When does a volunteer become an employee?

It is not uncommon for relatives to lend a helping hand in family-owned business without expecting anything in return. But when does this help cross the legal line and transform the relationship into one of employment?

The distinction is important due to the implications for business owners in either scenario under both the Employment Relations Act 2000 (ER Act) and the Health and Safety at Work Act 2015 (HSW Act).

Employment Relations Act 2000

The rights of employees under the ER Act are not extended to volunteers.

Section 6 of the ER Act provides that, for the purposes of the ER Act, an employee is anyone who does work for a reward and has an intention to work. In contrast, a volunteer is someone who does not expect to be rewarded and receives no reward for their work.

Rather than accepting the parties’ description of the relationship at face value, the Employment Court (Court) or Employment Relations Authority (Authority) will make an objective inquiry into the “real nature of the relationship”, whilst assessing:

• The written and oral terms of any contract, usually containing an indication of a common intention;
• Any divergences from those terms and conditions in practice;
• The way in which the parties have actually behaved in implementing their contract; and
• The levels of control and integration.

The requirement of common intention between parties to form an employment relationship is a grey area for business owners, as intention can be implied through conduct such as formalisation of working arrangements through rostering, or expectations on individuals.

The 1992 Employment Court decision of MacGillivray v Jones suggested that there may be a presumption that relatives working in family businesses do not share such mutual intention. This decision has to be considered in light of more recent cases where the Court has ruled that mutual intention may be implied where a reward is involved (in reference to section 6 of the ER Act).

A ‘reward’ is a broad concept that encompasses intangible or non-monetary benefit. For example, in the Labour Inspector v Alpine Motor Inn and Café (2008) Ltd, 2016 case the Authority held that food and lodging amounted to a reward.

So, if relatives are working regularly for food and lodgings and operate under some form of direction, the Court or Authority may determine there is an employment relationship and order the business to pay the necessary entitlements under the ER Act.

If an unpaid relative/volunteer is found to be an employee, an employer will be liable to provide the employee all of their rights and entitlements under the ER Act, the Minimum Wages Act 1948, the Holidays Act 2009 and further to this, comply with their respective obligations under the HSW Act as an employer and employee.

Health and Safety at Work Act 2015

 The purpose of the HSW Act is to ensure that persons conducting a business or undertaking (PCBU) are ensuring the health and safety of their workers and workplaces. The term ‘worker’ covers more than just employees – it includes both employees and volunteer workers.

A volunteer worker includes individuals who carry out work that is an integral part of the business with the knowledge/consent of the PCBU on an ongoing and regular basis. It excludes volunteers engaged in non-commercial activities (for example, those participating in fundraising or recreational activities).

If a relative performs work on a regular basis and that work constitutes an integral part of the business on a day to day basis, such as serving customers or cashing up, inevitably, responsibilities under the HSW Act will be likely to arise regardless of whether intention or reward is involved.

Workplace Law team

If you have any queries in respect of the above, or any other Workplace Law issues, please contact a member of Lane Neave’s Workplace Law team:

Employment: Andrew Shaw, Fiona McMillan, Gwen Drewitt, Maria Green,  Hannah Martin, Joseph Harrop, Holly Struckman, Alex Beal, Giuliana Petronelli, Abby Shieh
Immigration: Mark Williams, Rachael Mason, Daniel Kruger, Nicky Robertson, Julia Strickett, Ken Huang, Mary Zhou, Shi Sheng Cai (Shoosh), Sarah Kirkwood, Janeske Schutte, Lingbo Yu
ACC: Andrew Shaw
Health and Safety: Andrew Shaw,  Fiona McMillan