Three Foot Six Ltd v Bryson
[2004] NZCA 276
•12 November 2004
IN THE COURT OF APPEAL OF NEW ZEALAND
CA246/03
BETWEENTHREE FOOT SIX LIMITED
Appellant
ANDJAMES BRYSON
Respondent
Hearing:12 August 2004
Bench:McGrath J
William Young J
O'Regan JAppearances: P M Muir and T J Dobson for Appellant
M E Gould for Respondent
Judgment:12 November 2004
JUDGMENT OF THE COURT
The appeal is allowed. The decision of the Employment Relations Authority is restored. In respect of this appeal, the appellant is awarded costs of $6,000 together with disbursements (including travelling and accommodation expenses if any) to be agreed between the parties and in default of agreement to be fixed by the Registrar. Costs in the Employment Court are to be determined in that Court.
REASONS
McGrath J (dissenting) [1]
William Young and O’Regan JJ [36]McGRATH J
Introduction
[1] This is an appeal brought by a film production company against a judgment of the Employment Court, delivered by Judge Shaw, which held that the respondent was employed by the appellant between 16 October 2000 and 30 September 2001 under a contract of service. The sole issue in the appeal is whether the respondent was an “employee” during the relevant period within the meaning of that term under s 6 of the 2000 Act.
[2] Three Foot Six Limited was established to administer the production of The Lord of the Rings film trilogy in 1999. The respondent joined it in April 2000, on secondment from Weta Workshop Ltd, to work on the production of the films. Initially he was a temporary model maker but he later became a model technician. He entered into a written contract with the appellant, which was described as a “crew deal memo”, on 30 October 2000. This governed the terms of his engagement from 16 October 2000 until he was made redundant on 30 September 2001. The crew deal memo stipulated that the respondent was engaged by the appellant as an independent contractor and not as its employee.
[3] Following the termination of his employment the respondent attempted to bring a personal grievance proceeding before the Employment Relations Authority under the Employment Relations Act 2000. The appellant raised the preliminary point that the respondent was not an employee but a contractor, who was unable to bring a personal grievance proceeding under the 2000 Act. The Authority upheld this contention which precluded the respondent from proceeding with his grievance. He appealed to the Employment Court against the Authority’s decision, successfully. The present further appeal is brought, with this Court’s leave, against the Employment Court’s decision.
[4] I adopt the statement of the background facts set out in the judgment of William Young and O’Regan JJ, which is the judgment of the majority of the Court. That judgment decides that the respondent was an independent contractor, and not an employee, and accordingly allows the appeal. I have reached a different conclusion as to the status of the respondent during the period concerned and in this judgment I set out my reasons for doing so.
The TNT Worldwide Express case
[5] Under the 2000 Act, as under the Employment Contracts Act 1991, the rights, duties and protection of employment legislation extend to all employers and employees. Under the 1991 Act the definition of “employee” had been expressed in minimalist terms so that the question of whether in any case a person had been engaged as an employee or an independent contractor turned largely on the application of common law principles. Section 6 of the 2000 Act, by contrast, states some guiding principles concerning who is an employee although the common law tests remain relevant. These tests were considered by this Court, in the context of the 1991 Act, in TNT Worldwide Express (NZ) Limited v Cunningham [1993] 3 NZLR 681. As s 6 was intended to modify the position under the 1991 Act, it is helpful to understand the principles stated in the TNT Worldwide Express case as a starting point for applying that section.
[6] Mr Cunningham was a courier driver who was contracted to TNT Worldwide Express (NZ) Limited to provide a courier service on such routes as the company directed. He was required to provide his own vehicle, keep it insured in a scheme approved by the company, and to hold a goods service licence at all times. He was also required to have the vehicle painted in the company’s colours, display its logos and wear a uniform chosen by the company. He was allotted 20 days of sick leave each year, but assumed the responsibility of arranging for and funding a replacement driver (who also had to be approved by the company) if on sick leave. Mr Cunningham received a fixed minimum salary, with additional payments made on a per trip basis. He was precluded from doing any other courier work. His agreement with the company was stipulated to be a contract for services.
[7] Separate judgments were delivered by the five members of the Court. Cooke P observed that the label attached to the contract was of little or no importance (at 684). Of greater significance was the intention of the parties which was revealed through the interpretation of the contract as a whole. Cooke P said (at 686):
When the terms of a contract are fully set out in writing which is not a sham (and there is no suggestion of a sham in this case) the answer to the question of the nature of the contract must depend on an analysis of the rights and obligations so defined. The writing may turn out not to be complete. For instance, the terms could later be varied or added to by oral agreement. But there has been no finding of any agreed variation or addition in the present case, nor as I understand it has there even been any claim to that effect.
[8] The President then added that the operation of the contract might, as a subsidiary factor, indicate the degree of control which the contract contemplated.
[9] In emphasising the terms of the agreement that the parties had entered into, Cooke P rejected an approach which sought to counter any element of bargaining power by which the principal was able to insist that the engagement be on the basis of a contract for services. Nor was the fact that the position was one in which an employee could equally have carried out the work sufficient to establish a contract of service (at 689).
[10] Hardie Boys J also followed an approach in which he sought to rely on the intention of the parties, ascertained from the words they used in their contract, with such assistance as was available from the surrounding circumstances. He said (at 698):
Where persons wish to enter into a contract for services the Courts should not frustrate that wish by unswerving adherence to a test which looks to the effect of what they have agreed rather than to the purpose for which for which they agreed to it.
He added that the requirement and acceptance of a considerable degree of control over the person providing the services was not to be seen as a reason for treating the contract as other than what on overall consideration it truly was.
[11] Casey J, similarly, adopted an approach whereby the nature of the parties’ relationship was to be ascertained from consideration of the contents of the contract, read in light of all of the surrounding circumstances. He considered the contract with a view to ascertaining the degree of control and integration which it provided for as well as the underlying economic reality of the arrangement entered into. Casey J concluded that although his principal exercised a degree of control over Mr Cunningham, he was in business on his own account and his claim to be an employee failed.
[12] McKay J felt able to agree with Cooke P and Casey J, indicating that he did not see substantial difference between them. He said that the particular services could be provided by either employees or contractors, and the degree of control stipulated by their contract would indicate which choice the parties had made.
[13] The fifth Judge, Robertson J, held (at 701):
The case is to be determined by an analysis of the contractual relationship having regard to the arrangement they entered into and its operation. The fact that in the written contract they declared that Mr Cunningham was an independent contractor and not an employee is not determinative. But that along with the other manifestations of their relationship as contained in the written contract are to be weighed and assessed in reaching an objective determination.
