EMPLOYEE vs LOCUM (CONTRACTOR)
The IRD (and employment law) has very specific criteria for what it regards as a contractor (in veterinary terms, that’s a locum) and employee.
If a clinic hires a locum for an ongoing, open-ended position, the IRD could start to wonder why the incumbent isn’t an employee.
Different legal rights & responsibilities
The rights and responsibilities for employees & contractors are very different.
Regardless of the differing employment law or tax obligations applying to each (locum cf employee), health and safety laws apply to both. All people must be kept safe at work.
The four tests
It doesn’t matter whether a clinic or the professional providing the serivce (veterinarian or veterinary nurse) calls themselves a locum or an employee, it’s the nature of the working relationship that counts for everythig.
If a clinic gets it wrong, it’s expensive!
None of these tests in isolation dis/proves the nature of the working relationship one way or the other, but if you have any cause for doubt (or question), please get in touch with an employment lawyer.
Intention:
What did the parties intend to be relevant in the relationship between the two?
This relationship is usually evident in the wording of the agreement between the parties.
The two types of agreements are a contract for services or individual employment agreement.
- is holiday pay being paid?
- are public holidays being paid at time and a half + a day in lieu?
- is there an Employment Agreement in place between the parties or a Contract for Services?
Control vs Independence:
Which of the two parties has the greater control – the one doing the work or the one requesting the work to be done?
A worker with greater freedom over when they work and for whom is more likely (although not necessarily) to be a contractor.
Contractors can choose to accept or decline assignments offered to them.
- control over time, work, location?
- hours are set
- control over availability
- supervision and direction
Integration
This test looks at whether the work performed by the person is fundamental to the organisation’s business (and whether they are ‘part and parcel’ of the organisation).
An integration test is whether the worker would be invited to participate / attend organisation events.
- works with own equipment
- team integration
- paid by results
- reimbursed for work related expenses
- uniform has the logo of the company
Fundamental / Economic Reality
This test involves looking at the total situation of the work relationship to determine its economic reality.
A contractor is a person in business on their own account.
A contractor sets their own fees – which may be more or less than what an employee receives for the same duties.
- Fees or salary/wage
- minimum wage
- pays tax directly to the IRD as PAYE & ACC or WHT
- GST registered
- ACC bill
- profit – sets their own rates & number of jobs to take on
- have others do the work for them
- who carries the financial risk?
- how many entities can the person work for
- advertises for their own work
- an invoice required for payment
VetStaff Locums
99.9% of the veterinarians and veterinary nurses we (VetStaff) place into veterinary clinics are self-employed contractors of VetStaff.
VetStaff is the principal agent with vets and nurses subcontracting to VetStaff.
All VetStaff locums are able to get their own work if they want (some do, some don’t). However, most find it easier to let us do the time-sucky admin work of liaising with the clinics, etc. This means that all VetStaff locums have to do is turn up when they’re expected and be the most amazing professional they can be on the day.
