It is well known that a fair process must be followed before terminating an employee’s employment. But what is the situation where the person is a contractor, engaged under a contract for services, rather than an employee? Is that person due an opportunity to explain or improve their conduct before facing the axe?
In Ike v NZ Couriers Ltd [2012] NZHC 558, the High Court (Toogood J) considered a case where a courier driver engaged under a contract for services had his contract terminated without notice on the basis that he had breached the ‘diligence, dress and courtesy’ provisions of the contract.
The courier driver’s case was based on an argument that the company’s contractual ability to terminate his contract was limited by a subsequent provision allowing for a reasonable time to remedy any breach. The driver’s argument was essentially that because of this ‘reasonable time to remedy’ provision, the company was contractually bound to follow a fair process in terminating the contract. The driver also said that because of the similarity between the courier contract and an employment agreement, the Court should imply obligations of fairness on the company.
The Court noted the well-settled law that courier drivers engaged on a contract for services are not to be treated as if they are employees, and held that obligations of fair and reasonable treatment are not to be implied into a contract for services unless the express terms of the contract provide for this.
The Court held that in this case, the relevant provisions did not justify the implication of an over-arching obligation of fair treatment; finding that the power to terminate the driver’s contract was not governed by any obligation to allow him time to remedy any breach. Rather, the provisions of the contract simply meant that the Court had to be vigilant to ensure that the powers provided by those provisions were properly exercised. The driver’s case was dismissed.