Fenton Darien: Minimum Wage and Remuneration Amendment Bill — First Reading 
Fenton Darien: Minimum Wage and Remuneration Amendment Bill — First Reading 
[Volume:633;Page:4815] 
DARIEN FENTON (Labour) 
: 
 I move  
That the Minimum Wage and Remuneration Amendment Bill be now read a first time. 
 It gives me great pleasure to introduce the first reading of this bill and at the appropriate time I intend to move that the bill be considered by the Transport and Industrial Relations Committee. The Minimum Wage and Remuneration Amendment Bill provides that the Governor-General is able by Order in Council to make regulations prescribing the minimum rates of remuneration payable to any person working under a contract for services. Such minimum rates may be prescribed as a monetary amount or as a percentage of any other minimum rate prescribed under the regulations. 
The bill does not attempt to define the difference between independent contractors and employees. It simply sets out a process for minimum remuneration to be determined for contractors and enables that to be enforced. Contractors lack the most fundamental of protections—the right to be paid no less than what is considered socially acceptable for other workers who have the protection of the minimum wage. Minimum remuneration is a baseline protection and should apply equally to all workers regardless of whether they are in a traditional employment relationship or whether they have entered into a contract for services. This bill will provide that protection. 
The intent of the bill is not to defeat agreements being made under commercial relationships between two parties. It is not designed to restrict those who are entrepreneurs making whatever arrangements suit when contracting for services but there is a difference between workers who depend on selling their services in order to survive and entrepreneurs who invest capital and hire workers. 
Like the rest of the world New Zealand has experienced a rapidly changing labour market. The nature of the world of work has changed dramatically and will continue to change in the future. Over the past 15 years there has been a growth in non-standard employment from full-time permanent employment to part-time casual temporary and contracted jobs. Employment patterns in a range of sectors and industries have changed drastically and contract work is becoming one of the most preferred work arrangements of employers throughout the world. It is the new casualisation. As with almost all atypical work contracting is contributing to a growing disparity between the actual results of the labour market and labour laws where protections for workers are based on the traditional employment relationship. 
New Zealand has seen considerable growth in the number of self-employed as a percentage of the total workforce. Approximately 20 percent of the labour market is described as self-employed and is likely to be working under a contract for services. Who are these workers? Many immigrants opt for this kind of employment because of the difficulty in obtaining suitable waged or salaried employment. They are likely to be Maori and Pacific Islanders. New Zealand women are becoming self-employed at over twice the rate of men yet most of those businesses start smaller remain smaller and generate lower incomes. 
 Contract workers are used in both the private and public sectors in a broad range of industries. There are many reasons why firms often prefer to obtain services through means other than employment contracts such as simplified payroll and human resources administration and greater flexibility in terms of dealing with workers. For many contract workers this works well and in fact they will be earning well above the equivalent to the current minimum wage. But having no floor above which remuneration can be paid means that some companies are unfairly exploiting the competition between contractors. 
Contracting arrangements are often used for the purpose of denying rights and avoiding obligations under labour laws. Where independent and dependent contracting is used improperly the consequences for those who perform the work are losses in wages job security and working conditions. Differences in the treatment of workers on the basis of the contractual form of their work relationship can induce the stronger party usually the purchaser of labour to create less-regulated commercial relationships over more-regulated employment relationships. This creates a downward pressure on wages working conditions and living standards for other workers. 
Numerous examples of contracting are occurring in New Zealand including for example in personal care forestry construction courier services transport agriculture and telecommunications. Pamphlet and newspaper deliveries used to be the domain of young people trying to earn a few extra dollars but today parents and older people are very often contracted for these deliveries. Although some of us might think it is OK to pay young workers very little—and I am not one of them—this kind of contract work becomes a real problem when families and older workers are relying on it as a source of income. 
Contracting often comes in the guise of a commercial contract in which labour is the main service provided. Contractors work for one employer or company or even a former employer. Although the Employment Relations Authority has the ability to investigate the real nature of an employment relationship—and there is established case law on the definitions of contractors versus employees—workers can be accorded the status rights and protections of employees only if they undertake the risk and expense of challenging their employer in court. 
This bill is not about whether or not someone is an employee but whether that person should be afforded some basic protection in law. Social security health and safety protection and accident compensation are already provided to workers who are not considered employees. So what is so different about providing the protection of a minimum level of remuneration? Information on contractors and what they are paid is not available in New Zealand. I have no doubt that at the select committee there will be many complex arguments about different arrangements and they will need to be considered carefully. But this bill raises the question of whether we consider it acceptable in a First World economy like New Zealand’s to allow arrangements whereby workers can be used to work for less than a socially accepted minimum remuneration. 
My bill will provide minimum protection for those contractors who have little experience and no advice and who are vulnerable to exploitation. It will also put some minimal controls on the vicious practice of underbidding for contracts for services. If we are serious about improving the earnings of all New Zealanders this House cannot continue to ignore the growing group of workers who make an important contribution to our economy and our society but who are denied this most basic right in law to minimum pay. New Zealanders believe in fairness and this means ensuring some equality of treatment for workers regardless of their legal employment status. We need this most basic of protections to reflect the realities of new forms of work and to keep pace with the changing world of work in the 21st century.