Moves to finally outlaw the exploitation of dependent contractors is vindication for a pair who battled for years on their behalf.
A former truckie and a high-profile lawyer who have spent a decade fighting for the little guy are claiming victory following the government’s announcement it will change the law to protect small operators.
Peter Gallagher, who runs advocacy group ProDrive, and Simpson Grierson partner Ben Upton say the proposed unfair commercial practices rules are a big win for small business people like owner-operator truckies and couriers.
The Labour government plans to ban “unconscionable” conduct, and extend unfair consumer contract protections to also cover business contracts worth up to $250,000. It will offer assurance for small operators who are forced to sign standard contracts with no room for negotiation, Gallagher and Upton say.
“I just feel proud that we are finally going to have some opportunity for equity and fairness to be restored to thousands of contractors across this country,” Gallagher says.
The reform is significant, and would have made a huge difference eight years ago when they took food conglomerate Goodman Fielder to court after it tried to slash the livelihoods of 11 bread truck drivers, Upton says.
The Goodman Fielder bread run contracts allowed the company to alter how it remunerated the drivers, and it attempted to cut their pay by 25% with one week’s notice. It was no coincidence the international corporate had just had to announce a A$300m impairment on its baking division, he says.
“Had we litigated that case with this piece of legislation in play then we would have won much more easily.
“We would have simply pointed to the provision… to say that was such a one-sided term that it should be treated as unfair and effectively unenforceable.”
In the end the truckies won the Olsen case, as it became known, but only on a tenuous legal argument. After rejecting various other tacks, Justice Patrick Keane finally agreed that Goodman Fielder had a duty to the drivers, and it had to give notice and consult if was going to make a material change to the contract.
The proposed new law reflects the conclusion Justice Keane came to, Gallagher says – that if Goodman Fielder had the complete unilateral power that it claimed, then the contractors were rendered as vulnerable as they said they were. The trouble was it took nine months, thousands of pages of legal documents and three days in court to reach that point, he says.
“One week’s notice to reduce people’s incomes by an average of 25%. No reasonable person could ever entertain that as fair.”
Small business minister Stuart Nash says some of the examples of misconduct that people provided while it was consulting on the law change were particularly concerning.
“We heard about a range of potentially unfair contract terms, including extended payment terms, one-sided contract terms, and businesses being locked in to contracts for long periods of time. We also heard that some businesses aren’t complying with the terms of existing contracts, making excessive demands, and blacklisting and bullying their suppliers.”
Upton says the new law will change the landscape for small businesses who are dealing with companies that will trade only on their own standard term contracts. This will include the likes of courier drivers, dependent contractors and franchisees.
The trucking industry in particular has been dogged by poor and unsafe practices to the point it has been called “transport’s dirty little secret”. There have been numerous cases of drivers forced to operate illegally over their hours just to make their contracts pay, and there is evidence that this has contributed to the rising road toll.
“How many people have died, possibly because of the lack of this kind of legislation being in place 10 years ago?” Gallagher asks.
The Bulletin is The Spinoff’s acclaimed daily digest of New Zealand’s most important stories, delivered directly to your inbox each morning.