[14] The TNT Worldwide Express decision is relevant to the present appeal, as it contains the principal statement of the courts on the approach that was to be taken in ascertaining whether a person was an employee under the 1991 Act. Accordingly it provides an important part of the legal context against which the altered definition of employee in the 2000 Act is to be read. There are differences between the five separate judgments that were delivered in the TNT case as to the correct approach but, with the possible exception of that of Hardie Boys J, they are largely differences of emphasis rather than substance. The main common theme is that whether a person engaged is an employee or an independent contractor turns on an analysis of contractual rights and obligations, spelt out by the contractual terms, considered objectively. Any subjective statement or label given by the parties to their relationship is less significant. There were also shades of difference as to the extent that particular indicators, such as control and integration of the person into the principal’s business, are important in making the final assessment of a person’s status. The Court in TNT Worldwide Express was unanimous that the courier driver was an independent contractor.
Legislative history of s 6
[15] The perception following the Court’s judgment in TNT was that relationships were to be characterised under the 1991 Act predominantly by reference to contractual form. This is reflected in the explanatory note to the Employment Relations Bill that was introduced to the House of Representatives on 13 March 2000:
With regard to dependent contractors, the Bill extends access to the rights, obligations and protections of employment law to those persons who are currently classified as “independent contractors”, but are in reality working in situations that are identical to an employment relationship. To this end, the Bill provides clear statutory direction in the application of specific legal tests when deciding whether individuals or groups employed as nominally independent contractors are, in fact, actually employees. The primary consideration is given to the reality of the relationship, rather than the nominal “label” given by the parties to it.
The last sentence, however, mischaracterised the judgments in the TNT Worldwide Express case which, as indicated, were more concerned with the terms of the whole contract, and its effect, than the label given by the parties to the relationship.
[16] Under cl 6 of the Bill, as introduced, it was provided that the extent to which the work of the person engaged was subject to the control and direction of the principal, or was integrated into that principal’s business, would be the primary consideration in any judgment on the engaged person’s status. How the agreement characterised the relationship was to be given less weight.
[17] In the report back to the House by the Select Committee, however, cl 6 was substantially redrafted and the Bill was enacted with cl 6 in its present form. Of the redrafted cl 6 the Select Committee said at p 6 of its report:
Our intent in addressing these concerns has been to amend the clause to provide increased clarity regarding the policy intent. The amendments will ensure that volunteer workers are excluded from the effects of clause 6, and that the employment institutions, such as the Employment Relations Authority (the Authority) will continue to be directed to look at all relevant factors, including the intention of the parties, in determining the employment status of individuals. However, the label applied to the relationship by the parties cannot be a determining factor. To promote this, clause 6(2) has been redrafted, and new subclauses 3 to 6 inserted.
[18] The redrafted provision clearly reflected compromise amongst the political forces which eventually caused the Bill to be passed. But the Select Committee’s comment concerning the change provides little assistance in clarifying the meaning of the language used in s 6 in relation to the characterisation of arrangements as contracts of service or contracts for services. This Court in the end has simply to focus on the meaning of the text as it was enacted, reading it in the context of the principles stated in the TNT Worldwide Express case concerning the previous legislation to which s 6 was directed as a reforming measure. Only s 6(1), (2) and (3) need be analysed.
Section 6 and the meaning of “employee”
[19] Section 6, so far as relevant, reads:
6 Meaning of employee
(1) In this Act, unless the context otherwise requires, employee –
(a)means any person of any age employed by an employer to do any work for hire or reward under a contract of service; and
(b)…
(2)In deciding for the purposes of subsection (1)(a) whether a person is employed by another person under a contract of service, the Court or the Authority (as the case may be) must determine the real nature of the relationship between them.
(3)For the purposes of subsection (2), the Court or the Authority-
(a)must consider all relevant matters, including any matters that indicate the intention of the persons; and
(b)is not to treat as a determining matter any statement by the persons that describes the nature of their relationship.
[20] Under s 6(1)(a) the respondent will be an employee if employed by the appellant to do any work under a contract of service. Under s 6(2), in deciding whether the respondent was employed under a contract of service, the Court must determine “the real nature of the relationship between” the respondent and the appellant. For these purposes, under s 6(3)(a), all relevant matters must be considered, including any that indicate the intention of those persons. However under s 6(3)(b) the statement in their contract that the engagement is under a contract for service is not a determining matter.
[21] The Act thus requires an assessment of all matters relevant to the real nature of the arrangement. The parties’ intentions concerning the status of the person engaged are expressly included among those relevant matters. These may be subjectively indicated, as by a statement of intention concerning the engaged person’s status, sometimes called a “label”. While such a statement is relevant as an indication of intention it is not determinative of the real nature of the relationship. The parties’ intentions may also emerge objectively from an analysis of the contractual terms particularly where they reveal indications of a kind that have traditionally been seen by the common law as pointing to a contract of service or a contract for services.
[22] The contract will not, however, necessarily provide a complete picture of the real nature of the relationship under s 6(2). Evidence of the way that an engagement operated in practice may significantly contribute to it. It may do so for example by indicating that the reality of the relationship is not what the contractual label or other terms reveal. The decision of the Queen’s Bench Division in Market Investigations Ltd v Minister of Social Security [1969] 2 QB 173 makes plain that it has long been accepted that at common law there is no single indicator test. Control over the manner in which work is performed is not decisive but, subject to countervailing considerations, a high degree of control may point to an engagement being a contract of service, as may the high degree of integration of the work being done into the principal’s business. Indications that a relationship may be in the nature of a contract for services include the engaged person’s ownership of the tools with which the work is done, the chance of profit or risk of loss, and whether remuneration is at a rate turning on the volume of product (or service) delivered. It has also been said that:
The question can only be resolved by examining the whole of the various elements which constitute the relationship between the parties (Montreal v Montreal Locomotive Works Ltd [1947] 1 DLR 161, 169 per Lord Wright, cited in Market Investigations Ltd at p184).
[23] As indicated, s 6(2) requires that the assessment be of “the real nature of the relationship”. The Act’s emphasis on the real nature of the relationship requires that, in cases where the real nature of the work as constituted by the agreement’s substantive terms and its objective features point clearly to an employment relationship, there will be little scope for the parties to agree that the relationship is nonetheless a contract for services. In cases where the real nature of the relationship is less certain, the parties will have greater freedom to constitute their relationship in either way.
Application of the approach
[24] In applying this approach to ascertain the real nature of the relationship in this case, I focus on the relationship between the respondent and the appellant, although I do briefly address the relevance to that question of the way engagements generally in the film industry are constructed.
