Kia ora,
Welcome to my first update on legal and commercial issues that might, in my experience, be relevant to the sporting sector. They will be a heads-up on legal or commercial changes or cases that may affect you, your sport or NSOs, clubs and sporting organizations. They will not be detailed legal advice. I trust you will find the October sport sector legal update to be insightful.
Contractors vs Employees
Many sporting organisations are still wrestling with where the line sits between an employee and a contractor. It’s especially tricky in the sporting sector because coaches, support staff and athletes often work irregular, event-based, tailored hours that don’t fit tidy categories. The law looks at the real nature of the relationship, not the label on the contract. Getting it wrong can potentially mean back-paying minimum wage and leave entitlements, PAYE/KiwiSaver/ACC plus interest and penalties, health & safety and vicarious-liability exposure, and the risk of personal grievances/unjustified dismissal claims – not to mention reputational damage. I empathise, it’s not always easy or clear.
Thankfully, the Government has now introduced reforms that would add a “gateway test” to clarify when someone can properly be engaged as a contractor. What this means is that an organization could undertake a pre-test to check whether a person is being treated as a contractor and if they tick the (likely) four boxes below (plus a requirement to give them a reasonable opportunity to get independent legal advice before signing), then the assessment would be clear. If any box is missed, you fall back to the usual “real nature of the relationship” test.
The likely requirements will include:
- a written agreement saying they’re an independent contractor;
- free to work for others (including competitors);
- no minimum/rostered hours or the worker can sub-contract;
- you can’t terminate the arrangement just because they decline extra tasks; and
the worker has had a reasonable opportunity to seek independent advice before signing the agreement.
For example, if you engage a coach for event-based sessions with no guaranteed hours, they can coach elsewhere, you allow subbing in another coach, and you don’t penalise them for turning down extra clinics, then you’re likely inside the gateway (contractor). Miss a box? You’re back to the full employee-vs-contractor assessment.
You can read more about the proposed changes here – https://www.mbie.govt.nz/business-and-employment/employment-and-skills/employment-legislation-reviews/employment-relations-act-2000-amendments, which are aimed at providing clearer up-front certainty for both organisations and workers. While timing depends on the Parliamentary process, they is likely to be enacted by December this year.
Athletes and Collective Bargaining
Somewhat related (but not quite the same) – you may have seen some media covering the case between High Performance Sport NZ (HPSNZ) and the Athletes’ Cooperative (TAC). IN this case, TAC argued that its athlete members should be able to initiate collective bargaining with HPSNZ under the Employment Relations Act. In the recent High Court decision (which I can provide, if you’d like a copy of it), it was confirmed that because athletes are not employed by HPSNZ, there is no employment relationship – and without that, the union could not initiate collective bargaining with HPSNZ. In other words, funding/support is not the same as an employment relationship, so the usual employment rights and bargaining processes don’t apply to athletes in respect of HPSNZ.
However, as a note of caution, that decision was specific to the relationship between high performance athletes and HPSNZ. The relationship between athletes and their National Sporting Organisations (NSOs) is different and would have to be assessed on its own facts.
Takeaways for sports organisations
- Be clear about whether the people you engage are employees, contractors, or participants – and document that consistently with how things work in practice.
- Once the new legislation is enacted, review and update your contractor templates to assess whether existing arrangements remain clear and compliant in light of the new gateway test.
- If in doubt, get a quick sense-check before onboarding or renewing arrangements.
Of course, always happy to chat if you’d like to understand what this might mean in your organisation’s particular context.
