Contract & Property Law, Employment Law

Contractors not entitled to fairness

A contract for services is different to a contract of services.  One of the main difference is that only a contract of services (employment relationship) provides for fairness rules when it comes to termination. Which can not be implied into a contract for services.

This was recently confirmed by the High Court in Ike v New Zealand Couriers Limited [2012] NSHC 558. Mr Ike’s contract was terminated due to him committing two breaches of NZ Courier’s procedures within a 60 day period and he challenged the termination, arguing that his contractual relationship was so similar to that of an employment relationship that NZ Couriers should have treated him fairly and give him a chance to remedy the breaches (which the contract did not provide for).

Not so, the HC found. Rules of fairness and procedure are implied in an employment relationship, but not in a contractor relationship. In the absence of a contractual obligation on NZ Couriers to act reasonable, they were entitled to terminate in accordance with the contract.

That makes sense and what Mr Ike should have done instead, of course, is to lodge his claim in the Authority and not the High Court. Given that most contractor relationships, especially in the courier industry, come very close to being in fact an employment relationships, he might have had more success arguing that he was in fact an employee, not a contractor.

Too late now.