[25] The appellant is described in the completed crew deal memo which he signed as “the contractor” and there is an express provision in its incorporated standard terms and conditions which reads:
INDEPENDENT CONTRACTOR: The Contractor is engaged as an independent contractor and not as an employee of the Company…
[26] The crew deal memo is throughout expressed in the language of independent contracting, including its provisions for payment, deduction of taxation and dismissal. These are, however, provisions which are largely of a mechanical kind. They do not provide for particular features concerning these matters which are indicative of a contract for services. Rather they simply reflect the independent contractor label given to the nature of the engagement. All these considerations are clearly relevant to the real nature of the relationship and to some extent indicate that the parties’ intentions were that their relationship should be under a contract for services.
[27] Arguably a further indicator of a contract for services is the project nature of the work that the contract provides for. It is of a kind which has inherent fluctuations in manpower needs and the potential for a limited term of engagement.
[28] On the other hand, there are many features of the respondent’s engagement and actual work which point to his engagement being under a contract of service. The respondent was, during the period covered by the crew deal memo, working in a situation in which his work the subject of a high degree of supervisory control and was substantially integrated into the business of the appellant film production company which was concerned with The Lord of the Rings trilogy project. In particular, the respondent’s work was conducted entirely at the direction of the appellant. He was trained by the appellant in the work that he was engaged to do. He did not set his own hours and his work was effectively fulltime. If the particular work he was engaged to do was completed early he was allocated further different work. He was not at liberty to enter into arrangements to use his skills with any person other than the appellant.
[29] The respondent was a sole trader but he was not, in reality, in business on his own account. He could not profit from the particular way in which he did the job. He had no financial risk in respect of the undertaking. He was remunerated for the hours he worked. Tools were provided to him although he made some use of his own equipment. He did not in any way engage assistance from others for the work he was doing. He had no personal investment such as might occur in a franchise type operation. He was unable to delegate the carrying out of any part of his work.
[30] It is true that the respondent’s engagement was on work of a project kind linked to The Lord of the Rings trilogy. I do not however consider the project nature of the work to be a strong indicator of a contract for services, at least in the present context. The duration of the respondent’s engagement actually extended over nearly 17 months, which is a period of significant length. Furthermore s 6(1) refers to “any work”. I accept however that an engagement for a very short period in some contexts may be indicative of a contract for services.
[31] To my mind these features of the arrangement strongly suggest that the underlying nature of the parties’ relationship is one of employment under a contract of service. The force of the contrary indications of intention of the parties, derived largely from the contractual expression of their relationship in the language of contracting, carries little weight in assessing its real nature, because of the largely mechanical nature of the provisions. The impression these give is that they were included for the purpose of labelling of the relationship in a way that is covered by s 6(3) and thus not determinative of its nature.
[32] For these reasons my overall assessment of the real nature of the relationship between the appellant and the respondent over the period covered by the crew deal memo is that it was one of employment under a contract of service.
[33] In my view the main point of difference between my approach and that in the judgment of the majority concerns the importance the majority places on the film industry’s almost invariable practice of contracting for services. I recognise that engagements of persons to perform services in this industry are virtually always under contracts that have been framed as contracts for services and have no doubt that in many instances that framework will be consistent with the 2000 Act. But to say that film industry workers are all independent contractors is a label argument. This Court is required by the 2000 Act to assess the real nature of the respondent’s relationship with the appellant and to determine its individual character (which may be shared with certain other employees). While it might be said that the respondent is an ordinary worker in an industry where such persons are independent contractors, there is a risk in applying such an argument that a whole industry will be treated as excluded from the provisions of the Act where nothing in the language of the statute indicates an intention to deal with engagements on an industry wide basis.
[34] The principle stated in Whitcombe & Tombs Limited v Taylor (1907) 27 NZLR 237 that a well established custom or practice may become part of a contract cannot apply in a situation where individual circumstances are by statute the required basis of the determination. If Parliament’s purpose was to exclude engagements for services of persons in the film industry it could have made provision for them to be covered by the exclusionary provision in s 6(1)(c).
[35] It is accordingly not open in my view to the Court under the definition of “employee” in the 2000 Act to reach a decision that has general application to the film industry, although that was the way that the argument for the appellant was presented in this case by Ms Muir for the appellant. I would conclude that the engagement of the respondent was under a contract of service and dismiss the appeal.
WILLIAM YOUNG AND O’REGAN JJ
(Given by William Young J)
Table of Contents
PARAGRAPH NUMBER INTRODUCTION [36] THE FACTS [37] THE TERMS OF THE CONTRACT [48] THE INDUSTRY BACKGROUND [53] THE LEGAL BACKGROUND THE COMMON LAW [62] THE EMPLOYMENT CONTEXT [66] THE EMPLOYMENT CONTRACTS ACT [68] THE TNT CASE [69] THE EMPLOYMENT RELATIONS BILL [71] SECTION 6 OF THE EMPLOYMENT RELATIONS ACT [76] PRELIMINARY COMMENTS [77] THE JUDGMENT UNDER APPEAL [81] THE ARGUMENT FOR THE APPELLANT [92] THE ARGUMENT FOR THE RESPONDENT [93] DISCUSSION GENERAL [94] WHAT IS INHERENT IN “THE REAL NATURE OF THE
RELATIONSHIP” TEST?[101] THE SIGNIFICANCE TO BE ATTACHED TO THE FORM OF THE
CONTRACT BETWEEN THE PARTIES[103] THE INDUSTRY CONTEXT [110] THE IMPLICATIONS OF THE DECISION [112] CONCLUSION [118] THE RESULT [119] Introduction
[36] This is an appeal from a judgment delivered by Judge Shaw in the Employment Court on 14 October 2003 in which she held that the respondent, Mr James Bryson, was an employee of the appellant, Three Foot Six Ltd, and therefore, on his “dismissal”, was entitled to pursue claims against the appellant under the Employment Relations Act 2000.
The facts
[37] The appellant was formed to produce The Lord of the Rings trilogy. Also associated with this project was Weta Workshop Ltd which we assume is a related entity.
[38] For many years Mr Bryson made models as a hobby. From about 1996 he decided to do so for a living. Between February and May 1998 he worked for Weta Workshop Ltd making miniatures for The Lord of The Rings. He was laid off in May 1998. This was apparently associated with funding difficulties arising from the withdrawal of Miramax Pictures from The Lord of the Rings project. It is common ground that in 1998 Mr Bryson was engaged by Weta Workshop Ltd as an independent contractor. In his dealings with the Inland Revenue Department he acted on the basis that he was self-employed.
[39] Mr Bryson rejoined The Lord of the Rings project and Weta Workshop Ltd on 13 February 2000. He worked there until April that year. Again it is common ground that he worked for Weta Workshop Ltd as an independent contractor.
