An Auckland University law professor is warning the government that changing the so-called "Hobbit Law" could scare off future film productions in New Zealand - possibly even the upcoming Amazon Lord of the Rings series.
Dr Bill Hodge this morning spoke to TVNZ 1's Breakfast following the government's announcement that it would set up a working group to reconsider the law, which is formally called the Employment Relations (Film Production) Amendment Act 2010.
The law made a legal distinction between employees and independent contractors after a protracted legal case brought by a contractor who claimed he was unjustifiably dismissed after production ended, thus leading Hobbit production company Warner Brothers to threaten to shift production due to the legal uncertainty of how a precedent could impact them financially.
Dr Hodge said the "Hobbit Law" "has worked, we haven't had issues with it" and urged the government to carefully consider their next move.
"What I fear is, not knowing exactly what they're doing, they'll stumble into a change that causes legal uncertainty - and legal uncertainty is very expensive and it scares off people who have a choice," he said.
"If you've got choices and you've got the money, where do you go? You could go to Bulgaria, you could go to Romania, you could even go to a place across the ditch - you could go to Australia.
"That's one of the dangers here - it'll fly away.
"We've got such a wonderful industry going, we've got great connections with Skywalker Ranch - George Lucas - and of course all the other productions that are going on ... Avatar ... and this is putting that in peril."
It was yesterday announced that Amazon has acquired the rights to produce a new multi-season television show based in the Lord of the Rings universe, with events taking place before those depicted in both the Lord of the Rings and Hobbit trilogies.
It is still unknown where the new series production will take place, but Dr Hodge says production companies will see the government's announcement as potentially-expensive "legal uncertainty" and said the government should tread carefully.
"They should leave it alone, it doesn't need fixing, its not broken - it works," Dr Hodge said.
WHAT IS THE HOBBIT LAW?
The Employment Relations (Film Production) Amendment Act 2010 - known as the 'Hobbit Law' - was passed in 2010 after a legal case between James Bryson and production company Three Foot Six Ltd.
The case which looked at the distinction between contractors and employees after Bryson claimed he was unjustifiably dismissed at the close of production - an legal option available only to those who are employees, not contractors.
The employment authority first decided he was a contractor, and he appealed that in the Employment Court, who ruled he was an employee.
The Court of Appeal then gave leave for that decision to be appealed and decided he was a contractor, and the case moved on once again to the Supreme Court.
Bryson was backed thoughout the legal process by the New Zealand actor's union, NZ Equity, who used the opportunity to push for the right for actors to bargain collectively, despite most of them being on independent contracts.
At this point, production company Warner Brothers was making noises about potentially pulling the product of the upcoming Hobbit movies away from New Zealand, due to the legal uncertainty and potential expenses the case's result could bring.
The National government then stepped in to protect, it said, the considerable economic gains afforded by New Zealand's film industry, and legislated to define the difference between contractors and employees.
The new law essentially said that people hired as contractors could not claim the benefits of employees after serving a term as a contractor.
"What the Hobbit Law did [was] to say if you sign an independent contract, you're an independent contractor, full stop," Dr Hodge said.
"You can't reverse that status and go back to being an employee after you've gone through a period of being a contractor."