Chen v Construst Ltd [2025] NZERA 20

Employment Relations Authority – Employment status – Employee or contractor

Employment Relations Authority – Breach of minimum employment standards – Failure to provide employment agreement – Failure to keep time and wage records – Penalties

Key issues were:

whether the applicant was an employee or contractor
whether the alleged employer breach minimum employment standards by not giving the applicant an employment agreement and by not keeping time, wage, holiday and leave records
whether the employer should be penalised for minimum employment standard breaches
whether the applicant was unjustifiably dismissed.

The second respondent, the director of a construction company, met with the applicant in a café and offered him a full-time position as “Carpentry Team Leader”. The parties agreed the applicant would be paid $40 an hour, with a petrol allowance and tools provided by the company, starting the next day. The applicant did not enter into any written agreement with the company.

The director had a practice of employing migrants on work visas as employees and taking on people who did not require a work visa as independent contractors. The parties did not discuss whether the applicant was to be an employee or a contractor, but the applicant understood he was to be an employee.

Shortly after the applicant started work, he became concerned about when he would be paid. In a series of WeChat messages to the director, the applicant requested fortnightly payments, provided his IRD number and requested an employment agreement. The director responded with messages saying the applicant was a contractor. The director said he could only offer a self-employed contract as “there are too many work visas right now, I need to lay off some first” (see paragraph 30).

When the applicant had been working for a month, the company paid him a sum of money and said there would be no work the next week. When the applicant asked when he could return to work the director told him there was no more work and did not provide any thereafter. The applicant claimed he was unjustifiably dismissed. The director maintained that the applicant was a contractor.

The Employment Relations Authority (the Authority) found the real nature of the relationship between the parties was one of employee and employer (see paragraphs 86–88), and that the director was the applicant’s employer, not his company (see paragraph 94).

In coming to the determination that the applicant was an employee, the Authority took into account that:

The Authority accepted the applicant had raised the issue of PAYE at the initial interview (see paragraphs 52, 53).
The applicant worked full-time, as directed by the director, with tools provided by the director. The director exercised a high degree of control over what the applicant did (see paragraphs 54, 62, 63, 67–72, 75).
The director presented the applicant to other workers as the “Carpentry Team Leader”, as an employee and not an independent business owner (see paragraph 74).
The applicant provided the director with his hours of work but did not provide any invoices (see paragraphs 54, 56). The applicant was paid by the hour, not for specific tasks he completed (see paragraph 58).
The applicant did not bear any risk of loss nor was he able to profit from his work other than by working more hours, allocated to him by the director (see paragraphs 58, 77–80, 87).
The applicant did not work for anyone else, nor did he subcontract anyone to work on his behalf (see paragraphs 59, 63).

The Authority accepted that the director failed to provide the applicant with an employment agreement and failed to keep time and wage and holiday and leave records, contrary to sections 65 and 130 of the Employment Relations Act 2000 and section 81 of the Holidays Act 2003. It ordered the director to pay penalties of $2,750 (see paragraph 140).

The Authority also (see paragraph 162):

found the director unjustifiably dismissed the applicant
ordered the director to pay the applicant $20,000 compensation for distress and $5,236.53 lost remuneration
ordered the director to pay wage, holiday pay and petrol allowance arrears of $840, with interest.

Chen v Construst Ltd [2025] NZERA 20

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