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Inspectorate says no more disguising business employees as ‘volunteers’

Businesses in NZ are being warned by the Labour Inspectorate about disguising business employees as ‘volunteers’ following a nationwide investigation that revealed some concerning practices.

“Businesses cannot evade their obligations as employers by calling their workers volunteers and then simply rewarding them with a bed in a dormitory, food and Wi-Fi rather than a fair wage,” says Labour Inspectorate General Manager George Mason.

“This practice is unfair to businesses that do follow the law and pay their employees. It damages the prospects of people seeking employment in the industry and also takes advantage of the good nature of travellers who may not know what their employment rights are,” says Mr Mason.

These arrangements may also breach immigration laws, which require that work is performed only by those lawfully entitled to work in New Zealand. There are also taxation implications.

While the Inspectorate is supportive of genuine volunteering in New Zealand, there are concerns around volunteer relationships that may stray into an employment relationship, especially in business. The Inspectorate has issued a position statement to provide clarity to businesses, encouraging employers to take action and make sure they are meeting their obligations under New Zealand employment law.

“We are now engaging with the industry to ensure they understand what is required to reach compliance with the requirements of New Zealand law by bringing these practices and workers into the light.

“Key indications that a worker should be regarded as an employee rather than a volunteer include being paid or rewarded for their work, that the worker expects to be rewarded, that the business is making an economic gain from their work, the work is integral to the business, and the workers hours are controlled,” says Mr Mason.

“When you take a closer look at some of these schemes where businesses have workers putting in as many as 32 hours per week cleaning linen, working reception, and vacuuming, many of them are blatantly employment relationships and they are taking advantage of these workers.

“Wherever a worker is being rewarded in a business at whatever level, the Labour Inspectorate’s starting position is that these people are employees and minimum employment standards apply.

“This means providing clear documentation for these workers, with written employment agreements, accommodation agreements, keeping wage and time records, paying wages in money, and paying tax,” says Mr Mason.

It is possible for businesses to deduct from wages the reasonable costs of accommodation provided to an employee where that has been agreed in writing. But accommodation arrangements need to be treated separately from employment.

“With clear documentation, exploitative practices will be exposed and these workers will be afforded the protection of New Zealand employment law – preserving the reputation of New Zealand as a fair and equitable place to work. It will also ensure legitimate businesses are not undermined.” says Mr Mason.

The investigation followed on from number of complaints about businesses taking advantage of scheme such as Willing Workers on Organic Farms (WWOOFing) and VolunteerX, advertising on their sites to find travellers willing to take on work in exchange for accommodation.

“It is not the name of the scheme that is important, but the nature of the relationship,” says Mr Mason.

“While our initial focus has been on working with the accommodation industry, we understand there are other businesses that may be using volunteers in such a fashion.

“We encourage all businesses that are currently rewarding labour other than by payment of wages to read our position statement, and where necessary, change their employment practices so they can demonstrate they are meeting their legal obligations,” says Mr Mason.

View The Labour Inspectorate position statement on Work In A Business Operation Without Payment of Wages [PDF 199KB].