It is somewhat ironic that you would have to be living without access to media (as they do at Gloriavale) to have missed the outcry following the Employment Court’s decision in a case involving the Christian community in which three ex members were found to have been employees from the age of 6 until they left the community.
The term modern day slavery has been used to describe the conditions at Gloriavale. More broadly, the case reinforces the importance of ensuring employees have a real and genuine opportunity to obtain advice before entering into an agreement, as well as the legal test being the real nature of the relationship and labels or contracts not being determinative on their own.
Key aspects of the Employment Court decision
Three ex-Gloriavale members applied to the Employment Court for declarations that they were employees while they lived at Gloriavale. Gloriavale argued that the work the plaintiffs did as children could be classified as chores, the work that they did at the age of 15 was educational work and training, and the work they did after turning 16 was covered by an agreement which declared that they were not employees but were volunteers.
The Court specifically held that:
- Work that the plaintiffs performed from the ages of 6 to 14 could not be classified as chores. The work had a commercial element to it, was strenuous, performed for extended periods of time and sometimes dangerous. The plaintiffs’ parents had little to no involvement in when, how and what work their children performed, these decisions were made by a Gloriavale leadership group. If the work was not performed quickly enough to the right standard, the children were denied food and sometimes beaten as punishment.
- Work that the plaintiffs performed at the age of 15 could not be classified as educational work experience. This work was covered by an agreement titled “Transitional Education Agreement” which the plaintiffs signed. The agreement stated that the plaintiffs had received their education so far, agreed that the work was for their own benefit, agreed that they were not an employee or a partner, and agreed that they will not be entitled to wages or payment for the work they perform. The plaintiffs were required to do whatever hours were necessary to complete the task at hand. The nature of work was more akin to the work an adult does in the workforce instead of work experience for educational and training purposes. The Court held that the label applied to this relationship was misleading and failed to reflect the real nature of the relationship and the work performed.
- Work from the age of 16 onwards was covered by an agreement that labelled the plaintiffs Associate Partners. Again the Court held that the label was misleading and did not reflect the real nature of the relationship. The plaintiffs did not have any understanding of the agreement they had and did not have any real opportunity to get proper guidance or advice regarding the obligations under the agreement. The work that they did was not as volunteers. The plaintiffs had no choice but to enter into the engagement and perform the work. The plaintiffs were paid money from the profits made on the company shares they held, but the money was then transferred straight back to the Gloriavale shared account.
The benefits the plaintiffs received for the work they did through the different stages were provision of food and accommodation, the necessities of life and the ability to participate in the Community.
The key considerations that the Court took into account in this case were:
- A strict contractual approach is not appropriate in employment matters. The focus must be on all relevant matters to determine the real nature on the relationship. Irrespective of what label is given to the relationship, the “underlying policy intent of s 6 (of the Employment Relations Act 2000) was to prevent employers avoiding statutory employment protections and standards by use of agreements and arrangements which placed form over substance”.
- Involvement of religious beliefs and values does not raise a presumption against the existence of an employment relationship. The involvement of religious beliefs is just one factor that needs to be considered along with all other relevant factors. In any case, any such presumption would “restrict classes of workers from accessing statutory employment protections”.
- If the working conditions amounted to slavery or forced labour, that did not exclude the application of s6 and did not exclude the Court from having jurisdiction in the matter. Parliament excluded certain types of workers from holding employment status but working as slaves or in servitude was not excluded.
Importance and relevance of the case
The Court reiterated in this case that, whether a worker is an employee depends on the real nature and substance of the relationship, and how the relationship operated in practice. The label given to the relationship or what either party subjectively considered the relationship to be is not the determining factor in the matter.
The case highlights the importance of having agreements that reflect the true nature of the working relationship and that parties cannot contract out of minimum statutory employment standards. It also highlights the importance of each party having the right to seek independent legal advice.
The principles discussed in the case are particularly relevant for organisations that engage workers as independent contractors or volunteers – it is essential to ensure that the arrangements entered into actually operate in the manner that the agreement or the label stipulates. Incorrectly labelling the relationship can result in the organisation becoming liable for severe penalties and back pay for the employee.
If you have any questions about the working arrangements at your organisation, please feel to contact our team for specific advice regarding your circumstances.