Edmonds Judd

Employment law

Handling an employee’s poor performance

Employment, First Job, Latest news, Media, News, Relationships
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Luke’s juggling a lot right now—his first baby on the way, a crash in Sally’s Tesla, and new business work piling up. But his biggest challenge? His employee, John.

John does not have the experience he made out during his interview and he is not able to complete tasks given to him.

Luke has done his best to mentor John and to train him on the job, but John doesn’t seem to want to learn or improve. Luke is at his wits’ end as his business can’t continue like this. Luke has no idea what to do to fix the situation with John and is not sure if he can just let John go.

First things first, Luke pulls up a copy of John’s employment agreement to see what it says about dealing with poor performance. Luckily for Luke, the employment agreement sets out exactly what he should do as his agreement sets out a process for addressing poor performance. He also recalls his lawyer telling him that the Employment Relations Act requires employers to act in a fair and reasonable way and to act in good faith towards John.

Luke has also realised that he can’t just fire John for his poor performance.

Luke can see that his mentoring John was a good start, but it is clear to him that he now needs to take the formal steps set out in the employment agreement to let John know that he is concerned about his performance and that he will place him on a performance improvement plan.

After having a chat with his lawyer, Luke finds out that some of the steps that he is going to need to take are:

  1. Identify the issues with John’s performance: clearly identify the performance problem, whether it’s related to the quality, quantity, or timeliness of John’s work.

 

  1. Communicate his concerns to John: Luke decides to invite John to a meeting to discuss his performance. He’s then going to meet with John to discuss the performance issues, explaining what areas need improvement and why it’s affecting the workplace.

 

  1. Provide support and clear expectations: Luke realises he needs to offer support, so, he has decided to offer John some further training and additional resources. He’s also going to set clear, achievable performance goals and a reasonable timeframe for improvement, and let John know the possible consequences if his performance does not improve.

 

  1. Monitor John’s progress: Luke has set up some reminders in his diary to monitor John’s progress towards meeting the set performance goals and provide regular feedback during meetings.

 

  1. Hold a formal review: If John’s performance doesn’t improve, Luke will arrange a formal review meeting for John to respond to the feedback.

 

  1. Implementation of further performance improvement plans, final warning or dismissal: If there is still no improvement, Luke now knows that he has some options about how to proceed from there – such as a performance improvement plan, issuing a final warning, or, in more serious cases, proceeding with dismissal.

Luke has decided to keep in touch with his lawyer as he works through the process with John to make sure that he meets his obligations as an employer. He’s keeping his fingers crossed that John will improve, and that a formal review and other actions won’t be necessary.

 

Kristin O’Toole

 

 

 

Are Uber drivers employees and why does that matter for you?

Commercial, Employment, First Job, Uncategorized, Your Own Business
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A case from the Court of Appeal on Monday acts as an urgent reminder that you can’t contract out of the Employment Relations Act (the Act) and that includes by calling the relationship an independent contract when it is not. The case involved four Uber drivers and the companies that own and run Uber Drive and Uber Eats.

Uber argued that they were not employers but provided an introduction service. Interestingly, adapting to new ways of working, the Court held that the drivers were all employees when they were logged in to the Uber Drive App.

Using an independent contractor rather than taking on an employee is attractive because it cuts out a whole swathe of costs, paperwork, responsibility and inconvenience: holidays, sick leave, termination issues and PAYE to name a few.  If you get the nature of the relationship wrong however, it can have an enormous impact on the employer: investigation, prosecution, fines and penalties, PAYE arrears, holiday pay arrears and much, much more.

So how do we know when a relationship is actually employment if we can’t rely on what the parties themselves agree in the contract? The answer is section 6 of the Act. Section 6 requires the court to focus on the realities of the parties’ mutual rights and obligations. In particular: how is the relationship working in practice (especially if that differs from the contract)?

Three key issues that the Court must weigh up are:

  • the extent of the control over the worker,
  • the degree of integration of the worker into the business, and
  • the “fundamental test” of whether the worker is carrying on their own (independent) business.

