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Minimum Wage for Contractors passes 2nd reading

Minimum Wage for Contractors Bill passes second reading

Labour MP Darien Fenton’s Minimum Wage & Remuneration Bill, passed its second reading in Parliament last night.

The bill will bring minimum wage rights to workers employed as independent or dependent contractors and break new ground for thousands of workers who are currently without any rights to minimum pay.

Speech attached:
Minimum Wage and Remuneration Bill
Second Reading Speech – Darien Fenton MP
21 May 2008
I move that the Minimum Wage and Remuneration Bill be now read a second time.
The second reading of this Bill is very timely.
Over the past two episodes of Fair Go, a story has been running about children employed as independent contractors to deliver junk mail. The children, some as young as 12 and others nearly 16 are earning as little as 25 cents an hour and to make matters worse have recently had their pay cut.

Fair Go reports that it has had more responses to this story than any other story this year. There has been outrage about what’s happening to these children, but there were as many stories about adults employed as contractors being treated in the same way.

I am not surprised. This Bill started with leaflet deliverers, but since the bill was tabled almost two years ago, many workers employed as contractors in a wide variety of occupations and industries have come forward to say that this kind of abuse is happening to them as well.

It is a privilege to speak up for those workers who are currently without minimum wage protection. It is a privilege to speak on behalf of those workers who will not have the benefit of increases to the minimum wage this year, next year or indeed any year unless this legislation is passed.

This Bill breaks new ground at the harder end of the labour market. But most submitters to the Select Committee agreed that the principle behind this bill is absolutely correct – that no-one who works in this country should be paid less than a socially acceptable minimum wage.

In the Select Committee process, we heard of contractors who are in need of minimum wage protection in many occupations and many industries. For some workers it’s so bad that they cannot even prove whether they have been paid fairly, because the contractor who engaged them doesn’t keep any records.

Contract workers have told me about how they are being affected by the lack of any minimum wage protection.
For example, a pizza deliveryman told me he was employed as a "contract driver," not an employee, then his franchise boss assigned him to work 10 hours straight on well below minimum wage.

A home-care worker, on 24-hour shifts looking after a man with Alzheimer's disease, signed a contract with an agency saying she is "self-employed" and therefore not entitled to the minimum wage.

A waitress was told she was not an employee; she was an independent contractor with a waitressing business. A hotel housekeeper was contracted on a room by room cleaning basis.

A workers’ brief experience as a "subcontractor" hired to mop floors and dust offices later discovered that other workers had also signed an independent contract with the licensee of a commercial cleaning company. She was told where and when to clean and told to buy hundreds of dollars in supplies.

Ten months after signing her contract, after working for what amounted to less than $6 an hour, she has no cleaning business. And the company is still recruiting workers in employment ads to "Be Your Own Boss."

Under these and other types of contracting arrangements, many low-paid workers delivering services are being denied minimum wages.

But it’s not only those workers we think of as vulnerable who are being affected. Actors Equity and the Musicians Union are also calling on politicians to support this bill. They say that the poor pay & conditions of many actors and musicians is not commonly known, but because they are classed as dependent or independent contractors, they are expected to work for a whole lot less than minimum wage.

Under New Zealand’s labour laws, minimum standards protect an employee's rights to annual leave, statutory holidays, sickleave, minimum wage and holiday pay.

But the catch is you have to be deemed an "employee."
At the end of the working week, the wages of many contractors can amount to a lot less than the half the legal minimum wage.

The most disturbing part of this trend is that big and small companies alike are passing on the risk and the cost of doing business to the lowest-paid workers.

I talked to a truck-driver, who was employed as an independent contractor. He was promised $1000 a week of driving work. He thought that driving would be the perfect job for him and would deliver a decent income for him and his family.

For two months, he received no jobs. Then in June, he received a call to come in for training – and watched an hour-long video on how to drive trucks. He heard nothing again for weeks.

Frustrated and worried, he made repeated phone calls to the principal and was finally assigned a job driving every Saturday, a contract worth less than $100 a week.

The driver eventually got two more contracts, but the three jobs altogether paid only $450 a week, less than half of what he had been promised and he had to work long and sometimes dangerous hours.

When the driver approached the principal, he was told that every driver in their employ runs an independent business and the principal bore no responsibility to the workers. The principal contractor told him it was up to the drivers to do their own thing and he had nothing to do with the workers.

His advice to the truck driver : "Go to the small claims court if you have a problem."
This is a real problem here in New Zealand. It has the potential to grow if we do nothing. We have the opportunity to do something about it and my bill provides that opportunity.

The changing labour market in New Zealand needs to be acknowledged. Study after study has found that non-standard work has become a mechanism for lower pay, fewer benefits, less job security and fewer career opportunities.

(The National Party) will stand up in a minute and say this bill is interfering in commercial relationships and utter other homilies that would be quite at home in a Bill Birch speech of the early 1990’s. If she has a problem with basic minimum pay protections for such workers, she should tell us and tell the people of New Zealand, so when they vote later this year, they will do so with their eyes wide open.

And a similar question can and will be directed to New Zealand First.
This bill is about workers who are paid substandard wages in cash who don't exist in any records. And it’s about the businesses that hire them who claim no legal responsibility and who use contracting arrangements to avoid labour rights and decent pay.

The basic principle behind this bill is that it’s not fair that some workers should be paid less than others simply because they happen to be in a working arrangement that doesn’t fit within our current employment laws.

During the Select committee stages, the Labour members of the Committee accepted that the Bill needed to be narrowed in its application and as is evident from our comments in the Select Committee report, we acknowledge the validity of concerns about individual arrangements such as the person mowing the lawns, or painting our houses, or providing catering to a family wedding.

So in the Committee stages of the House, I intend to move a number of amendments by way of SOP that will limit the scope of the bill to specified occupations only for workers over 16. There will be no differentiation between workers aged 16 and 17 and older workers.

Other amendments will also spell out how minimum remuneration could be calculated when many contracts for services are not hours based and will provide more clarity to the definition of Principals and specifically exclude householders.

In finishing, I thank the former and present Minister of Labour, the officials, the advisors and my colleagues on the Select Committee for their dedicated work on this very important bill.

I thank the submitters and all of those workers who have spoken out.
I also want to thank the Greens and the Maori Party for their support and say to them that by doing so, they are helping to provide that most basic of protections to minimum pay - in other words, a fair days pay for a fair day’s work.

I look forward to this Bill progressing through its stages in this House.


ENDS

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