The continuing development of the gig economy and the increased use of remote working following the pandemic has presented challenges for determining the true nature of working relationships. This determination is critical for businesses. Misclassification of workers as independent contractors or consultants can lead to significant consequences.
Properly classifying workers is critical in determining whether a worker will be entitled to the benefits and protections of the Employment Act 2000 ("EA 2000") and to certain other obligatory benefits like health insurance or pensions.
In February 2023, the Ministry of Economy and Labour published guidance on the difference between employees nd independent contractors. At the time of writing, this guidance could be found here.
The guidance is careful to note that there is no definitive test applicable in all workplaces to determine whether an individual is an independent contractor. However, the guidance sets out 12 indicators to consider when hiring employees and contractors.
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