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Employment Relations Act 2000

Continuity of employment if employees' work affected by restructuring - Specified categories of employees

69E: Examples of contracting in, contracting out, and subsequent contracting

You could also call this:

“This law explains how jobs can change when companies switch who does the work, like cleaning or cooking, and how workers can keep their jobs.”

This section explains what contracting in, contracting out, and subsequent contracting mean in the context of employment changes. It uses examples to help you understand these concepts.

When a business decides to bring work back in-house that was previously done by an outside company, this is called contracting in. For instance, if a rest home starts doing its own food catering instead of using an outside company, the workers from the outside company might be able to choose to work for the rest home.

Contracting out is when a business decides to have an outside company do work that its own employees used to do. For example, if a school hires a cleaning company instead of having its own cleaners, the school’s cleaners might be able to choose to work for the cleaning company.

Subsequent contracting happens when one outside company replaces another to do work for a business. For example, if an airport changes from one food catering company to another, the workers from the first company might be able to choose to work for the new company.

In all these situations, whether workers can transfer to the new employer depends on if section 69F applies to them. This section doesn’t decide that - it just gives examples to help you understand what these changes look like.

The examples also show that these changes can happen at different levels, like when a company hires a subcontractor. The same rules about workers being able to transfer can apply in these cases too.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM59623.

Topics:
Work and jobs > Worker rights
Business > Industry rules
Rights and equality > Anti-discrimination
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69DA: Associated person, or

“This rule explained who counts as a person connected to a business for employee protection during changes.”

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69F: Application of this subpart, or

“This part explains when the rules apply to workers whose jobs might change because of company changes.”

Part 6A Continuity of employment if employees' work affected by restructuring
Specified categories of employees

69EExamples of contracting in, contracting out, and subsequent contracting

  1. This section contains examples of contracting in, contracting out, and subsequent contracting.

  2. Whether, in the following examples, an employee comes within the protection provided by this subpart depends on whether section 69F applies to the employee.

  3. This subsection sets out examples of contracting in.

    Example A

    A rest home carries on business in the age-related residential care sector. Instead of providing food catering services through its employees, it enters into an agreement with an independent contractor to provide those services.

    The agreement under which the independent contractor provides those services to the rest home expires or is terminated.

    The rest home then uses its employees or engages further employees to provide those services.

    Employees of the independent contractor to whom section 69F applies may elect to transfer to the rest home.

    Example B

    The circumstances in this example are the same as in example A except that the independent contractor engages a subcontractor to provide food catering services to the rest home.

    As a result of the agreement between the rest home and the independent contractor expiring or being terminated, the agreement between the independent contractor and the subcontractor expires or is terminated.

    Employees of the subcontractor to whom section 69F applies may elect to transfer to the rest home.

    Note

    In both example A and example B, it does not matter whether the rest home's or the independent contractor's employees originally provided the food catering services or whether the work was contracted out or subcontracted at the outset.

    In example A and example B, the persons relate to the definition of contracting in as follows:

    • the rest home is person A:

    • the independent contractor is person B.

  4. This subsection sets out examples of contracting out.

    Example C

    A school has employees who provide cleaning services.

    The school then enters into an agreement with an independent contractor to do that work or some of that work.

    The employees of the school to whom section 69F applies may elect to transfer to the independent contractor.

    Note

    Example C would not be a contracting out if, at the outset, the school does not have employees providing cleaning services.

    In example C, the persons relate to the definition of contracting out as follows:

    • the school is person A:

    • the independent contractor is person B.

    Example D

    The circumstances in this example are the same as in example C, except that later on the independent contractor decides that, instead of using its employees for the contract for the school, it will engage a subcontractor to do the work or some of the work.

    Employees of the independent contractor to whom section 69F applies may elect to transfer to the subcontractor.

    Note

    In example D, the persons relate to the definition of contracting out as follows:

    • the independent contractor is person A:

    • the subcontractor is person B.

    Note

    In example C and example D if, at the outset, the independent contractor did not have employees providing cleaning services, but subcontracts the work straight away, then the employees to whom section 69F applies may elect to transfer to the subcontractor.

  5. This subsection sets out examples of subsequent contracting.

    Example E

    An airport operator enters into an agreement with an independent contractor to provide food catering services at the airport.

    Some time later, the agreement under which the independent contractor provides those services expires or is terminated.

    The airport operator then enters into an agreement with a second independent contractor to provide food catering services at the airport.

    Employees of the first independent contractor to whom section 69F applies may elect to transfer to the second independent contractor.

    Note

    In example E, it does not matter whether the agreement between the airport operator and the first independent contractor constitutes a contracting out.

    In example E, the persons relate to the definition of subsequent contracting as follows:

    • the airport operator is person A:

    • the first independent contractor is person B:

    • the second independent contractor is person C.

    Example F

    The circumstances in this example are the same as in example E, except that the first independent contractor engages a subcontractor to do the work or some of the work.

    Later on, the agreement under which the subcontractor provides the work expires or is terminated and the first independent contractor engages a second subcontractor to provide food catering services at the airport.

    The employees of the first subcontractor to whom section 69F applies may elect to transfer to the second subcontractor.

    Note

    In example F, the subsequent contracting occurs at the subcontracting level.

    In example F, the persons relate to the definition of subsequent contracting as follows:

    • the independent contractor is person A:

    • the first subcontractor is person B:

    • the second subcontractor is person C.

Notes
  • Section 69E: replaced, on , by section 40 of the Employment Relations Amendment Act 2018 (2018 No 53).