Yang JianDr JIAN YANG (National): The aim of this bill is to amend the Minimum Wage Act 1983 to extend its provisions to payments under contract for services that are remunerated at below the minimum wage. Under the proposals advanced by the bill labour inspectors would be authorised to seek remuneration arrears and penalties on behalf of certain independent contractors in instances where a contractor's remuneration has allegedly been below the minimum wage proposed by the bill. We believe that the bill is not workable. As Business New Zealand says in its submission The Bill is impracticable uneconomic and breaches basic legal principles." The bill seeks to fix something that is not broken according to a submitter. Independent contractors and related remuneration models operated in for example the express package industry have been there for over 50 years. Throughout its lifetime the industry has not been dogged by issues relating either to the independent-contractor model or related remuneration models. The fundamental reason that this is the case is the partnership that exists between the principal's needs and the independent contractor's needs. Both parties need each other in business to stay in business. This model has provided New Zealand with a highly highly efficient and essential express package industry. The bill is uneconomical because it changes a productivity-based remuneration model to a partially fixed remuneration model that is not based on productivity. The bill artificially and inappropriately orders contractual relationships that are mutually agreeable to both parties. It does not account for the different types of remuneration common in the contract industry including for example hourly rates—time-based; piece rates which are volume based—and fixed price on completion or outcome based. The bill artificially makes contractors working on the basis of piece rates or for a fixed price on completion of work move to time-based remuneration despite the former being their preferred model of remuneration. Despite the fact that the bill will be applicable only to self-employed contractors and not staff the bill makes an incorrect assumption that every contractor within the prescribed schedule is taken on as a contractor when they would prefer to be an employee. This is not correct. Many contractors have multiple clients giving them an adequate income from all sources while preserving a level of flexibility and variety that they value and do not get in a more traditional employment relationship. Comprehensive enforcement of this bill's provisions will be impossible to achieve without a very significant increase in regulatory capacity. Enforcement therefore is likely to be based on grievances and complaints of non-compliance and therefore will mostly benefit only those very few who take and win a case. So the consequences of forcing a time element into contracted outcomes are significant including the possibility of encouraging unsafe practices by contractors in order to meet artificial deadlines and it is unlikely that outcomes will be gained. For example people may want to purposefully delay their work in an attempt to get better pay or more money. Delays in contract performance or cost overruns arising from minimum wage claims would be inevitable. These in turn could lead to contract performance complaints claims for compensation and the like which normally leave neither party the winner. Also we do have existing laws to regulate the market. Any breach of the current Minimum Wage Act caused by improperly treating someone as a contractor rather than an employee can already be challenged. All occupations specified in proposed schedule 2 will suffer negative consequences if the bill is introduced. The courier service is very important to our economy. In the main independent courier contractors are engaged on the basis of pick up haul and deliver and the courier segment itself has several sub-segments. The largest is the network courier segment where items are picked up from A by one courier and delivered to B by another courier either locally or elsewhere in the country. So between these functions the post trucks planes and so forth are required to underpin the service. So this segment typically remunerates couriers on piece rates. Another primary segment is the point-to-point segment where an item is picked up from A and delivered to B by the same courier. In this segment couriers are often remunerated by way of a pre-agreed revenue split between the contracting company and a courier or on a job-by-job basis.Both these sub segments have existed from the outset of the modern courier industry in the 1960s without drivers being exploited. Independent contractors in this industry make business decisions based on their equity investment in vehicles. They can be leased or owned new or second-hand and maintenance plans operating costs including their employees' labour and general overheads are included there. Investment and other business decisions are unique to each contractor and to the type of contract holder. The generic time-based model proposed by the bill would not recognise independent contractors' unique input costs nor would it incentivise productivity. Instead it is likely to disincentivise productivity leading directly to higher costs and reduced service levels. Market intervention such as this would be destructive to the courier industry its customers and the many thousands of couriers who have invested in their own businesses and are currently working productively and positively in industries. The current law is sufficient to prevent misuse of contractor status. Therefore I would like to oppose this bill."