintain the confidentiality of that information. Good reasons include:

• complying with statutory requirements to maintain confidentiality;
• protecting the privacy of individuals;
• protecting the commercial position of an organisation from being unreasonably prejudiced.

Clause (1B) does not affect an employer’s obligations under the Official Information Act 1982, or the Privacy Act 1993. 
To sum the above up, an employer must give any employee who may be affected by redundancy relevant confidential information about themselves.  An employer does not have to give him or her confidential information about another employee if, by doing so, it would involve an unwarranted disclosure of the affairs of that person.  This would be a good place to give a definition of confidential information.  It is information subject to an express or implied mutual understanding of secrecy. 
This area of employment law is difficult for employers because even with the guidance provided by the ERA, it can sometimes be very difficult to determine what is, or is not, confidential information.  For example, what information will or will not cause unreasonable prejudice to an employer’s commercial position?  An employer may think one thing; his lawyer may think another; and his accountant yet something else.  And, on that very unhelpful note, I will close because I may think something else as well. 
P.S.  No, seriously, the place to look for the answer is the judgements of the Employment Relations Authority and the Employment Courts.  I just wished to make the point that, for many employers, they simply wouldn’t know.  If he or she is thinking of making an employee redundant, it may pay to get some advice on the process rather than possibly face an unjustified dismissal claim.