This Friday (4 March 2022) concludes the end of a fascinating two-week Employment Court hearing where the Court was asked to determine whether residents of the West Coast Gloriavale community are employees or volunteers.
In July 2021, the Labour Inspectorate found that Gloriavale residents cannot be considered employees under New Zealand law. Instead, the Labour Inspectorate deemed them to be ‘volunteers’, the effect of which was to deny them of the minimum protections afforded to employees in New Zealand. Three former Gloriavale residents are challenging this finding, and seeking a declaration that Gloriavale residents are, in fact, employees.
A finding in favour of the applicants would have far reaching consequences for Gloriavale. As we await the Court’s decision with bated breath, this dispute is a timely reminder of the importance of ensuring volunteers are actually volunteers, and the potential repercussions of getting it wrong.
Who is a volunteer?
The Employment Relations Act 2000 (ERA) describes (but does not define) a volunteer as someone who does not expect to be rewarded for work and receives no reward for work performed. By contrast, an employee is defined by the ERA as any person of any age employed by the employer to do any work for hire or reward under a contract of service.
The ERA states that when determining whether a worker is an employee, the Court or Authority must make an objective inquiry into the “real nature of the relationship”, which involves an assessment of the intention of the parties. As such, assessing this intention is crucial when determining whether a worker is a volunteer or an employee.
Pursuant to the ERA’s description of volunteer, the Court and Authority have held that central to this assessment of intention is whether a worker expects and receives any reward in return for work.
What is a reward?
Whilst ‘reward’ is not defined in the ERA, the Court has established that reimbursement of costs associated with a worker’s position does not amount to a reward.
As such, in Brook v Macown, the Court found that an annual expense allowance and reimbursement for costs, including for maintenance of a home office, did not amount to a reward(1). Accordingly, the Court found the worker was a volunteer.
Conversely, in Labour Inspector v Alpine Motor Inn and Café (2008) Ltd, the Authority found that food and lodging did amount to a reward(2). Similarly, the Court in Kidd v Beaumont found that a weekly cash payment, a free licence to occupy a campsite and the ability to use campsite facilities constituted rewards(3).
Other Influential Factors
In addition to expecting and receiving reward, the following factors are indicative of the fact that a volunteer may actually be an employee:
• The worker’s hours and days of work are controlled;
• The business receives economic gain from the work performed by the worker;
• The work performed by the worker is integral to the business; and
• The work performed is work that an employee would usually perform.
The above factors may be less indicative if the business is a charity or not-for-profit.
Labels not determinative
When assessing whether a worker is an employee, the Court or Authority must not treat the labels the parties have placed on the relationship as determinative. In other words, while labels may be relevant, just because a worker is called a volunteer or has agreed to be a volunteer, this does not necessarily mean they are a volunteer.
Why does this matter?
If a volunteer is found to be an employee, their employer will be liable to provide them with all rights and entitlements under the Employment Relations Act 2000, the Holidays Act 2003, the Minimum Wage Act 1948 and the Wages Protection Act 1983.
These entitlements include (but are not limited to) minimum wage for every hour worked, minimum rest and meal breaks, sick leave, public holidays and annual leave. Employment law also imposes obligations on employers to act and deal with employees in good faith and to not subject them to unjustified action, nor unjustifiably dismiss them. This list of obligations is in no way conclusive.
If a volunteer is found to be an employee, they may be able to claim against the employer for employment law breaches going back as far as six years.
How should I ensure a worker’s volunteer status?
• Before a volunteer commences work, have them sign a written volunteer agreement explicitly agreeing to their status as a volunteer;
• Be careful not to provide the volunteer with any reward, other than reasonable reimbursement of costs or infrequent tokens of appreciation, such as flowers;
• Inform the volunteer of the expenses they will be reimbursed for and how these reimbursements will be paid. Record this in the volunteer agreement;
• Limit the control you have over the volunteer’s hours and days of work;
• Ensure the work the volunteer is performing is not integral to your business or work that an employee would usually perform; and
• Ensure you do not receive economic gain from volunteer’s work.
If you have any concerns about the volunteer status of workers you engage, or any other questions, do not hesitate to get in touch with a member of our employment law team.
(1) [2014] NZEmpC 79.
(2) [2016] NZERA Auckland 420.
(3) [2016] NZEmpC 158.