[40] At Weta Workshop Ltd he was required to have his own tools but had the opportunity to buy them from a hardware store on discounted terms which were arranged by Weta Workshop Ltd.
[41] On 3 April 2000 he was seconded to the appellant to work in its miniatures unit. This was initially for two weeks. During this period his contractual relationship (still as an independent contractor) was with Weta Workshop Ltd .
[42] At the conclusion of that two week period, Mr Bryson was invited to continue work for the appellant in its miniatures unit as an on-set model technician. After careful consideration and negotiation as to the hours he was to work, Mr Bryson accepted this offer.
[43] No formal contract in writing was entered into until October 2000.
[44] Mr Bryson’s work involved moving miniatures supplied by Weta Workshop Ltd onto the stage and preparing and embellishing them for filming. He was also required to make running repairs when required. During filming he was expected to stay on-stage on stand-by. He was trained for approximately six weeks before he was fully proficient in this role. Mr Bryson worked, when required, with the model shop crew moving miniatures to and from storage to the four shooting stages and fixing them in position. He was also engaged in model making work.
[45] The appellant initially worked from 8.00am to 6.00pm. From late July 2000 his working hours were 7.30am to 6.30pm. If he worked outside those hours he was paid over-time. The work he did was determined and vetted by the appellant. After beginning to work for the appellant, Mr Bryson acquired more tools pursuant to the discount arrangement negotiated by Weta Workshop Ltd. When working for the appellant he sometimes used his own tools (for instance his own craft-knife, cordless drill and scalpel) but also used equipment supplied by the appellant.
[46] In August 2001 the appellant announced that the miniatures unit was going to be down-sized. This policy was implemented in September 2001 and the appellant’s work came to an end.
[47] He now claims to have been unjustifiably dismissed.
The terms of the contract
[48] The only written contract between Mr Bryson and the appellant is a “crew deal memo” which Mr Bryson signed on 30 October 2000. The front page sets out the key features of the agreement, start date (in fact 16 October 2000), the services to be provided and rates of remuneration. On the reverse side, in regrettably small type, are standard terms.
[49] The scheme of the contract was that Mr Bryson was a contractor and not an employee. Payment, tax and ACC arrangements provided for in the contract are consistent with that status. So too are other provisions, for instance as to statutory holidays, arbitration, and termination. On the other hand, the terms of the contract as a whole, leaving aside those which we have mentioned, could equally have appeared in a contract of employment.
[50] It is not seriously suggested that the contract was a sham. The appellant and Mr Bryson conducted their affairs in accordance with its terms. During the period which was covered by the crew deal memo, Mr Bryson rendered invoices for money which was due to him under the contract. In his dealings with the Inland Revenue Department, Mr Bryson assumed self‑employed status and claimed deductions accordingly. He would not have been entitled to these deductions as an employee.
[51] We recognise that some of the documents generated by the appellant referred to withholding tax it deducted from money due to Mr Bryson as PAYE. This was explained in evidence as being due to rigidities in the software utilised by the appellant. What was deducted was at the rates applicable to contractors and was accounted for as between the appellant and the Inland Revenue Department as withholding tax. We do not see this misnomer as material to the genuineness of the contractual arrangements.
[52] The terms of the crew deal memo are based generally on guidelines for the engagement of crew produced by the New Zealand Film and Video Technicians Guild Inc.
The industry background
[53] There are many reasons why firms often prefer to obtain services otherwise than through employment contracts: simplified payroll and human resources administration, freedom from fringe benefit tax and ACC requirements, greater flexibility in terms of dealing with workers, and, of course, avoidance of the risk of personal grievance procedures.
[54] These advantages apply, to a greater or lesser degree, in any (or virtually any) commercial situation in which a choice is required to be made between contracts of service or contracts for services. But it appears that they are seen as particularly important in the film industry. Indeed, those working in the New Zealand film, television and commercials production industry (to which we will refer generically as “the film industry”) do so overwhelmingly as contractors rather than employees.
[55] There are particular features of the film industry which have encouraged the practice of obtaining the services of film crew as contractors rather than employees. These include:
1.The possibility of a project being terminated at any time. Those contemplating the funding of films are likely to be discouraged if there is a prospect of residual liabilities associated with film crew having employee status with consequential entitlements (such as holiday pay) and the right to make open-ended claims associated with dismissal.
2.Constant fluctuation of man-power requirements.
3.The specialised nature of the services which many film crew provide and their consequent desire for flexibility including the ability to work as and when their services are required.
4.The short-term nature of many productions and thus the project-based and intermittent nature of screen production.
[56] Consistently with New Zealand industry practice, the Inland Revenue Department accepted that film crew engaged by the appellant were properly regarded as independent contractors.
[57] Industry practice in other countries is different. In the United States of America film production crews are exclusively employees In the United Kingdom, Canada and Australia most of those working on feature films are employees rather than contractors.
[58] The industry context raised by the case is of some interest.
[59] The drift of the evidence establishes that application of the Employment Relations Act to the New Zealand film industry would significantly increase costs and create circumstances of uncertainty. This would be of concern to those who have the choice whether to make films in New Zealand. The costs (as anticipated by employers) of applying the employment law regime to film crew are likely to be reflected in the remuneration employers are prepared to pay. Further, commonsense suggests that any lessening in the competitive advantage of New Zealand’s film industry will have the tendency to reduce the work which will be carried out in this country. So the thrust of the evidence is that the corollary of allowing employment protection to Mr Bryson is likely to be to the detriment of the industry as a whole.
[60] Considerations of this sort are not determinative. If the level of protection which the law provides to employees exceeds what would otherwise be market norms, there are likely to be consequences in relation to other parts of the packages offered to employees. There are also always likely to be downstream adverse effects on competitive position. The Employment Relations Act reflects a policy that, in general, such effects are an acceptable corollary of the benefits provided by an employment protection regime. As well, the New Zealand legislation is consistent with international standards and broadly comparable legislation in other jurisdictions with similar legal systems.
[61] The problem is nonetheless acute in the film industry. It is not inconceivable that the ability of the New Zealand film industry to compete against well-established film industries in other countries has, in part, been associated with the willingness of film crew in New Zealand to work flexibly and as contractors. Indeed, that this has been the almost invariable norm in New Zealand suggests that there are underlying structural reasons why firms in this industry have avoided the use of contracts of employment. If this is the case, it follows that interference with existing practice in the industry may well have serious implications for those who work in it.
The legal background
The common law
[62] The distinction between contracts of service and contracts for services has often been fundamental to the operation of various statutory regimes. For this reason, there has been much litigation as to how particular relationships should be categorised.
