Lessons from the Employment Court decision in Gloriavale – Who is an employee?

The Employment Court has found that six female plaintiffs who lived and worked at Gloriavale were employees, not volunteers. [1] Significantly, this means that they are entitled to the minimum entitlements and protections afforded to employees such as minimum wage, holidays, sick leave, bereavement leave, meal breaks and more. The Court’s decision is a landmark decision for the Gloriavale community, but is also a timely reminder for employers to consider the real nature of the relationship of those working with them. In addition, whether any written terms accurately reflect the parties rights and entitlements. 

The Community – and the plaintiffs’ work 

Gloriavale is a Christian community with limited contact with the outside world and life is based on the King James Version of the bible. It is a patriarchal community led by the Overseeing Shepard who is assisted by a group of leaders. [2] 

All the plaintiffs were born in the community and carried out work in the community from a young age of around 6 years old. By around 15 years old they were working full time on the ‘Teams’ which undertook work consisting of cooking, cleaning, washing and food preparation tasks. The Court accepted that the work was “unrelenting, grinding, hard and physically and psychologically demanding.” [3] 

The Claim - background 

Each of the plaintiffs left the community. They raised concerns with the Labour Inspector about working conditions at Gloriavale. However, the Labour Inspector concluded that the people who worked there were not employees. The plaintiffs then sought a declaration from the Employment Court that they were employees.  

The plaintiffs claimed that they were employees, while the Gloriavale leadership argued that the plaintiffs were not employees, and the work was voluntary. At the time the work was being performed, neither the plaintiffs, nor the Gloriavale leadership regarded themselves as being in an employment relationship. 

The Court’s Approach and Findings 

Section 6 of the Employment Relations Act 2000 (‘the Act’) defines “‘employee”’ and allows the Court to declare a worker to be an employee. The Employment Court’s role was to determine whether the plaintiffs were employees. 

The Court referred to employment status as ‘the gateway’ to access minimum entitlements which “are designed to guard against worker exploitation”. The Court considered that the underlying purpose of section 6 and the statutory entitlements and protections it provides access to are relevant to the assessment of where the gatepost sits and the way in which the provision is to be approached and applied.  

Were the plaintiffs volunteers? 

The Court first assessed whether the plaintiffs fell within the excluded category of volunteers. Section 6 of the Act excludes volunteers from the definition of employee. There are two requirements that must be met to fall within the excluded volunteer category:  

1. The worker does not expect to be rewarded for work performed as a volunteer; and  
2. Receives no reward for work performed as a volunteer.  

The Court found that the plaintiffs expected to be rewarded for their work while working on the Teams and that they received a reward for their work on the Teams. 

“…In exchange for their work they expected to be permitted to remain in the Community with their family and friends and continue to lead a life they were familiar with; that they would receive food, shelter, clothing, religious support and guidance; and the promise of spiritual redemption (as against the threat of eternal damnation if they left).” [4] 

The Court found the plaintiffs were not volunteers and therefore not excluded from the section 6 ‘employee’ gateway on that basis.  

Whether workers undertook work for hire or reward under a contract of service – all relevant factors. 

The Court then considered whether the plaintiffs undertook their work for hire or reward under a contract of service by undertaking a “broad contextual inquiry” considering “all relevant factors which point to the real nature of the relationship.” The Court referred to the Judgment of the Supreme Court in Bryson v Three Foot Six Ltd “determining whether an employment relationship exists a number of factors may be relevant; the factors are not closed when considering what the real nature of the relationship is.” [5]  

In considering all relevant factors the Court noted: 

• “Party intention is a mandatory factor to weighed into the mix, but it is not determinative and is to be objectively determined.”  

The Court referred to the ostensible willingness of the plaintiffs to carry out the work and the very limited choice the plaintiffs exercised in reality. The plaintiffs were close to the no-or-very little real choice end of the spectrum in terms of the work. 

“The plaintiffs did their work on the Teams... because that is what they were told to do; what each of them had been trained to accept from birth; and the consequences of not doing what was expected were dire and well known – exclusion from the Community, from all that was familiar, from family and friends, and into a world they know little about, were ill equipped to navigate and had been taught to fear.” [6] 

• The so- called ‘domestic’ nature of the work did not assist in determining whether they were employees and labels such as ‘commercial’ and ‘domestic’ are a dangerous substitute for analysis. The Court highlighted that chefs and cleaners that are employees in hostels do work of a ‘domestic nature’.  
• It is not helpful to differentiate work which generates an externally sourced income and work that does not. The Court highlighted that not-for-profit organisations and government departments have employees.  
•  The absence of an expectation of financial remuneration or a failure to pay is also not determinative. These may simply reflect a misunderstanding of legal status or entitlements, or a deliberate or unintentional breach of law.  
•  The ability to pay was not a relevant factor in determining employment status.  
•  The Community’s way of life and religious tenets have contextual relevance, but are not determinative of the employment relationship. The Judge commented that a finding that the plaintiffs were employees would not be incompatible with the Community’s chosen way of life and /or their rights under the New Zealand Bill of Rights Act. 

The Court found: 

“that the plaintiffs worked under the strict direction and control of the Overseeing Shepherd and were subordinate to him. They worked strictly as required, for long hours and for years on end. The nature of the work was akin to working in a large scale hostel, which would otherwise be paid for. The work was essential to the Community’s operations. The plaintiffs were rewarded for the work, namely by being able to remain in the Community, and this was understood by all parties” [7]

All of these pointed to the real nature of the relationship being one of employment. The Court declared the six plaintiffs were employees.  

The Court adjourned the question of who the employer was. Once it is determined who the employer was, if the parties make a claim, the Court may determine whether applicable minimum employment standards were met and if not, determine what remedies should be awarded. The Court may also make recommendations concerning actions that should be taken to prevent similar problems occurring.  

Considerations in deciding the real nature of the relationship - employee, contractor, volunteer? 

This is one of a number of recent key cases regarding whether workers are employees (including courier drivers [8], ride-share drivers, [9] members of religious community).[10] 

This case highlights the Court’s willingness to look beyond labels and even party intentions when undertaking a broad contextual inquiry to determine the real nature of the relationship.  However, any written documentation will always be informative, and is recommended in any working relationship.

The classification of a worker as an employee can have significant implications for businesses from liability for minimum entitlement costs to obligations such as good faith and the requirement to justify dismissals.  Accordingly, it is wise for businesses to take care when making these assessments, and to seek advice.

The team of specialist employment lawyers at DTI Lawyers can provide advice to organisations regarding their arrangements with workers including volunteers, independent contractors and employees. We also provide advice to workers regarding employment status. You can contact us on 07 282 0174 or reception@dtilawyers.co.nz.