18.05.2022

Employment Court Deems Gloriavale Residents Employees

The definition of “employee” in the Employment Relations Act 2000 (ERA) can at times be tricky to navigate; recent cases involving builders, couriers, and uber drivers can attest to the issues that frequently arise.

Just this month the Employment Court considered this issue again in the case of Courage & Ors v Attorney General & Ors, determining that three former Gloriavale residents (Plaintiffs) had been employees from the age of 6, occasionally working 70-hour weeks, in various roles.

Background

Gloriavale is a self-sustaining community that lives according to a specific set of religious beliefs. It operates through a complex internal structure which includes the operation of limited liability companies producing goods for commercial sale.

The Plaintiffs brought a claim under section 6 of the ERA which confers exclusive jurisdiction on the Court to make a determination as to whether a person is an employee. An overview on the operation of section 6 can be found in our article here.

The Plaintiffs alleged they were employees over three distinct periods of time:

  • Six to 14 years old;
  • The transitional year (15 years old); and
  • 16 years old and onwards.

The Plaintiffs worked in Gloriavale businesses from the age of six, collecting moss, working on farms and in the honey factory.

Once the Plaintiffs turned 15, they signed a “Transitional Education Agreement” which is described as a work experience programme. The Transitional Education Agreement stipulated the Plaintiffs were not entitled to wages or payment, but acknowledged a number of “benefits” to be provided such as accommodation, meals, clothing, footwear and medical expenses.

From 16 onwards the Plaintiffs became “Associate Partners” and were required to sign an “Agreement to Provide Services”, a detailed contract under which the Plaintiffs would record their hours on a timesheet which would be invoiced to the relevant business. The wages would then be paid into a bank account which would immediately be transferred to the Gloriavale sharing account.

The Plaintiffs argued that at all relevant times they were in an employment relationship by nature of the control exercised over them, the community, and their access to life’s essentials.

Gloriavale argued that the Plaintiffs were never employees and that no contract for the provision of services was entered into. Rather, the Plaintiffs carried out chores, then work experience, and were later simply contributing voluntarily to the community.

Issues for Determination

Section 6(1)(c) of the ERA expressly excludes from the definition of employee, a “volunteer” which is defined as a person who does not expect to be rewarded, nor is rewarded, for work performed as a volunteer. This is the central question of the case; were the Plaintiffs volunteers or not?  

When deciding employment status, the Authority or Court must consider the “real nature” of the relationship. A strict contractual approach has been rejected by the Supreme Court and labels such as “volunteer”, “chores”, and “Associate Partnership” will not be determinative; it will always be a heavily factual inquiry. Some of the relevant factors include:

  • The degree of control exercised by the employer (when, where, why, how work is conducted);
  • Who is benefiting from the work; and
  • The economic reality of the relationship.

Decision

The Employment Court determined that in all three age brackets the Plaintiffs were employees and not simply performing chores, gaining work experience or volunteering within the community. Key findings included:

  • The Plaintiffs did not meet the definition of volunteers because they received reward in the form of accommodation, food, and security in exchange for their labour. They were plainly not offering to work as a matter of free choice and “without solicitation, compulsion, constraint or influence of another”.
  • The notion that the Plaintiffs were performing “chores” in their early years was promptly rejected. Despite being described as an “extended family” this was not a literal family relationship in the legal sense. It was a relationship of a commercial nature, performed for an extended period of time, and often involving strenuous, difficult work. Similarly, the labels of “transitional work experience” and “Associate Partner” was of little significance; the focus must be on substance over form.
  • The fact that the Plaintiffs were not expecting to be remunerated and may have subjectively considered themselves to not be employees is immaterial. The pivotal consideration is the real nature of the relationship, inferred from the conduct of the parties.
  • The Court was not precluded from finding an employment relationship on the basis that the Plaintiffs were children for part of the relevant period. Section 6(1)(a) of the ERA does not place a lower limit on the age in which a person can be an employee and therefore children can enter into contractual employment relationships.
  • Gloriavale argued that there is a presumption against an employment relationship where the endeavours are of a religious nature. The Court concluded there was no such presumption, and to allow this interpretation would restrict classes of workers from accessing their statutory employment protections and entitlements. 

Implications

This case did not consider the issue of back pay for the Plaintiffs, but subsequent action to reclaim unpaid wages and holiday pay remains an available option, as well as an option for other current and former Gloriavale members of the same status.

The Minimum Wage Act 1983 allows for claims in breach of minimum entitlements to span back as far as six years, exposing Gloriavale with its 600 odd members to significant financial liability if pursued.

However, the matter is not necessarily concluded, as seeking leave to appeal the decision to the Court of Appeal is still an option available to the defendants. In the meantime, there is an ongoing investigation into the Labour Inspectorate for a breach of duty claim in relation to the lax “desk-top” reviews conducted on Gloriavale’s labour practices in 2017 and 2020/21, with the outcome still pending.  

There is also still an outstanding issue in relation to the identity of the employer(s) for each of the Plaintiffs over each of the time periods.  In other words, the implications of this decision are likely to be ongoing, and to be the subject of much discussion to come.  Watch this space!

If you have any questions about volunteers, employees, or the distinction between the two, please get in touch with our Employment Team or your usual contact at Hesketh Henry.

 

Disclaimer:  The information contained in this article is current at the date of publishing and is of a general nature.  It should be used as a guide only and not as a substitute for obtaining legal advice.  Specific legal advice should be sought where required.

 

Do you need expert legal advice?
Contact the expert team at Hesketh Henry.
Kerry
Media contact - Kerry Browne
Please contact Kerry with any media enquiries and with any questions related to marketing or sponsorships on +64 9 375 8747 or via email.

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