[63] In the sort of context in which disputes tend to arise, it is usually legitimate to describe the party acquiring services as the “employer”, using this word in an ordinary rather technical sense, and the person supplying the services as the “worker” and to do so in a way which leaves open the true nature of the underlying relationship. We will adopt that usage in this judgment. We will, however, use the word “employee” to denote a person providing services under a contract of service and the word “contractor” to denote a person providing services under a contract for services.
[64] Often enough the underlying disputes have arisen in contexts where the contractual terms agreed upon by the parties were not specific as to the basis upon which they were contracting. For the purpose of resolving status in this context, the Courts developed three tests; the control test, the integration test and what is often called “the fundamental test”. This last test was enunciated by Cooke J in Market and Investigations Limited v Minister of Social Security [1969] 2 QB 173 and focuses on whether the worker was providing the relevant services on his or her own account. Having stated what he saw as the real question (in terms of this test) that Judge went on to say (at 184-185):
… No exhaustive list has been compiled and perhaps no exhaustive list can be compiled of the considerations which are relevant in determining that question, nor can strict rules be laid down as to the relative weight which the various considerations should carry in particular cases. The most that can be said is that control will no doubt always have to be considered, although it can no longer be regarded as the sole determining factor; and that factors which may be of importance are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk he takes, what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task.
[65] A fertile source of difficulty has been alleged incongruity between specific contractual provisions defining particular relationships as contracts for services and what is said to be the underlying reality of the relationship. At this point in the judgment it is fair to say that the Courts have not been entirely consistent in the way in which they have reconciled a general desire to recognise and defer to party choice and a reluctance to see the operation of statutory regimes distorted by artificial contractual form.
The employment context
[66] The distinction between contracts of service and contracts for services has been of particular significance in the application of statutory employment protection regimes both in New Zealand and in other jurisdictions.
[67] Mr Bryson began working for the appellant in April 2000 when the Employment Contracts Act 1991 was still in force but he signed the crew deal memo after 1 October 2000 by which time the governing statute was the Employment Relations Act 2000. So Mr Bryson’s work with the appellant was subject to both statutory regimes; cf Curlew v Harvey Norman Stores (NZ) Pty Ltd [2002] 1 ERNZ 114. It is, in any event, necessary to refer to the position under the Employment Contracts Act as an appreciation of the law as it developed under the Employment Contracts Act is a pre‑requisite to an understanding of the background to the relevant provisions of the Employment Relations Act
The Employment Contracts Act
[68] Section 2 of the Employment Contracts Act, provided:
Interpretation
In this Act, unless the context otherwise requires,—
…
Employee—
(a) Means any person of any age employed by an employer to do any work for hire or reward; and
(b) Includes—
(i) A homeworker; or
(ii) A person intending to work:
The TNT case
[69] The leading case on this definition was TNT Worldwide Express (NZ) Ltd v Cunningham [1995] 3 NZLR 681 (CA). In that case, this Court held that the definition incorporated the existing common law principles (albeit with an extension in the case of homeworkers). Three important features of the case are:
1.Respect for contractual form. While the label ascribed to a particular contract was not seen as being definitive, the status of the worker (to use this word in a neutral sense) depended on the true construction of the contract. This approach is expressed most emphatically in the judgments of Cooke P and Hardie Boys J. It is perhaps less marked in the judgments of Casey, McKay and Robertson JJ.
2.Acceptance of the choice made by the parties. The Court proceeded on the basis that some services could be supplied by a worker under either a contract of employment or a contract for services. Where the relationship was governed by a written contract, the status of the worker was to be determined not necessarily by an analysis of the details of the work carried out, but rather by whether the parties elected to contract with each other as employer/employee or employer/contractor. Again this approach is most explicit in the judgments of Cooke P and Hardie Boys J.
3.Rejection of a pro-employment bias. The Court recognised that the key decision as to the chosen status of a worker would normally by made by the employer and the worker’s choice would thus usually be confined to the decision whether or not to accept engagement on the terms offered. Cooke P addressed, and in the end rejected, the argument that there should be a bias or presumption in favour of categorising doubtful agreements as contracts of employment. This has been proposed by Mr Hugh Collins in his article “Independent Contractors and the Challenge of Vertical Disintegration to Employment Protection Laws” (1990) 10 Oxford Journal of Legal Studies 353 at 378-379 which was much discussed in the judgment of Cooke P. Although this point is not dealt with explicitly in the other judgments, there is nothing in them to suggest any dissent from the approach taken by Cooke P.
[70] The extent to which the Courts should defer to the choice made ostensibly by the parties whether to contract as employer/employee or employer/contractor had been in issue previously, see for instance, Calder v Kitson Vickers & Sons (Engineers) Ltd [1988] ICR 232 which reviews the English cases as to the status of labour-only sub-contractors employed “on the lump”. The differences of emphasis in the various judgments which were delivered in TNT are such that the case does not stand for absolute deference to party autonomy. On the other hand, the case was seen by many with an interest in this area of the law as tilting the balance too far in that direction and providing inadequate protection for those customarily described as “dependent contractors”.
The Employment Relations Bill
[71] When the Employment Relations Bill (the precursor to the Employment Relations Act 2000) was introduced, the definition of “employee” was in these terms:
6Meaning of employee
(1) In this Act, unless the context otherwise requires, employee -
(a) means any person of any age employed by an employer to do any work for hire or reward under a contract of service; and
(b)includes –
(i) a homeworker; or
(ii) a person intending to work
(2) In deciding whether a person (person A) is employed by another person (person B), -
(a) a primary consideration is the extent to which the work that person A does under the agreement, contract, or arrangement and how and when person A does the work is –
(i)subject to the control and direction of person B; or
(ii)integrated into person B’s business or affairs; or
(iii)both; and
(b) the Court or the Authority (as the case may be) must, among the other matters that the Court or Authority takes into account, give less weight to anything in an agreement, contract, or arrangement that, expressly or by implication, -
(i) describes person A as a contractor or independent contractor; or
(ii) describes the agreement, contract, or arrangement as an agreement, contract, or arrangement for services; or
(iii) provides that the relationship between person A and person B is not that of the employee and employer.
[72] The explanatory note dealt with this definition under the heading “dependent contractors” in this way:
With regard to dependent contractors, the Bill extends access to the rights, obligations and protections of employment law to those persons who are currently classified as “independent contractors”, but are in reality working in situations that are identical to an employment relationship. To this end, the Bill provides clear statutory direction in the application of specific legal tests when deciding whether individuals or groups employed as nominally independent contractors are, in fact, actually employees. The primary consideration is given to the reality of the relationship, rather than the nominal “label” given by the parties to it. …
[73] The definition of “employee” in the bill was the subject of much controversy in the submissions which were made to the Select Committee considering the bill.
