The blurred line between employee and volunteer

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Kidd v Beaumont Family Trust

Volunteers are a critical part of the fabric of our society so it is disturbing to see an increasing number of cases where the definition of employee is being challenged by volunteers who retrospectively want the benefits of being employees. This case, however is at the other end of the spectrum and more like a friendly deal that was really an employment relationship.

Mr Kidd and his wife retired and went to live in a small caravan park. The owner of the caravan park was the family trust of a retired couple (the Beaumonts). The resource consent for the caravan park required a manager to be living on site. Initially the Beaumonts lived on site but they decided to live in their own home which was around two kilometres away, so they needed to have a manager resident on site.

The Beaumonts asked the permanent residents living at the park if any were willing to help out by acting as the manager and doing some cleaning in return for a waiver of their site rental. The Kidds and another couple agreed to do this and each couple covered the role two days a week. They managed the work between themselves. After a few months the hours expanded to four days on four days off and the compensation expanded to include $25 a day.

Everything worked fine until there was a disagreement between Mrs Beaumont and Mr Kidd. She was not happy with the way he did his work and in particular dealt with customers. He felt he was being treated unfairly. He went to the Labour Inspectors who agreed that he was an employee and had not been paid the minimum employment entitlements (wages and holidays) and confronted Mrs Beaumont. Mr Kidd was due to have surgery and Mrs Beaumont said she had someone organised to take his job – she meant to cover his absence – he assumed he was being permanently replaced.

The Kidds moved to another caravan park and took a personal grievance for minimum entitlements and wrongful dismissal. The first step was to prove that they were employees. The matter went to the Employment Authority which concluded that the practice of using volunteers in campsites was not unusual and that they did not meet the test for being employees. Nor did they meet the test of being volunteers, in reality they were contractors.

Not satisfied with this, Mr Kidd (who was by now separated from his wife) took the matter to the Employment Court which has conducted an exhaustive analysis of dictionaries, NZ and UK legislation and case law to determine what is and what isn’t a volunteer.

The Employment Relations Act defines a volunteer as a person “who does not expect to be rewarded for the work to be performed… and receives no reward for work performed as a volunteer…” The Judge examined the question of the payment, which could not be considered to be reimbursement for out of pocket expenses as there were none, all the costs were met by the business. A further factor in the decision was the nature of the enterprise. The Judge states “usual, if not universal, features of such volunteering arrangements include that the organisation is not engaged in commerce, at least as a profit-making or capital gain-making enterprise, and that the enterprise would not be sustainable but for the commitment of such volunteers.”

Having determined that Kidd was not a volunteer, the Judge then turned to the question of whether he was a contractor, and after running through the routine tests of control, integration in the business, the fundamental test, and the parties’ intentions, and concluded that he was not a contractor but an employee.

Having reached the conclusion that Kidd was an employee and that the family trust was the employer, the parties were sent away to work out how much was due in wage and holidays arrears. (Kidd had claimed $44,000.) The personal grievance for unjustified dismissal was rejected as Kidd had abandoned his job rather than been dismissed.

This decision is really disturbing for people who get a friend to help out in their business in return for a reward in kind and that happens frequently in small businesses – the “will you help with my market stall for some free produce” scenario. The problem is not when it is going well for everyone, it is when the friends fall out.

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