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DOL Letter To Dr Mapp Re Ingram Report

11 August 2006

Dr Wayne Mapp MP

Dear Dr Mapp


Your letter of 26 July (hand delivered) asserts that the Ingram Report “raises serious questions as to whether or not there has been a breach of New Zealand’s Minimum Wage Act 1983”, and goes on to submit that the Department is “put on notice that it must investigate whether or not the employment law has been complied with”.

While we had already looked at the Report from this perspective, the Department has again considered the issues you raise. We have concluded that there is no basis for a Department of Labour investigation.

I am sure you are aware that the Department’s jurisdiction in employment matters is dependent on there being an employment relationship in existence.

What the Ingram Report shows is that various work was performed on various properties owned by Mr Field. It does so in terms that seem to support the existence of relationships of principal/contractor and contractor/subcontractor. In the Department’s view, none of the indications of an employment relationship (other than the doing of work) are described in relation to any of the situations.

We have looked carefully at each aspect of the Report that your letter highlights (paras 492, 498, 500, and 501) and those parts in the body of the Report which provide the detail about each.

We can see none of the questions which you pose being raised by those aspects of the Report.

The Ingram Report uses language to describe the monetary arrangements that in the Department’s view suggests nothing about wage rates or minimum wages but rather talks in terms of “underpayments” as judged against “market rates”. The “market rates” relied on by the Ingram Report appear based on assessments of the overall cost of each job by professionals qualified to judge overall project costs, not things such as wage rates.

The notion of “underpayments” referred to in the Report seems in fact not indicative of a payment under what was agreed but indeed a payment less than what Dr Ingram considered might be expected for a prudent contractor.

Some examples of the terminology include the following:

- “cost (inclusive of GST)… for a whole contract, $......, for labour only $......“ (Paras 268, 292, 323, 325)
- “price substantially discounted from market rates” (para 313)
- “reasonable remuneration for those services” (para 314)
- “quotation” (para 318, 325 three times)
- “cash job” (para 318)
- “engaged to do the work” (para 324)
- “relevant invoice” (para 325)
- “receipt” (para 330)
- “reasonable market rate” (para 334, 335)

All of this language is the language of contracts for services, ie, of contracting not employment.

As you will no doubt appreciate, those people who are not in employment relationships do not have their remuneration levels currently regulated in New Zealand. They are free to contract for whatever level of remuneration they consider to be fair or appropriate in the circumstances – and each party considers all manner of factors in deciding what that will be.

In keeping with the suggestion in your letter we have sought to test this analysis by approaching Dr Ingram QC. He has confirmed firstly that his Report should speak for itself on such matters and secondly that he cannot release any further information.

Even if there were issues worthy of Department of Labour investigation, our normal policy would involve talking to the workers concerned first and ensuring that they wished the Department to pursue their interests. None of these people who did the work in question have approached the Department with any concerns about their remuneration levels.

Our labour inspectors can take action on behalf of workers but we would not do so against the wishes of a worker. We always make the worker aware of their rights and the possibilities that flow from that.

We have to, and do, bring to the consideration of matters such as this a fully objective and apolitical perspective. We repeat that we cannot see any basis for the devotion of departmental resource to an investigation which, by our assessment, would falter at the first, and most important, hurdle – the threshold question of whether any employment relationship existed.

Accordingly, it is not the Department’s present intention to carry out any investigation, but we remain ready to receive any evidence or worker complaint that might suggest we should reconsider that view.

Thank you for your letter.

Yours sincerely

James Buwalda


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