[74] In its report of June 2000 to the Select Committee considering the bill, the Department of Labour summarised the submissions and recommended changes to the definition of “employee”. The key element in the definition proposed by the Department was in these terms:
In deciding whether a person is an employee the Authority or Court must consider all relevant circumstances and factors, including the intention of the parties, with a view to determining the true nature or reality of the relationship. Any label the parties have used to describe the relationship must not be a determining factor in that decision.
[75] As the substance of this proposed definition now appears in s 6 of the Employment Relations Act, the associated comments made by the Department in its report to the select committee are of interest:
The policy intent by clause 6 is to stop some employers labelling individuals as ‘contractors’ so as to avoid responsibility for employee rights such as holiday pay and minimum wages. The clause recognises this intent by allowing individuals or groups to have their employment status clarified by the employment institutions, based on the broad criteria in the clause. These criteria are drawn from well-established common law principles that discuss the difference between a contract of service (employee) and a contract for services (contractor).
Officials believe that clause 6 can be amended to provide increased clarity regarding the policy intent. In particular, voluntary workers should be expressly excluded from the ambit of clause 6, the employment institutions would be directed (as currently) to look at all relevant factors (including the intention of the parties) in determining the employment status of individuals, while ensuring that the label applied is not determinative … .
Section 6 of the Employment Relations Act
[76] The upshot of this process is s 6 of the Employment Relations Act. This provides:
Meaning of employee
(1) In this Act, unless the context otherwise requires, employee—
(a) means any person of any age employed by an employer to do any work for hire or reward under a contract of service; and
(b) includes—
(i) a homeworker; or
(ii) a person intending to work; but
(c) excludes a volunteer who—
(i) does not expect to be rewarded for work to be performed as a volunteer; and
(ii) receives no reward for work performed as a volunteer.
(2) In deciding for the purposes of subsection (1)(a) whether a person is employed by another person under a contract of service, the Court or the Authority (as the case may be) must determine the real nature of the relationship between them.
(3) For the purposes of subsection (2), the Court or the Authority—
(a) must consider all relevant matters, including any matters that indicate the intention of the persons; and
(b) is not to treat as a determining matter any statement by the persons that describes the nature of their relationship.
…
Preliminary comments
[77] The key features of s 6 that require consideration are:
1.The reference to “contract of service” which must be taken to refer to the existing common law principles.
2.The requirement “to determine the real nature of the relationship”.
3.The requirement to consider the “intentions” of the parties.
4.The requirement not to treat as determinative “any statement … that describes the nature of their relationship”.
[78] We start by observing that the approach dictated by s 6 is plainly not the same as that taken by Cooke P and Hardie Boys J in TNT. On the other hand, both the wording of s 6 and its Parliamentary history suggest that what was intended was more in the nature of a nudge rather than radical change in this area of the law.
[79] The policy underlying s 6 is to stop employers inappropriately limiting the reach of the Employment Relations Act by resort to artificial contractual form. This policy and the requirement to focus on “the real nature of the relationship” presuppose that there are categories of workers whose “real” status is as employees irrespective of what is provided for in contractual terms which define the relationship. This in turn presupposes some standard against which that issue can be assessed.
[80] If this case is looked at in this way, the competing contentions of the parties can be reconstructed along the following lines:
1.Mr Bryson says that there is an incongruity between the terms of the contract and “the real nature of the relationship”. He asserts that services of the sort he provided are properly the subject of contracts of employment. On this approach, what is important is that he was providing, in essence, labour and skill under the close supervision of the employer and that he did not, himself, possess the infrastructure thought to be typical of independent entrepreneurs or carry any appreciable entrepreneurial risk in respect of the relationship or have the prospect of making any entrepreneurial gain.
2.The appellant says there is no such incongruity because services of the sort which Mr Bryson provided (ie as a member of a film crew) are customarily provided pursuant to contracts for services and in light of this and the terms of the contract, “the real nature of the relationship” was not employment.
The judgment under appeal
[81] As a consequence of what he alleged was his “dismissal”, Mr Bryson brought a claim in the Employment Relations Authority alleging, inter alia, that he had been unjustifiably dismissed. As only employees can bring such a claim, the key issue for determination was his employment status.
[82] The Authority ruled against Mr Bryson, holding that he had been engaged as an independent contractor and was not an employee.
[83] Mr Bryson then appealed to the Employment Court. In that Court, Judge Shaw found in favour of Mr Bryson.
[84] The Judge referred to the law in the following way:
[19] Since s 6 of the Employment Relations Act 2000 changed the tests for determining what constitutes a contract of service there have been two cases [Koia v Carlyon Holdings Ltd [2001] ERNZ 585 and Curlew v Harvey Norman Stores (NZ) Pty Ltd [2002] 1 ERNZ 114] which have interpreted the changes to the law. The principles established by these cases may be summarised as follows:
· The Court must determine the real nature of the relationship.
· The intention of the parties is still relevant but no longer decisive.
· Statements by the parties, including contractual statements, are not decisive of the nature of the relationship.
· The real nature of the relationship can be ascertained by analysing the tests that have been historically applied such as control, integration, and the “fundamental” test.
· The fundamental test examines whether a person performing the services is doing so on their own account.
· Another matter which may assist in the determination of the issue is industry practice although this is far from determinative of the primary question.
[20] On this last point, Mr Gould submitted that industry practice is not relevant to establishing the kind of relationship that the parties entered into but even if it were it could only go to the intention of a party.
[21] I am not prepared to go so far as to say that under the Employment Relations Act 2000 evidence of industry practice should be completely disregarded. It would be contrary to the common law and would mean the Court could not take account of matters which are important to the parties. The ultimate decision in a case such as this depends upon the entire factual matrix.
[22] In Muollo v Rotaru [[1995] 2 ERNZ 414], a case brought under the Employment Contracts Act 1991, the Chief Judge held that the Court may consider industry practice when assessing the nature of an employment contract especially where a custom or practice is sufficiently well established. In such a case, the Chief Judge held that such practice could go to establishing the intention of the parties.
[85] Judge Shaw analysed the terms of the contract. She considered it “questionable” whether the crew deal memo “reliably indicates the real nature of the contract”. Her view was that “[i]n spite of the references to independent contractor in the crew deal memo much of it reads like a contract of service”.
[86] Leaving aside the terms of the written contract, she saw no evidence to indicate that the parties had agreed on the nature of their working relationship in a way which was decisive of Mr Bryson’s status. In saying this, she accepted that the appellant only ever intended to employ Mr Bryson as an independent contractor and that Mr Bryson had worked for Weta Workshop Ltd as an independent contractor. But she reached the view that there was insufficient evidence to infer that Mr Bryson “knowingly intended to be an independent contractor with” the appellant.
