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The employment status of a worker is a concept that has long been contested and is challenging to determine for many, especially with flexible working arrangements and the so-called ‘gig economy’.
An individual’s employment status and whether they are an ‘employee’ as defined under section 6 of the Employment Relations Act 2000 (the Act) is important because of the statutory protections and entitlements which are provided to employees that are not applicable to others, such as independent contractors and volunteers. These benefits include various forms of leave under the Holidays Act 2003, minimum wage payments and the ability to bring personal grievances against the employer, to name a few.
In Pilgrim & Ors v Attorney General & Ors [2023] NZEmpC 105 (the 2023 Gloriavale Case), the issue for the Employment Court (the Court) was whether six individuals were in fact employees.
This is not the first time that Gloriavale has come under Court scrutiny regarding the classification of its residents/workers. For further information regarding the Court’s previous consideration, please see our article on the 2022 Gloriavale Case.
Background to the 2023 Gloriavale Case
Gloriavale is a self-sustaining community which is located on the West Coast of the South Island (Gloriavale). The residents of Gloriavale live their lives in accordance with a specific set of religious beliefs.
The 2023 Gloriavale case dealt with six women (the Plaintiffs) who were born and raised in Gloriavale. While a part of the community, these women were expected to and did carry out work from ages as young as six years old. Their involvement and the work assigned to the Plaintiffs increased as they got older. All of the Plaintiffs left school (at around 15 years of age) to work full time on the “Teams”. In these Teams, the Plaintiffs were required to clean, do washing, prepare and cook food for the Gloriavale residents. The Plaintiffs’ work in the Teams was supervised and performed under a Team Leader.
The scale of these tasks were extensive; each week the Teams would collectively wash more than 17,000 items and cook more than 11,000 meals.
The Plaintiffs left Gloriavale at various points between 2017 and 2021, and subsequently raised concerns about the working conditions within Gloriavale with a Labour Inspector from the Ministry of Business, Innovation and Employment.
Following an investigation, the Labour Inspectorate concluded that the residents who worked in the Teams were not employees; unsatisfied with this outcome, the Plaintiffs sought a declaration from the Court that they were employees.
Are the Plaintiffs “volunteers”?
Section 6(1)(c) of the Act excludes “volunteers” from the definition of an employee. Volunteers are classified as workers who have no expectation of reward for their work and receive no reward.
Did the Plaintiffs expect a reward?
For the expectation part of the test, Chief Judge Inglis considered whether the Plaintiffs carried out the work for the benefit of the community or for the expectation of reward. The Court found that the Plaintiffs had an expectation that providing work for Gloriavale would permit them to stay and failure to do so would lead to:[1]
“exclusion from the Community, from all that was familiar, from family and friends, and into a world they knew little about, were ill equipped to navigate and had been taught to fear.”
Chief Judge Inglis considered that this expectation of being allowed to remain in Gloriavale (if they carried out the work) amounted to expectation of a reward for the work done.
Were the Plaintiffs rewarded?
Having successfully established that the Plaintiffs had an expectation of reward the Court considered and found that the Plaintiffs were rewarded by:
- receiving food, shelter, clothing, religious support and guidance;
- being permitted to remain in the community with their friends and family; and
- the continued promise of spiritual redemption.
It was determined that the Plaintiffs did expect to be rewarded for their work on the Teams and were rewarded for the work they performed, therefore, they were not volunteers.
Are the Plaintiffs “employees”?
Once the Court was satisfied that the Plaintiffs did not fall under the volunteer exception, it moved on to consider whether the Plaintiffs were employees for the purposes of section 6 of the Act. This required the Court to look at the real nature of the relationship between the parties and consider all relevant matters, including those that indicated the parties’ intention.
It was agreed that neither the Plaintiffs nor the leaders of Gloriavale intended for there to be an employment relationship. However, this was not determinative, and the relationship still needed to be assessed objectively. The Court found a number of factors supported the view of the relationship being one of employment, including that:
- In practice the leaders of Gloriavale had a significant degree of control, direction and power over the Plaintiffs’ work and the Plaintiffs were subordinate to them.
- The Plaintiffs’ work was strictly managed and they were required to work for long hours and for years on end.
- Had the Plaintiffs withdrawn their labour, they would likely not have been allowed to remain within the community.
- The work that the Plaintiffs were performing was comparable to what would be required in a large-scale hostel. The Court noted that it was vital to the operation of Gloriavale and if not for the individuals working on the Teams, the work would need to be paid for if performed outside of Gloriavale.
- The Plaintiffs had an expectation that they would be rewarded and were rewarded for their work. The fact that this reward was non-monetary was not determinative.
Despite Gloriavale’s arguments that there was no employment relationship the Court held that:
- The “domestic” nature of the work had no effect on whether there was an employment relationship;
- The financial viability of treating the workers as employees (and Gloriavale’s capacity to pay) was not relevant to the determination of employment status;
- Whether the work generated external income was irrelevant; and
- The work was not performed for some “notional big family”. There were 82 distinct families within Gloriavale.
All of these factors were indicative of the real nature of the relationship being one of employment. The Court granted a declaration that the Plaintiffs were employees while working on the Teams with both the precise identity of the employer, and the remedies, yet to be determined.
Although establishing a worker’s employment status is an entirely fact-specific endeavour, the Gloriavale case shows the Court’s willingness to take a flexible approach to the application of the control, integration and fundamental/economic reality tests to ascertain the real nature of the relationship. Employers should be aware that the Court is likely to continue to apply this approach and these tests to future cases involving employment status. Having said that, Gloriavale has sought leave to appeal the Employment Court’s decision, so there may yet be further developments in this area of law.
If you have any questions about volunteers, employees, or the distinction between the two, please get in touch with our Employment Law 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.
[1] Pilgrim & Ors v Attorney General & Ors [2023] NZEmpC 105 at [99].
