Consultants can protect firms from workers

The use of third-parties, such as recruitment consultants, can help protect employers from litigation, a gathering of IT chiefs heard in Auckland.

The use of third-parties, such as recruitment consultants, can help protect employers from litigation, a gathering of IT chiefs heard in Auckland. Employment law specialist Kit Toogood QC also told the 50 representatives of IT companies present that the contracting industry still faced uncertainly from the Employment Relations Act. The session was arranged by Candle IT & T recruitment, which among others led a charge against an earlier draft of the Employment Relations Bill, which would have given contractors some rights to be classed as permanent employees. However, partly thanks to the recruitment industry, Toogood says that concerning contractors, the ERA now "does not appear to significantly alter the legal principles which applied under the Employment Contracts Act". But he warns there is "a real risk" that an aggrieved worker could claim unfair dismissal if the courts determined a relationship was on an employment rather than contractual basis. Using a "third-party agency minimises risk" he says, as by reducing the employer's control over the employee, it makes it likely the relationship will be classed more as contractual. While the contracting party would still have day-to-day control over the worker, the contractual arrangements can provide for early termination (whether summarily or on notice, depending on the circumstances), with similar provisions between the worker and the agency, he says. "This type of arrangement can be either project based or open ended (terminable upon the giving of notice). It is likely to be particularly useful where long term arrangements are entered into. Such arrangements significantly reduce the risk of the relationship between the contracting party and the contractor being held to amount to an employment agreement, particularly where there is no direct contractual relationship of any kind between the provider of the services and the industry." "The use of an agency minimises the risk of being caught by what you may regard as the strictures of the new employment legislation while maintaining the necessary flexibility to operate dynamically and competitively," Toogood says. Candle operations manager Christine Fitchew says the law now means independent contracting maybe better for businesses than having fixed term contractors and firms "have to get this right."

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