Dunedin taxi drivers owed $100,000 in unpaid wages after 'sham contracting'

A Dunedin taxi company has today been ordered to reimburse nearly $100,000 to employee drivers in unpaid minimum wages and holiday wages.

Taxi (file picture). Source:

The Employment Relations Authority (ERA) has determined Southern Taxis had been treating four of their employee taxi drivers as contractors to save money.

Southern Taxis has also been ordered to pay interest on this lost pay the drivers were withheld.

"This is clear evidence of sham contracting being practiced by employers who knowingly breached the law at the expense of these drivers," Labour Inspectorate National Manager Stu Lumsden.

"At best, the drivers received minimum wage no more than 15 per cent of the time they were employed, and received no holidays or leave.

"This should send a strong message that employers need to be very clear about the difference between contractors and employees – you can’t remove minimum employment standards if, in essence, you’re treating staff in any way as employees."

The ERA is still determining if the directors of Southern Taxis should be personally liable for the wages in arrears. 

The Dunedin company was judged to know the difference between contractor and employee drivers, but attributed an ambiguous title of "commission agents" to the four drivers owed pay.

ERA said there is no such employment term under New Zealand employment law.

Southern Taxis even had other contractor drivers on their payroll, the ERA said.

The Determination found Southern Taxis’ treated the four workers as employees in all four criteria.

"Contractors by law have control over their own terms and conditions," Mr Lumsden said.

"It was clear these drivers had no such control while working for Southern Taxis.

"The ERA also determined it could not be said the drivers were operating autonomous businesses and there was evidence that showed the drivers were 'part and parcel' of Southern Taxis.

"Additionally, the company also acted as an employer by deducting PAYE payments and issued the drivers with payslips.

"Simply put if employment is disguised as contracting, its sham contracting and the Labour Inspectorate will take enforcement action and seek penalties."

The New Zealand Labour Inspectorate can be contacted on 0800 49 68 77.