 The Uber case in particular emphasised Uber’s control of the workers which included Uber controlling fare setting and performance management, and right to discipline. They looked at the practice as it varied from the contract: even though the drivers could theoretically choose when and where they worked, they were penalised for not working regularly. They were not an independent business as the drivers were restrained by Uber from expanding their business. For example, there was a ban on contacting clients independently.

This situation might not be substantially different from many ‘independent contracts’ on our farms or in a small business setting.

If you have an independent contractor and that worker only works for you (perhaps because you do not permit subcontracting or them taking on other jobs, or simply because the job takes up all available time), if you can dictate what that worker must do from day to day and how they do it, if you can discipline them, if they work on your site and you provide most of the equipment, then it might be time to take a second look and seek independent professional advice.

Nicolette Brodnax
Nicolette Brodnax, Special Counsel

Contractors

First Job, Latest news, Your Own Business
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A veritable minefield of employment law

From a legal perspective, hiring contractors has always been tricky. The onus of correctly identifying who is an employee versus a contractor, and ensuring legal compliance, remains an employer’s responsibility. The financial consequences of misidentification can be significant for a business owner.

With the rise of the ‘gig economy’, employers are increasingly relying on contractors to fulfil essential roles, so correctly identifying these people’s employment status is more important than ever. The Employment Relations Authority has been very clear that it does not matter that a ‘contractor agreement’ is in place, if the individual behaves like an employee, their employer is responsible for ensuring compliance with the Employment Relations Act 2000 and will be penalised if they fail to do so.

We explore the key features to differentiate between contractors and employees, and what changes may lie ahead for those who fall into the grey area in between.

Defining a contractor

A contractor is a self-employed person who is engaged to provide services privately under contract law and issues invoices for those services. As such, the Employment Relations Act 2000 and all associated entitlements do not apply to the relationship. Key identifying features of a contractor are:

  • They have their own business and are responsible for all their own taxes and associated expenses such as ACC levies
  • They are considered to have an equal bargaining position to the business they are contracting with (in contrast to the power imbalance between an employer/employee)
  • The relationship may not be exclusive
  • They will ordinarily have an element of control or discretion over their daily tasks and work, and
  • Under normal circumstances they are freely able to accept or decline work.

Who is an employee?

Anyone who is not clearly a contractor should be considered an employee until determined otherwise. Red flags should be raised to treat an individual as an employee if there is little discretion on daily tasks, an exclusivity of relationship or they do not complete all their own financial accounting and reporting.

If they are an employee, you will need to assess if they are casual, part-time or full-time and are provided with the appropriate employment agreement and entitlements.

Consequences of getting it wrong

Misidentifying your employee as a contractor can give rise to a personal grievance (PG). The outcome of that PG could result in your employee being entitled to backdated entitlements such as annual leave and sick leave all the way through to the beginning of the relationship. There may also be other financial penalties imposed by the Employment Relations Authority.

Introducing the ‘dependent contractor’

A grey area arises when a person clearly runs their own business but works exclusively for one company or depends heavily on one contract for an income, and has very little discretion in daily tasks.

An example of this is a courier driver who owns their own vehicle, runs their own accounts, is free to contract with third parties and take on additional duties. For the majority of the time, however, they work for one company, are dependent on one income source and have very little control over the day-to-day activities as this is dictated by that company.

The government has consulted on a proposal to introduce legislation designed to protect this type of vulnerable worker. A new category under employment law is proposed called the ‘dependent contractor’ that is designed to protect and enhance the entitlements of this type of contractor such as a courier or rideshare driver. These contractors’ protections would be extended into parts of employment law which means a dependent contractor may be entitled to certain benefits such as sick leave.

These proposals have not been finalised and further consultation is expected this year. If this proposal is enacted, employers will need to be proactive in promptly reviewing and reclassifying (if necessary) their workforce to ensure all dependent contractors are given their new protections and entitlements.

Classify your employees

Ensuring your employees are correctly classified as contractors or employees is essential. Roles such as marketing, social media management, IT support, website management and virtual assistants are all examples of valid contractors who, under the right engagement circumstances, could be considered employees or, if the new proposal becomes law, a dependent contractor.

If you have concerns about correctly classifying an existing contractor or you are a contractor but believe you are probably an employee, please feel free to discuss this with us.

 

 

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