Contractor or employee question settled in ERA case

Work for DR provider was contracting, not employment, authority rules

A former contractor to Oracle database disaster recovery specialist Avisit Solutions has failed to establish that he was in an employment relationship with the company during the 2005-2011 period.

In a preliminary hearing on another substantive matter before the Employment Relations Authority, heard last month, Lars Lundbom, who had carried out marketing work for Avisit during those years, claimed that an employment relationship was established either in 2005 or 2006, when remuneration on a commission basis was agreed as the means of paying Lundbom for his services.

Avisit denied this, saying Lundbom was a contractor to it during that time.

In her ruling, ERA member Eleanor Robinson noted there were two issues to be determined: First, whether Lundbom was employed by Avisit in either 2005 or 2006 on a commission-only basis; and whether Lundbom was an employee of Avisit or an independent contractor when he carried out project work for the company during the period from September 2005 until March 2011.

In a summary of background facts, Robinson noted that while a commission-on-sales approach had been discussed as a possible means of remunerating Lundbom for marketing work he carried out for specific Avisit events in 2005-2006, he was never actually paid in this manner, and, rather, had submitted invoices charging for his services at an hourly rate during the years he was engaged in activity with Avisit.

As to whether Lundbom was an employee or an independent contractor between September 2005 and March 2011, Robinson noted that the relevant legislation to the situation, section 6 of the Employment Relations Act states that the Authority “must consider all relevant matters, including any matters that indicate the intention of the parties”.

While there were no written terms and conditions of employment between Lundbom and Avisit, the fact Lundbom was employed on a full-time basis by a printing company during that time, and fitted his work for Avisit around that, pointed to him being a contractor to Avisit, not an employee, she noted.

Also, invoices that Lundbom sent to Avisit were from companies Lundbom registered.

Robinson also noted in the determination: “It was established that Avisit had a high use of contractors, which I find to be characteristic of the IT industry, given its highly specialised nature.

“Whilst not determinative of the matter, I do find such industry practice to be a highly relevant factor.”

Avisit also did not calculate, deduct or pay PAYE on behalf of Lundbom, Robinson noted.

In summary, she noted, “I find that there is sufficient evidence to indicate that Mr Lundbom was in business on his own account.

“I determine that Mr Lundbom was an independent contractor during the period of his providing services to Avisit.”

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