Home Taxi company Facts Outweigh Employers’ Beliefs, Court of Appeal Says in Southern Taxis

Facts Outweigh Employers’ Beliefs, Court of Appeal Says in Southern Taxis

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Southern Taxis, which operated between 2002 and 2016, described its drivers as independent contractors.

Rachel Kelly / Stuff

Southern Taxis, which operated between 2002 and 2016, described its drivers as independent contractors.

Employers sincerely claiming not to violate employment law could still be held personally responsible, the Court of Appeal ruled.

In 2019, the two former directors of the Southern Taxis company in Dunedin were held personally responsible for the non-payment of the minimum wage and the holiday pay after the liquidation of the company, and the company was unable to pay the $ 97,753 owed to the drivers. The labor court subsequently overturned this decision.

The Employment Relations Authority had previously discovered that Ronald Grant and Maureen Grant were treating four taxi drivers as contractors when they were in fact employees of Southern Taxis in Dunedin.

In a Dec. 20 decision, the Court of Appeal said it was irrelevant that the Grants believed the drivers were contractors and referred the case to the labor court.

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The key was whether the grants knew the facts that led to the conclusion that the drivers were employees, Judge David Goddard said on behalf of the Court of Appeal.

The court agreed with the lawyer for the labor inspector of the Ministry of Enterprise, Innovation and Employment that this was a test case.

Southern Taxis, which operated between 2002 and 2016, labeled its drivers independent contractors and paid them a flat-rate commission of 40% of what they earned driving company-owned vehicles.

After four of the drivers complained to MBIE’s labor inspectorate, the Labor Relations Authority determined in July 2018 that they were employees and owed around $ 80,000 in minimum wage, public holidays. , breaks and illegal detentions.

About two months earlier, the limited liability company had been dissolved and its surplus assets had been paid to its shareholders and directors, the Grants. The company said it had fulfilled all of its obligations to known creditors.

The authority said administrators were personally responsible for money owed to drivers, but the labor tribunal found in May 2020 that they were not personally responsible after administrators appealed.

The inspection turned to the Court of Appeal to request a judgment on the level of knowledge necessary to establish a person’s liability.

Inspectorate South Director Jeanie Borsboom said the Court of Appeal ruling meant a person was not immune from liability by saying they did not know they were in breach the right of work.

“Individuals have an obligation to understand their obligations, to obtain appropriate advice and not to condone the possibility that their actions violate their employment obligations,” Borsboom said in a statement Monday.

Under the Labor Relations Act 2000, grants can be held personally liable for amounts that Southern Taxis did not pay to employees if they were “involved” in Southern Taxis’ breaches of its obligations.

“In this case, it depends on whether they were ‘knowingly concerned’ with the violations,” Goddard said in the judgment.

“Mr. and Mrs. Grant sincerely believed that drivers were independent contractors, not employees. The authenticity of this belief is not in dispute.


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