[87] She concluded that the appellant closely controlled the work done by Mr Bryson. It required him to attend regular meetings and directed the work to be done. He was paid for down time and was not free to get on with his private business. The evidence indicated that the appellant expected Mr Bryson to work regular hours and treated him as an employee in this regard. His work was an integral part of the appellant’s business.
[88] Apart from the terms of the contract and the payment arrangements (ie on invoices rendered) Judge Shaw saw no evidence that Mr Bryson was acting as a separate business entity which contracted independently with the appellant. The Judge asserted that he did not have a “separate legal identity as a trust, a company, a partnership or even as a sole trader”. He was simply paid a “regular wage based on an hourly rate”. The Judge concluded that the respondent “acted solely as an individual who took work as it became available regardless of how it was characterised by the person engaging him”.
[89] Judge Shaw was not persuaded by the industry evidence produced by the appellant. She noted particularly Mr Bryson’s lengthy exclusive and continuous service on The Lord of the Rings project. According to the Judge, Mr Bryson “had no investment in plant or equipment and did not operate as a sole trader”. She noted that the appellant, unlike many in the industry, was well funded. She took particular exception to evidence suggesting that the New Zealand employment protection regime was not acceptable to the industry:
This evidence could be interpreted to mean that a significant reason for the present employment arrangement is to avoid the responsibilities imposed by employment law in which case they are a sham.
[90] In conclusion, Judge Shaw held that Mr Bryson was an employee.
[91] She noted the potential of her decision to “cause significant disruptions in the film industry with potentially adverse outcomes both in economic terms and in terms of attracting overseas film companies to bring the productions to New Zealand”. On the other hand, she considered that the result was based on the particular circumstances of the case and that not every individual who signed the crew deal memo was an employee.
The argument for the appellant
[92] For the appellant, Ms Muir argued that that the Employment Court erred in its interpretation of s 6 of the Employment Relations Act, did not apply established principles in determining Mr Bryson’s employment status and did not take adequate account of industry practice. She also contended that some of the findings made by the Judge were unsupported by evidence.
The argument for the respondent
[93] Counsel for the respondent submits that the Employment Court was correct in recognising the law change and in applying the established legal principles.
Discussion
General
[94] We note that Judge Shaw regarded her conclusion on the case as turning on a question of fact. Certainly her decision is partially based on evaluative and factual determinations. Nonetheless, her approach was so significantly affected by her interpretation of s 6 of the Employment Relations Act that we think it inescapable that her conclusions turned sufficiently on issues of law for the appellant to have a right of appeal to this Court. Counsel for Mr Bryson did not seek to argue to the contrary.
[95] There are a number of specific aspects to the judgment which are open to criticism:
1.The Judge’s assertions that Mr Bryson did not have a “separate legal identity … even as a sole trader” and that he “did not operate as a sole trader” are at best conclusory. If the arrangement between Mr Bryson and the appellant was a contract for services, it follows that he was a sole trader and necessarily had a “separate legal identity” as such.
2.A contractual arrangement intended to avoid the reach of the Employment Relations Act is not a sham merely because it is motivated by lack of enthusiasm for being subject to personal grievance procedures, albeit that this may be relevant to the application of the policy which underlies s 6.
3.The finding of fact to the effect that Mr Bryson did not initially intend to contract with the appellant as a contractor is surprising, given Mr Bryson’s work history with Weta Workshop Ltd, the fact that he continued to fill in IR3 forms, his claims for deductions on the basis that he was self‑employed and his knowledge of industry practice.
[96] These aspects of Judge Shaw’s judgment in a sense all concern peripheral issues and are not fundamental to the resolution of the case. Also of peripheral significance is Mr Bryson’s status in the period between when he first started working for the appellant and 1 October 2000 (when the Employment Relations Act came into force) and the period between 1 October 2000 and 30 October 2000 (when he signed the crew deal memo). The case really turns on the status of Mr Bryson at the time when he was “dismissed” and this requires an evaluation of the situation as it was at that time.
[97] In favour of the Judge’s conclusion is that the way in which Mr Bryson’s engagement by the appellant worked out in practice smacks very much of employment. Mr Bryson made limited use of his own equipment but no more so than is common in many employment situations. So Mr Bryson was, in substance, supplying his labour and skills. His skills were, at least in part, taught to him by the appellant. He was paid by the hour rather than by product or outcome. He was fully integrated into the appellant’s infrastructure. On a day to day basis, he did what he was told. If he was not required to work as an on-set model technician he was deployed in the model shop. He was not able to delegate his work or arrange for some other person to carry it out. His job was effectively full-time and he did not work for anyone else while engaged by the appellant.
[98] It will be recalled that Judge Shaw took the view that the real nature of the relationship “can be ascertained” by the control, integration and fundamental tests. That was, in effect, the approach she took. Implicit in this approach was acceptance of the argument which we have attributed to Mr Bryson in [80] above.
[99] On the other hand, in this particular industry context, services of the relevant kind are virtually always provided pursuant to contracts for services and not contracts of service. Viewing Mr Bryson alongside others providing similar services and in light of the terms of the contract he signed, it is not unreal to regard him as a contractor. That is the basis upon which he dealt with the appellant and also how he chose to conduct his tax affairs.
[100] This brings us back to the competing contentions which we have set out in para [80] above. As will become apparent, we think that the correct analysis of the case is along the lines of the argument which we have attributed to the appellant.
What is inherent in “the real nature of the relationship” test?
[101] We consider that the phrase “real nature of the relationship” in s 6 is not just a short-hand for the result of an analysis based solely on the control and integration tests or the fundamental test applied primarily by reference to the control and integration tests. If this is what Parliament intended, it could easily have said so. Something broadly along these lines was, after all, initially proposed in cl 6 of the Employment Relations Bill but this was not proceeded with. The terms of s 6 (especially when considered in light of the relevant Parliamentary history) suggest that a more open-textured inquiry is necessary.
[102] We think that Parliament used the expression “the real nature of the relationship” in a way which was at least consistent with Cooke J’s “fundamental test” in the Market Investigations case. We agree that if the facts of the present case are analysed solely in terms of the criteria referred to by that Judge in that case (see [64] above), the conclusion that Mr Bryson was an employee might be thought to follow. But it is important to recognise that Cooke J was not purporting to list exhaustively all the relevant criteria. He was not dealing with a case in which the parties had specifically addressed the basis upon which they were contracting; nor was he addressing an industry in which the almost invariable practice is for workers to be engaged under contracts for services rather than contracts of service. These are the two features of the present case which significantly favour the appellant and each, in our view, was significantly underplayed by the Judge.
The significance to be attached to the form of the contract between the parties
[103] On Judge Shaw’s approach, “the real nature of the relationship” can be ascertained by the control, integration and fundamental tests. Implicit in this approach is that if those tests point to a contract of employment, contractual terms making it clear that what was intended was a contract for services are to be disregarded as not reflecting the reality of the relationship. This approach would appear to leave little scope for significant weight to be placed on contractual intention.
[104] In the course of argument Ms Muir for the appellant sought to persuade us that s 6 of the Employment Relations Act did not change the law as stated in TNT. On her argument s 6(3)(a) and (b) merely reiterate the old rule that contractual labels are not determinative of status. Such status should still, in a case governed by a contract which is in writing, be determined by the true interpretation of the contract.
[105] Although this approach is literally open on the wording of s 6(3)(a) and (b), we do not see it as tenable in light of the policy underpinning s 6. So we are prepared to accept that s 6 of the Employment Relations Act proceeds on the basis that “the real nature of the relationship” is not controlled by contractual terms and this is so even in cases where the contractual form adopted by the parties cannot be stigmatised as a sham.
[106] On the other hand, such terms are not relegated to the status of secondary considerations (as was the case under the original definition contained in the bill as introduced). Still less are such considerations of only the nominal significance which they were accorded by the Judge in this case.
[107] The scheme of the contract was implemented in the way in which Mr Bryson invoiced the appellant and addressed his tax obligations. His status as an independent contractor under the contract was sufficiently real to be recognised by the tax system. Although the capital and infrastructure associated with his business were of modest proportions (consisting we assume largely or entirely of his collection of tools) he incurred some expenses which were recognised by the tax system in a way which would not have happened if he had been treated as an employee. The bona fides of the associated taxation arrangement distinguishes this case from the English “on the lump” cases (reviewed in Calder, see [70] above) in which the worker’s designation as self-employed was a device to enable the worker to evade tax and was thus easily susceptible to being dismissed as a mere label.
[108] We recognise that this aspect of the case is not altogether easy. The contractual terms which are primarily relevant in this context are those which provide that Mr Bryson was an independent contractor and the associated provisions as to payment which are consistent with that status. Since there would not be much point in providing that Mr Bryson was a contractor without, at the same time, providing for a system of payment which was consistent with that status, the contractual terms relied upon by the appellant could, conceivably, be regarded as being in the nature of a label despite the bona fides of the associated taxation arrangements. In other words, putting in place a system of payment and associated taxation arrangements which proceed on the basis that the worker is an independent contractor is plainly not determinative of that worker’s status.
[109] So although we disagree with the way in which the Judge downplayed the significance of the contract between the parties, we accept that, standing alone, that contract and its implementation in respect of the Inland Revenue Department are not necessarily determinative of the issue which we must address.
The industry context
[110] Judge Shaw saw the industry context as having a limited significance. She seems to have seen it as confined in relevance to her assessment of the intentions of the parties. This is the most significant aspect of the case on which we differ from her.
[111] The approach of the Judge involved comparison between Mr Bryson and the type of self‑employed contractor envisaged by Cooke J in the Market Investigations case – perhaps a builder, plumber or electrician. She would appear to have concluded that because Mr Bryson did not “carry on business” in the same way as such a self-employed contractor might, there was, therefore, no reality to his purported status as an independent contractor. But this conclusion does not sit comfortably with the fact that there are hundreds and perhaps thousands of people in New Zealand who work in the film industry in very much the same way as Mr Bryson did, and do so as contractors. In light of that, it seems to us that the Judge adopted the wrong standard of comparison. In effect she ignored the external reality which is most obviously relevant to the situation of the parties. In light of industry practice there is no basis for holding Mr Bryson’s relationship with the appellant was other than what was provided for in the contract he signed. It also follows that the Judge was wrong in treating industry context as confined solely to what the intentions of the parties were. It is directly relevant to the “real nature of the relationship” between the parties.
The implications of the decision
[112] We think that the point we have just made is reinforced by consideration of the implications of the decision of Judge Shaw in light of what the legislature might be thought to have intended when it enacted s 6.
[113] As we have already noted, we think that the legislature, by s 6 of the Employment Relations Act, intended to nudge the law away from the position of almost absolute deference to party autonomy adopted in at least some of the judgments in the TNT case. We are, however, likewise satisfied that radical change in this area of the law was not intended. It seems to us that the approach taken by Judge Shaw in effect involves a claim to require the restructuring of the way in which the film industry operates. We see this as going well beyond the jurisdiction which Parliament intended to confer upon the Authority and the Employment Court.
[114] This point requires some elaboration.
[115] Judge Shaw’s approach was very much focused on the facts of the case at hand. These were, at least on her appreciation, atypical in the film industry. This was in respect of the length of the production period (although of course some television series are produced for years), the training provided to Mr Bryson and, as his skills developed, the ability of the appellant to deploy him as and when required in a number of roles. This is why she apparently saw her decision as not being destabilising for the film industry as a whole. Some in the film industry will be held to be employees and others contractors. On her approach each individual case would be dealt with on its merits.
[116] Unsurprisingly this approach has caused dismay in the industry.
[117] If each case is to be looked at on its own “merits”, with industry practice and contractual provisions no more than background factors of limited significance, any worker whose situation is in anyway atypical will have a reasonable chance of establishing employee status. Such assessment will necessarily be made by the Employment Relations Authority and Employment Court after the fact. At the time a worker is engaged it will not be practicable to predict how the relationship might later be categorised. For instance here, a very significant factor in the Judge’s mind was the length of the engagement. But often this will be undetermined as the time the worker is engaged. And if length of engagement is critical, this will provide an incentive to limit the time during which services are obtained from any particular worker. Common-sense suggests that it will be an unimaginative worker who cannot point to some aspect of his or her engagement which is atypical. Under such an approach, film producers could have no confidence that the contractual arrangements they enter into will be upheld and will have to build into the decisions they make (including decisions whether to carry on business in New Zealand) associated uncertainties, disruptions and likely costs.
Conclusion
[118] The upshot is that we are of the view that the real nature of Mr Bryson’s relationship with the appellant was that of independent contractor, this being in accordance with both the contract he signed and the almost invariable practice in the industry in which he chose to work.
The result
[119] The appeal is allowed. The decision of the Employment Relations Authority is restored. In this Court, the appellant is awarded costs of $6,000 together with disbursements (including travelling and accommodation expenses if any) to be agreed between the parties and in default of agreement to be fixed by the Registrar. Costs in the Employment Court are to be determined in that Court.
Solicitors:
Simpson Grierson, Wellington for Appellant
Gibson Sheat, Wellington for Respondent
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